    [Senate Hearing 112-590, Part 3]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 112-590, Pt. 3

    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 3

                        READINESS AND MANAGEMENT SUPPORT

                                   ----------

                           MARCH 21 AND MAY 10, 2012

             Printed for the use of the Committee on Armed Services

                                                      S. Hrg. 112-590 Pt. 3

    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 3

                        READINESS AND MANAGEMENT SUPPORT

                                   __________

                           MARCH 21 AND MAY 10, 2012
                                   __________

             Printed for the use of the Committee on Armed Services

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            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

                                     ______

                Subcommittee on Readiness and Management Support

                      CLAIRE McCASKILL, Missouri, Chairman

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

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
        Military Construction, Environmental, And Base Closure Programs
                                 march 21, 2012

                                                                       Page

    Robyn, Dr. Dorothy, Deputy Under Secretary of Defense for
      Installations and Environment..................................     8
    Hammack, Hon. Katherine G., Assistant Secretary of the Army
      (Installations, Energy, and Environment).......................    25
    Pfannenstiel, Hon. Jackalyne, Assistant Secretary of the Navy
      (Energy, Installations, and Environment).......................    35
    Yonkers, Hon. Terry A., Assistant Secretary of the Air Force for
      Installations, Environment, and Logistics......................    52

                      The Current Readiness Of U.S. Forces
                                  may 10, 2012

    Austin, GEN Lloyd J., III, USA, Vice Chief of Staff, U.S. Army...   111
    Ferguson, ADM Mark E., III, USN, Vice Chief of Naval Operations,
      U.S. Navy......................................................   117
    Dunford, Gen. Joseph F., Jr., USMC, Assistant Commandant, U.S.
      Marine Corps...................................................   122
    Breedlove, Gen. Philip M., USAF, Vice Chief of Staff, U.S. Air
      Force..........................................................   127

                                     (iii)

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

                                  ----------

                           WEDNESDAY, MARCH 21, 2012

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

        MILITARY CONSTRUCTION, ENVIRONMENTAL, AND BASE CLOSURE PROGRAMS

        The subcommittee met, pursuant to notice, at 10:09 a.m. in
    room SR-232A, Russell Senate Office Building, Senator Claire
    McCaskill (chairman of the subcommittee) presiding.
        Committee members present: Senators McCaskill, Nelson,
    Shaheen, and Ayotte.
        Majority staff members present: Peter K. Levine, general
    counsel; Jason W. Maroney, counsel; John H. Quirk V,
    professional staff member; and Russell L. Shaffer, counsel.
        Minority staff members present: Paul C. Hutton IV,
    professional staff member; and Lucian L. Niemeyer, professional
    staff member.
        Staff assistants present: Mariah K. McNamara and Brian F.
    Sebold.
        Committee members' assistants present: Ryan Ehly, assistant
    to Senator Nelson; Jason Rauch, assistant to Senator McCaskill;
    Patrick Day and Chad Kreikemeier, assistants to Senator
    Shaheen; and Brad Bowman, assistant to Senator Ayotte.

        OPENING STATEMENT OF SENATOR CLAIRE McCASKILL, CHAIRMAN

        Senator McCaskill. I think it is always a good sign to have
    a hearing on military readiness and for me to look up from my
    notebook and see three women. That is great.
        This hearing will come to order.
        You are outnumbered, sir.
        Mr. Yonkers. I am honored to be here.
        Senator McCaskill. In good company.
        We will begin the hearing on readiness and management
    support that we will have today. I will give a brief opening
    statement, give Senator Ayotte a chance for an opening
    statement, and then we will look forward to your testimony.
        The Subcommittee on Readiness and Management Support meets
    this morning to hear testimony on the fiscal year 2013 budget
    request for the Department of Defense (DOD) installations and
    environment. At today's hearing, we will hear from our
    witnesses on their request for military construction (MILCON)
    and environmental programs for fiscal year 2013.
        I would like to begin by welcoming the members and say how
    much I look forward to working with you on this year's National
    Defense Authorization Act (NDAA). It has been a pleasure
    working with Senator Ayotte. Her sharp focus and dedication to
    readiness and management issues has been exceptional, and I
    really enjoy our partnership on this subcommittee.
        I would also like to thank our witnesses for rearranging
    their schedules to appear today. It is important for us to have
    this hearing as early in the congressional budget process as
    possible so we can have a full and frank discussion of the
    President's request that informs this year's defense
    authorization bill, and we appreciate your help in enabling us
    to do that.
        Last year, this subcommittee identified approximately $1.7
    billion in programs that could be eliminated or deferred in the
    MILCON and environment accounts, approximately 10 percent of
    the President's budget request. While I cannot promise we will
    find similar savings in this fiscal year, I do not believe
    there is anything DOD is doing that we cannot do better, and I
    do not believe that there is any part of the budget that can be
    off limits as we look for savings. I will be looking at every
    area of this subcommittee's jurisdiction again this year as we
    attempt to cut duplicative projects and programs, increase
    management efficiencies, and reduce waste.
        Overall, the President's budget request for MILCON and
    family housing is $11.2 billion in fiscal year 2013, as
    compared to $13 billion authorized in last year's NDAA based on
    the President's budget request of $14.7 billion.
        DOD is certainly getting the message that the fiscal
    environment is extremely tight and we were pleased to see a
    renewed focus on tip-of-the-spear projects that directly
    support the warfighter. However, there are a number of projects
    and decisions reflected in the budget request that raise
    questions and we look forward to a discussion about them.
        Accompanying the budget is a request by Secretary Panetta,
    Secretary of Defense (SECDEF), for two additional rounds of
    base realignment and closure (BRAC) authority in fiscal years
    2013 and 2015. In making this request, the SECDEF noted that
    while the BRAC process is controversial, it is the only
    effective way to achieve needed infrastructure savings made
    available by DOD force structure reductions.
        While I applaud DOD's desire to find responsible places to
    achieve savings, there is one area where there is absolutely no
    room for compromise this year and that is BRAC. I will not
    support the request for a BRAC process to be carried out in
    2013. Government auditors have not yet completed a final
    analysis of the recently completed 2005 BRAC round. Congress
    needs to understand completely our planned force structure,
    including our overseas force posture, before we consider a new
    round of BRAC.
        The impact BRAC has on communities around the country and
    some in my home State is extraordinary. I will not support a
    process that is casual or one that is rushed before we fully
    comprehend whether or not this task is clearly in the best
    interest of the American taxpayers and our national security.
        DOD has a long way to go before it proves to me that these
    initial criteria have been met.
        The Government Accountability Office (GAO) has an ongoing
    mandate to study and report on BRAC. Their most recent analysis
    shows that the one-time implementation cost for BRAC 2005 grew
    from $21 billion, as originally estimated by the BRAC
    commission, to approximately $35 billion, an increase of 53
    percent.
        The news is even worse when we look at estimated savings.
    The original estimation of net annual recurring savings of $4.2
    billion with 20-year net present value savings of $36 billion
    are now, according to a review of the fiscal year 2011 BRAC
    2005 budget submission, the most recent study by GAO, shows
    that BRAC 2005 now will have a net annual recurring savings of
    $3.8 billion, a 9.5 percent decrease and a 20-year net present
    value savings of $9.9 billion, a 73 percent reduction over
    previously estimated savings.
        In short, what we have here is increased up-front costs and
    reduced savings. This is unacceptable. We must learn from BRAC
    2005. The up-front costs were much higher than anticipated and
    the net savings were too much lower than anticipated.
        Current GAO analysis shows that we will not even recoup our
    upfront costs until 2018, 5 years later than originally
    estimated. Even more galling is the fact that 77 out of 182
    commission recommendations, or 42 percent, will not pay back at
    all in the 20-year period.
        We cannot afford to do this again. Given all of the
    downward pressures on the defense budget, the amount of top
    line eaten up by the up-front costs of a BRAC would be
    catastrophic to other accounts. There is nothing that has been
    shown to me or I believe the Senate Armed Services Committee
    (SASC) that would indicate that we can avoid the catastrophic
    upfront costs in a new BRAC, and until there is some
    demonstration of that, I cannot support a BRAC.
        The 2005 BRAC round was unlike previous rounds of BRAC, and
    I believe some of those differences contributed to its reduced
    efficiency and I fear we have not learned our lesson. The 2005
    round had three overarching goals: transform the military,
    foster jointness, and reduce excess inventory. Previous rounds
    were primarily focused on achieving savings by reducing excess
    inventory. I support the concept of revising and updating our
    force structure and force lay-down to meet current challenges.
    However, I have grave concerns about using the 2005 BRAC model
    as a means to do so, especially since we do not yet have a
    clear vision of our force posture as we draw down in the Middle
    East.
        At this time, DOD is continuing to study and deliberate on
    its preferred force posture in Europe and the Pacific. Force
    posture decisions like these come with associated costs, and
    those costs are often first apparent in MILCON accounts. Too
    often, when we look back on failed projects and programs, we
    see that the analysis and decisionmaking on the front end was
    deficient, and I do not believe we have completed the requisite
    analysis to support future rounds of BRAC.
        There are other areas in which we can do better and should
    do better. For example, the budget request includes funding for
    a new cadet dormitory at West Point as a cost to the taxpayers
    of almost $200 million. I understand the unique attributes of
    West Point but fail to understand why the academy has not done
    a better job managing its student population to avoid the
    overcrowding cited as a reason for this very expensive project.
        The budget request includes funding for the second
    increment of a project associated with the Guam realignment,
    valued at $25.9 million, despite DOD's failure to satisfy
    requirements contained in last year's defense authorization
    bill. This committee has been clear that no further funding
    will be provided until DOD meets those requirements.
        The Air Force has instituted a deliberate pause in their
    MILCON program and has reduced its request from $1.36 billion
    last year to $388 million in fiscal year 2013. At first glance,
    this is a cause for celebration. I applaud the Air Force's
    fiscal restraint. However, I have become very concerned that
    this realignment of budget top line to other accounts will have
    significant consequences for future year MILCON requests. The
    money was not saved. The money was just shifted.
        The President's budget request also includes just under $4
    billion for defense environmental programs, down slightly from
    last year's request but still representing a solid commitment
    to important environmental programs which ensure compliance
    with environmental rules, management of natural resources on
    installations, protection of our bases and training ranges, and
    cleanup of legacy contamination.
        The biggest piece of the environmental budget is, as with
    past years, the environmental restoration program to clean up
    contamination at bases, current and former, including
    unexploded ordnance and discarded military munitions. These
    environmental hazards must be addressed and resolved
    aggressively and we will be interested in hearing from our
    witnesses on how they plan to keep pressing towards meeting
    these cleanup challenges.
        DOD must also continue to look for ways to trim costs
    associated with environmental protection while not sacrificing
    environmental stewardship. Ultimately, it must remain the goal
    of the military departments to work to maintain the balance
    between environmental protection on one hand and military
    readiness on the other, and to do so in an era of increasing
    fiscal constraints.
        I would like to applaud the witnesses for their various
    commitments to energy efficiency at our installations. Using
    energy from reliable and renewable sources ensures that
    missions are accomplished, strategic risk to our military is
    reduced, the cost to our taxpayers is lessened, and our
    national security is ultimately improved.
        I would also like to commend the Army for working with this
    subcommittee to recalibrate their long-range plan for all Army
    ammunition plants and arsenals, not just for Lake City
    Ammunition Plant. By following a comprehensive investment
    strategy that enhances the work environment, improves safety,
    and modernizes these critical installations, we can do a better
    job of enabling the dedicated men and women who support our
    warfighters.
        We have a great deal to discuss today. I look forward to
    your testimony and a lively discussion that will follow not
    only today, but throughout the year.
        I now turn to Senator Ayotte for any opening remarks she
    may have.

                   STATEMENT OF SENATOR KELLY AYOTTE

        Senator Ayotte. Thank you, Madam Chairman, and thank you,
    Senator Nelson. I thank you for calling this hearing, Madam
    Chairman, for the 2013 budget request for military
    installations and environmental programs.
        It has been a real pleasure to work with Senator McCaskill
    and I look forward to working with you again this year. Thank
    you for your leadership. I think we have been a really strong
    team in dealing with our Nation's military readiness in this
    committee and also strong stewards of taxpayers' dollars.
        I want to thank our witnesses for continuing to manage a
    full range of installation, environment, and energy programs
    for your respective departments through difficult times. Many
    of these programs are facing declining budgets with difficult
    choices that require an honest assessment of the risk for our
    military members and their families. You all deserve our
    gratitude and appreciation for your dedication.
        As we consider the budget request for this year for
    installation and energy programs, as well as the
    administration's request for authority to conduct two more
    rounds of BRAC, we must ensure that the critical missions and
    core responsibilities of DOD are preserved in a very difficult
    budget environment. We must continue to ensure that every
    taxpayer dollar provided to DOD is used to meet a valid
    military need or shortfall.
        DOD has proposed a budget for 2013 that includes $11.2
    billion for installation programs, which is $3.5 billion, or 25
    percent, less than last year's request. The investments
    proposed for facility recapitalization are 41 percent lower
    than last year. The Air Force request for MILCON and family
    housing this year is the lowest since the 1970s. An
    accompanying $7.3 billion request for the sustainment of
    facilities is 6 percent less than DOD's annual goal and the
    lowest year to date. Accounts for base operating support are
    also down.
        In addition, the Services have proposed deferrals of MILCON
    and facility maintenance over the next 5 years under the guise
    of efficiency to save billions of dollars. I am not sure how
    putting off bills is going to be counted as an efficiency if
    eventually we have to pay those bills.
        On the topic of facility sustainment, I would like the
    witnesses to describe how the models used to determine the
    minimal level of funding for each installation accounts for the
    unique features of that installation. Locations like the
    service academies, hospitals, and historic forts are in some
    cases over 170 years old and have an estimated 150 to 180
    percent higher cost to sustain each facility on the
    installation because of their age. These bases must account for
    requirements imposed by the local historical preservation
    offices for repairs to facilities that are listed or eligible
    for the National Registry of Historical Places. I would like to
    know how the Services account for these additional requirements
    in the estimates that you have provided us.
        In total, this year's budget request for installations
    increases risks. Risks at our installations and ranges that
    continue to support the operational and training needs for our
    military members. The risk is greater for our members of the
    Guard and Reserve. The MILCON request for the Army National
    Guard is 30 percent lower than 2011. The MILCON request for the
    Air National Guard is even worse, 78 percent lower than 2011.
        While the administration proposes to cut at least 8 Army
    brigades, 20,000 marines, and numerous Air Force squadrons, the
    budget's proposed investments in renewable energy projects and
    non-DOD items in my view are at an all-time high. There are $51
    million to be transferred to local school districts to pay for
    repairs that have historically been paid for by local
    communities. $119 million is requested for water lines,
    regional public health laboratories, and mental health
    facilities to serve local civilian beneficiaries with no
    military association at a time when the need for mental health
    services for our Active Duty members and veterans and their
    families is greater than ever. This is on top of hundreds of
    millions of dollars invested in biofuel refineries, net zero
    installations, and synthetic fuels purchased at $26 a gallon.
        We are faced with $487 billion in defense cuts, and I know
    that this is a number that was handed to you by Congress and
    not one that you came up with yourselves.
        We are also facing the potential of another $492 billion in
    defense cuts. It is $600 billion if you include interest
    savings if sequestration is allowed to occur in 2013. The
    SECDEF has said that if sequestration occurs, it would inflict
    severe damage to our national defense for generations.
        Let me just say upfront that I am deeply concerned about
    this. I want to hear from our witnesses what they think will be
    the impact if sequestration goes forward, and I am cosponsoring
    a bill to stop this from happening to DOD.
        We need to get a better understanding of how DOD has
    assessed its risk to meet its core mission of national security
    in light of the budget numbers that you have been handed.
        The President's budget also includes a request for Congress
    to authorize two BRAC rounds in 2013 and 2015 which the
    chairman has discussed. Having just completed the 2005 BRAC
    round, I share the views expressed by Senator McCaskill. I do
    not believe that Congress should authorize additional BRAC
    rounds at this time for the following reasons.
        First, DOD is reviewing military force posture overseas in
    Europe and in Asia and developing plans that will not be
    finalized in the near future, and we need to know what those
    plans are. Those plans will have a direct impact on bases in
    the United States. Initiating another BRAC round before those
    overseas plans are finalized would be premature.
        Second, the budget request is proposed to slash 125,000 of
    our forces. It does not make sense to initiate a BRAC round
    before end strength reductions have been implemented especially
    when the pace and perhaps even the size of these reductions may
    change. The Pentagon asserts that this is important to retain
    the ability to reverse these end strength reductions in the
    future. We have heard that from each of our military leaders,
    reversibility. But we cannot reverse a BRAC decision.
    Preserving the option of reversibility must include preserving
    the bases already in place for these troops.
        Third, it is clear that a BRAC round, as Senator McCaskill
    outlined in detail, may not be a sound fiscal decision at this
    point. We have already seen that the 2005 BRAC round, as
    Senator McCaskill has already laid out, cost so much more than
    was estimated. The total cost of BRAC decisions were estimated
    in 2005 to be $21 billion, and according to GAO, the actual
    round of BRAC cost taxpayers $14 billion more, $35 billion. The
    unfortunate part is we are not going to see the savings from
    the 2005 BRAC round until around 2018 or 2019, 13 or 14 years
    down the line.
        In short, I do not believe we can justify spending tens of
    billions of dollars within the DOD budget in the short term to
    fund more BRAC rounds for returns that may take decades to
    materialize and when we are not even sure that we are going to
    be able to have the money to pay in the short term, as Senator
    McCaskill outlined and that DOD can absorb these costs. I am
    very, very concerned about where we are.
        I also would like to hear details regarding defense
    sequestration, overseas force posture, and the size of our
    forces. All of these are unknowns and yet we are asking for a
    BRAC round right now.
        We have many issues to cover in this hearing. We need to
    know how DOD plans to determine domestic bases for the basing
    of new weapons systems, including the F-35 and the KC-46
    tanker. It would be very important for us to know those
    decisions, and those decisions would have a significant impact
    on BRAC decisions as well.
        Finally, we need to hear DOD's revised plan for realignment
    of the U.S. Marines on Okinawa and the relocation of 8,700
    marines and their families on other locations including Guam.
    The way forward on this complex issue is as uncertain as ever
    with negotiations currently taking place between our Government
    and Japan. Before we spend another dollar of either U.S.
    taxpayer funds or those already provided by the Government of
    Japan, DOD needs to comply with the provisions of the NDAA for
    Fiscal Year 2012 to include a review of an independent study on
    our U.S. military force posture in the Pacific region.
        I thank you, Senator McCaskill, for this hearing. Thank you
    for your leadership, and I look forward to hearing the
    testimony of our witnesses today. Thank you.
        Senator McCaskill. Thank you.
        Senator Nelson, would you like to say anything briefly
    before we begin?
        Senator Nelson. No. I will defer to the questions. Thank
    you.
        Senator McCaskill. Thank you.
        Our witnesses today are Dr. Dorothy Robyn, the Deputy Under
    Secretary of Defense; the Honorable Katherine Hammack,
    Assistant Secretary of the Army; the Honorable Jackalyne
    Pfannenstiel, Assistant Secretary of the Navy; and the
    Honorable Terry Yonkers, Assistant Secretary of the Air Force.
        We will begin our testimony this morning with Dr. Robyn.

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

        Dr. Robyn. Thank you, Chairman McCaskill, Ranking Member
    Ayotte, Senator Nelson. Thank you for the opportunity to
    testify on the President's budget for MILCON and environmental
    programs.
        Let me touch on three issues: MILCON and family housing,
    our request for two new BRAC rounds, and environment and
    energy.
        So as to say more about BRAC in response to your opening
    statements, let me say less in my opening statement about our
    MILCON budget. You summarized the key numbers. Let me just
    point out what we are not asking money for.
        We are not asking money for family housing here in the
    United States. That is because we have now privatized nearly
    all of our 200,000 units of military family housing. Using the
    power of the commercial market, we leveraged a $3 billion
    investment by DOD to generate $27 billion worth of high-
    quality, well-maintained homes which have done an enormous
    amount to improve the quality of life for military families. It
    is an extraordinary success story, the most successful reform
    my office has carried out, and it is something we should be
    looking to do much more broadly.
        Let me turn to BRAC. We need another BRAC round, ideally
    two. The math is straightforward. Force reductions produce
    excess capacity. Excess capacity is a drain on resources. BRAC
    is the only way that we can realign our infrastructure with our
    strategy.
        For the record, let me summarize the savings from BRAC. If
    you had Bob Hale sitting here, he would tell you that BRAC is
    probably the single most effective thing DOD has ever done in
    terms of producing greater efficiency and savings. It is
    enormously important.
        The first four BRAC rounds generated a total of $8 billion
    in annual recurring savings. The total savings to date from the
    first four rounds is $100 billion. For the BRAC 2005 round, the
    annual recurring savings is $4 billion although because, as you
    point out, the payback period is 9 years, we will not see net
    savings until 2018. The total of $8 billion and $4 billion
    represents the additional costs DOD would incur each year for
    base operating support personnel and leasing costs had we not
    had BRAC. This is the equivalent to what DOD would spend to buy
    300 Apache attack helicopters, 124 Super Hornets, or 4
    Virginia-class submarines.
        Now, let me respond on the 2005 round in particular. It is
    not the right comparison. Unlike the first four BRAC rounds,
    which paid off in a relatively short period of time, the 2005
    round was not about savings and eliminating excess capacity.
    Carried out in a post-September 11 environment when DOD was at
    war, it was about transforming installations to better support
    the warfighter. The Army in particular used BRAC 2005 to carry
    out major transformational initiatives such as the
    modularization of brigade combat teams (BCT). Let me quote Dr.
    Craig College, the Deputy Assistant Chief of Staff for Army
    Installation Management. ``The urgency of war drove the Army to
    leverage BRAC 2005 as the tool to integrate several critical
    transformational initiatives which, if implemented separately,
    might have taken decades to complete.'' The initial estimated
    cost did go up, and in the question and answer, I can speak to
    that.
        In short, the 2005 round took place during a period of
    growth in the military and it reflected the goals and needs of
    that time. The focus was on transforming installations to
    better support forces as opposed to saving money and space. So
    it is a poor gauge of the savings DOD can achieve through
    another BRAC round. The prior BRAC rounds represent a better
    gauge of such savings.
        Finally, let me talk about energy and the environment. We
    are requesting, as you said, $4 billion for environmental
    programs, and my statement details our progress and our goals
    with respect to cleanup and pollution prevention. Separately I
    describe our four-part installation energy strategy which is
    designed to reduce our $4 billion a year facility energy bill
    and at the same time make our installations more resilient to
    the prospect of grid disruption. You will hear from my
    colleagues about the wonderful strides we are making.
        Let me highlight one common theme: technology. Technology
    has been DOD's comparative advantage for 200 years going back
    to Eli Whitney and interchangeable machine-made parts for
    musket production. It is what we do. Although we tend to talk
    about technology and DOD's technological innovation in the
    context of weapons systems and combat operations, it is every
    bit as important to harness that advantage for what we are
    trying to do with respect to both the environment and energy.
    Let me give you an example.
        A decade ago, the two environmental technology programs I
    oversee took on a challenge, developing technologies that could
    discriminate between scrap metal and hazardous unexploded
    ordinance (UXO); in other words, distinguishing between beer
    cans and bombs. Current cleanup technologies lack that ability.
    They have a 99.99 percent false positive rate. So you have to
    dig up everything. As a result, our estimated cost for UXO
    cleanup is $14 billion.
        Remarkably, 10 years of investment by these two
    organizations has yielded technology that can distinguish bombs
    from beer cans with a very high degree of reliability, and in
    the year since I first told you about this, last year, we have
    accelerated our live-site demonstrations of the technology, and
    no less important, we are working with the UXO cleanup firms,
    with State regulators, and with the DOD contracting community
    to make them comfortable with what is a fundamentally new
    approach to UXO cleanup. We think this can save billions of
    dollars in UXO cleanup costs.
        Similarly, our facility energy strategy should, above all,
    exploit DOD's extraordinary strength as a technological
    innovator. To illustrate, 3 years ago my office created the
    Installation Energy Test Bed, run by the same folks who
    addressed the UXO problem. The rationale is similar. In the
    energy area, as in the environmental area, emerging
    technologies offer a way to significantly reduce DOD's cost and
    improve its performance. But because of fundamental market
    failures, these technologies are very slow to get to the
    market. The valley of death is very wide, if you will, when it
    comes to energy technologies, particularly those for retrofit
    of buildings.
        As the owner of 300,000 buildings, it is in DOD's direct
    self-interest to help overcome the barriers that inhibit
    innovative technologies from being commercialized and deployed
    on our installations. We do this by using our installations as
    a distributed test bed to demonstrate and validate the
    technologies in a real-world, integrated building environment.
    By centralizing the risk and distributing the benefits of new
    technology to all DOD installations, the test bed can provide a
    significant return on DOD's investment. There are a number of
    other ways in which we can leverage and are leveraging advanced
    technology to further our facility energy strategy.
        In sum, the two themes I want to hit, the management of
    installations and related energy and environmental issues are
    two of the most business-like activities DOD carries out. We
    should be taking full advantage of market mechanisms and
    competition, and we should be leveraging our extraordinary
    talent for driving technological change.
        Thank you, and I look forward to your questions.
        [The prepared statement of Dr. Robyn follows:]
                    Prepared Statement by Dr. Dorothy Robyn
        Chairman McCaskill, Senator Ayotte and distinguished members of the
    subcommittee: Thank you for the opportunity to present the President's
    fiscal year 2013 budget request for the Department of Defense (DOD)
    programs to support installations, facility energy and the environment.
    My testimony covers four topics: international and domestic basing,
    including the Department's request for authorization of two new rounds
    of Base Realignment and Closure (BRAC); our management of the built
    environment, including the programs that support military construction,
    family housing, and sustainment and recapitalization; our strategy for
    managing facility energy to reduce costs and improve installation
    energy security; and our management of the natural environment,
    including the programs that support environmental conservation and
    restoration, environmental technology and compatible development.
            i. the global picture: international and domestic basing
        To project power globally, the Department must have the right mix
    of forces and facilities at strategic locations. My office supports the
    Department's strategic security objectives by ensuring that decisions
    about basing of troops and facilities are the product of joint planning
    and rigorous analysis. We also seek to reduce our installation
    footprint wherever possible.
    Rebasing Marines from Okinawa to Guam
        The United States is rebalancing its global posture to reduce its
    presence in certain regions and enhance it in others. As the recent
    U.S.-Japan joint statement made clear, the United States and Japan are
    strongly committed to strengthening our robust security alliance, which
    is dedicated to the security of Japan and to the maintenance of peace
    and security in the Asia-Pacific region. The United States has
    conducted a strategic review of its defense posture in Asia in order to
    achieve a more geographically distributed, operationally resilient and
    politically sustainable force structure. Japan has welcomed this
    initiative.
        Based on that review, the development of Guam as a strategic hub,
    with an operational Marine Corps presence including marines relocated
    from Okinawa, remains an essential part of the Alliance's Asia-Pacific
    Strategy. The United States and Japan have begun official discussions
    to adjust our plans as set forth in the 2006 Realignment Roadmap. In
    particular, we propose to delink the movement of marines to Guam and
    the resulting land returns south of Kadena from progress by Japan on
    the Futenma Replacement Facility (FRF) near Camp Schwab. We remain
    committed to mitigating the impact of U.S. forces on Okinawa and to
    construction of the FRF as the only viable way forward. That said, we
    believe the two sides must invest in the Futenma facility in the near-
    term, to ensure both safety and combat readiness.
        The President's fiscal year 2013 budget request includes $51
    million for construction to support the Marine relocation to Guam. Our
    request includes another $139.4 million for Guam civilian
    infrastructure to address population growth there, of which $106.4
    million is for Guam water and wastewater infrastructure capital
    improvements such as water treatment plant modifications, supply well
    improvements and provision of backup power at wastewater pump stations.
    Base Realignment and Closure
        After a decade of war the United States is at a strategic turning
    point. With changes in strategy come changes--in this case reductions--
    in force structure. Simply stated, the cuts in force structure that we
    are implementing must be accompanied by cuts in supporting
    infrastructure, including military bases. Absent a process for closing
    and realigning bases, the Department will be locked in a status quo
    configuration that does not match its evolving force structure,
    doctrine and technology. Given the high cost of our infrastructure,
    moreover, if we retain bases that we do not need, we will be forced to
    cut spending on forces, training and modernization.
        Overseas Basing Review
        The Department's request for additional rounds of BRAC comes at a
    time when we are looking aggressively at where we can close bases
    overseas--particularly in Europe. (Although domestic closures require
    legislative authority, overseas closures do not.)
        We have already made significant reductions in our European
    footprint. Since 2003, the Department has returned more than 100 sites
    in Europe to their respective host nations, and we have reduced our
    personnel by one-third. Between fiscal year 2012 and fiscal year 2015
    the Army alone will close 23 additional sites as previously announced.
        With the recently announced force structure changes in Europe, we
    can do more to consolidate our infrastructure with the goal of reducing
    long-term costs while still supporting our operational requirements and
    strategic commitments. First, we can reduce the number of discrete
    installation sites we maintain in Europe. We have more than 300 such
    sites--ranging from small communications posts to robust Main Operating
    Bases--of which about 200 house most of our activities. Second, we can
    eliminate excess support infrastructure such as warehouses,
    administrative space and housing. The infrastructure located off-base
    presents a particularly attractive target for consolidation. Third, we
    can take advantage of the capacity made excess by force structure
    changes to accommodate new functions.
        My office has undertaken the first step in this process: we are
    working with the EUCOM theater commander, his component commanders and
    Service leadership here in Washington to measure the capacity of all of
    our European installations. This inventory will allow us to analyze how
    much capacity can be shed and where. With the goal of long-term cost
    reduction, we will assess the costs and savings of each proposed action
    and identify those with the highest payback. We anticipate having
    preliminary options for the Secretary to review by the fall.
        Domestic Basing: The Need for BRAC
        Even a significant reduction of our footprint overseas will not
    achieve the needed cuts to overall infrastructure--hence our request
    for a parallel, BRAC process. It makes sense to look at our domestic
    and overseas bases at the same time, moreover, so that the two reviews
    can inform one another. The Department took this approach in 2004-2005,
    and it would be no less useful now given the major strategic
    realignment underway. Let me briefly summarize the case for BRAC.
        First, the same strategic and fiscal factors that compel
    consolidation overseas require it here. In addition to the global
    posture shifts discussed above, we are shaping a joint force for the
    future that, while agile and technologically advanced, will be smaller
    and leaner across the board. The Army is reducing force levels by
    72,000, the Marine Corp is resizing to 182,000 active Marines, and the
    Air Force is eliminating approximately 300 aircraft over 5 years. We
    are also delaying, restructuring and canceling modernization programs.
    To adjust to these strategic changes, and to eliminate the excess
    capacity that results from reductions in force structure, the
    Department will need to close and realign installations in the United
    States as well as Europe.
        Moreover, the overhead cost to maintain, sustain and protect bases
    is high. In recent years we have spent about $40 billion a year on
    facilities construction, sustainment and recapitalization. Other costs
    associated with operating military installations (e.g., air traffic
    control, religious services and programs; payroll support; personnel
    management; morale, welfare, and recreation services; and physical
    security) have averaged about $15 billion a year. If we retain bases
    that are excess to need, we will be forced to cut spending on forces,
    training and modernization.
        Second, the statutory commission process provided by BRAC is the
    only fair, objective and proven method for eliminating excess domestic
    infrastructure and reconfiguring what remains. BRAC provides for a
    sound, thorough and transparent analytical process, based on a 20-year
    force structure plan developed by the Joint Staff; a comprehensive
    inventory of installations by the Department to ensure a thorough
    capacity analysis; and defined selection criteria that place priority
    on military value. The requirement to look at every installation means
    DOD must consider a broad range of approaches, not just the existing
    configuration; and the transparency of the process facilitates
    independent review by the commission and affected communities. Most
    important, the requirement that the President and Congress accept or
    reject the Commission's recommendations on an ``all-or-none'' basis
    insulates BRAC from political interference.
        Third, the savings from BRAC are real and substantial. Of all the
    efficiency measures that the Department has undertaken over the years,
    BRAC is perhaps the most successful and significant. The first four
    rounds of BRAC (1988, 1991, 1993, and 1995) are producing a total of
    about $8 billion in annual recurring savings, and the comparable figure
    for BRAC 2005 is $4 billion. This amount ($12 billion) represents the
    additional costs that the Department would incur every year for base
    operating support, personnel and leasing costs had we not had BRAC.
    These annual savings, or avoided costs, are equivalent to what the
    Department would spend to buy 300 Apache attack helicopters, 124 F/A-
    18E/F Super Hornets or 4 Virginia class submarines.
        Understandably, some have questioned the specifics of our savings
    calculations, and critics have pointed to the 2005 round as evidence
    that BRAC does not produce the hoped for savings--or at least not in a
    reasonable timeframe. I will respond to these criticisms in more detail
    tomorrow when I testify before the House Armed Services Committee's
    Subcommittee on Readiness, but let me say this here: The 2005 round
    took place during a period of growth in the military, and it reflected
    the goals and needs of that time. Because the focus was on transforming
    installations to better support forces--as opposed to saving money and
    space--it is a poor gauge of the savings that the Department can
    achieve through another BRAC round. The prior BRAC rounds--which
    reduced capacity and paid off in 2 to 3 years--represent a better gauge
    of the savings potential of future BRAC rounds.
        Joint Basing
        A significant action under BRAC 2005 that my office has championed
    is the consolidation of 26 installations into 12 Joint Bases. This
    action responded to persistent internal and external criticism that
    base support was duplicative. The Department also felt that joint
    operation would enhance the military value of Service-unique
    installations, making them a DOD-wide asset.
        The creation of a joint base is complex. The commander must merge
    diverse, service-specific financial systems, management structures,
    operating procedures, and staffs, so as to jointly manage functions
    ranging from facilities sustainment to mail delivery to the provision
    of family support services. Considering the size of many of our
    installations, such a consolidation is equivalent to the merger of two
    corporations. As with corporate mergers, moreover, the cultural
    differences are often the hardest to bridge.
        I chair a flag-level group (the Senior Joint Base Working Group
    (SJBWG)) that has met regularly for the last 3 years to oversee the
    implementation and operation of Joint Bases. The SJBWG created the
    initial framework for joint basing, including a body of policy guidance
    (Joint Base Implementation Guidance) and a collaborative governance
    structure (Joint Management Oversight Structure). Throughout the
    process, the SJBWG made key strategic decisions.
        First, to hold the lead Service accountable, the SJBWG created a
    comprehensive set of Common Output Level Standards (COLS). Previous
    efforts to create joint bases had encountered strong resistance because
    of concerns by one Service that another Service would not provide
    adequate base support--i.e., that it would adopt a ``lowest-common-
    denominator'' approach to installation management. To allay this fear,
    the SJBWG led an exhaustive effort to define a COLS metric for every
    relevant aspect of base support--274 COLS in all.\1\ Significantly, in
    every case the SJBWG opted for the highest standard used by any of the
    Services as the COL standard for Joint Bases. Although this ``highest-
    common-denominator'' approach allayed the fears that had doomed joint
    basing in the past, it did so at a price: installation support costs
    for the Joint Bases have gone up by 6 percent on average. However, we
    expect the savings from consolidation to offset this. Moreover, COLS
    give the Department a solid basis for estimating and budgeting for
    installation support requirements--a best practice that we hope to
    apply to all military bases.
    ---------------------------------------------------------------------------
        \1\ For example, one COLS metric specifies the maximum height that
    grass on an installation can reach before it must be cut. In addition
    to defining the underlying metric (grass height, measured in inches),
    the SJBWG selected the actual value (standard) for that metric to which
    the Joint Bases as a whole would be held.
    ---------------------------------------------------------------------------
        Second, the SJBWG opted to give the Joint Bases a transition period
    to merge their organizations before asking them to achieve a savings
    target.\2\ This represents a conscious decision by the Services to
    defer the near term savings from joint basing in order to increase the
    odds that it will succeed in the long run. It is directly analogous to
    the Department's approach to traditional BRAC actions, which often
    require an upfront investment in order to achieve the long-term
    savings.
    ---------------------------------------------------------------------------
        \2\ Specifically, Joint Base commanders were given leeway to adjust
    resources within their portfolios, for fear that premature staff
    reductions could compromise the design and implementation of their new
    organizational constructs. Ironically, the Joint Bases have had to
    function with a large number of civilian vacancies largely because of
    the Services' backlog of personnel actions.
    ---------------------------------------------------------------------------
        Joint Bases represent a fundamental change in our approach to
    installation management. Although these bases have been operating for
    only a short time, we are already beginning to see the expected
    economies of scale from consolidation. For example, by combining its
    recycling operations, Joint Base McGuire-Dix-Lakehurst is avoiding $1
    million in facility and equipment costs and $200,000 a year in contract
    costs. Less expected, however, is that our Joint Bases are proving to
    be incubators for innovation, as the commanders, faced with
    inconsistent Service rules and requirements, adopt new, cross-cutting
    business processes. For example, at Joint Base San Antonio, the
    commander standardized security procedures and created a single chain-
    of-command across the three facilities that make up the installation,
    thus facilitating cooperation with state and local law enforcers.
        I have had the opportunity to meet personally with most of the
    Joint Base Commanders. They get it. They see ``jointness'' not just as
    a more efficient and effective way to support the installation missions
    on their bases but as a superior way to support the soldiers, sailors,
    airmen and marines learning to fight together. I strongly believe their
    ability to transcend traditional practices and develop innovative
    solutions to longstanding inefficiencies will position us for future,
    Department-wide reforms.
                       ii. managing our built environment
        The President's fiscal year 2013 budget requests $11.2 billion for
    Military Construction (MILCON) and Family Housing--a decrease of
    approximately $3.5 billion from the fiscal year 2012 budget request.
    This decrease primarily reflects the declining budget environment and
    the Services' decision to defer facility investments at locations that
    may be impacted by changes in force structure.

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

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

                      TABLE 3. FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2012 VS. FISCAL YEAR 2013
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Change from Fiscal  Year 2012
                                                        Fiscal Year     Fiscal Year  -------------------------------
                                                       2012  Request   2013  Request      Funding         Percent
    ----------------------------------------------------------------------------------------------------------------
    Family Housing Construction/Improvements........           372.7           190.6          -182.1             -49
    Family Housing Operations and Maintenance.......         1,318.2         1,458.3          +140.1             +11
    Family Housing Improvement Fund.................             2.2             1.8            -0.4             -18
    Homeowners Assistance Program...................             1.3               0            -1.3            -100
                                                     ---------------------------------------------------------------
      Total.........................................         1,694.4         1,650.7           -43.7              -3
    ----------------------------------------------------------------------------------------------------------------

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

             TABLE 2. SUSTAINMENT AND RECAPITALIZATION BUDGET REQUEST, FISCAL YEAR 2012 VS. FISCAL YEAR 2013
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Change from Fiscal  Year 2012
                                                        Fiscal Year     Fiscal Year  -------------------------------
                                                       2012  Request   2013  Request      Funding         Percent
    ----------------------------------------------------------------------------------------------------------------
    Sustainment (O&M & MILPERS).....................           8,835           8,674           (161)             (2)
    Recapitalization (O&M, MILCON, MILPERS, RDT&E)..           9,031           5,331         (3,700)            (41)
                                                     ---------------------------------------------------------------
      Total.........................................          17,866          14,005         (3,861)            (22)
    ----------------------------------------------------------------------------------------------------------------

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

             DOD reduced its energy intensity by 2 percent--a
            meaningful improvement but less than the 3 percent needed to
            meet the annual goal. Overall, DOD has reduced its energy
            intensity by 13.3 percent since 2005, compared to the
            cumulative goal of 18 percent.
             With respect to the renewable energy goal (produce or
            procure 25 percent of all electricity from renewable sources by
            2025), DOD lost ground, going from 9.6 percent to 8.5 percent.
            The drop was partly the result of a policy decision to buy
            fewer Renewable Energy Credits.\9\ It also reflected a decline
            in the output of the 270 MW geothermal facility at China Lake.
    ---------------------------------------------------------------------------
        \9\ The purchase of renewable energy credits (RECs) is an
    alternative to the actual development of renewable energy; DOD has
    decided to meet the goals by adding supply on its installations as
    opposed to buying RECs.
    ---------------------------------------------------------------------------
             DOD continued to reduce its consumption of petroleum,
            reaching a cumulative reduction of 11.8 percent since 2005--
            just shy of the 12 percent goal.
             DOD reduced its potable water intensity (measured as
            consumption per gross square foot) by 10.7 percent from 2007 to
            2011--well above the goal of 8 percent.
    Fiscal Year 2013 Budget Request
        The President's fiscal year 2013 budget request includes funding
    for the ESTCP Installation Energy Test Bed as well as the Energy
    Conservation Investment Program (ECIP).
        Installation Energy Test Bed
        The budget request includes $32 million in fiscal year 2013 for
    energy technology demonstrations under ESTCP.\10\ ESTCP began these
    demonstrations--now known as the Installation Energy Test Bed--as a $20
    million pilot in 2009. Seeing its value, the Department continued to
    fund the Test Bed on an annual basis the $30 million level. Starting
    this year, we have funded the test bed, as an RDT&E line, across the
    Future Years Defense Program. Although a modest investment, the Test
    Bed is a high leverage program that the Department believes will
    produce major savings.
    ---------------------------------------------------------------------------
        \10\ As discussed in section IV, we are also requesting $43.9
    million for ESTCP for environmental technology demonstrations. These
    two demonstration programs appear as separate lines under ESTCP in the
    fiscal year 2013 budget.
    ---------------------------------------------------------------------------
        ESTCP awards funds based on rigorous competition. The process
    begins with a solicitation to firms and others to identify emerging
    technologies that would meet installation needs. The response has been
    huge: the 2012 solicitation drew 600 proposals from leading companies
    in the building energy sector, small startups with venture capital
    funding and the major DOE labs. The proposals are reviewed by teams
    made up of technical experts from inside and outside of DOD along with
    Service representatives familiar with the installations' needs; winning
    proposals are matched up with a Service and an installation at which to
    demonstrate the technology. ESTCP has funded about 70 projects, and the
    fiscal year 2010 projects will begin reporting results this year.
        The timing for an Energy Test Bed is ideal--one reason the response
    from industry has been so strong. The Federal Government has invested
    significant resources in energy R&D, largely through DOE, and the
    private sector is making even larger investments as evidenced by the
    growth of venture capital backing for ``cleantech.'' As a structured
    demonstration program linked to the large DOD market, the Test Bed can
    leverage these resources for the military's benefit.
        Energy Conservation Investment Program
        The fiscal year 2013 budget requests $150 million for ECIP, $15
    million above the fiscal year 2012 appropriation. ECIP has a long
    history of producing savings for the Services, and we have reoriented
    the program to give it even greater leverage.
        ECIP traditionally has funded small projects that promised a
    significant payback in reduced energy costs, and the Services relied
    heavily on it to achieve their energy goals. In keeping with DOD's
    focus on energy, last year we began to reshape the role that ECIP
    plays--from one of funding the Services' routine energy projects to one
    of leveraging their now-larger investments in ways that will produce
    game-changing improvements in energy consumption, costs or security.
    Two other changes are worth noting. To encourage long-term planning, we
    are requiring the Services to build a 5-year program of projects that
    they want to get funded through ECIP. To encourage them to put forward
    their best ideas, we are replacing formula-funding with competition. In
    fiscal year 2013, we incorporated competition but guaranteed each
    service a minimum level of funding. Beginning in fiscal year 2014, we
    will award the funds based purely on competitive merit.
                          v. environmental management
        The Department has long made it a priority to protect the
    environment on our installations, not only to preserve irreplaceable
    resources for future generations, but to ensure that we have the land,
    water and airspace we need for military readiness. Over the last 10
    years, the Department has invested more than $40 billion in its
    environmental programs, and our steady level of expenditure has
    produced quality results. In the President's fiscal year 2013 budget,
    we are requesting $3.97 billion to continue the legacy of excellence in
    our environmental programs. While this is below the fiscal year 2012
    request, the reduction reflects management efficiencies and improved
    technology rather than any decline in effort.

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

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

        Senator McCaskill. Thank you, Dr. Robyn.
        Ms. Hammack?

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

        Ms. Hammack. Thank you very much, Chairman McCaskill,
    Ranking Member Ayotte, and Senator Nelson. On behalf of
    soldiers, families, and civilians of the U.S. Army, I want to
    thank you for the opportunity to present to you the Army's
    MILCON budget request for fiscal year 2013.
        The budget request supports an Army in transition, yet we
    are still at war. We know the fiscal challenges that the Nation
    faces and are planning accordingly to implement what was asked
    of us by the Budget Control Act (BCA). The committee's
    continued support will ensure that the Army remains manned,
    ready, trained, and equipped to face the challenges of
    protecting this Nation's interests both at home and abroad.
        The Army's MILCON budget request reflects the Nation's
    current fiscal reality and is a 32 percent reduction from the
    prior year. Pending strategic decisions on the Army's end
    strength reductions, force structure, and stationing have
    required the Army to prioritize our facility investments and to
    defer some of those investments that could be impacted by force
    structure changes. The active Army MILCON budget has absorbed
    most of these reductions, although we have taken some cuts in
    the National Guard and Reserve based upon budget requirements.
    Once a total Army analysis has been completed, the Army will
    then rebalance the fiscal year 2014 MILCON budget to meet the
    needs of a realigned force.
        The Army has implemented a facility strategy to focus our
    strategic choices on cost-effectiveness and efficiency,
    reducing unneeded footprints, saving energy by preserving the
    most efficient facilities, and consolidating functions for
    better space utilization. It also demolishes failing buildings
    and uses appropriate excess facilities as lease alternatives.
        For fiscal year 2013, the Army's budget request is $3.6
    billion, 103 construction projects, of which $1.9 billion is
    Active Army; $614 million, National Guard; and $306 million for
    the Reserves.
        I do want to talk about BRAC, echoing a bit what Dr. Robyn
    said. The Army met our BRAC 2005 obligations within the 6-year
    implementation window, but it was a very different BRAC for the
    Army in that it was a transformational BRAC. It transformed how
    the Army trains, deploys, supplies, equips, and cares for its
    soldiers and its garrisons. We shut down 11 installations, 387
    Reserve component sites, and realigned 53 installations and
    their functions at an investment cost of almost $18 billion
    which included 329 major construction projects.
        I want to highlight that the realignment has enabled our
    troops to train the way we fight. This may not have resulted in
    cost savings, but it has impacted training effectiveness, as
    highlighted by a recent trip I took to Fort Benning. That is
    what the guys on the ground were saying, that we do not
    encounter the other types of fighting in the battlefield. We
    are training together side by side and we are more efficient
    and effective when we meet the enemy.
        BRAC 2005 also greatly benefitted the Army Guard and
    Reserve in that they consolidated on a 3 to 1 basis out of
    failing facilities into newer facilities, returning land to
    communities for greater economic and taxpayers' use.
        As of January 2012, the Army has conveyed an unprecedented
    47 percent of our BRAC 2005 excess acreage, over 35,000 acres,
    which is more than we have in any other BRAC round. Other BRAC
    rounds waited until the BRAC date of closure and then transfers
    started, but we were able to, in this BRAC round, transfer land
    during the BRAC process.
        For fiscal year 2013, the Army is requesting $106 million
    for BRAC 2005, and of that, it is a 50-50 split to handle both
    environmental cleanup activities and caretaker requirements. We
    also are requesting $79 million for prior BRAC rounds. In the
    prior BRAC rounds, a more significant portion is for
    environmental cleanup, whereas $4 million remains for caretaker
    status.
        The Army does support the administration's request for BRAC
    authority in 2013 and 2015. Changes in force structure will
    necessitate evaluation of our facilities to optimize usage,
    capability, and costs.
        We have listened to Congress and have followed your
    guidance to reduce costs and footprint in Korea and Europe.
        In Europe, over the last 6 years, we have closed 97 sites
    and returned 23,000 acres. In the next 4 years, we plan to
    close another 23 sites and return 6,400 acres, primarily in
    Germany.
        In Korea, over the last 6 years, we have closed 34 sites
    with over 7,000 acres returned, and in the next 4 years, we
    plan another 20 sites and over 9,000 acres.
        So we have been implementing a BRAC-like base realignment
    and closure overseas for many years similar to what has been
    done in the United States.
        On energy, the Army has a comprehensive energy and
    sustainability program. Energy at Army facilities is mission
    critical to us and we have seen energy challenges due to recent
    weather events. The tornadoes that we have seen over the last
    12 months have had an impact on some of our installations,
    reducing access to energy as power lines go down and causing us
    to rely on generators. So we recognize that energy is mission
    critical.
        Since 2003, the Army has reduced our installation energy
    consumption by 13 percent, while at the same time our number of
    active soldiers and civilians on installations has increased 20
    percent.
        We have implemented in the last 12 months a net zero
    initiative which focuses on reducing energy, water, and waste
    on our Army installations. We identified 17 installations that
    are striving to reach net zero by 2020. In the fiscal year 2013
    budget, we only ask for $2 million to assist in funding the
    management, oversight, and direction of this program. The
    initiative is to encourage and to provide direction to our
    installations as to how to improve their energy and water
    consumption, leveraging existing authorities and existing
    funding.
        We have implemented an energy initiatives task force that
    is focusing on large scale alternative energy production on
    Army installations. Again, leveraging private sector
    investment, we are not asking for money to fund that renewable
    investment.
        At the same time, we have accelerated the use of energy-
    saving performance contracts. These are contracts where the
    private sector invests in energy security projects and puts the
    capital up to install it on an Army installation. We pay them
    back out of energy savings. In the first quarter of fiscal year
    2012, we implemented $93 million of contracts for energy-saving
    performance contracts, and that was more than all of fiscal
    year 2011, which was $74 million. So the Army is on track, if
    not ahead of schedule, to meet the goal set by the President of
    energy-saving performance contracting in the military sector.
        Each of these energy initiatives is leveraging private
    sector capital, not appropriated funds, utilizing authorities
    that you, Members of Congress, have given us. This enables us
    to enhance energy security, promote job growth in local
    communities, and leverage the cost effectiveness of the private
    sector.
        In closing, I want to thank you for the opportunity to
    appear before you today and for your continued support for our
    Army's soldiers, families, and civilians. The Army's fiscal
    year 2013 budget request is a balanced program that reflects
    the current fiscal environment. It supports an Army in
    transition while at war.
        I look forward to your questions.
        [The prepared statement of Ms. Hammack follows:]
                Prepared Statement by Hon. Katherine G. Hammack
                                  introduction
        Chairwoman McCaskill, Senator Ayotte, and members of the
    subcommittee, on behalf of the soldiers, families, and civilians of the
    U.S. Army, I want to thank you for the opportunity to present the
    Army's Installation Management Community Fiscal Year 2013 Military
    Construction budget request.
        The Army's Fiscal Year 2013 Military Construction budget request
    supports an Army in transition while still at war. We understand the
    fiscal challenges faced by the Nation. Through efforts like the Army
    Facility Strategy 2020, the Army Family Covenant, the Army Community
    Covenant, and the Army Energy Enterprise, the Installation Management
    Community is focused on providing the facilities to support a trained
    and ready land force. We continue to be careful stewards of both the
    fiscal and environmental resources provided to the Army.
        Over the past 4 years, the Army, with the support of Congress, has
    regained balance, restoring strategic flexibility for the Nation.
    Continued support of Congress will ensure the Army remains manned,
    trained, equipped, and ready for all challenges and to protect
    America's interests at home and abroad. The committee's commitment to
    our soldiers, families, and civilians and support of the Army's
    military construction program is deeply appreciated. The Army's
    strength is its soldiers--and the families and Army civilians who
    support them. They are and will continue to be the centerpiece of our
    Army. America's Army is the Strength of the Nation.
                                    overview
        The Army's fiscal year 2013 President's budget requests $3.6
    billion for Military Construction (MILCON), Army Family Housing (AFH),
    and Base Realignment and Closure (BRAC). This request is $1.7 billion
    less or a 32 percent reduction from the fiscal year 2012 request. The
    $3.6 billion request represents 3 percent of the total Army budget. Of
    the $3.6 billion requested, $1.9 billion is for the Active Army, $614
    million is for the Army National Guard, $306 million is for the Army
    Reserve, $186 million is for BRAC, and $535 million is for AFH. In
    addition and in support of Army installations and facilities the
    President's budget requested $9.0 billion for Base Operations Support
    (BOS) and $1.17 billion for environmental programs.
        The 32 percent reduction in this budget request reflects the new
    fiscal reality that we are facing as a Nation. The Budget Control Act
    of 2011 combined with the pending strategic decisions on Army end
    strength reductions and force structure and stationing across the
    country required the Army to review the facility investments necessary
    to sustain an All-Volunteer Army. This MILCON budget request reflects
    the investments required in training, maintenance, operations, and
    quality of life facilities to preserve the All-Volunteer Force.
                          army facility strategy 2020
        As we shape the Army of 2020 through a series of strategic choices
    over the coming months and years, the Installation Management Community
    looks to implement its Army Facility Strategy 2020 (AFS 2020) to
    provide quality, energy efficient facilities in support of the Force.
    AFS 2020 provides a strategic framework to manage facilities at Army
    installations and is integrated with Army Systems and Force Structure
    decisions. AFS 2020 proposes a more cost effective and efficient
    approach to facility investments that reduces unneeded footprint, saves
    energy by preserving more efficient facilities, consolidates functions
    for better space utilization, demolishes failing buildings and uses
    appropriate excess facilities as lease alternatives while meeting
    future Force drawdown as a 2020 objective.
        AFS 2020 incorporates a facility investment strategy using MILCON
    funding to build out critical facility shortages; MILCON and Operation
    and Maintenance-Restoration and Modernization (O&M R&M) funding to
    improve existing facility quality; O&M Sustainment funding to maintain
    existing facilities; and O&M Demolition and Disposal funding to
    eliminate failing excess facilities. Investments from MILCON and O&M
    funding will support facilities grouped in the following categories:
    Global Defense Posture Realignment; Redeployment/Force Structure;
    Modularity; Barracks; Recapitalization/Deficit; and Ranges and Training
    Facilities. The fiscal year 2013 budget request begins the
    implementation of the AFS 2020 Facility Investment Strategy (FIS) by
    building out shortfalls for barracks, maintenance facilities, ranges,
    and Reserve component facilities.
          fiscal year 2013 budget request--military construction, army
        The Active Army Fiscal Year 2013 Military Construction, Army (MCA)
    budget request is for $1,923,323,000 (for appropriation and
    authorization of appropriations) to support the Army facility
    investment strategy. There are no requests for construction in Germany
    as we reassess our force structure in that country. The MCA budget has
    been further reduced by deferring projects that could be impacted by
    the Total Army Analysis (TAA). Upon completion of the TAA, future MCA
    budget requests will be rebalanced to meet the needs of a realigned
    force.
        Barracks Buyout ($401 million/21 percent): The fiscal year 2013
    budget request will provide for 1,180 new permanent party barracks
    spaces that will meet Department of Defense ``1+1'' construction
    standard and contribute to the reduction of inadequate permanent party
    barracks and deficits. The locations of these projects are at Joint
    Base San Antonio, TX; Wheeler Army Air Field and Schofield Barracks,
    HI; and Camp Ederle, Italy. The fiscal year 2013 request will also
    provide our soldiers 2,280 new training barracks spaces that meet
    applicable standards. The locations of these projects are at Fort
    Jackson, SC; Fort Lee, VA; and Fort Leonard Wood, MO. The total
    barracks buyout investments will provide 3,460 spaces at 7
    installations.
        Global Defense Posture Realignment ($128 million/7 percent): The
    fiscal year 2013 budget request includes two projects that support
    forward deployed forces in the Pacific Theater: $45 million for a
    battalion complex at Army Garrison Humphreys in South Korea and $18
    million for a vehicle maintenance facility in Sagami, Japan. The
    request also includes $65 million for two mission projects for units
    currently stationed at Fort Leonard Wood, MO, in temporary or failing
    structures.
        Modularity ($301 million/16 percent): The fiscal year 2013 budget
    requests $78 million to support a critical strategic communication
    facility required by the Army's Network Enterprise Technology Command
    in its continuous pursuit of improved command and control,
    communication and intelligence linkages between combatant commanders
    and the National Command Authorities. Another $128 million supports
    barracks and mission facilities for unaccompanied soldiers at Fort
    Campbell, KY, and Joint Base Lewis-McChord, WA. The remaining $95
    million will provide aircraft maintenance hangers for the Combat
    Aviation Brigade at Fort Drum, NY.
        Redeployment/Force Structure ($165 million/9 percent): The fiscal
    year 2013 budget request includes $30 million for infrastructure
    necessary to support six Special Operations Command (SOCOM) buildings
    programmed in fiscal years 2012 and 2013. Senate Report 104-116
    accompanying the Military Construction Appropriation Bill, 1996,
    prohibited the inclusion of infrastructure improvements in SOCOM
    Defense Wide MILCON budget requests and Senate Report 104-116 directed
    the military departments responsible for supporting the special
    operations forces to provide installation infrastructure as well as
    other common support facilities. The request includes $107 million to
    support the fielding of the Gray Eagle units at Fort Bragg, NC; Fort
    Campbell, KY; Fort Hood, TX; Fort Riley, KS; and Fort Stewart, GA. As a
    result of the Energy Independence and Security Act of 2007 and
    Executive Order, the remaining $28 million replaces failing heating
    systems with ground source heat transfer systems at Fort Benning and
    Fort Gordon, GA.
        Recapitalization/Deficit: ($572 million/30 percent): The fiscal
    year 2013 budget request includes 11 projects with investments of $94
    million for operations facilities, $202 million for operational support
    facilities and $276 million for institutional support projects.
    Included in the $202 million is $91 million for a waste water treatment
    plant at Joint Base Lewis-McChord, WA. Joint Base Lewis-McChord must
    recapitalize this plant to meet the more stringent Puget Sound effluent
    standards and avoid escalating environmental violations. Also included
    is $93 million to support the upgrade of the Army's aging critical
    industrial base facilities located at Corpus Christi Army Depot, TX;
    Joint Base McGuire-Dix-Lakehurst, NJ; and the Military Ocean Terminal
    Concord, CA. The two institutional support projects are the Cadet
    Barracks at the U.S. Military Academy for $192 million and the
    expansion of the Arlington National Cemetery for $84 million, plus
    planning and design funds to support the development of the former Navy
    Annex. The Cadet Barracks will provide 325 modern 2-person rooms for
    the future leaders of the Army, eliminating current overcrowding. The
    expansion of the Arlington National Cemetery's Millennium Site will
    provide hallowed burial grounds for soldiers, sailors, airmen, and
    marines beyond 2025.
        Ranges and Training Facilities ($232 million/12 percent): The
    fiscal year 2013 budget request includes $160 million for training
    ranges to support multiple weapon systems and $72 million in digital/
    simulations training facilities. The Army ranges and training
    facilities are used by all components of the Army to achieve mission
    combat readiness. The current ranges do not meet the quantity required
    by training demands and/or require modernization to meet current
    weapons qualification standards.
        Other Support Programs ($124 million/6 percent): The fiscal year
    2013 budget request includes $65 million for planning and design of MCA
    projects and $34 million for the oversight of design and construction
    of projects funded by host nations. As executive agent, the Army
    provides oversight of host nation funded construction in Japan, Korea,
    and Europe for all Services. The fiscal year 2013 budget also requests
    $25 million for unspecified minor construction to address unforeseen
    critical needs.
                   military construction, army national guard
        The Army National Guard fiscal year 2013 MILCON budget request of
    $613,799,000 (for appropriation and authorization of appropriations) is
    focused on Modularity, Recapitalization/Deficit, Ranges and Training
    Facilities, Barracks, and other support programs.
        Modularity ($227.2 million/37 percent): The fiscal year 2013 budget
    request is comprised of 15 projects, which include 9 Readiness Centers/
    Armed Forces Reserve Centers, 2 Combined Support Maintenance Shops, 2
    Army Aviation Support Facilities, 1 Field Maintenance Shop, and 1
    Refill Station Building.
        Recapitalization/Deficit ($310.5 million/51 percent): The Army
    National Guard budget requests 18 projects to replace failing,
    inefficient facilities. There is one Maneuver Area Training and
    Equipment Site, four Regional Training Institutes (RTI), five Readiness
    Centers/Armed Forces Reserve Centers, two Operations Readiness Training
    Complexes, three Field Maintenance Shops, one Taxiway, Ramp & Hangar
    Alterations, one Unit Training Equipment Site, and one RTI enlisted
    barracks. These projects will provide modernized facilities to enhance
    the Guard's operational readiness.
        Ranges and Training Facilities ($34.4 million/5 percent): The
    fiscal year 2013 budget request includes four projects which will
    support the Army National Guard's training of its operational force.
    These funds will provide the facilities soldiers require as they train,
    mobilize, and deploy. Included are one Live Fire Shoot House, one
    Combined Arms Collective Training Facility, one Urban Assault Course,
    and one Scout Reconnaissance Range.
        Other Support Programs ($41.7 million/7 percent): The fiscal year
    2013 Army National Guard budget request includes $26.6 million for
    planning and design of future projects and $15.1 million for
    unspecified minor military construction to address unforeseen critical
    needs.
        Special Program Considerations: The Army National Guard requests a
    technical correction to the scope of the fiscal year 2010 North Las
    Vegas, NV, Readiness Center. Due to technical errors, the DD Form 1391
    did not reflect the correct size for two line items and omitted one
    line item from what was presented to Congress. The Readiness Center
    should read 68,593 square feet (SF) vice 65,347 SF, and the unheated
    equipment storage area read 10,000 SF vice 4,800 SF. In addition 25,000
    SF unheated vehicle storage must be added. All changes in scope can be
    executed within the appropriated amount of the project.
                      military construction, army reserve
        The Army Reserve fiscal year 2013 MILCON budget request for
    $305,846,000 (for appropriation and authorization of appropriations) is
    for Recapitalization/Deficit; Ranges and Training Facilities, Barracks,
    and other support programs.
        Recapitalization/Deficit ($258.8 million/85 percent): The fiscal
    year 2013 Army Reserve budget request includes $258.8 million for
    facilities that prepare our soldiers for success in current operations.
    The construction of six new Army Reserve centers, one Armed Forces
    Reserve center, and one Operational Readiness Training Complex will
    provide modernized training classrooms, simulations capabilities, and
    maintenance platforms that support the Army force generation cycle and
    the ability of the Army Reserve to provide trained and ready soldiers
    for Army missions when called. The construction of one Equipment
    Concentration Site will enhance maintenance, equipment training set and
    storage capacity at Fort McCoy, WI. In addition, the request includes a
    new Central Issue Facility and a consolidated Dining Facility at Fort
    McCoy. The construction of these two facilities will provide modern,
    technologically advanced and energy efficient facilities, as well as
    demolish eight failing World War II era wood structures.
        Ranges and Training Facilities ($15.9 million/5 percent): The
    budget request includes three ranges that enable soldiers to hone their
    combat skills. Two ranges will be constructed at the Devens Reserve
    Forces Training Area, MA, and one will be constructed at Joint Base
    McGuire-Dix-Lakehurst, NJ, to support Reserve component soldiers in the
    northeastern part of the country.
        Barracks Buyout ($4.3 million/1 percent): The budget request
    includes an Unaccompanied Personnel Housing (UPH) barracks project for
    permanent party soldiers assigned to Fort Hunter-Liggett, CA.
        Other Support Programs ($26.8 million/9 percent): The fiscal year
    2013 Army Reserve budget request includes $15.9 million for planning
    and design of future year projects and $10.9 million for unspecified
    minor military construction to address unforeseen critical needs.
                              army family housing
        The Army's fiscal year 2013 budget request for $534,692,000 (for
    appropriation and authorization of appropriations) is for the Army's
    investment in and operation of its worldwide inventory of family
    housing assets. The Army relies first on the local economy to provide
    housing for our soldiers. When housing on the economy is not available,
    the Army provides housing by various means including government-owned,
    privatized, and leased housing. The Army has successfully privatized 98
    percent of on-post housing assets inside the United States, while
    overseas we primarily house families in Army-owned and leased quarters.
        Residential Communities Initiative (RCI). In 1999, the Army began
    privatizing housing assets and the RCI continues to provide quality
    housing that soldiers and their Families and senior single soldiers can
    proudly call home. The Army leverages appropriated funds and existing
    housing by engaging in 50-year partnerships with nationally recognized
    private real estate development, property management, and home builder
    firms to construct, renovate, repair, maintain, and operate housing
    communities.
        RCI family housing is at 44 locations, with a projected end state
    of over 85,000 homes--98 percent of the on-post family housing
    inventory inside the United States. Initial construction and renovation
    investment at these 44 installations is estimated at $12.7 billion over
    a 3 to 14 year initial development period, which includes the Army's
    contribution of close to $2.0 billion. From 1999 through 2012, our
    partners have constructed 27,497 new homes, and renovated another
    23,025 homes.
        The RCI program for Senior Unaccompanied Housing includes 4
    installations for a total of 1,394 accommodations for senior single
    soldiers in grade staff sergeant and above including officers at
    locations where there is a deficit of adequate accommodations off post.
    The four locations are Forts Irwin, Drum, Bragg, and Stewart.
                        army family housing construction
        AFH Construction ($4.6 million/1 percent): The Army's fiscal year
    2013 Family Housing Construction request is $4.6 million for planning
    and design of future projects to continue our significant investment in
    our soldiers and their families. This supports our goal to improve Army
    owned housing and eliminate our remaining inadequate inventory at
    enduring overseas installations.
                         army family housing operations
        AFH Operations ($530 million/99 percent): The fiscal year 2013
    budget request includes $530.1 million for: Operations, Utilities,
    Maintenance and Repair, Leased Family housing, and management of RCI.
    This request supports over 16,000 Army-owned homes, in the United
    States and in foreign countries, as well as almost 7,500 leased
    residences and provides government oversight of more than 83,000
    privatized homes.
        Operations ($102.9 million): The operations account includes four
    subaccounts: management, services, furnishings, and a small
    miscellaneous account. All operations subaccounts are considered
    ``must-pay accounts'' based on actual bills that must be paid to manage
    and operate the AFH owned inventory.
        Utilities ($88.1 million): The utilities account includes the cost
    of delivering heat, air conditioning, electricity, water, and
    wastewater support for owned or leased (not privatized) Family housing
    units. The overall size of the utilities account is decreasing in
    proportion to the reduction in supported inventory due to RCI.
        Maintenance and Repair ($109.5 million): The maintenance and repair
    account supports annual recurring projects to maintain and revitalize
    AFH real property assets. Since most Family housing operational
    expenses are fixed, maintenance and repair is the account most affected
    by budget changes. This funding ensures that we appropriately maintain
    housing so that we do not adversely impact soldier and family quality
    of life.
        Leasing ($203.5 million): The Army leasing program is another way
    to provide soldiers and their families adequate housing. The fiscal
    year 2013 budget request includes funding for a total of 7,490 housing
    units, including 250 existing section 2835 (``build-to-lease''--
    formerly known as 801 leases), 1,478 temporary domestic leases in the
    United States, and 5,762 leased units overseas.
        Privatization ($26.0 million): The privatization account provides
    operating funds for management and oversight of privatized military
    family housing in the RCI program. RCI program costs include: civilian
    pay, travel, and contracts for environmental and real estate functions;
    training; real estate and financial consultant services, and oversight
    to monitor compliance and performance of the overall privatized housing
    portfolio and individual projects.
                    base realignment and closure--brac 2005
        The Army met its BRAC obligations within the 6-year implementation
    window on 15 September 2011. The implementation of BRAC 2005 enabled
    the Army to reshape the infrastructure supporting the Operating Force,
    the Generating Force and the Reserve component transforming how the
    Army, trains, deploys, supplies, equips, cares for and garrisons its
    soldiers, families, and civilians. BRAC 2005 closed 12 installations,
    387 Reserve component sites, realigned 53 installations and/or
    functions at an investment of almost $18 billion which included 329
    major construction projects. The completion of those recommendations,
    combined with the efficiencies achieved in the completion of the other
    Army BRAC recommendations, generates almost $2 billion in annual
    recurring savings. BRAC 2005 relocated three four-star and five three-
    star headquarters to multi-use installations that support the missions
    of those headquarters, six Joint and Army Training Centers of
    Excellence, a Human Resources Center of Excellence, seven joint bases,
    four joint mobilization sites, and two joint technical and research
    facilities. It transformed the Army's industrial base, medical
    infrastructure and authorized 125 multi-component Armed Forces Reserve
    Centers and realigned the Army Reserve command and control structure.
    The Army has also conveyed an unprecedented 47 percent of its 70,311
    BRAC 2005 total excess acreage as of January 2012. The remaining focus
    for BRAC 2005 is to dispose of the balance of excess property.
        The Army fiscal year 2013 budget request for BRAC 2005 is
    $106,219,000. The funding request includes $48.4 million to support
    facility caretaker requirements. In fiscal year 2013, the Army will
    continue environmental closure, cleanup and disposal of BRAC
    properties. These activities will continue efforts previously ongoing
    under the Army Installation Restoration Program and will ultimately
    support future property transfer actions. The budget request for
    environmental programs is $57.8 million, which includes management of
    munitions and explosives of concern as well as hazardous and toxic
    waste restoration activities. The timely execution of environmental
    restoration projects in fiscal year 2013 at several industrial sites,
    such as Riverbank Army Ammunition Plant, CA; Lone Star Army Ammunition
    Plant, TX; and Kansas Army Ammunition Plant, KS, is critical to
    transferring property back into productive reuse and job creation.
                                   brac 1990
        The Army is requesting $79,863,000 in fiscal year 2013 for prior
    BRAC rounds. The request includes $4.5 million for caretaking
    operations and program management of remaining properties and $75.4
    million for environmental restoration to address environmental
    restoration efforts at 280 sites at 36 prior BRAC installations. The
    funds requested in fiscal year 2013 are needed to keep planned clean-up
    efforts on track, particularly at Forts Ord, CA; McClellan, AL;
    Wingate, NM; Devens, MA; and Savanna Army Depot, IL. The Army has
    disposed of 178,357 acres (85 percent of the total acreage disposal
    requirement of 209,291 acres), with 30,934 acres remaining. Similar to
    BRAC 2005, prior BRAC also produces recurring savings which the Army
    estimates at nearly $1 billion annually.
                                  future brac
        The Department of Defense is requesting BRAC authority in 2013 and
    2015. In BRAC 2005, the National Guard and Reserve benefited greatly
    through consolidation of facilities into joint readiness centers. On a
    3 to 1 basis, the Army closed and returned land and buildings to local
    communities, consolidating onto military or other lands. The benefit to
    the local communities and Army was both economic and operational. We
    anticipate that there could be similar efficiencies in a future BRAC
    round. Additionally, with the anticipated end-strength reduction, BRAC
    could facilitate realignment of leased facilities onto installation
    facilities vacated due to TAA. Although no analysis has been completed,
    further study could identify other opportunities to gain efficiencies
    and reduce costs.
                                     energy
        The Army is the largest facilities energy user in the Federal
    Government. To maintain an effective readiness posture as energy costs
    escalate, the Army has implemented a comprehensive Energy and
    Sustainability program based on culture change, increased energy
    efficiency, and development of renewable and alternate sources of
    energy. Reducing energy use at Army facilities is mission critical,
    operationally necessary, and financially prudent.
        Army installations and facilities require secure and uninterrupted
    access to energy. Dependence on fossil fuels and a vulnerable electric
    power grid jeopardizes the security of Army installations and mission
    capabilities. Investment in renewable energy and energy efficient
    technologies will help ensure the Army can meet mission requirements
    today and into the future. The Army evaluates every single energy
    investment opportunity to determine its long-term benefits for the
    Army. For investments on our installations we examine projects based on
    positive return on investment and demonstrated cost savings over its
    lifetime. We also expect projects to make positive contributions to
    energy security and improve the quality of life experienced by soldiers
    and their family members.
        Since fiscal year 2003 the Army has reduced its installation energy
    consumption by 13.1 percent while its total number of active soldiers
    and civilians has increased 20 percent. In addition, the Army has
    adopted the highest building code in the Federal Government, ASHRAE
    189.1 which will reduce energy and water consumption on average 40
    percent annually in our new construction program and in existing
    facilities that undergo major renovations.
        In fiscal year 2013 the Army's Installation Energy budget totals
    $1.453 billion and includes $50 million from the Department of Defense
    (DOD) ``Defense-Wide'' appropriation for the Energy Conservation
    Investment Program (ECIP), $343 million for Energy Program / Utilities
    Modernization program, $1,053 million for Utilities Services, and $7.1
    million for installation related Science and Technology research and
    development. The Army conducts financial reviews, business case and
    life-cycle cost analysis and return on investment evaluations for all
    energy initiatives.
        The Army's fiscal year 2013 allocation of the ECIP program, $50
    million, includes seven renewable energy projects, six energy
    conservation projects, one water project, and two Energy Security
    projects. In accordance with DOD guidance, fiscal year 2013 project
    submissions are divided into four categories: Renewable Energy; Energy
    Conservation; Water, and Security. Effective with fiscal year 2013,
    ECIP has established a new funding category to capture a project's
    contribution to enhancing water and/or grid security. The Army is
    taking a strategic look at requirements, including a thorough project
    validation and prioritization process, to develop an ECIP Future Years
    Defense Program to fund additional requirements should such an
    opportunity arise.
        The Utilities Services account pays all Army utility bills and is
    used to finance the repayment of Utilities Privatization, Energy
    Savings Performance Contracts (ESPCs) and Utilities Energy Service
    Contracts (UESCs). ESPCs and UESCs allow the Army to implement energy
    efficiency improvements through the use of private capital, repaying
    the contractor for capital investments over a number of years out of
    the energy cost savings.
        Reducing consumption and increasing energy efficiency are among the
    most cost effective ways to improve installation energy security. The
    Army funds many of its energy efficiency improvements through the
    Energy Program/Utilities Modernization program account. In addition to
    funding O&M project execution, this account enables planning and
    developing of third party financed renewable energy initiatives such as
    the Energy Initiatives Task Force ($29 million) and integrated holistic
    design strategies for managing resources on Army installations such as
    the Net Zero Initiative ($2.2 million).
        The Army is moving forward to address the challenge of energy and
    sustainability to ensure the Army of tomorrow has the same access to
    energy, water, land, and natural resources as the Army of today. Our
    energy goals include a 30 percent reduction in facilities energy
    intensity by 2015 from the 2003 baseline; generation of 25 percent of
    energy from renewable resources by 2025; reduction in petroleum use in
    nontactical equipment by 20 percent by 2015; and elimination of the use
    of fossil fuel generated energy in newly constructed buildings by 2030.
        In fiscal year 2011, the Army announced two key initiatives, the
    Net Zero Initiative and the Energy Initiatives Task Force (EITF). These
    initiatives will make the Army a leader in sustainable practices and
    use of renewable energy. The Net Zero Installation initiative is
    advancing an integrated approach and will improve the management of
    energy, water, and waste. Net zero installations will consume only as
    much energy or water as they produce and eliminate solid waste to
    landfills, and when fully implemented, will establish Army communities
    as models for energy security, sustainability, value, and quality of
    life. Seventeen installations have been identified for this effort,
    with plans to reach Net Zero by 2020.
        The EITF strengthens Army Energy Security and Sustainability by
    developing a comprehensive capability to plan and execute cost-
    effective large-scale renewable energy projects by leveraging private
    sector financing. The EITF will serve as a one-stop shop and augment
    installation staff for the development of renewable energy projects
    greater than 10 MW on Army installations to obtain secure, sustainable,
    and affordable energy from a diversity of sources. The EITF is
    currently evaluating 12 projects at 8 installations to determine
    whether they are worthy of further development and has identified
    further opportunities at 21 installations.
        The Army is incorporating cost effective Energy Efficient Measures
    into the MILCON Program. The Army has implemented energy efficiency
    requirements into all new facilities construction, renovation and
    modernization requirements.
        The Army is committed to contributing to our Nation's energy
    security by reducing our dependence on foreign oil. In the Army,
    ``Every Soldier is a Power Manager'' and energy is a consideration in
    every aspect of how we do business. We are committed to advancing
    energy security by changing our doctrine, our behavior, and our
    technological advancement throughout all aspects of our enterprise. We
    will build on our past accomplishments and ensure our soldiers and
    civilians wisely employ the resources entrusted to them.
                                  environment
        The Army fiscal year 2013 Environmental program provides $1.17
    billion in support of current and future readiness. The environmental
    program includes Army Working Capital Fund, BRAC 2005 and Prior BRAC,
    and Army O&M programs. This program ensures an adequate environmental
    resource base to support mission requirements, while maintaining a
    sound environmental compliance posture. Additionally, it allows Army to
    execute environmental aspects of restationing, Global Defense Posture
    Realignment and BRAC while increasing programmatic efficiencies, and
    addressing the Army's past environmental legacy.
        As a land-based force, our compliance and stewardship sustains the
    quality of our land and environment as an integral component of our
    capacity to effectively train for combat. We are committed to meeting
    our legal requirements to protect natural and cultural resources and
    maintain air and water quality during a time of unprecedented change.
    We are on target to meet DOD goals for cleaning up sites on our
    installations, and we continue to manage environmental compliance
    requirements despite operating in a constrained resource environment.
                    sustainment/restoration & modernization
        The Army continues its commitment to fund sustainment at 90 percent
    of the OSD Facilities Sustainment Model (FSM) requirement. The Army
    views 90 percent sustainment funding as the absolute bedrock of proper
    facilities stewardship, and is an essential objective of the Army
    facilities investment strategy. The Army has chosen not to take risk in
    the sustainment of our facility inventory valued at $329 billion. In
    keeping with the Army Facility Investment Strategy (FIS), the Army has
    increased its investment in facility restoration through the O&M
    Restoration and Maintenance account. This will fully restore trainee
    barracks, enable progress toward energy objectives and provide
    commanders with the means of restoring other critical facilities.
    Facilities are an outward and visible sign of the Army's commitment to
    providing a quality of life for our soldiers, families, and civilians
    that is consistent with their commitment to our Nation's security.
                            base operations support
        The Army's fiscal year 2013 Base Operations Support (BOS) request
    is $9.0 billion and is consistent with our fiscal year 2012 BOS Budget
    request. The Army's fiscal year 2013 BOS strategy continues to
    prioritize funding for Life, Health and Safety programs and Army Force
    Generation (ARFORGEN) requirements ensuring soldiers are trained and
    equipped to meet demands of our Nation at war. Army remains committed
    to its investment in Army Family Programs and continues to evaluate its
    services portfolio in order to maintain relevance and effectiveness.
    Army will meet the challenge of day-to-day requirements by developing
    more efficient service delivery or adjusting service levels while
    managing customer expectations. These efforts will encourage program
    proponents to evaluate policies, seek alternative and find innovative
    solutions to meet these challenges. The Army is committed to developing
    a cost culture for increasing the capabilities of BOS programs through
    an enterprise approach. Additionally, the Army will continue to review
    service delivery of its soldier, family, and civilian programs to
    ensure the most efficient and effective means of delivery are realized.
                                   conclusion
        The Army's fiscal year 2013 installations management budget request
    is a balanced program that supports the Army in transition while at
    war, supports our soldiers, families, and civilians, and recognizes the
    current fiscal reality. The Army Facility Strategy 2020 and facilities
    investment strategy will be accomplished through Congress' continued
    commitment to timely and sustained funding of the military
    construction, BRAC and family housing budget request.
        In closing, thank you again for the opportunity to appear before
    you today and for your continued support for our soldiers, families,
    and civilians.

        Senator McCaskill. We will now move to the testimony of Ms.
    Pfannenstiel.

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

        Ms. Pfannenstiel. Thank you, Madam Chairman.
        Madam Chairman, Senator Ayotte, Senator Nelson, I am
    pleased to appear before you today to provide an overview of
    the Department of the Navy's investment in shore
    infrastructure.
        The Navy's fiscal year 2013 budget request includes $13
    billion for investment in MILCON, facilities sustainment, and
    restoration and modernization, previous rounds of BRAC, family
    housing, environmental restoration, and base operating support.
        The MILCON request of $1.8 billion supports our combatant
    commanders, new warfighting platforms and missions, facility
    recapitalization, and servicemember quality-of-life initiatives
    for the U.S. Navy and Marine Corps.
        MILCON projects in Bahrain and Djibouti support high
    priority missions in the region, enhance our forward presence
    and provide stability for U.S. interests. Two projects in Spain
    support the forward-deployed naval forces, and a project in
    Romania supports the European Phased Adaptive Approach
    infrastructure.
        Equally important, our MILCON programs invest in support
    facilities for the Joint Strike Fighter (JSF) and MV-22B,
    infrastructure improvements, training and education facilities,
    and the safety and security of nuclear weapons in the United
    States.
        I would specifically like to emphasize that we remain
    committed to establishing an operational Marine Corps presence
    on Guam. We know Congress has concerns regarding execution of
    the Guam military alignment, and we are taking the necessary
    steps to address them and move the program forward. The U.S.
    Government is currently meeting with the Government of Japan to
    discuss adjustments to the 2006 realignment road map agreement.
    As Secretary Panetta has testified, Guam is an important part
    of the U.S. effort to reposition our forces in the Pacific. We
    believe the adjustments being discussed will address execution
    concerns, increase our flexibility, and strengthen our presence
    in the region. This is an important year for the Guam
    realignment. We will continue to work with you and our partners
    on Guam and in Japan as more information becomes available.
        As for the 2005 round of BRAC, DOD met our legal
    obligations by the statutory deadline of September 15, 2001 and
    successfully implemented all required realignment and closure
    actions, as has been previously specified in our business
    plans. For BRAC 2005 installations, our fiscal year 2013 budget
    request of $18 million enables ongoing environmental
    restoration, caretaker, and property disposal efforts.
        For the prior BRAC rounds, our fiscal year 2013 budget
    request of $147 million will enable us to continue disposal
    actions for the remaining 7 percent of real property and meet
    the legal requirements for environmental cleanup.
        The Navy fully supports the SECDEF's proposal for
    additional rounds of BRAC to assess and improve the alignment
    of our shore infrastructure with our force structure.
        Finally, we intend to meet the energy goals set forth by
    Congress and the Secretary of the Navy. We recognize that
    energy is a critical resource for maritime, aviation,
    expeditionary, and shore missions. We must strengthen our
    energy security and reduce our vulnerability to price
    escalations and volatility. With this in mind, the Navy and
    Marine Corps continue to reform how we produce, procure, and
    use energy. Our budget request includes $1 billion in fiscal
    year 2013 and $4 billion across the Future Years Defense
    Program (FYDP) that will not only increase our combat
    effectiveness, but also improve our security.
        Under the direction of Congress and our Commander in Chief
    and in partnership with other Federal agencies, we have two
    major initiatives underway.
        The first is symbolized by our demonstration of what we
    call the Great Green Fleet, that name being a tribute to the
    Great White Fleet that President Roosevelt sent around the
    world in 1906 to demonstrate America's technological
    achievements. This summer, we will mix biofuels in a 50-50
    blend with standard fuel to power ships and planes during the
    international Rim of the Pacific exercise. We are testing and
    certifying our ships and planes on advanced biofuels to reduce
    our Service's dependence on conventional sources of fuel.
        Our second major initiative is advancing the production and
    consumption of renewable energy generation on our
    installations. While we are a seagoing service, we own more
    than 3 million acres of land and over 72,000 buildings. We will
    facilitate the production of a gigawatt of large-scale
    renewable power projects on Navy installations. By using
    existing third-party financing mechanisms, power purchase
    agreements, joint ventures, and enhanced use leases, we will
    avoid adding costs to taxpayers.
        Currently our bases support about 300 megawatts of
    renewable energy, 270 megawatts of which is produced by a
    geothermal power plant at China Lake. We have awarded contracts
    for three solar projects in the Southwest and are finalizing a
    similar contract for Hawaii. The three awarded purchase power
    agreements at China Lake, Twentynine Palms, and Barstow will
    save the Navy $20 million over 20 years. In all three
    locations, we will be paying less per kilowatt hour than we
    would for conventional power.
        In closing, your support of the Navy's fiscal year 2013
    budget request will ensure that we can build and maintain the
    facilities that our Navy and Marine Corps need to meet the
    diverse challenges of tomorrow.
        Thank you for the opportunity to testify before you today.
    I look forward to answering any questions you may have.
        [The prepared statement of Ms. Pfannenstiel follows:]
               Prepared Statement by Hon. Jackalyne Pfannenstiel
        Chairman McCaskill, Senator Ayotte, and members of the
    subcommittee, I am pleased to appear before you today to provide an
    overview of the Department of the Navy's (DON) investment in its shore
    infrastructure.
                      the navy's investment in facilities
        Our Nation's Navy-Marine Corps team operates globally, having the
    ability to project power, effect deterrence, and provide humanitarian
    aid whenever and wherever needed to protect the interests of the United
    States. Our shore infrastructure provides the backbone of support for
    our maritime forces, enabling their forward presence. The Department's
    fiscal year 2013 budget request includes a $13.0 billion investment in
    our installations, a decrease of $0.3 billion from last year.
        The fiscal year 2013 military construction (Active + Reserve)
    request is $1.8 billion. Although significantly less than the fiscal
    year 2012 request of $2.5 billion, it represents continued investment
    enhancing combatant commander's capabilities, improving servicemember's
    quality of life, supporting mission requirements, continued emphasis on
    energy security, and recapitalizing aging infrastructure.
        The fiscal year 2013 family housing request of $480 million
    represents a 2-percent increase from the fiscal year 2012 request. The
    Navy and Marine Corps continue to invest in housing, both the
    recapitalization of our overseas housing and additional privatization
    to recapitalize inadequate housing in the United States. Having
    privatized virtually all family housing located in the United States,
    we are investing in a ``steady state'' recapitalization effort to
    replace or renovate housing at overseas and foreign locations where we
    continue to own housing.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Our BRAC program consists of environmental cleanup and caretaker
    costs, as well as property disposal costs for prior round BRAC and BRAC
    2005 locations. We do not foresee potential for large revenue from land
    sales, which were used to fund the legacy BRAC program from fiscal year
    2005 through fiscal year 2008. Thus, we again seek appropriated funds
    in fiscal year 2013 in the amount of $147 million. The fiscal year 2013
    BRAC 2005 budget request of $18 million supports ongoing environmental
    restoration, caretaker costs, and property disposal efforts. The
    Department has completed implementation of the BRAC 2005
    recommendations. The DON fully supports the Secretary's proposal for
    two additional rounds of BRAC to improve alignment of our shore
    footprint with our force structure.
        Our fiscal year 2013 request for base operating support (BOS) is in
    excess of $7.0 billion. The BOS program finances the operation of our
    DON shore infrastructure worldwide including programs that support
    ship, aviation and combat operations, public safety, security,
    installation management, housing and quality of life for both Active
    and Reserve components. To maximize the impact of our BOS funding, we
    continue to pursue and realize more cost effective ways of providing
    base support functions.
        Finally, the Department's budget request invests $1.0 billion in
    fiscal year 2013, and $4.0 billion across the Future Years Defense
    Program (FYDP), to support DON's aggressive energy goals to increase
    energy security and reduce dependency on fossil fuels.
                             military construction
        The DON's fiscal year 2012 military construction program requests
    appropriations of $1.8 billion, including $105 million for planning and
    design and $17 million for Unspecified Minor Construction.
        The Active Navy program totals $918 million and includes:

             $176 million to fund eight combatant commander
            projects: At Camp Lemonnier, Djibouti: a joint operations
            center, a cold storage warehouse, containerized living/work
            units and a fitness center; in Souda Bay: an aircraft parking
            apron and an intermodal access road; and, in Bahrain: a
            bachelor quarters and dining facility.
             $146 million to fund Quality of Life initiatives
            including a bachelor quarters at Naval Base Coronado, CA, in
            support of the Chief of Naval Operations' Homeport Ashore
            initiative; a training barracks at Naval Air Station Oceana,
            VA; a bachelor quarters in Okinawa, Japan; a dining facility at
            Naval Air Station Meridian, MS, and a fitness center at Naval
            Support Activity South Potomac, VA.
             $280 million to fund the second increment of a second
            explosives handling wharf at Naval Base Kitsap, WA.
             $284 million to fund twelve projects to achieve
            initial or final operational capability requirements for new
            systems and new missions: a general purpose warehouse and high
            explosive magazine at Naval Station Rota, Spain; an Aegis
            Ashore missile defense complex at Naval Support Facility
            Romania; a Broad Area Maritime Surveillance (BAMS) mission
            control facility at Naval Air Station Jacksonville, FL; a BAMS
            maintenance training facility at Beale AFB, CA; a H-60S
            simulator training facility at Naval Base Coronado, CA; a EA-
            18G flight simulator facility at Naval Air Station Whidbey
            Island, WA; a Littoral Combat Ship training facility at Naval
            Base San Diego, CA; drydock electrical distribution upgrades
            for CVN78 at Norfolk Navy Shipyard, VA; a cruiser/destroyer
            training facility at Naval Support Activity, South Potomac in
            Virginia; a combat system engineering building at Naval Weapons
            Station Earle, NJ, and a BAMS operational facility at an
            overseas location.
             $32 million to fund additional critical Navy
            priorities: a strategic systems evaluation lab consolidation at
            Naval Weapons Station Seal Beach, CA, and communications
            infrastructure at Naval Support Facility, Diego Garcia.

        The active Marine Corps program totals $664 million and includes:

             $18 million for the construction of unaccompanied
            housing at Naval Weapons Station Yorktown, VA, for the
            consolidation of the Marine Corps Security Force Regiment;
             $13 million to provide quality of life facilities such
            as a mess hall at Quantico;
             $31 million to construct student billeting for the
            Basic School in Quantico, VA;
             $83 million to build infrastructure to support
            ingress/egress access at Marine Corps installations. These
            projects include road improvements, main gate improvements,
            anti-terrorism force protection posture improvements, and
            correct safety issues. These projects will have a direct effect
            on the quality of life of our marines along with alleviating
            both on-base and off-base community concerns;
             $394 million to fund projects enhancing operational
            capability such as those needed for the MV-22 aircraft at Camp
            Pendleton, Hawaii, Miramar, and Yuma; Joint Strike Fighter at
            Beaufort and Iwakuni; and operational units in New River,
            Cherry Point, and Yorktown;
             $53 million to provide training facilities at Camp
            Pendleton, Camp Lejeune, Beaufort, and Iwakuni;
             $47 million for land expansion for MAGTF large-scale
            training exercises at Twentynine Palms;
             $26 million for the second increment of the North Ramp
            Parking project at Anderson Air Force Base to support the
            relocation of marines to Guam.

        The Navy and Marine Corps Reserve Military Construction
    appropriation request totals $47 million and includes a Transient
    Quarters at Naval Air Station Joint Reserve Base New Orleans, LA, a
    Commercial Vehicle Inspection Site at Naval Air Station Joint Reserve
    Base Fort Worth, TX, a Joint Navy and Marine Corps Reserve Center at
    Des Moines, IA, a Marine Corps Reserve Training Center at Yuma, AZ, and
    a Vehicle Maintenance Facility at Brooklyn, NY.
                             facilities management
    Facilities Sustainment, Restoration, and Modernization (SRM)
        The Department of Defense (DOD) uses a Facilities Sustainment Model
    to calculate life-cycle facility maintenance and repair costs. The
    model uses industry-wide standard costs for various types of buildings
    and geographic areas and is updated annually. Sustainment funds in the
    operation and maintenance accounts are used to maintain facilities in
    their current condition. The funds also pay for preventative
    maintenance, emergency responses for minor repairs, and major repairs
    or replacement of facility components (e.g. roofs, heating and cooling
    systems).
        The fiscal year 2013 budget request funds sustainment at 80 percent
    and 90 percent of the model's recommended levels for the Navy and
    Marine Corps, respectively. To maximize support for warfighting
    readiness and capabilities, the Navy has requested overall facilities
    sustainment at 80 percent of the DOD model level. To enhance the
    quality of education at our premier institutes of higher learning, we
    will continue to fund the Naval Academy, Naval War College, and Naval
    Postgraduate School at 100 percent of this model. Additionally, the
    Navy has targeted the allocation of sustainment funds to increase the
    sustainment and maintenance of unaccompanied housing. The Navy has
    minimized operational impacts and ensured the safety of our Sailors and
    civilians by prioritizing maintenance and repair efforts for facilities
    that directly affect mission operations such as piers, hangars, and
    communications facilities, as well as unaccompanied housing and family
    support centers. The Marine Corps will maintain sustainment funding at
    90 percent of the model. Even this strong commitment will result in
    some facilities degradation. The Marine Corps will continue to
    prioritize and target facilities that directly affect mission
    operations for full sustainment.
        Restoration and modernization provides major upgrades of our
    facilities. In fiscal year 2013, the DON is investing $0.6 billion of
    Military Construction, and $1 billion of Operation and Maintenance
    funding into restoration and modernization of existing facilities.
                                  naval safety
        Protecting the Department's sailors, marines, and civilian
    employees and their dependents remains one of our highest priorities. I
    consider continual, marked improvement in our safety performance to be
    essential to maintaining the highest state of operational readiness for
    our Navy and Marine Corps team. During fiscal year 2011, DON once again
    achieved recordsetting mishap rate reductions in numerous key mishap
    categories.
        The Department continues to be a world-class safety organization,
    where, in step with civilian industry leaders, no avoidable mishap or
    injury is considered acceptable. In benchmarking against the Nation's
    largest, safest, and most productive commercial industries, we have
    recognized that our top initiative must be the development and
    deployment of a state-of-the-art Risk Management Information System
    (RMIS). RMIS will dramatically expand the quality and quantity of data
    available, improve DON safety information management and analysis,
    simplify reporting, enhance unit-level access to safety information,
    and automate unit-level safety program management. RMIS is a high
    priority for funding in our fiscal year 2014 budget.
        Using fiscal year 2002 as a baseline, the Secretary of Defense
    established a goal for each Military Service and DOD Agency to achieve
    a 75 percent reduction in key mishap rates by the end of fiscal year
    2012. By the end of fiscal year 2011, both the Navy and the Marine
    Corps achieved mishap rate reductions which exceeded the DOD-wide
    average reduction in each of the three primary mishap categories being
    tracked by the Office of the Secretary of Defense. The three mishap
    categories and associated reductions from the fiscal year 2002 mishap
    rate baseline are depicted below:

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

        I am committed to sustained, continuous improvement and our hard
    work is paying dividends. At the end of fiscal year 2011, the
    Department achieved the lowest on- and off-duty fatality rates ever
    recorded in our history. Similarly, for the first time we achieved the
    lowest ever fatality rates for on-duty, private motor vehicle and off-
    duty/recreational mishaps in the same year. On the civilian side, over
    the past 10 years, the Department has witnessed declines in civilian
    total and lost time case rates of 39 percent and 36 percent,
    respectively. These reductions are in line with annual Presidential
    injury and illness rate reduction requirements.
        I am pleased to report that the DON is the proud owner of nearly
    half of all DOD OSHA VPP (Voluntary Protection Program) Star sites, and
    we recently recognized three OCONUS installations in Japan as VPP Star
    equivalent sites. Implementation of safety management systems, such as
    VPP, will be an important tool for our continued improvement in
    Department-wide safety results.
                                     energy
        The DON is committed to implementing an energy program that
    enhances our national security by reducing our dependence on imported
    fossil fuels. Its platform is that energy security is national
    security. The energy program is comprehensive--it involves both
    Services and contains initiatives to reduce energy demand and provide
    alternative forms of energy supplies on shore, afloat, in the air, and
    in theater.
        The Department is a recognized leader and innovator in the energy
    industry by the Federal Government and private sector as well. Over the
    past decade, DON has received almost a quarter of all of the
    Presidential awards and nearly a third of all of the Federal energy
    awards. Additionally, DON has received the Alliance to Save Energy
    ``Star of Energy Efficiency'' Award and two Platts ``Global Energy
    Awards'' for Leadership and Green Initiatives.
    Goals and Initiatives
        The program for which fiscal year 2013 funding is sought will
    exceed the goals established by the Energy Independence and Security
    Act of 2007, Energy Policy Act of 2005, National Defense Authorization
    Act of 2007 and 2010, Executive Orders 13423 and 13514.
        The Secretary of the Navy has set five aggressive department-wide
    goals to reduce DON's overall consumption of energy, decrease its
    reliance on petroleum, and increase its use of alternative energy.
    Meeting these goals requires that the Navy and Marine Corps value
    energy as a critical resource across maritime, aviation, expeditionary,
    and shore missions.
        The goals are:

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

        A myriad of investments and activities will be directed to meeting
    the Secretary's goals. Principally, they will be geared toward
    behaviors and technologies that will reduce the Navy and Marine Corps'
    overall requirements for energy and technologies that can provide
    adequate substitutes for fossil-based energy. Two significant
    initiatives will be:

             The development of a biofuel alternative to the liquid
            fuels used in ships, tanks, and tactical vehicles. To meet the
            goal of 50 percent of total DON energy from alternative energy,
            the DON has partnered with the DOE and USDA to collectively
            pool $510 million to spark development of the commercial
            advanced alternative fuels industry. The DON is using
            authorities provided by the Defense Production Act (DPA) Title
            III for its contribution. This effort will help to obtain the 8
            million barrels of biofuel needed by 2020. The alternative fuel
            must be available at prices competitive with the conventional
            petroleum fuels being replaced; it must not have negative
            consequences for the food chain; and it must be a ``drop-in'',
            that is, not requiring infrastructure or operational changes.
             Development of a gigawatt of renewable energy
            generation on DON installations. Pursuant to meeting the 50
            percent shore energy goal, the Secretary has directed the
            establishment of a task force to facilitate the production of
            large-scale renewable power where possible on the bases. This
            development will use existing third-party financing mechanisms
            such as power purchase agreements, joint ventures and enhanced
            use leases. The projects will cost no more over their life than
            conventional energy sources.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Funding
        The Department has budgeted $1.0 billion in fiscal year 2013 and
    approximately $4.0 billion across the FDYP for operational and shore
    energy initiatives. The strategy for executing these initiatives
    focuses on reducing our dependence on petroleum, lowering our energy
    cost, and complying with Federal legislation and energy mandates.
        The funding sources are:

              O&M Navy: Projects would include propeller coatings, in-port
            ship energy conservation, Advanced Metering Infrastructure,
            combustion system improvements, Aviation & Maritime training in
            support of best practices for energy conservation (ENCON) and
            facility energy audits and facility energy efficiency upgrades.
              O&M Marine Corps: Projects would include completion of energy
            audits, shelter liners, advanced power systems, renovated HVAC
            system to increase efficiency, and completed SMART metering
            projects.
              National Defense Sealift Fund (NDSF)/Other Procurement Navy:
            Projects would include Shipboard Lighting Upgrades, shore power
            management/monitoring systems, ship engine automation upgrades.
              Research, Development, Test, and Evaluation: Projects would
            include undersea power systems, energy storage and power
            management, the shipboard energy dashboard, water purification
            technologies, manportable electric power units, and energy
            storage and distribution.
    Achievements
        The Department is on track to meet its goals, and throughout 2011,
    we demonstrated progress through an assortment of energy programs,
    partnerships, and initiatives. This past summer, the Blue Angels flew
    all six planes on biofuels during their 2-day air-show at NAS Patuxent
    River.
        Since flying the F/A18, dubbed `The Green Hornet', at MACH 1.7 in
    2010 as part of the test and certification process using a 50-50 blend
    of Camelina based JP-5, the Department has also successfully conducted
    test and certification on the MH-60 Seahawk helicopter, AV-8B Harrier,
    E-A6B Prowler, MQ-8B Fire Scout, T-45C Goshawk, MV-22 Osprey, ran a
    Riverine Command Boat, Landing Craft Air Cushion (LCAC), Landing Craft
    Utility (LCU), 7m Rigid Hull Inflatable Boat (RHIB), the ex-USS Paul F
    Foster, and an Allison 501K turbine generator. The DON also partnered
    with Maersk to run a large merchant ship on renewable biofuel. These
    tests represent milestones necessary to meet the goal of sailing the
    Great Green Fleet in 2016.
        The USS Makin Island, using a hybrid-electric drive to dramatically
    lower its fuel usage at slow speeds is currently deployed to the
    Pacific region on its maiden operational deployment. The Navy is
    continuing to move forward with installation of a similar system on new
    construction guided missile destroyers and to look at the feasibility
    of retrofitting the fleet with these systems in the course of routine
    shipyard availabilities.
        Additional energy initiatives, such as propeller and hull coatings,
    were undertaken to make the existing inventory of ships more energy
    efficient. Stern flaps will also assist in reducing energy consumption,
    as will some combustor modifications and systems to monitor ship-wide
    energy use. Energy conservation programs were also put in place for
    both ships and aircraft to educate and incentivize the Fleets to reduce
    energy consumption and identify inefficient activities for improvement.
    The future Navy will use advanced materials on propellers, energy
    storage and power management systems, and advanced propulsion
    technology to make warships more efficient while allowing them to meet
    their combat capability.
        Last year, the marines tested equipment that could be deployed on
    battlefields at their Experimental Forward Operating Bases (ExFOB) at
    Twentynine Palms. Technologies tested at the ExFOB are now deployed
    with marines in Afghanistan. Solar power generators and hybrid power
    systems are reducing the amount of fossil fuel needed to operate in a
    combat zone. This year's ExFOB will concentrate on wearable electric
    power systems and lightweight manportable water purification systems.
    By deploying these technologies, the marines have proven that energy
    efficiency means combat effectiveness and increased safety for our
    deployed servicemembers as fewer convoys are needed to resupply fuel.
        In addition to these tactical and platform applications, the DON
    has implemented a number of energy projects at our facilities ashore.
    We are actively exploring for new geothermal resources to augment our
    existing 270 MW geothermal power plant at China Lake. We have awarded
    three projects under our Solar Multiple Award Contracts (MAC) in the
    Southwest (SW) and are finalizing a similar solar MAC for Hawaii. One
    of the SW solar MAC awards will provide 13.8 MW of solar power at NAWS
    China Lake. This project will save the Department $13 million over 20
    years while also providing security from electric grid outages. The
    Hawaii solar MAC will install 28 MW of solar PV on DON installations
    including covering the runway on Ford Island with PV thus recreating
    the look of the runway as seen from the air. We are also looking at
    developing our wind resources, exploring Waste to Energy projects and
    developing ocean power technology at all DON installations.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We are also aggressively conducting facility energy audits while
    completing installation of ``Smart'' electric metering to implement a
    wide range of facility energy efficiency measures. By the end of this
    year, over 27,000 meters will be installed in our existing facilities
    and provide the means to better measure the amount of energy we are
    consuming. This will allow for our energy managers to provide `real-
    time' feedback to our leaders on our installations. At the same time,
    we continue to ensure that new construction is built to LEED Silver
    standards per the 2012 NDAA.
        DON continues to explore how to implement and maintain culture
    change initiatives, beginning with education and training, to ensure
    that energy management is understood by all personnel to be a priority
    in tactical, expeditionary, and shore missions. Energy awareness
    campaigns will be used to encourage personal actions that show
    commitment to energy program goals. The Naval Postgraduate School has
    added an energy program to its curricula and we are partnering with the
    National Defense University to pilot two culture change demonstrations.
    The pilots, at MCB Camp Lejeune and NAVSTA Mayport, will focus on
    raising the energy awareness of civilian and military personnel.
        The Department will continue to cultivate strategic partnerships
    with existing and new organizations to leverage our energy goals. By
    partnering with Federal agencies, such as the Department of Energy, the
    Department of Interior, the Department of Agriculture, and the Small
    Business Administration, we are raising the awareness at all
    governmental levels of the strategic importance of energy within DON.
    In addition, we are working with academic institutions and private
    industry to bring innovative ideas and approaches to the forefront.
        Our budget request asks for continued support of these and similar
    projects in order to enhance our efficiency and maximize our move to
    greater independence and more resilient infrastructure.
                         relocating the marines to guam
        On February 8, 2012, the U.S. Government and Government of Japan
    acknowledged that they were meeting to discuss potential adjustments to
    the 2006 Realignment Roadmap. Both governments remain committed to the
    establishment of an operational Marine Corps presence on Guam. We
    believe that the adjustments to the Guam force laydown that are being
    considered will be responsive to congressional concerns, while also
    maintaining and enhancing peace and security in the Asia-Pacific
    region, one of two regions emphasized in the January 2012 Defense
    Strategic Guidance. Bilateral discussions have only just begun and I
    expect that more information will be available in the next couple of
    months. The Department will keep Congress informed of these discussions
    and, upon a final decision on the Guam laydown, will provide you with
    updates on our planning, programming and execution strategies for
    implementing any adjustments.
        The fiscal year 2013 budget request includes $26 million to
    construct facilities in support of the relocation of marines from
    Okinawa to Guam. The project funds the second increment of a facility
    necessary to support the relocating aviation element and, upon
    completion of both increments, will provide aircraft parking apron,
    taxiways, lighting, wash racks and supporting utilities at Andersen Air
    Force Base. This project supports the relocating aviation element and
    is required regardless of the final force laydown on Guam. In its JFY-
    12 budget (which runs April 1, 2012 through March 31, 2013), the
    Government of Japan has requested $8 million in design funds for its
    direct cash contribution. The JFY-12 budget request also includes $83
    million in funding for utilities financing, pursuant to the Realignment
    Roadmap, for water and power projects.
        The Government of Japan remains committed to both the realignment
    of Marine Corps forces to Guam and the Futenma Replacement Facility. Of
    the $6.09 billion Japanese share, $834 million in direct cash
    contributions have been received to date. The Government of Japan has
    also committed to making concrete progress on the Futenma Replacement
    Facility. In December 2011, the Government of Japan delivered an
    Environmental Impact Statement to the Governor of Okinawa, a necessary
    precursor to the signing of the landfill permit. Further progress on
    the Futenma Replacement Facility and future Japanese financial
    contributions to the Guam realignment will be discussed in detail
    during ongoing bilateral negotiations.
        A Record of Decision (ROD) for the Guam military realignment was
    signed in September 2010. The first military construction contracts
    were awarded following the ROD. Construction activity funded by both
    the U.S. and Government of Japan at Apra Harbor and Andersen Air Force
    base is now ongoing.
        In response to public concerns regarding access to cultural sites
    near the preferred alternative site for the live-fire training range
    complex, a decision on the location for the live-fire training range
    complex was deferred in the September 2010 ROD. In January 2011, the
    DON committed that training activities would be conducted in a manner
    such that access to these sites would remain available 24 hours per
    day, 7 days per week as is currently available today. The DON has
    evaluated options to satisfy this commitment while fully meeting the
    training requirements of the relocating marines. It was determined that
    a Supplemental Environmental Impact Statement (SEIS) would be necessary
    prior to making a final decision on the location of the live-fire
    training range complex. Litigation regarding the live-fire training
    range complex was dismissed in December 2011 following the Navy's
    commitment to prepare the SEIS.
        A Notice of Intent was published on February 9, 2012, which
    formally began the SEIS process. The SEIS is expected to take
    approximately 2 years to complete. Upon completion of the SEIS and the
    selection of a location for the training range complex, the DON will
    work with the Government of Guam and any affected private land owners
    in order to secure property necessary to meet training requirements.
        Guam remains an essential part of the United States' larger Asia-
    Pacific strategy, which includes developing the island as a strategic
    hub and establishing an operational Marine Corps presence. DOD
    recognizes Congress' concerns regarding execution of the Guam military
    realignment as outlined in the National Defense Authorization Act
    (NDAA) for Fiscal Year 2012 and is taking steps necessary to resolve
    critical issues that will allow the construction program to move
    forward. The United States and Japan are continuously looking for more
    efficient and effective ways to achieve the goals of the Realignment
    Roadmap. Both countries remain committed to maintaining and enhancing a
    robust security alliance, and the United States remains committed to
    enhancing the U.S.-Japan Alliance and strengthening operational
    capabilities while significantly reducing the impact of U.S. bases on
    the Okinawan people.
                                    housing
        The following tenets continue to guide the Department's approach to
    housing for sailors, marines, and their families:

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

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

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

        Our fiscal year 2013 budget includes $102 million in funding for
    family housing improvements (including planning and design). This
    request provides for the revitalization of approximately 200 Navy and
    Marine Corps housing units in Japan and Guam and the second phase of
    privatization in the Pacific Northwest, involving almost 900 homes. The
    budget request also includes $378 million for the operation,
    maintenance, and leasing of remaining Government-owned or controlled
    inventory.
        The Navy and Marine Corps privatized family housing inventory
    consists of over 63,000 homes. With over 90 percent of the housing
    stock privatized, our focus, and my priority, continues to be the
    oversight of the Department's privatized housing portfolio to ensure
    that the public/private ventures are financially viable and self-
    sustaining, that our private partners meet their obligations under the
    governing business agreements and that residents are satisfied with
    both their housing and the services they receive.
        Surveys continue to reflect steady, significant improvement in
    reported resident satisfaction. Where issues have been identified, the
    Department has worked with the partners to resolve them as quickly as
    possible. We have taken, or are taking, a number of actions to further
    strengthen our oversight. These include:

             Identifying and flagging key indicators (e.g., number
            and type of service calls, response times);
             Identifying common issues and trends identified in
            comments provided along with resident surveys;
             Increasing and reinforcing resident awareness of the
            Services' role in privatized housing and advocacy for members
            and their families; and
             In conjunction with the partners, developing a risk
            communications plan to respond to resident concerns.
    Unaccompanied Housing
        Our budget request includes over $133 million in funding for the
    construction of unaccompanied housing and student quarters to support
    over 1,000 single sailors and marines. This includes an $76 million
    unaccompanied housing project at Naval Base Coronado, CA to support the
    Chief of Naval Operations commitment to achieve the Navy's ``Homeport
    Ashore'' objective by 2016.
        The following are areas of emphasis within the Department regarding
    housing for single sailors and marines:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

             Provide Homes Ashore for our Shipboard Sailors. The
            Homeport Ashore initiative seeks to provide a barracks room
            ashore whenever a single sea duty sailor is in his or her
            homeport, so they need not live on the ship. The Navy has made
            considerable progress towards achieving this goal through
            military construction, privatization, and intensified use of
            existing barracks capacity. The Navy remains on track to
            provide housing ashore for all junior single sailors, assigned
            to sea duty, by 2016.
             Condition of Unaccompanied Housing. The Department
            continues to address the challenge of improving the condition
            of existing Navy and Marine Corps unaccompanied housing. The
            Navy has increased its level of Restoration and Modernization
            funding targeted to unaccompanied housing across the FYDP to
            ensure that 90 percent of the Navy's unaccompanied housing
            inventory is adequate by fiscal year 2022. With the
            construction of a large amount of new housing under the
            recently completed Commandant's BEQ initiative, almost 90
            percent of the Marine Corps' unaccompanied housing is now
            considered adequate.
                                  environment
        In fiscal year 2013, DON is investing over $1 billion in its
    environmental programs across all appropriations. This level of
    investment has remained relatively consistent over the past few years.
    The relative distribution of environmental funding across the
    environmental program areas, as displayed within the chart to the
    right, remains stable.
        While fulfilling its national security mission, DON continues to be
    a Federal leader in environmental management by focusing our resources
    on achieving specific environmental protection goals and proactively
    managing emerging environmental issues. The Department continues its
    commitment to environmental compliance, stewardship and responsible
    fiscal management that support mission readiness and sustainability. In
    this regard, DON is continuing efforts to integrate sound environmental
    policies and long-term cost considerations into the early stages of the
    acquisition process to achieve cleaner, safer, more energy-efficient
    and affordable weapons, materials, processes, and technologies across
    the naval enterprise.
    Compliance--Sustainability
        The Department's environmental budget will ensure continued
    compliance with existing regulations, while also smartly investing in a
    more agile and sustainable Navy and Marine Corps. Sustainability is
    seen by DON as a means of supporting our mission while also reducing
    lifecycle costs. DON has instituted many policies and practices
    implementing sustainability tenets including retrofitting/constructing
    buildings to optimize energy and water use, adopting goals for
    renewable energy use and stormwater management on facilities, and
    conducting integrated solid waste management.
        As an example, to reduce afloat solid waste, Naval Supply Systems
    Command (NAVSUP) has several packaging initiatives underway. These
    include two programs (Plastics Removal In Marine Environment (PRIME)
    and Waste Reduction Afloat Protects the Sea (WRAPS)) that reduce the
    amount of solid waste generated at sea and encourage use of
    environmentally friendly products. Under these programs, NAVSUP is
    working with the General Services Administration (GSA) to identify
    items that can be shipped with reduced packaging that is free of
    plastics and is implementing a reusable water bottle pilot project.
    NAVSUP is also working with GSA on industry packaging strategies that
    shift the mindset from point of sale packaging to e-commerce packaging
    that features recyclable boxes that are easy to open and free of excess
    materials such as hard plastic clamshell cases, plastic bindings, and
    wire ties.
    National Ocean Council
        The National Ocean Council (NOC) is a Cabinet-level body
    established by Executive Order in July 2010 which includes a mandate
    for the use of spatial planning as a tool to maximize compatible use.
    Including the DON, there are 27 Federal agencies and offices tasked to
    develop a comprehensive national ocean policy which uses ecosystem
    based management and coastal and marine spatial planning as
    foundational building blocks. The DON is extensively engaged in
    supporting the President's NOC goals while working to ensure our
    current operating areas remain accessible within the comprehensive
    national ocean policy: for the first time comprehensive spatial
    planning is being conducted in the Exclusive Economic Zones (EEZs)
    including the western Pacific, Alaska and the Arctic, the Gulf of
    Mexico, and the Caribbean. DON is supporting the NOC in a variety of
    activities, including collecting and developing information about
    military activities in the coastal and marine zone, writing strategic
    plans, serving as the Federal co-lead for the South Atlantic Regional
    Planning Body, and participating in developing Coastal and Marine
    Spatial Plans for each of the nine identified regions.
        The Department participates in numerous interagency ocean-policy
    working groups formed under the NOC. The DON also participated in
    developing the NOC Implementation Plan, which was released to the
    public in January 2012. To foster more effective Federal engagement
    with tribal governments regarding coastal and marine spatial planning,
    DON is coordinating delivery during 2012 of the DOD Tribal
    Communications and Coastal and Marine Spatial Planning courses to
    participants from all four Military Services plus the President's
    Council on Environmental Quality, the U.S. Coast Guard, National
    Oceanic and Atmospheric Administration, and Bureau of Ocean Energy
    Management.
    Chesapeake Bay
        After issuing the Chesapeake Bay Strategy in May 2010, the
    Department continues to demonstrate environmental leadership working
    with the other Federal agencies to achieve Chesapeake Bay restoration
    goals. DON represents DOD as the Executive Agent for the Chesapeake Bay
    program. As such, DON has participated with the Federal Leadership
    Council to ensure that the Strategy sets forth aggressive, measurable,
    and attainable goals to restore the health of the Chesapeake Bay, a
    National Treasure. DON continues working with the States as they
    develop their Watershed Implementation Plans. Our goal is to identify
    our nutrient and sediment sources, prioritize areas for nutrient and
    sediment reduction projects, and implement these projects to meet or
    exceed our reduction targets.
    Natural Resources Conservation
        DON natural resources program managers continue to provide
    installation commanders with special subject matter expertise, products
    and services necessary to ensure they can access, test, train, and
    execute construction projects with as little environmental constraint
    as possible, while also protecting the natural resources under our
    stewardship. The basis of our conservation program centers on the
    preparation and implementation of Integrated Natural Resources
    Management Plans (INRMPs). These plans integrate natural resources
    management with the installation's operational and training
    requirements as well as address the needs of our Federal and State
    partners and other stakeholders to ensure our INRMPs remain current and
    effective. A primary objective of our INRMPs is to implement
    conservation measures which protect threatened and endangered species
    and their habitat as required by the Endangered Species Act, which can
    help to reduce or eliminate the need to designate critical habitat on
    DON property. The Department has been very successful in protecting and
    conserving natural resources on our installations and near-shore areas
    while ensuring our installation commanders have the land, sea and
    airspace necessary to test and train in a realistic manner.
        A recent noteworthy accomplishment involved the installation of a
    living shoreline at Naval Support Activity Panama City, FL. The Navy
    partnered with the Florida Department of Environmental Protection to
    restore approximately 2,800 feet of shoreline. This shoreline was
    restored by establishing 175 separate reefs created from recycled
    oyster shells obtained from local restaurants and plantings of
    approximately 22,000 donated marsh grasses. This living shoreline is a
    natural substitute for the typical hardened sea wall or rip rap that
    would otherwise be necessary to address years of erosion from natural
    and manmade causes. This enduring project was supported by 2,840
    volunteer hours, both military and civilian, who worked together to
    provide this living shoreline which will support interactive
    educational opportunities provided by the Navy.
    Cultural Resources Conservation
        Cultural resources under the Department of Navy's stewardship
    include infrastructure, ships, and objects of our Navy and Marine Corps
    heritage; vestiges of our Colonial past; and Native American/Alaskan
    Natives/Native Hawaiian resources. We take great pride in our heritage,
    and the many cultural resources on our installations serve as reminders
    of the long and distinguished course we have charted and of those who
    lived on the lands before they were incorporated into our bases. The
    objective of the Department's cultural resources program is to balance
    our current and future mission needs with our stewardship
    responsibility to the American taxpayer and our desires to preserve our
    cultural heritage for future generations. The primary mechanism to
    achieve these goals is an Integrated Cultural Resources Management Plan
    (ICRMP), which remains the key mechanism for gathering information
    about an installation's history and resource inventory, assessing
    potential use/reuse candidates with our built environment and ensuring
    that our installation planners and cultural resources managers are
    working closely together to protect cultural resources while supporting
    the DON mission.
        To increase awareness of many of the Nation's cultural resources
    under the stewardship of DON, this past year, the Marine Corps began
    the development of a poster series, titled ``Defending Our Cultural
    Heritage,'' that celebrates and educates the public on Marine Corps
    stewardship of cultural resources. The initial four posters in this
    series highlight the National Historic Landmarks under Marine Corps
    stewardship, as well as the partnership initiative with the Advisory
    Council on Historic Preservation, the National Park Service, and the
    State Historic Preservation Offices in the four States represented by
    these posters.
    Installation Restoration Program (IRP)
        The DON continues to make significant progress remediating past
    contaminants. At the end of fiscal year 2011, the Department had
    completed cleanup or has remedies in place at 86 percent of the 3,909
    contaminated sites on active installations. We are projecting that all
    but 46 of these sites will be cleaned up or have remedies in place by
    2014. These remaining sites will be subject to newly established DOD
    metrics to drive successful completion in the coming years.
    Munitions Response Program (MRP)
        The DON is proceeding with investigations and cleanup of Munitions
    and Explosives of Concern and Munitions Constituents at all Navy and
    Marine Corps munitions response sites. Our major focus through fiscal
    year 2011 was initiating remedial investigations and completing site
    inspections for newly identified sites. Of the 361 sites in the
    program, site inspections have been completed at 99 percent of these
    sites, with only one remaining. This site had a removal action underway
    that was necessary prior to the start of the investigation. Additional
    funding was also obligated to address high priority sites at Vieques,
    PR. DON is using the results of the completed site inspections to
    prioritize the next phases of work. DON plans to achieve cleanup or
    remedies in place at 99 percent of MRP sites by fiscal year 2020, with
    the remaining five sites reaching remedy in place by fiscal year 2024.
    Marine Mammals
        The DON is continuing its focused research and monitoring programs
    addressing marine mammals and anthropogenic sound. The Navy is
    investing over $25 million per year to continue research into the
    effects of sound on marine mammals, develop products and tools that
    enable compliance with marine mammal protection laws for Navy training
    and operations, provide a scientific basis for informed decisionmaking
    in regulatory guidance and national/international policy, continue
    research to define biological criteria and thresholds, and to predict
    location, abundance, and movement of high risk species in high priority
    areas.
        Using our improved scientific knowledge developed from our
    research, the Navy has started a second round of environmental
    documentation focused on marine mammal and sound issues. Phase II
    Environmental Impact Statements will include all of the spatial areas
    covered by Phase I, plus increased coverage to include parts of the
    global commons.
                              compatible land use
        The DON has an aggressive program to promote compatible use of land
    adjacent to our installations and ranges, with particular focus on
    limiting incompatible activities and protecting important natural
    habitats. A key element of the program is Encroachment Partnering,
    which involves cost-sharing partnerships with States, local
    governments, and conservation organizations to acquire interests in
    real property adjacent and proximate to our installations and ranges.
    Encroachment Partnering agreements help prevent development that would
    adversely impact existing or future missions. These agreements also
    preserve important habitat near our installations in order to relieve
    training or testing restrictions. The program has proven to be
    successful in leveraging DOD and Department of Navy resources.
        DOD provides funds through the Readiness and Environmental
    Protection Initiative (REPI) that are used in conjunction with Navy and
    Marine Corps O&M funds to leverage acquisitions in partnership with
    states, local governments and non-governmental organizations. For
    fiscal year 2011, the Marine Corps acquired restrictive easements over
    3,349 acres. REPI and Marine Corps funds totaled $3.4 million while the
    encroachment partners provided $3.6 million. The Navy acquired 1,908
    acres with combined REPI and Navy funds of $9.36 million and $6.4
    million provided by partners.
        To date, the marines have acquired restrictive easements for 33,862
    acres of land with $50.8 million of REPI and Marine Corps funding.
    Encroachment partners have contributed $55.7 million. The Navy has
    acquired 9,851 acres to date with $28.4 million of REPI and Navy
    funding, and $35.5 million contribution from encroachment partners.
        Vital to the readiness of our Fleet is unencumbered access to
    critical water and air space adjacent to our facilities and ranges. An
    example is the outer continental shelf (OCS) where the vast majority of
    our training evolutions occur. The Department realizes that off-shore
    energy exploration and wind development play a crucial role in our
    Nation's security and are not necessarily mutually exclusive activities
    with military training. Therefore, we are engaging with the other
    Services, the Office of the Secretary of Defense, and the Department of
    Interior to advance the administration's energy strategy. We are poised
    to coordinate with commercial entities, where feasible, in their
    exploration and development adjacent to installations and our operating
    areas along the OCS that are compatible with military operations.
    However, we must ensure that obstructions to freedom of maneuver or
    restrictions to tactical action in critical range space do not degrade
    the ability of naval forces to achieve the highest value from training
    and testing.
                              brac implementation
    BRAC 2005 Implementation
        The Department met its legal obligations by the statutory deadline
    of September 15, 2011 and successfully implemented all required
    realignment and closure actions as specified in our established
    business plans. Going forward, our fiscal year 2013 budget request of
    $18 million enables ongoing environmental restoration, caretaker, and
    property disposal efforts at BRAC 2005 installations.

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        BRAC 2005 provided an important opportunity to improve operational
    efficiencies, reduce excess infrastructure, add joint bases, and
    produce savings. In total, the Department led 33 recommendations which
    involved 484 realignment and closure actions and 118 BRAC construction
    projects. We invested our dollars to build state-of-the-art facilities
    which vary in function from administrative to industrial to research
    and development that are necessary to support our warfighters.
        During the past year, DON closed Naval Air Station Brunswick, ME,
    Naval Air Station Joint Reserve Base Willow Grove, PA and the Naval
    Support Activity New Orleans, LA along with a number of Navy Marine
    Corps Reserve Centers. The Department established the Marine Corps
    Support Facility in the first-of-its-kind Federal City New Orleans. We
    led the effort and completed the relocation of five DOD Investigative,
    Counterintelligence and Security agencies to Marine Corps Base
    Quantico. The Department invested over $400 million on construction and
    outfitting of 11 facilities to establish a state of the art Research,
    Development, Acquisition, Test and Evaluation center for Integrated
    Weapon System and Armaments and Fixed Wing Air Platforms at Naval Air
    Warfare Center China Lake, CA.
        By the end of fiscal year 2011, the Department disposed of 52
    percent of the property that was slated for closure in BRAC 2005. These
    disposal actions were completed via a combination of lease transfers
    and terminations, reversions, public benefit conveyances, Federal and
    DOD agency transfers and an Economic Development Conveyance (EDC). Of
    interest for fiscal year 2011 is the conveyance of 1,133 acres at Naval
    Air Station Brunswick to several recipients using various real estate
    authorities supporting economic redevelopment of the community and
    public uses, such as education and parks.
        For 2012, the Department will continue its disposal efforts at
    Brunswick with another 1,593 acres planned for conveyance. The 2012
    Plan also includes transfer of remaining real property at Naval Station
    Ingleside, TX, Marine Corps Support Activity Kansas City, MO and Naval
    Support Activity New Orleans, LA. Other significant disposals include
    completing all disposal actions at five smaller facilities.
        Naval Support Activity New Orleans, LA: Construction for the new
    building that houses Headquarters, Marine Forces Reserve and Marine
    Corps Mobilization Command was completed in June 2011.
        Naval Air Station Brunswick, ME: The Department's largest BRAC 2005
    operational action closed Naval Air Station Brunswick and consolidated
    the East Coast maritime patrol operations in Jacksonville, FL. Runway
    operations in Brunswick ceased in February 2010. The closure ceremony
    occurred in May 2011. The disposal of NAS Brunswick has been a stunning
    success story to support the reuse and economic redevelopment of the
    base and mid-coast Maine. Almost 1,200 of the base's 3,400 acres have
    already been disposed. This includes 750 acres of runway and aviation
    facilities to start a private airport before the base even closed, and
    almost 300 acres through an EDC. This EDC was transferred at Fair
    Market Value with Navy receiving a portion of the mixed use
    redevelopment proceeds for the next 20 years. Smaller conveyances have
    also been made to the local community college for classroom facilities
    and to the Town of Brunswick for parks and recreation reuse.
        Over the last year, we spent $16 million in cleanup at BRAC 2005
    locations. The majority of this funded environmental activities at
    Naval Air Station Brunswick, ME, Naval Weapons Station Seal Beach
    Detachment Concord, CA, and Naval Air Station Joint Reserve Base Willow
    Grove, PA. Our remaining environmental cost to complete for fiscal year
    2012 and beyond is $189 million.
    Prior BRAC
        The BRAC rounds of 1988, 1991, 1993, and 1995 were a major tool in
    reducing our domestic installation footprint and generating savings.
    All that remains is to complete the environmental cleanup and property
    disposal on portions of 14 of the original 91 bases and to complete
    environmental cleanup, including long-term monitoring at 26
    installations that have been disposed.
        We disposed of 839 acres of real property in fiscal year 2011, for
    a total of 93 percent of real property disposed in the first four
    rounds of BRAC. In fiscal year 2011, we completed the disposal of
    nearly 400 acres at the former Naval Air Station Barbers Point, HI to
    the city and county of Honolulu via a National Parks Service sponsored
    public benefit conveyance. This will allow the city and county of
    Honolulu to develop much needed parks, ball fields, and preserve open
    space in the rapidly developing Kalaeloa area of Oahu. We continue to
    use the variety of the conveyance mechanisms available for Federal
    Property disposal, including the Economic Development Conveyance that
    was created for BRAC properties. Ninety-one percent of the property
    conveyed has been at no consideration to the Federal Government. Our
    fiscal year 2013 budget request of $147 million will enable us to
    continue disposal actions and meet the legal requirements for
    environmental cleanup.

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        With 64 percent of our remaining property requiring supplemental
    National Environmental Policy Act (NEPA) analysis and completion of
    environmental remediation activities, disposal actions will continue
    after fiscal year 2012. Due to changing redevelopment plans, we are
    finalizing Supplemental NEPA analyses at Naval Shipyard Hunters Point,
    CA and recently completed efforts at Naval Station Roosevelt Roads, PR.
        In fiscal year 2012, we have already conveyed nearly 600 acres at
    Naval Air Station South Weymouth, MA and over 1,000 acres at Naval
    Station Roosevelt Roads via EDCs. Other significant actions include the
    initiation of a public sale at Naval Station Roosevelt Roads, PR, for
    about 2,033 acres and the initial impending conveyance of property at
    Naval Station Treasure Island via an EDC. With the completion of these
    actions, we will have disposed of 96 percent of our prior BRAC real
    properties.
        The Department has now spent about $4.6 billion on environmental
    cleanup, environmental compliance, and program management costs at
    prior BRAC locations through fiscal year 2011. Our remaining
    environmental cost to complete for fiscal year 2012 and beyond is
    approximately $1.36 billion. This includes about $150 million cost
    growth, which is due in part to additional radiological contamination
    at Naval Air Station Alameda, CA, Naval Station Puget Sound, WA and
    Naval Station Treasure Island, CA. The increase is also associated with
    ground water cleanup at sites at Naval Air Station Moffett Field, CA
    and additional investigation and remediation at Naval Shipyard Mare
    Island, CA.
    BRAC Summary
        The Department met its legal obligation to complete the BRAC 2005
    closure and realignment actions by September 15, 2011. While the
    relocation of Navy organizations from leased locations in the National
    Capital Region to DOD owned space continues to require some effort, we
    expect to be fully complete this spring.
        For the Prior BRAC installations, we transferred 1,041 acres at
    Naval Station Roosevelt Roads, PR and 557 acres at Naval Air Station
    South Weymouth, MA to the respective Local Redevelopment Authorities.
    Additionally, we are working with the Naval Station Treasure Island
    Local Redevelopment Authority to complete the first transfer of
    property required for the construction of the Oakland Bay Bridge.
    Although the remaining prior round BRAC installations present cleanup
    and disposal challenges, we continue to work with regulators and
    communities to tackle complex environmental issues, such as low-level
    radiological contamination, and provide creative solutions to support
    redevelopment priorities, such as Economic Development Conveyances with
    revenue sharing.
                                   conclusion
        Our Nation's Sea Services continue to operate in an increasingly
    dispersed environment to support the maritime strategy and ensure the
    freedom of the seas. We must continue to transform and recapitalize our
    shore infrastructure to provide a strong foundation from which to
    resupply, re-equip, train, and shelter our forces. With your support of
    the Department's fiscal year 2013 budget request, we will be able to
    build and maintain facilities that enable our Navy and Marine Corps to
    meet the diverse challenges of tomorrow.
        Thank you for the opportunity to testify before you today. I look
    forward to working with you to sustain the war fighting readiness and
    quality of life for the most formidable expeditionary fighting force in
    the world.

        Senator McCaskill. Thank you very much.
        Mr. Yonkers?

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

        Mr. Yonkers. Thank you, Madam Chairman, Ranking Member
    Ayotte.
        It is a pleasure to be here today and have the opportunity
    to talk to you about the Air Force's installation, environment,
    and energy programs and again to say thank you to this
    committee for the strong, unwavering support that you give to
    our airmen in our Air Force every day.
        Our fiscal year 2013 budget request responds to two main
    drivers. The first is the BCA that Congress put into place last
    year. The second is the new strategic policy that the President
    and Secretary Panetta announced in January.
        As the Air Force prepared our fiscal year 2013 budget, we
    looked across the entire enterprise--nothing was left off the
    table--and made the difficult decisions to achieve the Air
    Force's share of the $487 billion mandated by the BCA.
        In our installations, MILCON, and environmental portfolios,
    we are focusing on investments in critical infrastructure
    needed to sustain our air bases and quality-of-life
    improvements for our airmen and their families. We are
    requesting funding to meet the COCOM's most critical facility
    requirements and most urgent facility modifications to bed down
    and sustain new weapons such as the JSF, the MQ-9 remotely
    piloted aircraft, and the accommodation of a B-52 squadron at
    Minot Air Force Base in North Dakota.
        We are ever cognizant of the smart investments that will
    drive down our cost of doing business, and we are requesting
    over $300 million this budget year to reduce our energy
    footprint by demolishing old, energy-inefficient buildings, and
    an additional $215 million to upgrade heating, ventilation, and
    cooling systems and other high energy use systems, investments
    that will have tangible payback across the FYDP.
        Across our energy program, we are requesting $530 million
    in fiscal year 2013, the $215 million I already mentioned, as
    well as $315 million in science and technology to develop more
    energy-efficient engines and to do things as practical as
    reengining KC-135s and looking at drag coefficients on KC-10s.
        Last year, this committee challenged us to find ways to
    lower our MILCON costs. We are currently reevaluating our
    policies and contracting mechanisms in this area and believe
    that we can reduce as much as 5 to 10 percent of our MILCON
    program.
        Additionally, last year we put into place new goals and
    contracting methods that are helping us avoid nearly 20 percent
    in our environmental cleanup programs.
        Our fiscal year 2013 budget request contains $3.9 billion
    for MILCON, family housing, facility sustainment, restoration,
    and modernization. For MILCON, Madam Chairwoman, as you
    mentioned, $442 million is the budget request for 2013, which
    is down $900 million from fiscal year 2012.
        We are channeling our limited resources to fund the most
    urgent combatant commander needs, our most pressing new mission
    work, and continuing our efforts to take care of our airmen.
    The deliberate pause in our program is prudent in light of the
    force structure decisions stemming from the new defense
    strategy, and for this year we have made a deliberate effort to
    build only where existing capacity is not available or where
    the cost/benefit analysis validates demolishing aging
    facilities and construction of more efficient and functional
    replacements.
        Also in our fiscal year 2013 budget request, we continue to
    emphasize first-class housing and strive to improve the overall
    quality of life for our airmen and their families. The 2012 to
    2016 dormitory master plan will guide our future investments
    for sustaining existing facilities and recapitalizing those
    which are inadequate.
        As we progress through 2012, we are nearing the completion
    of our privatized family housing in the continental United
    States and renovating family housing overseas, especially in
    Japan. Our fiscal year 2013 budget request for military family
    housing is $580 million. The funding will improve more than 400
    units and infrastructure, utilities, electrical, water, sewer
    systems, et cetera for Japanese bases, as well as here in the
    continental United States.
        On September 15, 2011, the Air Force successfully completed
    its 2005 BRAC program on time and within the original $3.8
    billion budget. The upfront BRAC investment is now resulting in
    savings of $1.4 billion on an annual basis.
        With that being said, we are still in need of a new BRAC.
    The BRAC 2005 did not meet our expectations of reducing that
    footprint. The SECDEF report that was provided to Congress in
    2004 highlighted 24 percent excess capacity for the Air Force,
    and I dare say if we were to look at that analysis today, we
    would find a similar outcome, particularly based on the
    reduction of almost 500 aircraft, 250 from the combat Air Force
    several years ago, as well as the almost 300 that are in the
    budget request for 2013.
        Lastly, let me close by touching briefly on our
    environmental efforts. This budget year, we are asking for $1.1
    billion to meet our environmental compliance commitments and
    the cleanup of past hazardous waste disposal sites.
    Specifically, we are requesting $469 million to meet our
    ongoing compliance commitments and natural resource management
    efforts. This includes $46 million for pollution prevention, up
    from last year's request, that will deliver efficiencies,
    reduce hazardous waste streams, and reduce our environmental
    liability and future costs. We are requesting $644 million to
    continue our environmental cleanups at both BRAC and non-BRAC
    bases.
        Last year, we implemented a new cleanup policy that relies
    on firm fixed-price, performance-based contracts to achieve
    closure of sites. While this year's request appears relatively
    the same as last year's request, by employing this new method,
    we are seeing about a 20 percent cost avoidance and getting
    sites to closure three times faster.
        Madam Chairwoman, Senator Ayotte, Senator Nelson, we heard
    you loud and clear. We have some challenging times in front of
    us and we need to be looking across the entire enterprise. We
    realize we can do things better and we look forward to the
    continued support of this committee to do exactly that.
        I look forward to your questions.
        [The prepared statement of Mr. Yonkers follows:]
                  Prepared Statement by Hon. Terry A. Yonkers
                                  introduction
        The United States is in the midst of a deliberate evolution in the
    role of the military in achieving our national interests. This
    evolution is shaped by a dynamic geo-strategic environment, uncertain
    economic circumstances, and the diffusion of regional centers of
    influence. In order to effectively deal with this new paradigm, the
    Department of Defense issued new Strategic Guidance which focuses our
    limited resources on deterring and defeating aggression across all
    domains, maintaining a safe and effective nuclear deterrent, and
    protecting the homeland, while reducing the quantity of our forces to
    ensure the quality of our force.
        The U.S. Air Force plays an integral role in this refined guidance,
    and we have taken care to protect the distinctive capabilities we
    provide every day to our joint, interagency, and coalition partners.
    These enduring capabilities include control of air, space, and
    cyberspace; providing global intelligence, surveillance, and
    reconnaissance; rapidly moving people and materiel around the planet;
    and holding targets at risk--anytime and anywhere.
        Difficult decisions were made to achieve the Air Force's share of
    the $487 billion in defense savings mandated by the Budget Control Act
    of 2011. These decisions fell into five broad categories: Force
    Structure, Readiness, Modernization, More Disciplined Use of Defense
    Dollars, and Taking Care of Our People. These five focus areas were
    integral to the allocation of the resources entrusted to us by the
    taxpayer.
        Within the portfolio of Installations and the Environment, we
    focused investments in critical installation facilities and
    infrastructure and quality of life improvements for our airmen and
    families; reducing our energy footprint by demolishing old, energy
    inefficient buildings and upgrading HVAC and other high energy use
    systems and continuing to build on our excellence in environment,
    safety, and occupational health across our Air Force.
        The Air Force is striving to identify opportunities and initiatives
    in each of the above areas that will enable us to maximize the impact
    of every dollar we are given with an eye of every investment have a
    return on those dollars. We are reevaluating how we can improve the way
    we manage our military construction, housing, real estate,
    environmental, and energy portfolios by centralizing these functions
    and services into a single Field Operating Agency. By doing so, we are
    substantially reducing manpower and overhead costs, streamlining
    processes and decisionmaking and centralizing program management and
    accountability under one agency.
        As funding for military construction becomes more austere we have
    made a deliberate effort to build only where existing capacity is not
    available or where the cost benefit analysis validates demolishing
    aging facilities in lieu of more efficient and functional replacements.
    Since 2008, we have demolished 23 million square feet of building space
    with an estimated savings of $184 million. Furthermore, we are re-
    evaluating our policies and contracting mechanisms in the areas of
    military construction and environmental cleanup with the objective of
    reducing construction and environmental costs.
        As we work our way through the current fiscal challenges the Air
    Force is committed to charting a path that fulfills the promises made
    to the American people today and in the future while staying true to
    our airmen and their families.
                                 installations
    Military Construction
        Our fiscal year 2013 President's budget request contains $3.9
    billion for military construction, military family housing, and
    facility sustainment, restoration, and modernization. For military
    construction we request $442 million, $900 million less than fiscal
    year 2012. This deliberate pause in our program is prudent in light of
    force structure decisions stemming from the new Defense Strategic
    Guidance.
        Our most critical projects are captured in this request and align
    with our priorities of continuing to strengthen the nuclear enterprise,
    partnering with the joint and coalition team to win today's fight,
    developing and caring for our airmen and their families, modernizing
    our air, space, and cyber inventories, organizations, and training, and
    recapturing acquisition excellence. Removal of the C-27 program is one
    example of how force structure decisions have affected our fiscal year
    2013 military construction program and the corollary elimination of
    facilities that would otherwise be needed to support the C-27 aircraft
    here in the CONUS.
        We are accepting minor risk by electing to wait a year to fund
    current mission requirements, channeling the limited funds we have
    requested to fund combatant commander and new mission needs--especially
    facilities needed to bed-down the Joint Strike Fighter. While we strove
    to fund our active, guard, and Reserve components in accordance with
    their equity in built infrastructure, the combination of austere
    funding and how the components derived their priorities led to a small
    shortfall in the Air Force Reserve.
        We continue to stay focused on the needs of our airmen and their
    families and are requesting nearly $500 million to sustain and
    modernize our overseas housing, while supporting housing privatization
    here in the United States. Unaccompanied airmen, likewise remain a top
    priority and we are requesting $118 million to build new dormitories or
    upgrade existing dorms to the Air Force standard--keeping us on track
    to meet our goal of eliminating inadequate housing for unaccompanied
    airmen by 2017.
        Finally, we request restoration and modernization funding at 90
    percent of historical levels, and sustainment funding at slightly over
    80 percent of the OSD model. For the first time in the Air Force,
    restoration and modernization funds will be centrally managed giving us
    the ability to prioritize new requirements across the enterprise while
    improving our ability to forecast where sustainment dollars should be
    invested to minimize risk in infrastructure maintenance and emergency
    repairs. This ``Asset Management'' approach to facility and
    infrastructure management is adopted from industry best practices--
    where industry has realized double digit savings. We expect to achieve
    similar results and are confident that by centralizing our management
    we can sustain our air bases on the dollars we have requested in this
    budget.
    Continue to Strengthen the Nuclear Enterprise
        The Air Force boasts a legacy of stewardship for two-thirds of the
    Nation's Nuclear Triad, providing security and maintenance for the
    weapons that enable a safe and effective deterrent. Accordingly, our
    number one priority remains the strengthening of the nuclear
    enterprise, with a continued focus on reliability, accountability, and
    compliance from the men and women who fly the bombers and man the
    missile silos in a state of constant vigilance. The fiscal year 2013
    budget request supports the standup of an additional B-52 squadron at
    Minot AFB, ND, with a $4.6 million munitions equipment maintenance
    facility addition.
    Partner with the Joint and Coalition Team to Win Today's Fight
        The Air Force continues to be an indispensable member of the joint
    team as our airmen make significant contributions in controlling the
    domains of air and space, providing unprecedented advantages in
    intelligence, surveillance, and reconnaissance, moving people and cargo
    around the world, and providing the ability to hold at risk any target
    on earth. We currently have more than 35,000 airmen deployed, including
    nearly 2,300 Air Force civil engineers. In particular, our Air Force
    Rapid Engineer Deployable Heavy Operational and Repair Squadron
    Engineers (Red Horse) and our Prime Base Engineer Emergency Force
    (Prime BEEF) personnel are the recognized experts in providing
    installation engineering and airfield capabilities to the warfighter.
    Red Horse assets are in high demand by COCOMS in deployed locations.
        Our fiscal year 2013 budget request invests $193.3 million in
    projects that support our Joint partners around the world. Examples
    include:

             Projects supporting our combatant commanders that will
            greatly enhance ongoing operations. This includes continuing
            the recapitalization of Headquarters, U.S. Strategic Command at
            Offutt AFB, NE.
             New facilities for operations and mission support. An
            expanded air support operations facility at Fort Stewart, GA,
            will allow us to consolidate personnel on the same installation
            as their joint partners, enabling the synergistic effects of
            training, working, and living together.
             Intelligence, Surveillance, and Reconnaissance
            facilities. The new MQ-9 maintenance hangar at Holloman AFB,
            NM, will provide adequate cover to work on this sensitive
            aircraft under any weather condition or any hour of the day--
            ensuring the training needs of aircrews are met.
    Develop and Care for Airmen and Their Families
        The All-Volunteer Force is the foundation of the capabilities we
    contribute to the defense of the Nation. In our fiscal year 2013 budget
    request we continue to emphasize providing first-class housing and
    striving to improve the overall quality of life for our airmen and
    their families. Our new 2012-2016 Dormitory Master Plan will guide our
    future investments for sustaining existing facilities and
    recapitalizing those which are inadequate.
    Billeting
        As part of our basing efficiencies initiative, we propose
    construction of a $17.6 million transient contingency dormitory to
    house personnel supporting rotational aircraft transiting through
    Europe. This project, when coupled with the elimination of the host
    nation maintenance contract and real property consolidation, has a
    payback period of only 2 years.
    Dormitories
        The Air Force continues to place a high priority on quality housing
    for our unaccompanied airmen. Our fiscal year 2013 budget request
    includes two dormitory projects totaling $42.5 million. One of these
    projects is located at Joint Base San Antonio, TX, replacing an
    inadequate facility with severe infrastructure problems and
    historically high sustainment costs. The other, at Thule AB, Greenland,
    replaces an inadequate 58-year-old building and is also the lynchpin of
    consolidation efforts at Thule that will provide a payback in 3 years.
    This initiative will reduce energy use by 35 percent and is estimated
    to save $20 million annually.
    Military Family Housing
        As we progress through 2012, we are nearing completion of our
    efforts to privatize family housing in the continental United States.
    This allows us to deliver high quality homes to our members faster than
    ever before, and at significant savings to the taxpayer. Our fiscal
    year 2013 budget request for military family housing is $580 million.
    Included in this request is $84 million to improve 400 homes and
    upgrade infrastructure in Japan, as well as nearly $500 million to fund
    operations, maintenance, utilities, and leases, and to manage
    privatized units for the family housing program.
    Modernize our Air, Space, and Cyberspace Inventories, Organizations,
            and Training
        Even in the face of declining budgets, we must continue to
    modernize our force to meet the Nation's requirements. Although the
    pace and scope of this modernization will slow, we must protect
    programs that are critical to future warfighter needs. Our fiscal year
    2013 request continues to invest in the beddown of new weapons systems.
    We request $93.5 million for a variety of military construction
    projects, including:

             Three projects to continue the bed down of our newest
            fighter, the F-35. These projects provide facilities at Hill
            AFB, UT, for the first operational F-35 unit, which is
            scheduled to begin receiving aircraft in 2015.
             Three projects supporting our HC/C-130J fleet. These
            projects include a fuel systems maintenance hangar at Little
            Rock AFB, AR, and flight simulators at Little Rock AFB and
            Moody AFB, GA.
             Other projects. These will support diverse mission
            areas, including F-22 support at Tyndall AFB, FL, F-16 training
            at Aviano AB, Italy, and the overseas basing efficiencies
            discussed previously, which are projected to save up to $120
            million across the FYDP.
    Base Realignment and Closure
        On September 15, 2011, the Air Force completed its 2005 Base
    Realignment and Closure (BRAC) program on time and within its original
    $3.8 billion budget. This upfront Air Force BRAC investment has
    resulted in $900 million in annual savings to the Department of Defense
    that are being reinvested in emerging missions starting in fiscal year
    2013. During the 6-year implementation period of BRAC 2005, the Air
    Force implemented 64 base closure commission recommendations affecting
    122 installations, closing 7 installations and realigning 63 others.
        Even so, BRAC 2005 fell short of the Air Force goal to reduce
    overhead and operational costs by reducing excess installation
    capacity. Today, 7 years later with almost 500 fewer aircraft in the
    inventory, the Air Force continues to maintain large amounts of excess
    infrastructure that is costing hundreds of millions of dollars each
    year--dollars that we need to invest in other areas. The Air Force has
    over 24 percent excess installation capacity (DOD's 2004 Report to
    Congress). This excess capacity can only be effectively eliminated by
    closing installations. As such, we fully support the Secretary of
    Defense's request for two more rounds of base closures in 2013 and 2015
    to right-size our infrastructure and reduce our overhead and operating
    costs. We need Congress' help and support--we can't do BRAC if you're
    not in our corner on this. Without the ability to consolidate and close
    bases, the Air Force will be forced to make harder choices in the
    future that will degrade our ability to invest in those assets that
    directly affect our ability to defend this nation.
    Joint Basing
        As the Air Force emerges from its first full year of joint basing,
    we remain committed to providing superior and standardized installation
    support to our sister Services. Efficiencies were always expected from
    consolidation of the joint bases--this year we will realize a small
    return of that investment--about 500 personnel across those joint bases
    for which the Air Force has operational responsibility. We continue to
    assess our processes and information systems, services support, and
    other key areas to garner greater savings from our joint bases. In
    fiscal year 2011, we met 88 percent of the Office of the Secretary of
    Defense (OSD) Tri-Service standards, and will continue to increase the
    effectiveness with which we provide installation support while lowering
    costs in fiscal year 2013.
    Encroachment Management
        The Air Force has taken a leadership role in developing
    encroachment management and compatible land use policies--and
    coordinating these efforts with communities around our installations.
    As a follow-on to the Nevada Forum, in January 2011, the Air Force on
    behalf of OSD, hosted a key interagency meeting aimed at finding ways
    to ``clear'' renewable energy projects that had no or little impact to
    military operations. Those efforts culminated in a cross-functional
    team and the DOD's Siting Clearinghouse policy and subsequent Air Force
    policy. In the last year we reviewed and ``cleared'' 486 Energy
    Projects.
    Privatized Housing
        We remain committed to providing quality housing to our airmen and
    their families. Under the housing privatization initiative, $485
    million in government funding has garnered $7.85 billion in private
    sector funding thus far, providing quality homes to our airmen and
    their families much more quickly than our standard military
    construction process. Approximately 41,500 units at 48 bases have been
    privatized to date, which is 76 percent of our housing inventory in the
    continental United States (CONUS), Alaska, and Hawaii. In addition,
    more than 37,000 inadequate units have been eliminated. Our goal is to
    privatize all CONUS housing by closing the remaining four privatization
    projects in 2012, which will result in 53,800 privatized homes across
    the Air Force portfolio.
    Enhanced Use Leasing
        The Air Force continually seeks to improve our stewardship of real
    estate assets and to leverage appropriated dollars with investments
    from the private sector. With the authorities provided to execute
    enhanced use leases (EUL), we're pursuing innovative ways to leverage
    our unused real estate to return value from our installations. The AF
    has set a goal of unlocking $5 billion in net present value from EULs
    through fiscal year 2020. In pursuit of this goal, we've executed 9
    leases with a net present value of $233 million and are close to
    completing a comprehensive survey of all AF installations to identify
    non-excess real estate assets that could be put to use to generate
    revenue to meet installation requirements.
        As we pursue EULs our intent is to extract the greatest value
    possible for the asset, and in the current environment renewable energy
    projects provide significant opportunities. Today, the AF is actively
    pursuing 11 projects valued at about $700 million, 7 of which are
    related to renewable energy. We've identified another 21 opportunities
    and have developed a set of initiatives to determine where market
    demand aligns with our available assets to create additional EUL
    opportunities.
                                     energy
        Energy and energy security is the corner stone of the Air Force's
    ability to maintain global vigilance, reach, and power at home and
    abroad. The Air Force defines energy security as ``having assured
    access to reliable supplies of energy and the ability to protect and
    deliver sufficient energy to meet operational needs.'' To enhance its
    energy security, the Air Force has developed a three-part strategy:

        (1)  Reduce energy demand through conservation and efficiency,
        (2)  Increase renewable and alternative energy sources, and
        (3)  Ensure the culture of the Air Force recognizes the necessity
    and criticality of energy to its operations.

        We have set a number of aggressive goals across our entire
    portfolio--goals that, if met, will help us avoid over $1 billion a
    year (based on today's energy prices) and improve energy security for
    our critical assets.
    Budget Impact
        The Air Force is the largest single consumer of energy in the
    Federal Government and as energy costs increase and budgets decrease,
    this means that energy is consuming a greater proportion of the Air
    Force budget. In fiscal year 2010, the Air Force spent $8.2 billion for
    fuel and electricity, an amount that increased to $9.7 billion in
    fiscal year 2011 due primarily to the increased cost of crude oil.
    Ironically, our demand for both fuel and electricity was down over the
    same period.
        At our installations, the Air Force spent more than $1 billion for
    facility energy in both fiscal year 2010 and fiscal year 2011. However,
    as a result of the initiatives put in place over the last 8 years, the
    Air Force avoided over $250 million in additional facility energy costs
    in fiscal year 2011 alone.
        In the fiscal year 2013 President's budget, the Air Force is
    requesting more than $530 million for aviation, infrastructure, and
    RDT&E energy initiatives to reduce energy demand, improve energy
    efficiency, diversify supply, and improve mission effectiveness.
    Included in this request is $215 million for energy conservation
    projects on Air Force installations, a continuation of the nearly $800
    million we have invested in such projects over the last 4 years.
    Energy Conservation
        Overall, our focus is to reduce our energy footprint across all
    operations. While we have reduced our overall facility energy
    consumption since fiscal year 2003 by nearly 20 percent, and reduced
    energy intensity by more than 16 percent, installation energy costs
    have increased by 32 percent over that same period. The Air Force is on
    track to reduce its energy intensity by 37.5 percent by 2020 and
    increase its renewable energy use to reach 25 percent by 2025.
        As a result of our energy conservation efforts, we have
    cumulatively avoided over $1.1 billion in facility energy costs since
    2003 that can be redirected to better enable warfighters to complete
    their missions. Investments we are making in fiscal year 2012 to
    improve our facility energy efficiency and reduce our energy
    requirement are expected to start generating savings in fiscal year
    2014, and the majority are expected to payback before or just shortly
    after the FYDP.
        The Energy Conservation Investment Program (ECIP) is a critical
    element of the Air Force's strategy to improve the energy performance
    of its permanent installations. In fiscal year 2011, we completed 15
    ECIP projects at a cost of under $20 million. The Air Force estimates
    these projects will save more than 253,000 million British Thermal
    Units (BTU) annually and nearly $54 million over the life of the
    projects. We have submitted six projects to OSD for inclusion in the
    fiscal year 2012 ECIP program. If funded, these projects will save over
    213 billion BTUs.
        The Air Force is also looking to reduce demand by building in
    smarter ways, including maximizing energy efficiency and using
    environmentally-friendly materials, and identifying and demolishing 20
    percent of our old, unnecessary, and high-energy use facilities by
    2020.
    Renewable Energy
        The Air Force is looking to improve its energy security and
    diversify its energy supply through increased use of renewable energy.
    In fiscal year 2011, more than 6 percent of the electrical energy used
    by the Air Force was produced from renewable sources. Moving forward,
    our goal is to develop more than 1,000 megawatts (MW) of renewable
    power, including more than 600MW from solar, on our installations by
    2016. By making the most of private sector knowledge, technology, and
    financing, we plan to improve our energy security by capitalizing on
    underutilized land on our installations to develop those projects.
    Currently, the Air Force has 131 operational renewable energy projects
    and another 50 under construction across a wide variety of renewable
    energy sources, including 8.7MW from wind energy, 26.2MW from solar,
    and 2.4MW from waste-to-energy projects.
        In fiscal year 2011, the Air Force had 46 projects funded through
    the MILCON appropriation with at least one renewable energy component,
    such as solar photovoltaic systems or cool roof attributes.
        The Air Force is not just limiting its efforts to renewable energy
    projects, but is also incorporating alternative fueled ground vehicles
    into our fleet. With the support of other private and public
    stakeholders, the Air Force is currently working to develop an all
    plug-in electric vehicle fleet at Los Angeles AFB, CA. When the
    initiative is completed later this year, Los Angeles AFB will be the
    first Federal facility to replace 100 percent of its general-purpose
    vehicle fleet with plug-in electric vehicles. By working with OSD and
    our Sister Services, we have identified 15 other potential locations
    where such vehicles will support the mission and improve our energy
    security. We will use the lessons learned at Los Angeles AFB to
    continue to refine the business case and operational analyses to
    determine where best to employ electric vehicles.
    Third-Party Financing
        While the Air Force has made considerable progress to reduce our
    energy demands and increase our energy diversity, there is still more
    to do. The Air Force is aggressively pursuing a third-party financing
    approach for both renewable and energy conservation projects.
        Direct Air Force renewable energy project funding through Air Force
    capital sources is rarely cost-effective when compared to commercial
    utility rates. To address this, the Air Force is using existing
    authorities, such as EULs and Power Purchase Agreements, to attract
    private industry to develop renewable energy projects on underutilized
    land on Air Force installations. The Air Force is anticipating third-
    party investments could reach more than $1 billion over the next 5
    years to construct on-base renewable projects, while we plan to invest
    only $5 to $8 million for renewable projects over the same period. The
    Air Force has set a goal to identify $5 billion worth of EULs and over
    half of this value will be energy EULs.
        The Air Force is reinvigorating third-party financing to fund
    energy conservation projects through energy savings performance
    contracts (ESPC) and utility energy service contracts (UESC). The Air
    Force is targeting over $260 million in potential ESPCs and UESCs over
    the next 2 years. While the Air Force did not award any third-party
    financed projects in fiscal year 2011, we anticipate awarding six such
    projects in fiscal year 2012 that would save approximately 1.1 million
    BTUs, and are evaluating three projects for fiscal year 2013.
                                 environmental
        Our environmental programs are designed to provide the mission-
    ready people, infrastructure and natural resources necessary to meet
    today's and tomorrow's mission requirements. The Air Force is committed
    to conducting our operations in an environmentally responsible way;
    meeting all environmental standards and legal obligations applicable to
    these operations; planning future activities to consider environmental
    and community impacts, and minimize them where practicable; eliminating
    pollution from activities wherever and whenever we can; cleaning up
    environmental damage resulting from past activities; and responsibly
    managing our irreplaceable natural and cultural resources in a
    sustainable manner. To address these commitments, the Air Force's
    fiscal year 2013 President's budget request seeks just over $1.1
    billion for our environmental programs.
        In meeting our environmental commitments, the AF is re-emphasizing
    improved efficiency and effectiveness as necessary outcomes for program
    management and for a host of process improvement efforts we have
    underway. Following are only a few examples of the initiatives we are
    championing.
    Environmental Restoration
        Our fiscal year 2013 President's budget request seeks $529 million
    for cleanup of active installations, and $115 million for cleanup of
    BRAC installations. We established our cleanup program in 1984 to
    cleanup former hazardous waste disposal sites on active and BRAC
    installations. Our past focus was on completing investigations and
    getting remedial actions in place--many of which were designed to
    operate for decades. In early 2011, we put into place a new policy and
    new metrics--one that shifts the goal from remedy-in-place to closing
    sites; from one that tolerated decades to complete the cleanup to one
    that rewards innovative technologies that get the job done in 8-10
    years; from one that was cost-plus to one that is fixed price and
    performance based and incentivizes contractors to develop innovative
    ways to get to site closure; and to one that considers the total life-
    cycle cost informed by a solid business case analysis.
        Our new goals are to achieve accelerated completion of 90 percent
    of Air Force BRAC cleanup sites and 75 percent of non-BRAC sites by
    2015, in order to place the emphasis on bringing the program to
    closure. Through the use of improved performance-based contracting,
    coupled with this new policy, we are cleaning up sites three times
    faster, with lifecycle cost savings as much as 19 percent, and it is
    our expectation this will go even higher as we mature this contracting
    approach. By using this approach, we're not only closing sites faster,
    we're eliminating land use restrictions, while still being fully
    protective of human health and environment. We continue to work with
    state and Federal regulators on socializing this new approach. We have
    received positive feedback from many of the regulators on the
    overarching goal to finish cleanup, but there are historical concerns
    with the execution of performance-based contracts that we are
    addressing.
    Environmental Quality
        Our fiscal year 2013 President's budget request seeks $469 million
    in Environmental Quality funding for compliance, environmental
    conservation, pollution prevention, and environmental technology
    investment. As in our cleanup program, we are refocusing our efforts to
    streamline and more effectively manage our Environmental Quality
    program activities. One example is how we've changed our approach in
    our National Environmental Policy Act (NEPA) program. Every decision we
    make is backed by environmental analyses--with major efforts and cost
    going into the development of Environmental Impact Statements and
    Environmental Assessments. As we looked at how to become more efficient
    in all our functional areas, we found that over time our NEPA process
    had become stagnant and bureaucratic. We had migrated away from the
    Council on Environmental Quality Guidance that emphasizes clear,
    concise, and analytical analyses rather than encyclopedic documents. On
    average, EISs were taking 3\1/2\ years to complete and EAs half that
    time. Our decisionmaking process was being crippled by such tasks as
    elaborate internal reviews and steps that added very little value to
    the quality of the analysis.
        In September 2010, we issued a policy to refocus our NEPA process.
    The policy emphasizes use of performance-based contracts to incentivize
    contractors to provide quality environmental analyses that are fully-
    compliant with the spirit and intent of NEPA, that are aimed at better
    decisionmaking. Likewise, to refocus our internal reviews the policy
    sets goals for completion of EISs in 12 months and EAs in 6 months. To
    execute the new policy the Air Force established a NEPA center of
    excellence to standardize the Air Force approach to NEPA management and
    contracting and to provide reach back to major commands and
    installation NEPA professionals. Results to date are very promising;
    our first contract actions are hitting the 12 month and 6 month
    schedules and we're doing this without sacrificing quality.
        We also have some initiatives underway that will change how the Air
    Force manages waste. Pollution prevention and waste minimization
    provide great potential to realize efficiencies while at the same time
    sustaining the Air Force mission, maintaining a safe and healthy
    workplace for our people, and improving the environment in which we
    live. This year, we are establishing pollution prevention and waste
    minimization goals; we will use our environmental management system to
    achieve these goals; and, we fully expect to see our operations become
    more efficient, more protective of the workforce, while realizing cost
    savings. We are also striving to change how our culture considers waste
    and the environment. The Air Force believes that `green' is a smart way
    to do business. Simply put: green is money; green is innovation; green
    is safety; and, green is good stewardship.
        Our pollution prevention initiative provides a great segue to
    something the Air Force is very excited about. We are embarking on an
    aggressive initiative to transform how the Air Force manages energy,
    water, green house gas production, and solid waste. This year, we are
    rolling out a net zero policy for the Air Force. This initiative will
    strengthen the Air Force's commitment to supporting the Air Force's
    operational mission by leading in energy and environmental management.
    We will do this by complying with legal requirements, reducing
    unacceptable risk to operations from energy-related considerations and
    environmental impacts, by continuously improving energy and
    environmental management practices to be more effective and efficient,
    and to ensure sustainable management of the resources we need to
    adequately fly, fight and win into the future. There is no question
    that responsible and prudent stewardship of the natural and other
    resources with which we are entrusted is of great importance to
    national and economic security.
        Working together with regulatory agencies, other Federal partners,
    and industry experts, the Air Force is continuously innovating and
    adopting best practices to lessen the environmental impact of its
    operations while helping the Air Force maintain its mission-ready
    posture and capabilities.
                                   conclusion
        Our fiscal year 2013 budget request satisfies our most pressing
    needs while supporting the greater good of the Nation's fiscal
    security. It stays true to the fundamental priorities of our Air Force:
    (1) continue to strengthen the nuclear enterprise; (2) partner with the
    Joint and Coalition team to win today's fight; (3) develop and care for
    our airmen and their families; (4) modernize our air, space, and cyber
    inventories, organizations, and training; and (5) recapture acquisition
    excellence. We continue to mature our use of centralized asset
    management principles to mitigate accepted risk in facilities funding.
    Our Total Force airmen and their families can rest assured that they
    are cared for as we strive to eliminate inadequate family housing by
    2018 and privatize housing in the United States by 2013.
        Finally, we continue to think about the taxpayer with every dollar
    we spend. Our commitment to continued efficiencies, a properly sized
    force structure, and right-sized installations, combined with steadfast
    stewardship of our energy resources and environment, will enable us to
    provide our trademark support to the joint fight without imposing
    fiscal hardship on the Nation.

        Senator McCaskill. Thank you very much.
        Let us start with touching on the BRAC issue. We have over
    78,000 authorized Active Duty military assigned to the European
    Command (EUCOM) right now. Recently DOD announced that this
    force posture will be reduced from three to two BCTs, an
    additional drawdown of one over last year's announcement of
    four to three. So that means we have announced we are going
    from four to two.
        I believe that DOD has contended that we do not need any
    additional MILCON for the four BCTs in EUCOM. It would make
    sense if we are going from four to two, plus additional
    drawdown resulting from fewer enablers required to support the
    BCTs, coupled with theater-wide service and civilian reduction,
    that we would have excess capacity in EUCOM. To date, DOD has
    indicated it will close two bases in Germany.
        Chairman Levin has stated--and I agree with him--that we
    should not consider a new round of BRAC until we have addressed
    the excess capacity overseas.
        What other locations is DOD considering closing in EUCOM
    and what are the projected savings from those closures? Is DOD
    considering closing Baumholder? Dr. Robyn?
        Dr. Robyn. I do not want to talk about specific locations,
    but let me just describe the process.
        Let me start by saying that in the last 20 years, U.S.
    force presence in Europe, both as measured by number of
    personnel and installation sites, has gone down by about 80
    percent. In the last 10 years, DOD has returned more than 100
    sites in Europe to their respective host nations and reduced
    our personnel by one-third. As Katherine said, in the next 3
    years, Army alone will close 23 additional sites. Those have
    already been announced. In terms of more to be done, we
    definitely believe, with the recently announced force structure
    changes, we can do more to consolidate in Europe.
        The goal? Reduce long-term costs while still supporting our
    operational requirements and our strategic commitments.
        My office is working with the EUCOM theater commander, his
    component commanders, and the Service leadership here in
    Washington. It is a BRAC-like process but without a commission
    looking at measuring the capacity of all of our European
    installations. We have 300 sites still in Europe. ``Site'' does
    not mean something like Anacostia or Bolling Air Force Base.
    Sites can be quite small, but we have 300 left. Most of our
    activity is on 200 of them. We are working with the EUCOM folks
    to measure the capacity of all of our European installations,
    and then we can analyze how much capacity we can shed and
    where. Then with the goal of long-term cost reduction, we will
    prioritize or will assess the costs and savings of each
    proposed action and identify those with the highest payback. We
    anticipate giving the SECDEF options this fall.
        Senator McCaskill. Do you understand that for many of us
    that would be something that should be the first step before
    consideration of a BRAC?
        Dr. Robyn. Yes. I think we hear that. Let me just say that
    ideally we would like to do the two in tandem. In 2004, we did
    our overseas analysis at the same time that we were doing our
    analysis for the 2005 BRAC round. There is an advantage in
    doing that because it allows us to think more creatively about
    where the troops that are returning from Europe can be placed.
    Rather than putting them wherever we have excess capacity, we
    can think about where they should be. So ideally we would do
    the two processes in tandem.
        Senator McCaskill. I know that Senator Ayotte will also
    cover some of this on BRAC, and I may return to it in the
    second round.
        But let me talk about the Navy's budget request for a
    waterfront development in Bahrain. The project was not
    authorized last year, but it was appropriated. One of the
    things that really irritates all of us authorizers is when we
    say no and the appropriators say yes. The funds cannot be spent
    without an authorization, and the committee has not received
    any request this fiscal year to authorize this project. It is
    my understanding that there are a number of very important
    unfunded projects in Bahrain such as the repair and replacement
    of the existing failing pier at the waterfront area. Has the
    Navy decided whether to request the authorization for this
    waterfront development project in Bahrain or--hint, hint--maybe
    looking for other priorities like the pier replacement with
    this money? Hint, hint?
        Ms. Pfannenstiel. Senator, we are looking at everything you
    have just recommended, and we will get back to you with where
    we want to go on this. I understand that there has been concern
    expressed, and we understood that was not authorized last year.
    So we need to continue to look at what our needs are and what
    we consider to be our highest priority needs in Bahrain.
        Senator McCaskill. I think all of us, if we look at force
    posture issues and developing trouble spots around the world,
    understand that having a pier that is not falling down in
    Bahrain, in light of everything that is going on in the world
    right now, ought to work its way towards the top of the list.
    It is obviously very important in terms of national security
    considerations at this juncture.
        Ms. Pfannenstiel. I understand your concern.
        Senator McCaskill. Let us talk about the dorm at West
    Point. I am confused about the dorm at West Point because I
    think, since I was in college, the West Point population has
    not changed, 4,400 cadets. I am confused as to why we need 650
    new beds at a cost of almost $300,000 per bed. If we need to
    update or we need to refurbish, I think that would be much less
    expensive than $200 million for 650 beds for a population that
    has not increased.
        Ms. Hammack. It is true that the population has not
    increased at West Point, but what has increased is that women
    are at West Point and there have been no modifications made to
    any of the existing barracks to accommodate it and that has
    caused some problems.
        We have also brought in--you might consider them like
    residential assistants (RA) in a dorm into the barracks where
    they were not collocated in the past. That has caused more of
    the overcrowding issues.
        So because of that, right now we are at 40 percent of the
    corps live with three cadets to a room in rooms that were
    designed for two cadets.
        Senator McCaskill. I just do not understand. 4,400 is 4,400
    is 4,400. I do not understand why we cannot refurbish to
    accommodate women and why we cannot--I mean, it looks like to
    me that somebody is not managing the population. I mean, you
    are adding 650 beds to a population that has not increased. The
    math does not work.
        Ms. Hammack. What we have done is we have changed the use
    of some of the rooms, and so by using some of the rooms for
    computer servers rooms, for study rooms, for an RA-like use, it
    has caused overcrowding. In order to better manage the
    population, we have changed the usage, and that has caused us
    to need the additional barracks.
        Senator McCaskill. Well, how many beds are you short?
        Ms. Hammack. 650.
        Senator McCaskill. You are telling me that 650 beds were
    moved over to other uses besides putting people in beds?
        Ms. Hammack. Yes.
        Senator McCaskill. Well, I think we are going to need more
    information on that. That does not sound right to me. That is a
    lot of rooms for computers, if we have given up 650 beds out of
    a total population of 4,400. Something does not make sense
    here. So if you would try to provide us more information, maybe
    we can muddle our way through this.
        Ms. Hammack. We can do that. Thank you.
        [The information referred to follows:]

        West Point has 4,036 bed spaces available for a population of 4,686
    cadets. The barracks requirement is based on the authorized graduation
    end strength of 4,400 cadets; 4,686 spaces accounts for historical
    attrition rates and international cadets. At the beginning of each
    academic year, 40 percent of the population lives with three cadets in
    rooms suited for two. Based on the current capacity, a requirement
    exists for a new barracks for 650 beds. The new cadet barracks, the
    first built since 1972, will eliminate overcrowding and improve the
    Corps of Cadets' academic environment and quality of life. Within the 9
    barracks building, 126 rooms are being used for critical requirements
    that support the Military Academy mission to train the Army's leaders
    by placing tactical officers and non-commissioned officers where they
    can have the greatest impact on leader development. Additional rooms
    are used for study, administrative purposed (used to conduct practical
    exercises and planning), and support building maintenance functions.

        Senator McCaskill. Senator Ayotte?
        Senator Ayotte. Thank you, Senator McCaskill. I thank all
    the witnesses for being here today.
        Let me just start with something I am struggling with a
    little bit, which is this. I know I am new around here, but
    when I hear BRAC described as we did not do it to save money,
    but we did it to be transformative--BRAC is a very difficult
    process for Congress to sign off on because it could mean that
    any one of our States is impacted. So I am really struggling
    and finding it hard to believe that we authorized--meaning
    ``we'' before I was here authorized--BRAC to undertake a
    transformative process as opposed to achieving cost savings
    from the 2005 round.
        My guess is, and I am going to go back to the testimony
    when DOD requested the BRAC rounds and see if it was presented
    to us collectively in Congress as a transformative process as
    opposed to saving money because it seems to me that we have
    undertaken this BRAC process in the past to achieve cost
    savings. So this to me seems at odds with why you would ask
    Members of Congress to undertake a very difficult decision to
    authorize you to subject bases in their own States that could
    potentially be closed. You can understand why I am struggling
    with this.
        Dr. Robyn. Can I respond?
        Senator Ayotte. Yes, Dr. Robyn.
        Dr. Robyn. In a two-part response, first let me say I think
    it is a fair question to say should we use the BRAC process,
    which is a marvelous process for carrying out something very,
    very difficult and imposing pain on some number of communities
    and the civilian workers there. It has worked very, very well
    for that. I think that is an open question as should one use
    the BRAC process for other things. I think one can debate that.
        As for the historical record, I think it depends on when
    you look. We started asking for another round of BRAC when I
    was still working in the Clinton White House.
        Senator Ayotte. 1998. Correct?
        Dr. Robyn. Yes. There was repeated requests for it.
        It was shortly after September 11 that--and I think
    probably in part because of September 11, but I was not here,
    so I am not sure. But the Senate approved it and the House
    acquiesced. So I think even at the time it was post-September
    11. I do not know how much of the discussion was about
    transformation.
        I will say that in 2002, 3 years before the round, when
    Secretary Rumsfeld put out the so-called kick-off memo,
    November 2002--if you go back and read that--it was very much
    about transformation. I mean he says, of course, we want to
    reduce capacity, but even more important, we can do something
    very powerful here which is to transform our infrastructure. So
    I think it became that between the time that it was approved--
    and I guess then maybe that gets back then to--but I do not
    think it was a surprise by the time it happened. A lot happened
    between 2001 and 2005.
        Senator Ayotte. Well, I do plan--I am going to go back in
    the record and find what was Congress told and what was our
    goal because, with all respect, to describe a process as
    marvelous that cost us 60-plus percent more than was estimated
    to Congress, where it is a very difficult decision for Congress
    to make, where there clearly was a substantial investment and
    upfront costs that we are still paying--so we do have to look
    back to the last round and the history of this if we are going
    to make this important decision.
        Another concern that I have is, we keep hearing, as I
    mentioned in my opening testimony, from DOD and the SECDEF that
    one of the most important things we have with the reductions of
    our end strength force with our ground forces is that we have
    to have reversibility. It is not clear to me how DOD will be
    able to quickly surge, regenerate and mobilize without the
    capacity in facilities and infrastructure to absorb additional
    forces if we have to reverse.
        So since DOD is asking for a BRAC round in 2013, will we
    also get a 20-year force structure plan and a facility
    inventory in order to define these requirements? Because I do
    not see authorizing a BRAC process to go forward without
    knowing how reversibility is going to be possible because it is
    not just reversibility in terms of having our troops trained
    and the equipment, but we know these facilities can be very
    important in terms of reversibility as well.
        So I would like us to have that, and I see that as a real
    concern. If you think that you can answer that question, I
    would be happy to have you answer it.
        Dr. Robyn. Well, let me just respond to my use of the word
    ``marvelous.'' Maybe that is not the right adjective, but I
    think the BRAC process, the up or down, all or nothing
    mechanism which was devised by Dick Armey, a Congressman from
    Texas, is an amazing mechanism. People come literally from all
    over the world to talk to us about how it works and there have
    been many efforts to use the BRAC mechanism for other purposes.
    The Office of Management and Budget is now leading a civilian
    BRAC-like process. Precisely because it is so painful, the BRAC
    mechanism, by requiring the vote to be all or nothing, up or
    down, insulates it from politics to the extent possible. That
    is what is amazing about it. I was referring to its use in the
    way that it was originally envisioned in the first four rounds.
        The 2005 round--I will defend that, but it is a different
    application of BRAC. I think the Army did things precisely
    because; with the difficulty of getting MILCON funding, it
    would have taken them decades to do any other way. I think it
    is worth a debate in the future, is that a good way to use
    BRAC.
        But our need now is savings, getting rid of excess
    capacity. Terry alluded to a study done in 2004, and I would
    not fall on my sword over the quality of the statistics, but it
    was a report we did for Congress on excess capacity. We
    estimated we had 24 percent excess capacity in 2004. That was
    before the 2005 round, but the 2005 round only eliminated, by
    our estimate, using the same statistical techniques, about 3
    percent of our capacity. So we think we even now have excess
    capacity.
        Senator Ayotte. We could spend probably the entire hearing
    on BRAC because I am not convinced it is insulated from
    politics. There are a lot of costs that go into just--I can
    tell you my own personal experience with BRAC. I am married to
    an A-10 pilot. What happened in the 2005 round is, just in
    Massachusetts, they moved the F-15s from the Cape to Westfield.
    They retrained A-10 pilots to be F-15 pilots. Then they
    transferred the A-10 pilots to another base, and many of them
    were retrained on other planes. We all know how much it costs
    to train a pilot. So the notion that it is insulated from
    politics I think is not the case. We could spend a lot of time
    on BRAC.
        I have a lot of additional questions, and I am not
    convinced until we really know what this concept of
    reversibility is and the substantial end force reductions that
    we are going to incur, that we will have the facilities if we
    suddenly have to engage in another conflict for this country if
    we undertake a BRAC process without knowing how that is going
    to work. So I think there is a lot more information that
    Congress needs before we as a group decide to undertake a BRAC
    process again.
        My time is up. I have a whole host of additional questions
    on other topics, and I will obviously continue to ask questions
    about BRAC and remain concerned that this is not the time to go
    forward with a BRAC round.
        Senator McCaskill. Thank you, Senator Ayotte.
        Senator Nelson.
        Senator Nelson. Thank you, Madam Chair, and thanks to all
    of you for being here today.
        Before I talk about BRAC, I would like to first talk about
    a MILCON project, and I think as you perhaps all are aware,
    progress is being made toward constructing a new command and
    control complex for U.S. Strategic Command (STRATCOM) with
    MILCON funds requested by the President and authorized and
    appropriated by this Congress for the fiscal year 2012.
        Obviously, the mission at STRATCOM is at the forefront of
    our national security. An aged building inadequate for the
    mission simply is impossible to support. So the entire project,
    which requires considerable funds, has been authorized, but
    because of the nature, DOD is going to have to have phased
    funding or incremental funding and Congress will have to
    annually step forward and be able to do that.
        Both General Dempsey and Secretary Panetta have indicated
    the importance of this project.
        Now, originally the project was scheduled to receive
    incremental funding over a 3-year period, but last year the
    $150 million request was cut to $120 million which now means
    that the funding has to be spread out over 4 years. We
    understand that.
        So I guess the first question is, is the full $160 million
    requested for fiscal year 2013 actionable on the project if
    authorized and appropriated? I guess we will start with you,
    Dr. Robyn. Then we will go to Secretary Yonkers.
        Dr. Robyn. I think I will just defer that one to Terry.
        Senator Nelson. You want to defer it. Okay. That will work.
        Mr. Yonkers. Well, you have characterized it pretty well.
    It is an absolute necessity requirement for STRATCOM to have
    this new facility, and we talked about this last year.
        $120 million in 2012, $161 million in 2013, $164 million in
    2014, and I think about $119 million in 2015, spread across 4
    years.
        Right now, the Corps of Engineers is about ready to go
    through the final throes of awarding this project.
        We have laid in what we think is the appropriate funding
    stream to complete the project. The dollar amount has stayed
    consistent across the programming years that we have been
    looking at this. But I do not think we are going to know the
    actual dollars until we make the award and the contracting
    entity that is going to actually do the final design and build
    says if we look at the construction schedule, $120 million is
    right for 2012, $161 million is right for 2013, and so forth.
        Senator Nelson. It is our best estimate, given what we know
    and what we anticipate to happen.
        Mr. Yonkers. Yes, sir. Just the executability. I mean, we
    are pretty confident with the dollars laid in that we will be
    able to execute according to those numbers.
        Senator Nelson. As each year progresses, of course, we will
    be faced with the same questions as this year. Will that be
    enough to take us through the construction for the new fiscal
    year? So that is why it is phased in.
        The second area that I am concerned about equally with my
    colleagues here is BRAC. I think there is an expectation that
    you expect savings as a consequence of closing and realignment.
    The question is whether you will and if you do, how much. But I
    do believe that the promise has always been out there that it
    would be a savings. I see we have sanitized BRAC to realignment
    and spend less time talking about closing. It is a harsher
    word, a little harder to accept. What seems to be the thought
    of some folks is, I will sacrifice until your last base.
        So I think we understand why the process is necessary, but
    if it is going to be about realignment, it ought to be, I
    think, done internally with expertise without the promise so
    much of savings and do it on the basis of what the military and
    DOD together think is the best way to realign based on current
    and future needs. What we have done with this process is
    injected politics into it in a way that I think is very
    difficult because who wants to vote to close their own base?
    That is like voting your town dry and then moving. It has about
    the same impact in the community.
        But in any event, I also believe that there is a greater
    emphasis that will be required on our overseas installations. I
    agree, Dr. Robyn, that that ought to be done at the same time
    if this is about realignment more than closing to save dollars
    because you can close a bunch of bases and save money and that
    would not necessarily constitute realignment. That is why the
    word ``realignment'' I think is included in there. I guess I
    would ask you to respond to that, any one of you.
        Dr. Robyn. All right. I will just respond briefly and then
    Katherine would like to as well.
        I did not mean to say realignment rather than closure. It
    is both. I think we did a lot of the bigger closures in the
    1990s, and it is probably not an accident that there were more
    realignments later in the process. But certainly I am not using
    ``realignment'' to be politically correct. It would be both.
        I think the way BRAC works, DOD does a very extensive
    analysis to decide where--they look at everything. Everything
    is on the table and it is judged primarily but not exclusively
    in terms of military value, and that takes into account costs
    but other factors as well. So we then give to the commission a
    list of recommendations, both closures and realignments, and
    the commission holds hearings and makes visits and evaluates
    those. So you have the best of our judgment internally tempered
    by the judgment of outside commissioners, independent
    commissioners.
        Is it completely free of politics? Probably not, but it is,
    I think, about as close as one could come.
        Senator Nelson. Well, it does have a certain amount of
    politics in it, or it would not be applied just in U.S.
    facilities and not applied to overseas facilities.
        Dr. Robyn. Well, we do not need legislative authorization.
        Senator Nelson. Well, I know. But if you can realign there
    without the legislation in place, because it does not affect
    the same group of constituents that it affects here at home--it
    is in lieu of politics, in place of politics or because of
    politics, but it is politics involved.
        Ms. Hammack. One thing to keep in mind in the BRAC 2005 is
    several installations in the continental United States absorbed
    units that were returning from units overseas. So it did have
    an overseas realignment component to it.
        As Dr. Robyn said, the recommendations made sense from a
    military standpoint. 2005 was a military realignment to realign
    the way we are fighting the current wars, and so it was a
    different kind of a BRAC and it was set up and it was
    communicated that it was going to be a different BRAC than
    prior BRAC rounds because we were at war during the time period
    that it was occurring.
        Senator Nelson. Well, it is very difficult to realign, to
    transition in the midst of war. There is no question about it,
    because it raises all kinds of other questions; obviously that
    is where we have been and it may be where we still are.
        Thank you, Dr. Robyn, and thank you all for being here. I
    appreciate it.
        Thank you, Madam Chair.
        Senator McCaskill. Thank you, Senator Nelson.
        Senator Shaheen.
        Senator Shaheen. Thank you very much, Madam Chair.
        Thank you all for being here this morning.
        I am sure you will not be surprised to know that I share
    the concerns that have been expressed by my colleagues about
    proposing another round of BRAC closures as early as 2013.
        Dr. Robyn, I know that in your testimony you estimated what
    the savings from the 2005 BRAC round will be. So I am assuming
    as we are thinking about--at least in testimony from Secretary
    Panetta, one of the things he implied was that he did not feel
    like he could go back to his DOD budget and make the cuts that
    have been required as the result of the agreement last year
    without also looking at a BRAC round. So I am assuming that to
    the extent that another BRAC round is being proposed, it is
    being proposed in the context of cost savings. As you point out
    in your testimony, it will be about 10 years before we get back
    at $4 billion a year and the cost of $35 billion--that would
    about 10 years to get back the payback.
        Dr. Robyn. A 9 year period.
        Senator Shaheen. 9 years. I will give you 9 years.
        I wonder if we have any outside expert estimates on what
    the savings are and whether we have engaged other experts in
    looking at potential savings from a BRAC round.
        Dr. Robyn. Well, we have not put out any estimates of the
    savings from a 2013 or 2015 round.
        Senator Shaheen. Right. I am sorry. I should have been
    clear. I am talking about the 2005 round.
        Dr. Robyn. Yes. GAO lives with us during BRAC, and Brian
    Lepore, the head of GAO's infrastructure group, testified with
    me before the House I guess just last week. GAO documents our
    analysis and our estimates very closely, and they are in
    agreement. We disagree on some minor issues. We disagree on how
    to calculate savings from military personnel who are moved from
    one base to another, perhaps like Senator Ayotte's husband. I
    am not sure if he would fall in that category. But by and
    large, GAO agrees with us on the magnitude of the savings, and
    I would be happy to get your Brian Lepore's testimony from last
    week. They literally are in the room almost throughout the
    entire process.
        Senator Shaheen. Are they also part of the process that
    looks at potential savings?
        Dr. Robyn. Yes.
        Senator Shaheen. So for a 2013 round that is proposed, they
    will be at the table with coming up with the potential estimate
    for savings that might be accomplished as the result of that?
        Dr. Robyn. Yes. That comes out of this in-depth, internal
    process of looking at all the alternatives. Out of that comes
    an estimate of savings.
        This is maybe a footnote, but it is worth saying. The
    estimated savings from the 2005 round--$21 billion I think it
    was, $22 billion--that comes from a cost of base realignment
    analysis. It is a model that is not designed to be budget-
    quality. What it is designed to do is allow us to compare
    different alternatives. So it is good for what it does, namely
    allowing us to compare the costs and benefits of different
    closures. It is not and really should not be put out as our
    budget-quality estimate of what we think the savings from a
    round will be.
        That having been said, the estimated cost of the 2005 round
    did go up significantly by any measure, and I think it is worth
    saying why that is the case. Katherine may want to elaborate. I
    think the single biggest reason was that the Army made a
    decision, a very deliberate decision--DOD did but it was
    primarily Army--to put additional money into various BRAC
    recommendations because they felt that they needed, rather than
    renovate, to build new in order to create some new capability.
    Over and over again, they decided to do more than what they had
    initially planned to do because they thought the benefits of
    that were worth it. They went to Congress and they said we want
    to move money from this part of our budget, from weapons, into
    this because this is important to us. That accounted for
    probably half of the increase, a significant increase, in the
    estimated cost of the 2005 round.
        The other factor was a decision by DOD to delay the
    implementation, and this was a decision by Secretary Rumsfeld
    to delay the implementation of BRAC. We have a 6-year window by
    law to implement it. In the past rounds, it has always been
    implemented very early in that window. There was a decision for
    budget reasons--again, we were at war--to push that out. So we
    pushed it out as far as we--I was not there then--but as far as
    was possible under the law.
        That turned out to be a problem for two reasons. One, delay
    is always expensive because the costs of inflation get factored
    in, but it pushed us into a period that no one anticipated of
    very record-high construction costs as a result of all of the
    activity in the aftermath of Katrina and then global demand for
    steel and concrete. So we were putting out our bids for
    competition at the worst possible time in terms of the
    construction market in 2007 and 2008, and that accounted for
    most of the rest of the increase.
        So the lesson from that is do not delay the implementation
    of a BRAC round. It eliminates flexibility.
        Senator Shaheen. Certainly the more information we have, I
    think, in making a decision, the better, and at least at this
    point I think there is a lot of information that has not yet
    been shared with Congress.
        Ms. Pfannenstiel, my next questions are for you. But I
    should begin by thanking you for helping us. As you are aware--
    I am not sure that the committee is aware--I chaired a hearing
    on the USS Kearsarge last week to look at what the Navy is
    doing around energy savings, energy efficiency, and moving to
    alternative energy. It was fascinating. I applaud the Navy's
    leadership in this area. I think it is an example that could be
    set for all of the Federal Government, looking at how we can
    both be much more energy efficient and also move to alternative
    sources of energy.
        Ms. Pfannenstiel. Thank you. I am sorry I was not able to
    be there. I understand the hearing was very effective and
    brought a lot of good discussion.
        Senator Shaheen. It was fascinating.
        I had the opportunity to visit the Portsmouth Naval
    Shipyard which has been the beneficiary of an award from the
    Navy for their energy efficiency at the yard in their class. So
    I know you are not going to be surprised to hear that I share
    Senator Ayotte's concerns about what is happening at our four
    public shipyards and really what I have to say is a troubling
    lack of support from the Navy for MILCON projects at the
    Portsmouth Naval Shipyard. There has been no support for MILCON
    projects in the 2013 budget request. There have not been
    projects that have been supported from the executive branch
    over the last 5 years, probably a little more.
        So despite that, the Portsmouth Naval Shipyard has been
    delivering ahead of schedule very efficiently. They delivered
    the USS San Juan 8 days ahead of schedule despite some other
    challenges. They are the first shipyard to work on the Los
    Angeles class sub, the Virginia class sub, and that is the
    weapons system that is going to serve as the backbone of our
    power for decades to come.
        So I wonder if you could just talk about why there has been
    this lack of support from the Navy for MILCON at Portsmouth?
        Ms. Pfannenstiel. Thank you, Senator Shaheen.
        We do understand the value of the Portsmouth Naval Shipyard
    and we share your view of how important that is to the Navy. We
    know that there are a couple projects upcoming, MILCON
    projects, that have been delayed and that there have been a
    couple segments that we have sort of pushed out beyond a time
    that you are comfortable with. But be assured that we are still
    looking at those and we are looking at those in terms of the
    needs that we see at the shipyard.
        There is still a possibility of combining the two segments
    into a single project which we would think might be able to be
    more efficient and have the two segments done together in a
    future year. So that decision is not final at this point. We
    are still looking at it.
        We have put a fair amount of money into the shipyard in
    energy projects which have been very effective, and I think
    they have been part of the efficiencies that we are looking for
    and that I think will make the shipyard that much more
    effective going forward.
        Senator Shaheen. Well, thank you. My time is up, but I
    would just ask if you would also commit to the shipyard
    modernization plan that is due back in Congress by September
    the 1st. Is that something that you think that we should count
    on arriving by September the 1st?
        Ms. Pfannenstiel. Yes.
        Senator Shaheen. Thank you.
        Senator McCaskill. Thank you, Senator Shaheen.
        Mr. Yonkers, I was picking in my previous questioning on
    the Army for the new dorm at West Point.
        I might point out that one of the problems, Dr. Robyn, is
    that when you come to Congress in the last BRAC and you say,
    rather than refurbish, we want to build new, it would be
    unusual for Congress to say no because typically what happens
    is the Members of the Senate that are from the States where the
    new construction is going to go on become wildly enthusiastic.
        One of the reasons BRAC began in the first place is--you
    may have noticed--none of us liked the notion of cutting the
    military, especially when you talk about it in terms of
    readiness and our capability and the excellence that our
    military represents to the rest of the world.
        Now, as somebody who has spent a lot of time in the weeds
    over the last 6 years looking at the way the military does
    business, I am confident that we can save a lot of money
    without impacting our excellence. Part of that is being very
    careful about asking for new construction when refurbishing
    will do, when updating will do. Building it new is not always
    the right answer especially if we are talking about point-of-
    the-spear readiness and what we have to be doing with our
    technology to continue to dominate the world's militaries in
    terms of our capability.
        So let me turn now to the Air Force Academy, and let me
    turn to a project that I have to tell you that I am not sure
    that I would have been excited about authorizing when it was
    authorized. It is called the Center for Character and
    Leadership Development. Well, I believe that is the Air Force
    Academy, the whole thing, that it is in fact a center for
    character and leadership development. That is why there are so
    many young men and women in Missouri that are disappointed
    every year when they cannot receive that appointment to the Air
    Force Academy. We always leave dozens and dozens disappointed
    that are really wanting to attend the Air Force Academy.
        The fact that we need to build this building just for that
    is a head-scratcher for me right now. What is even more of a
    head-scratcher is that it was authorized. You could not get it
    built for the amount that was authorized because a low-profile
    skylight was included that was going to cost $12 million just
    for the skylight.
        What I understand now is that the FYDP contains four
    projects for the Air Force Academy, including one for force
    protection, emergency operations center, with a total value of
    $53 million. I understand there is a plan to have the endowment
    pay for this skylight. I have looked at the skylight. It is
    fancy, but I do not know that it is necessary. I am wondering
    why the endowment would not look to some of these other needs
    instead of a $12 million skylight.
        Mr. Yonkers. Well, ma'am, I cannot answer why the endowment
    would not look at others. They may. Right now they are focused
    on the Center for Leadership.
        The MILCON project that you are talking about is for the
    basic building. The endowment, I believe, is on the order of $7
    million or $8 million to build the skylight, which the alumni
    that support the Air Force Academy believe is part of the heart
    and soul of Air Force Academy, not unlike every other academic
    institution that is supported by its alumni.
        So we have not heard--at least I have not heard as to
    whether or not the association or the endowment would consider
    others. They have in the past, and I would presume that they
    would in the future.
        Senator McCaskill. I just hope we would reexamine. It is my
    understanding the justification for the center was that we did
    not want to bus people for seminars on character and leadership
    to other locations. It is hard for me to believe that we could
    not find a location on campus for seminars on character and
    leadership without building a new building for that purpose.
    But I will look forward to additional justification for that.
        Dr. Robyn, we were notified by the Air Force of their
    intent to transfer $28 million from operation and maintenance
    to construct a student activity center at Sam Houston, TX, in
    support of a training mission consolidation directed by the
    2005 BRAC. This facility is for community and recreational
    activities and graduation activities.
        After extensive meetings and visits by our staffs to Fort
    Sam Houston, the committee concluded the additional project was
    not essential to carrying out the BRAC decision. We provided
    this position formally to DOD, which is consistent with our
    intent to take action when DOD's spending may not be essential
    to military missions.
        Unfortunately, in August 2011, the Department of Air Force
    decided to carry out the project despite our objections. In
    response, we have acted to rescind all unobligated balances of
    BRAC that we know about.
        Does DOD have any more remaining BRAC fund balances, and if
    so, can you a provide a record of how much and where they are
    located?
        Dr. Robyn. Yes, I can for the record. I do not offhand know
    what the amount is, but, yes.
        Senator McCaskill. I think it is important that we clean
    that up at this point. Especially if we are talking about a new
    BRAC, I think it is incumbent upon the military to let us know
    where there is still money. Obviously, when we have taken a
    hard look and said we do not think it is a good idea and it is
    done anyway, it does not make everybody cheerful on this side
    of the desk.
        Dr. Robyn. I will get you that.
        [The information referred to follows:]

        The budgeted cost to implement the Base Realignment and Closure
    (BRAC) 2005 recommendations was $35.1 billion. At the end of BRAC 2005
    implementation on September 15, 2011, an unobligated balance of $1.5
    billion remained in the account. Of that amount, in fiscal year 2012,
    $0.5 billion was reprogrammed with congressional approval to the
    Homeowners Assistance Program to provide benefits to eligible
    servicemembers and civilians, $0.3 billion was rescinded by Congress,
    and $0.7 billion remains in the account to source continuing caretaker,
    environmental cleanup, and construction close-out efforts.

        Senator McCaskill. Let us talk a little bit about Guam. The
    2012 NDAA contained a number of requirements that still must be
    met before any funds, including funds provided by the
    Government of Japan, may be obligated or expended. I will not
    go through all the requirements. I think that you probably
    know, Secretary Pfannenstiel. I am sure you are familiar with
    them.
        Can you give us an update on where we are on those
    requirements, and do you think everyone understands that we do
    not want any money spent until those requirements are met?
        Ms. Pfannenstiel. We do understand that.
        The requirements are underway. There is an independent
    study, I understand the contract for that is about to be
    signed, and all of the other pieces. But a lot of it has to do
    with the outcome of the discussions that are underway between
    the U.S. Government and the Government of Japan on the
    alternate movement to Guam, how many marines and what time
    frame and all of those. Those discussions are happening
    virtually as we speak, and as that gets resolved, that then
    will allow us to put together the master plan, which I think is
    one of the primary requirements under the NDAA. So, yes, we
    understand that that is necessary and we are planning to work
    with Congress to meet those requirements.
        Senator McCaskill. Just so that everyone is crystal clear
    that we do not want to go down the road. We do not want to even
    begin going down the road until we are sure where the road is
    going to lead at the end. So that is why we will continue to
    hold the line on any authorization for funds for any of those
    purposes until those requirements are met. I think this
    committee will remain as steadfast in that resolve as they were
    last year during the defense authorization when the decision
    was made.
        Ms. Pfannenstiel. Understood.
        Senator McCaskill. Senator Ayotte?
        Senator Ayotte. Thank you very much, Madam Chair.
        Secretary Yonkers, I wanted to ask you some questions about
    the process of developing the criteria for the selection of
    basing for the KC-46A, and I had the opportunity to discuss
    that with Secretary Donley, also with General Schwartz and
    General Johns. It is my hope that this is a very important
    decision, that it be done concurrently between our Guard and
    Active Duty because right now if you look at the refueling
    capacity of the KC-135, it is about 60 percent in the Guard and
    Reserve and 40 percent in the Active Duty. So I think this
    concurrent basing issue is very, very important.
        I have a few questions for you from the installations
    perspective because I know you will have feedback on that end
    in the basing criteria. That is, when we look at an
    installation environment, when you have environmental concerns,
    that can drive up the real costs in the long term in terms of
    basing. So when you are putting out the criteria, when you are
    looking at the basing, will you take into account a lack of
    environmental concerns, for example, for a particular area? In
    other words, a base that does not have issues that will be
    costly in terms of environmental concerns, is that something
    you will consider?
        Mr. Yonkers. By all means. I think it is fair to say that
    when we look through the basing criterion--and this is
    evolving. I mean, we did not get it all right the first time we
    did a basing decision. So we keep relooking at the criteria and
    it is weapons systems specific as well. But certainly looking
    at--one of the primary drivers here is cost and looking at the
    business case for how and what and how much it is going to cost
    to do it and just the operational imperative and can we
    optimize.
        Senator Ayotte. I am glad to hear you say that is one of
    the considerations that you are going to take into account.
    Obviously, military readiness, takes the primary concern, but
    costs are very important.
        I know that one of the issues can be whether you already
    have an existing simulator, for example, for the KC-135 that
    could be converted to a KC-46A simulator for training. Is that
    something that would be considered in terms of a cost issue?
        Mr. Yonkers. Well, it is a cost issue. So, yes.
        Senator Ayotte. So that would certainly be something
    important so that you did not have to install a new trainer on
    a base.
        Then also, what about the runway and the capacity? It can
    be very costly to lengthen runways, expand parking ramps, or
    build jet fuel storage at some potential bases which would
    require additional investment at a very difficult fiscal time.
    To what extent will you look at the issues of length of runway,
    size of existing aircraft parking ramps, or presence of large
    existing jet fuel storage as you look at this criteria?
        Mr. Yonkers. Ma'am, I think you have hit on a lot of key
    parameters here in terms of cost drivers, and they will be
    considered as we look across the entire spectrum of the
    enterprise to say where do those assets reside now, Guard,
    Reserve, Active Duty, and when we look at the cost analysis as
    we go through the site visits and those kinds of things to
    determine, from an overall cost point of view, does it make
    sense to bed that weapons system down at that point, that base,
    or what have you.
        Senator Ayotte. Okay.
        Other criteria I would say that are important criteria,
    proximity to deepwater ports, major interstate highways, also
    proximity to other military installations, and of course,
    combined with proximity to refueling tracks in key areas and
    also the capacity of the bases. So I am glad that you are going
    to look at the cost issue. I am hopeful, as I have told General
    Schwartz, as I have told Secretary Donley, as I have said to
    General Johns, that an open, objective, transparent, and
    concurrent with the Guard and also the Active Duty at the same
    time basing criteria will come forward.
        I have to say I am very proud of our 157th air refueling
    unit on all these fronts because we have one of the longest
    runways in the Northeast, the largest Air National Guard ramp
    in the Northeast, the largest fuel storage capability in the
    Northeast, and existing tanker simulator that could easily be
    transitioned to a KC-46A simulator, an absence of any
    environmental issues, close proximity, of course, to our
    shipyard that Senator Shaheen talked about, and I am very
    supportive of what she has just said, Secretary Pfannenstiel,
    about the shipyard, and appreciate that the Navy will continue
    to look at the modernization efforts at our shipyard. One of
    the things that we are very proud of is it has the highest
    utilization rate in the Guard. So I am very confident that in
    an objective and transparent process that looks at these
    factors that the 157th will be one of the top candidates for
    this.
        I understand this criteria is coming forward. I am looking
    forward to seeing it. I know Senator Shaheen is as well. We are
    both very proud of our unit, and I appreciate that you are
    going to look at these cost issues on the merits, that is the
    best way to make these decisions rather than--we talked about
    politics in BRAC. Well, we want objective, transparent
    criteria, and on the merits. That is how we hope that these
    basing decisions will be made.
        Mr. Yonkers. Well, if I could just remark as a closer here.
    We are not veering from our strategic basing process. This will
    be as transparent as it has been in the past. As we develop the
    criteria, Kathy Ferguson sitting behind me will come over with
    a team. We will go through that with Members of Congress and
    the staff. As we develop then the candidates again, come down
    to the preferred yet again, and then we will go through the
    National Environmental Policy Act analysis once we kind of hone
    down the preferred.
        But it is also of worthy note to consider that we are going
    to get--the buy is at 179 and that is the proposed number of
    aircraft for the KC-46. That is going to be metered out over 20
    some odd years as we purchase the aircraft. So I think the
    going-in position is we will look at a training facility first,
    along with a first ops facility as well and not try to play out
    where all 179 aircraft are going to be because we do not want
    to usurp the authorities of those that will follow us in these
    decisions.
        Senator Ayotte. I certainly understand that. As we go
    forward though, I hope that the initial criteria will be
    concurrent. I know that is a very important decision that you
    have to make, but if you look at what our Guard and Reserve
    have done and the experience level of the pilots in the Guard
    and Reserve, to base all of the initial KC-46As in the Active
    Duty in my view would be a mistake and it would not be
    consistent with what we are doing now in terms of the talent in
    our Guard and Reserve that is ready to easily take on the new
    tanker and train on it and be prepared. So I appreciate what
    you are saying.
        A very important question that I would like to make sure--
    if you would take it for the record because it is a very
    difficult time for DOD, and I understand. When I hear about the
    proposal for another BRAC round, there is no question in my
    mind that we handed you a number in the BCA and you are now
    proposing, for example, on BRAC to undertake that round as soon
    as 2013. That seems a lot faster than you probably otherwise
    would have appeared before us.
        In addition to that, you are facing the potential of
    sequestration. It is very important for us to understand the
    risks that are inherent with that. So I would ask each of you
    to come up with a detailed analysis of how specifically, if
    sequestration were to go forward, what would happen in terms of
    our installations, the environment and energy programs, and the
    modernization that we certainly need for public shipyards. All
    of that is incredibly important so we know as Members of
    Congress. In my view this is not a risk that we can afford to
    undertake on behalf of our national security, as Secretary
    Panetta has articulated so well.
        So can you please let us know what type of civilian layoffs
    we would face, what kind of contract terminations we would
    face, what kind of repairs would be put off, what type of
    modernization would be put off? Because if we do not take
    action before 2013, in January, you will be facing
    sequestration. I think we should stop it, but we need the
    information so that we can understand the risks that are
    involved with that.
        Thank you.
        [The information referred to follows:]

        Mr. Yonkers. The fiscal year 2013 proposed budget is a balanced and
    complete package with little margin of error. If sequestration were to
    go forward, it would rive a large additional reduction above the first
    phase of the Budget Control Act reductions incorporated in the Air
    Force fiscal year 2013 budget request. A sequester could have
    devastating effect on our readiness and our workforce, and disrupt
    thousands of contracts and programs. Absorbing these, and other
    reductions would potentially ``hollow out'' the force while making our
    ability to cover any emergent execution year requirements (i.e. fuel
    price increase or Libya operations) extremely difficult. Since the
    Department of Defense (DOD) is not currently preparing for a
    sequestration and the Office of Management and budget has not directed
    agencies (including DOD) to initiate plans for sequestration, the Air
    Force has not performed any detailed level analysis on sequestration's
    potential impacts.
        Ms. Pfannenstiel. The Department is not currently preparing for
    sequestration, and the Office of Management and Budget has not directed
    agencies, including the Department of Defense, to initiate plans for
    sequestration. If sequestration occurs, automatic percentage cuts are
    required to be applied without regard to strategy, importance, or
    priorities, which would impact almost every program within the
    Department. Sequestration would result in reduced funding for civilian
    personnel.
        Dr. Robyn. The Department of Defense has received no guidance from
    the Office of Management and Budget to begin planning for
    sequestration.
        Ms. Hammack. The Department of Defense has received no guidance
    from the Office of Management and Budget to begin planning for
    sequestration.

        Senator McCaskill. Senator Shaheen, do you have any
    additional questions?
        Senator Shaheen. I do. Thank you.
        Again, since Senator Ayotte and I both represent New
    Hampshire, you will not be surprised, Mr. Yonkers, to know that
    her lines of questioning around basing decisions are ones that
    I support.
        She actually raised a question that I would like to hear
    your response on talking about the experience that the Guard
    and Reserve bring to flying and whether or not, as you are
    looking at the MILCON decisions around basing, you also take
    into consideration things like training and some of the other
    personnel questions that, of course, contribute to the cost
    ultimately of those decisions.
        Mr. Yonkers. Let me make sure I understand the question and
    try to respond in this fashion. When we look at the MILCON
    program, we look at it across the total force. I think the
    SECDEF and the Chairman of the Joint Chiefs of Staff have been
    fairly consistent in the discussion about trying to balance the
    total force. The Guard and the Reserve bring a tremendous
    amount of capability. We all know this. That is why we went to
    a total force construct almost 2 decades ago to, again, try and
    use that asset more than we had in previous years. So we look
    at the MILCON program from the entire enterprise point of view.
        We try to go through, as I sort of talked about in my oral
    testimony, looking at certainly the highest priorities. We have
    priorities from our COCOM commanders. We have quality of life,
    and you will see a couple of dormitories in this year's
    program. We have beddown of new weapons systems like the JSF
    and the F-22, a move to Holloman and so forth. So we try to
    look at this from a point of view of what operationally makes
    the most sense, from a quality-of-life point of view, what
    makes the most sense, from a nuclear enterprise point of view,
    what makes the most sense, and of course, getting the biggest
    bang for the taxpayers' dollars by building new when the old is
    just so old and we are investing so much money in just trying
    to keep the thing running that it does not make sense to do it
    anymore.
        So I do not know if that gets at the real answer to the
    question or not, ma'am.
        Senator Shaheen. Well, sort of. But I guess I am suggesting
    that one of the other things that affects costs of some of
    these decisions are the human assets that are there, and that
    if we have--as you point out, the total force--if you look at
    the cost for Guard and Reserve versus the cost of Active Duty,
    there is a big difference. There is also a big difference if
    you are looking at training and education requirements for the
    new tanker, whether you have people who have some of that
    training already versus having to do it all new, whether those
    kinds of decisions are also included as you think about the
    basing decisions.
        Mr. Yonkers. I would like to take the specifics for the
    record, if I could. But it is all in the mix, as I understand
    it. So, again, looking at the total force, we look at the
    assets the Guard brings to the table in terms of personnel, et
    cetera, and the Reserve, as well as the Active Duty and factor
    those things into the overall decision.
        [The information referred to follows:]

        Cost comparisons between the Active and Reserve components vary
    considerably depending upon which costs are included in the mix.
    Because costs for training, facilities, equipment, base support, and
    other elements are shared within the Total Force, cost differences
    between components are not clear-cut. We want to build the most cost-
    effective force composition that meets mission needs, and many
    considerations will factor into that analysis and ultimate
    determination.

        Senator Shaheen. Thank you.
        Ms. Pfannenstiel, I want to go back to the energy hearing
    that we had because, as I said, I thought it was very
    impressive to see what is being done by the Navy. We had
    Secretary Mabus there talking about the work that is going on,
    and he mentioned two possible changes that would help with
    respect to energy use that I think are worth having the whole
    Armed Services Committee explore. One had to do with fuel
    contracts being limited to 5 years and the limits that that
    puts on the potential for biofuels. The other was the way the
    Congressional Budget Office currently scores fuel contracts.
        So I wonder if you could talk a little bit more about those
    changes because clearly they affect costs.
        Ms. Pfannenstiel. Let me talk first on the question of the
    5-year alternative fuel contracts. What we have heard from the
    biofuel producers who would like to sell us their product is,
    if we can only write them a 5-year contract--that is actually
    the Defense Logistics Agency, can only write a 5-year
    contract--then these potential developers, because they are
    new, because they are largely start-ups, have trouble getting
    the financing to build the refineries that they need to get the
    contracts, or to get the feedstock that they need, if they only
    have a 5-year commitment from us. So they would prefer a 20-
    year, even a 10-year would be a lot better for them than 5. So
    we have been working on that. I think that that really is a big
    issue.
        The scoring issue I am less knowledgeable about. Clearly,
    if there is a score, then that becomes a difficulty for us in
    terms of what the recommendation would be from the SECDEF, I
    will have to get back to you on that.
        [The information referred to follows:]

        Extending contract terms beyond 5 years will also make the advanced
    biofuels less expensive to the Department of Defense (DOD). To obtain
    financing, most facilities must recover their capital expenditures
    within the contract period that they have for delivery of their fuels
    (i.e. a financial entity will only lend for the period for which the
    producer can project/guarantee revenue). If this period is 10 years,
    the capital recouped per gallon produced is much less than it would be
    for a 5-year production run in a plant of the same size. This would
    lower delivered cost to the DOD.
        The scoring issue relates to whether or not a biofuels long-term
    contract is viewed as an operating lease or as a capital lease. The
    Office of Management and Budget (OMB) scoring is dependent on whether
    an acquisition is characterized as a capital lease or an operating
    lease. If it is characterized as a capital lease, the rules require the
    agency to record up-front in its budget the full cost that the agency
    will incur over the lifetime of the project. Operating leases only
    require upfront budget authority in an amount sufficient to cover the
    contract payments for the first fiscal year during which the contract
    is in effect, plus an amount sufficient to cover any termination
    liability.
        OMB Circular A-11 explicitly states that ``multi-year purchase
    contracts for expendable commodities (e.g., aspirin) will be considered
    to be operating leases.'' A-11, Exhibit ``B'' at 6. A-11 specifically
    identifies aspirin as an example of an expendable commodity; it does
    not otherwise define the term. Advanced biofuels--like aspirin and
    petroleum--are expendable, thereby meeting at least half of the
    definition, but are not easily argued as being a commodity as well by
    common definitions of the term.
        If advanced biofuels are not able to be viewed as an expendable
    commodity, long-term advanced biofuel contracts must be reviewed
    against A-11's operating lease criteria to determine whether they are
    treated as operating or capital leases. OMB Circular No. A-11, Appx.
    ``B'' at 6. The following criteria are among those that distinguish
    operating from capital leases:

             Whether the ownership of the asset is transferred to
            the Government;
             Whether the present value of the minimum contract
            payments over the life of the contract exceeds 90 percent of
            the fair market value of the asset at the inception of the
            contract;
             Whether the term of the contract exceeds 75 percent of
            the economic value of the asset;
             Whether the asset is a general purpose asset or is
            built to a unique specification for the Government;
             Whether there is a private-sector market for the asset

        With respect to the criteria of asset ownership, percentage of fair
    market value of the asset and percentage of economic life of the asset,
    it is likely that long-term biofuel contracts would be characterized as
    capital leases. The contracts would transfer ownership of the asset
    (i.e. the fuel) to the government for the full economic life of the
    asset, and the value of the contract payments would exceed 90 percent
    of the FMV of the fuel.
        The general purpose test and private sector test would appear,
    however, to weigh in favor of defining the biofuels contracts as
    operating leases, provided that the specifications for the advanced
    biofuels purchased by the Navy are not different than those used or
    usable by commercial aviation and ship industries. In other words, if
    the drop-in jet and diesel fuel acquired for, and used by military
    planes and ships are usable in commercial planes and ships, the fuel
    asset should be deemed to be a general purpose asset with a private
    sector application. Both of these determinations would suggest that
    operating lease categorization is appropriate.
        As A-11's operating lease criteria do not provide undivided
    criteria, we do not have sufficient visibility into OMB's methodology
    of prioritizing and weighing operating lease criteria, and are
    therefore unable to predict with certainty whether OMB would ultimately
    categorize long-term biofuel contracts as operating or capital leases.
    Long-term contracts for aspirin would likely fail to meet the asset
    transfer, economic life, and economic value criteria, and yet they are
    reviewed as operating leases. Aspirin, of course, clearly passes the
    general purpose and private-sector market tests. Accordingly, if
    advanced biofuels sufficiently penetrate the private sector fuel
    markets so as to pass the general purpose and private-sector market
    tests, advanced biofuel contracts should also be reviewed by OMB as
    operating leases.

        Senator Shaheen. Thank you.
        Thank you, Madam Chairman.
        Senator McCaskill. Thank you. In consulting with Senator
    Ayotte, we both agree, and I do not know if it is good news or
    bad news that we could stay here all day. I guess it shows that
    we are capable of great nerdiness----[Laughter.]
        --to stay here in the weeds on a lot of different subjects
    that frankly we are both prepared to talk about. But I am going
    to submit the remainder of my questions for the record.
        I particularly am going to be interested in hearing from
    the Air Force about the $900 million pause and why that is not
    being used to address backlog, and instead it is being shifted
    to other places in the budget. That is concerning to me and we
    will have a specific question about that and would ask for some
    detail on that.
        There are some other issues in terms of the cleanups that I
    have questions about on the environmental side, and we will get
    those questions to you. I know that Senator Ayotte has some
    that she would also like to submit for the record.
        We thank all of you for your hard work. We know this is a
    challenging time. We want you to do more and do it better. We
    want you to do it with a lot less and, by the way, with no
    politics while we are all yammering about how you cannot do
    anything to cut anything that is in any of our States. So good
    luck with that. We will continue to push as hard as we know how
    to make sure that every dime is accounted for and every dime is
    being used wisely. We appreciate your time today.
        This hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Claire McCaskill
                         base realignments and closures
        1. Senator McCaskill. Dr. Robyn, the President's budget will
    request two future rounds of Base Realignment and Closure (BRAC), one
    in 2013 and the other in 2015. The most recent round of BRAC has just
    completed and we are awaiting various reports outlining lessons learned
    and quantifying savings. Early indications, however, show that the 2005
    BRAC failed to achieve the cost savings originally forecasted. Also,
    many in Congress believe that, before authorizing new rounds of BRAC,
    we should close excess installations overseas, particularly in Europe.
    To the best of your knowledge, what analysis has been done to justify
    the request for two additional rounds of BRAC?
        Dr. Robyn. The Department has not undertaken an analytical effort
    to justify the President's request for two BRAC rounds because the need
    for BRAC is obvious. The math is straightforward: force structure
    reductions produce excess capacity; excess capacity is a drain on
    resources. Parametric techniques used to analyze various capacity
    measures in 2004 indicated that the Department 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 the
    Department's capacity, we believe we have significant excess capacity,
    and force structure reductions will only exacerbate this condition.
    Furthermore, periodic examinations of our infrastructure allow us to
    adapt it to evolving threats, technologies, and force structure
    changes.
        In any event, the BRAC statute includes a mechanism to verify the
    need for each BRAC round before that round may proceed. The Department
    must first develop a 20-year force structure plan and compile a
    comprehensive installation inventory. Using those, the Department
    prepares a report for Congress in which it must describe the
    infrastructure necessary to support the force structure, identify areas
    of excess capacity, and conduct an economic analysis of the effect of
    closures and realignments to reduce excess capacity. Then, based on all
    of that, the Secretary must certify that BRAC is needed and that it
    will achieve savings--only then is the Secretary authorized to proceed
    with the BRAC round.

        2. Senator McCaskill. Dr. Robyn, has the Department of Defense
    (DOD) quantified or measured in some way the perceived excess capacity
    that would necessitate any future round of BRAC?
        Dr. Robyn. In general, the Department believes that a periodic BRAC
    process is useful. Periodic examinations of our infrastructure allow us
    to adapt it to evolving threats, technologies, and force structure
    changes. Absent a process for closing and realigning bases, the
    Department will be locked in a status quo configuration that does not
    match its evolving force structure, doctrine and technology. 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.
    Therefore, we do not believe there is any particular amount of excess
    capacity that is required to necessitate a future BRAC. That said,
    parametric techniques used to assess various capacity measures in 2004
    indicated that the Department had 24 percent excess capacity overall
    relative to the fiscal year 2009 force structure-based requirements.
    Because BRAC 2005 eliminated only about three percent of the
    Department's capacity, we believe we have significant excess capacity
    and force structure reductions will only exacerbate this condition.
        In any event, the BRAC statute includes a mechanism to verify the
    need for each BRAC round before that round may proceed. The Department
    must first develop a 20-year force structure plan and compile a
    comprehensive installation inventory. Using those, the Department
    prepares a report for Congress in which it must describe the
    infrastructure necessary to support the force structure, identify areas
    of excess capacity, and conduct an economic analysis of the effect of
    closures and realignments to reduce excess capacity. Then, based on all
    of that, the Secretary must certify that BRAC is needed and that it
    will achieve savings--only then is the Secretary authorized to proceed
    with the BRAC round.

        3. Senator McCaskill. Dr. Robyn, in my opening statement I
    referenced some current numbers provided by the Government
    Accountability Office (GAO) on the most recent round of BRAC. In
    essence, costs to implement the most recent round grew by $14.1
    billion, or 53 percent, while 20-year net present value savings have
    shrunken from $36 billion to $9.9 billion, a 73 percent reduction. DOD
    completed the most recent round, the 2005 BRAC, on September 15, 2011--
    6 months ago. It is my understanding that GAO and DOD are still
    capturing lessons learned and have yet to fully analyze any data.
    However, given these initial figures provided by GAO, I find it hard to
    believe that we could characterize the most recent round of BRAC as a
    success. It has cost significantly more money to implement and saved
    far less money than originally estimated. I was struck to learn that
    GAO believes that 77 out of 182 approved BRAC 2005 recommendations,
    about 42 percent, are now not expected to even pay back in the 20-year
    period. Why was DOD so far off in estimating costs and savings from the
    2005 BRAC round?
        Dr. Robyn. The cost of the 2005 round was far more than expected:
    the upfront investment costs ($35.1 billion) exceeded the Department's
    original estimate by fully 67 percent. However, that increase was
    largely due to deliberate decisions by the Department (principally the
    Army) to expand the originally envisioned scope of construction and
    recapitalization--either to address deficiencies in our enduring
    facilities or to expand the capabilities they provide. In one case-
    namely, the reconfiguration of medical facilities in the National
    Capital Region-Congress added requirements that, while meritorious,
    increased the cost of construction and outfitting by $1 billion. In
    sum, BRAC 2005 served as a needed engine of recapitalization for our
    enduring military facilities (military construction (MILCON) accounted
    for 70 percent of BRAC 2005 upfront investment costs in contrast to
    only 33 percent of those costs in prior rounds).
        There are two other significant and related reasons for the
    increase in projected implementation costs. The Department decided to
    delay the implementation of BRAC 2005 because of competing budgetary
    priorities (in prior rounds, the implementation had always occurred
    early in the six-year window). That decision was expensive in and of
    itself because delay adds to the cost of inflation. In addition, delay
    meant that many of the large MILCON contracts were competed in 2007 and
    early 2008, just when construction costs spiked because of the rise in
    construction activity following Hurricane Katrina and because of an
    increase in the global demand for critical construction materials such
    as steel and concrete.
        The net annual recurring savings decreased by a far smaller
    percentage. The original estimate was $4.4 billion while the new
    estimate is $3.9 billion. The decrease is mainly due to lower savings
    in personnel eliminations and overhead reductions.

        4. Senator McCaskill. Dr. Robyn, in light of that performance, is
    there any reason why we should believe any estimates of costs and
    savings that you put forward to justify a new BRAC round at this time?
        Dr. Robyn. Because the focus of the BRAC 2005 round was on
    transforming installations to better support forces--as opposed to
    saving money and space--it is a poor gauge of the savings that the
    Department can achieve through another BRAC round. The prior BRAC
    rounds--which reduced capacity and paid off in 2 to 3 years--represent
    a better gauge of such savings. In those rounds, one-time costs ranged
    from $2.7 billion to $6.6 billion. These costs are essentially the
    investment which produced annual recurring savings of $1 billion to
    $2.7 billion.

                     future environmental planning for guam
        5. Senator McCaskill. Secretary Pfannensteil, it's been well-
    publicized that the United States and Japan are reconsidering certain
    elements of the agreement to move marines off the island of Okinawa.
    Under the current plan, about 8,000 marines would have moved from
    Okinawa to Guam. Now, it appears that the number of marines moving to
    Guam will be closer to 4,700, although it is still not clear how many
    of those marine billets will be assigned permanently to Guam and how
    many will be rotational. What is clear, however, is that the military
    buildup on Guam will be different than what was contemplated in the
    Final Environmental Impact Statement (EIS) that was signed by the Navy
    in September 2010. So, it seems likely that some form of additional
    environmental planning will be required before construction on Guam can
    begin. Based on the ongoing discussions between the United States and
    Japan, and the parameters of what is now being considered for Guam in
    terms of a military buildup to accommodate marines, do you think an
    additional EIS will be necessary--whether it's a new EIS or perhaps a
    supplemental EIS--and what would a notional timeline be for such a
    study?
        Ms. Pfannensteil. Depending on the size of the reduction, a
    reduction in the number of marines relocating to Guam may enable the
    consideration of new sites that were too small or otherwise
    inappropriate for the relocation of 8,000 marines. The Department of
    the Navy would analyze these additional sites from both an operational
    and environmental perspective. Depending again on the size of the
    reduction, this may require a new National Environmental Policy Act
    (NEPA) document such as a Supplemental EIS. We would utilize previous
    study results to the maximum extent possible in order to save time and
    resources. Based on experience, if supplemental NEPA analysis is
    required, it would probably take about 2\1/2\ years to reach a new
    record of decision.

                 air force military construction budget request
        6. Senator McCaskill. Secretary Yonkers, this year's budget request
    from the Air Force contains various MILCON projects valued at $388.2
    million. This is approximately $900 million below historic averages and
    has been described by the Air Force as a deliberate pause in MILCON. It
    is my understanding that the Air National Guard and the Air Force
    Reserves have a combined backlog of MILCON projects valued at
    approximately $830 million. Why did the Air Force decide to take this
    pause and reallocated budget authority instead of addressing this
    backlog?
        Mr. Yonkers. We took a deliberate pause in MILCON to ensure we were
    making the right capital investment decisions while adjusting force
    structure in line with the emerging defense strategy while continuing
    to meet combatant command and New Mission requirements within fiscal
    constraints. The ``deliberate pause'' ensures critical requirements are
    met (e.g. F-35 beddown), prevents unnecessary investment (e.g. C-27
    projects), delays early to need work (e.g. KC-46 beddown), and assumes
    risk in current mission areas.
        All the components carry a backlog in their MILCON program, the ANG
    and Air Force Reserve are not the exception. The Air Force uses Plant
    Replacement Value (PRV) to evaluate allocation of MILCON investment.
    PRV is appropriate to use for evaluating MILCON investment equity
    because it gives credit to the component or major command responsible
    for recapitalizing the facility, regardless of ownership. While the Air
    Force strives to maintain component equity in the budget year,
    generally the highest priorities be they Active, Guard, or Reserve are
    funded while still attempting to support component equity.

                      future cost of environmental cleanup
        7. Senator McCaskill. Dr. Robyn, the DOD environmental restoration
    program is necessary, but expensive--costing about $1.5 billion per
    year. The previous goal was to have remedies in place or responses
    complete at active installations by 2014. The new goal, issued in July
    2011, is to responses complete at 90 percent of sites by the end of
    2018 and 95 percent response complete by the end of 2012. We need to
    continue to keep pressing toward getting these cleanups done as soon as
    practical so we can begin to reduce costs associated with the cleanup
    of the legacy contamination at active and former DOD installations. Do
    you believe we are moving aggressively with the environmental
    restoration program?
        Dr. Robyn. Yes, I do believe we are aggressively moving forward
    with our cleanups. We have already finished cleanup activities at
    25,303 sites out of our total inventory of 34,869 sites and are only
    monitoring. Our new goals now focus on finishing cleanup activities--
    response complete.

        8. Senator McCaskill. Dr. Robyn, what do you see as the funding
    trends?
        Dr. Robyn. We appreciate the strong Congressional support for the
    steady level of funding that is essential to efficiently and
    effectively execute the long-term cleanup process. Between 2014 and
    2016 we expect funding for the installation restoration program
    (hazardous waste cleanup) to ramp down as we finish cleanup activities
    at these sites. Concurrently, we expect to shift that investment to the
    military munitions response program (unexploded ordnance cleanup).
    After 2021, we expect 95 percent or more of our sites will have
    finished cleanup activities. We will need to monitor many of these
    sites to ensure they continue to protect human health and the
    environment. Costs for these monitoring activities will be
    significantly lower than today's funding levels. However, the remaining
    5 percent of the sites will be extremely complex and continue to
    require steady investments.

        9. Senator McCaskill. Dr. Robyn, in light of these new goals, when
    do you believe we can reasonably expect to see the cost of the cleanup
    program begin to come down?
        Dr. Robyn. The DOD components are planning to effectively meet
    DOD's new goals of achieving response complete (finish cleanup
    activities) at 90 percent and 95 percent of hazardous waste and
    munitions response sites at active installations, and hazardous waste
    site at Formerly Used Defense Site properties in fiscal years 2018 and
    2021, respectively. While uncertainties in cost estimate exist,
    particularly with complex cleanup sites, we anticipate that the total
    cleanup cost will decrease as we finish cleanup activities.
        Additionally, DOD has developed advanced technologies to detect and
    identify unexploded ordnance, which we anticipate will further reduce
    program costs. Through working closely with our regulatory partners, we
    hope to begin adopting the new technology in fiscal year 2015.

                               munitions cleanup
        10. Senator McCaskill. Dr. Robyn, there are some promising
    technologies that have the potential to significantly reduce the time
    and cost associated with detection and remediation of unexploded
    ordnance. What is the status of this technology, and what is your
    expectation for when, and if, this technology will be available for DOD
    munitions response?
        Dr. Robyn. These technologies are undergoing testing in
    coordination with Federal and State regulators under the Environmental
    Security Technology Certification Program (ESTCP). The ESTCP
    demonstration program is scheduled to run through fiscal year 2015 with
    the goal of understanding the range of sites to which these
    technologies are applicable. As we progress through this program,
    participation will shift from the developers of the technology to
    potential users in order to develop a contractor base trained to
    utilize these technology advances. At the same time, the regulatory
    community is preparing for their adoption. In parallel with these
    demonstrations, initial production implementation of these technologies
    is beginning.

                       cleanup at tyndall air force base
        11. Senator McCaskill. Secretary Yonkers, environmental remediation
    at Tyndall Air Force Base (AFB) in Florida is an example of a cleanup
    effort that needs to move forward. Tyndall has been on the National
    Priority List since 1997. However, while some of the contaminated areas
    on the base have been cleaned up, negotiations between the
    Environmental Protection Agency (EPA), DOD, and the Air Force have been
    bogged down over enforcement issues in the Federal facilities
    agreement. As a result, Tyndall is one of just two military
    installations for which a Federal facility agreement (FFA) has not yet
    been signed. What is the holdup at Tyndall?
        Mr. Yonkers. The Air Force is ready and willing to continue
    negotiations with EPA to reach agreement on a mutually acceptable
    interagency agreement, as required by the Comprehensive Environmental
    Response, Compensation and Liability Act, for Tyndall AFB. Until an
    agreement is reached, the Air Force is committed to continue the
    cleanup at Tyndall using the procedures in the DOD/EPA FFA template.
    Since the Air Force does not question EPA's oversight and enforcement
    authorities, those given by law or those contained within the FFA
    template, Tyndall will continue to request EPA review, comment and
    consultation on remedy selection, and the documents specified in the
    FFA template. The Air Force is preparing a letter to EPA which will
    provide a clear explanation of the outstanding issues with EPA Region
    4's latest draft FFA proposed for Tyndall AFB. Once completed, we will
    provide the SASC a copy of the Air Force letter.

        12. Senator McCaskill. Secretary Yonkers, what needs to be done to
    settle this matter and to keep the cleanup effort moving?
        Mr. Yonkers. The Air Force is ready and willing to continue
    negotiations with EPA to reach agreement on a mutually acceptable
    interagency agreement, as required by the Comprehensive Environmental
    Response, Compensation and Liability Act, for Tyndall AFB. Until an
    agreement is reached, the Air Force is committed to continue the
    cleanup at Tyndall using the procedures in the DOD/EPA FFA template.
    Since the Air Force does not question EPA's oversight and enforcement
    authorities, those given by law or those contained within the FFA
    template, Tyndall will continue to request EPA review, comment and
    consultation on remedy selection and the documents specified in the FFA
    template.

                        improved contracting mechanisms
        13. Senator McCaskill. Secretary Yonkers, you testified that the
    Air Force is reevaluating contracting mechanisms in the areas of MILCON
    and environmental cleanup and expects to achieve savings of up to 5
    percent in MILCON and as much as 20 percent in environmental cleanup.
    Could you please describe the improved contracting mechanisms that you
    have adopted, or plan to adopt, to achieve such savings?
        Mr. Yonkers. The Air Force has several efforts underway to optimize
    life cycle costs of facilities acquired through MILCON.
        Design-Build contracts are being developed with increased
    performance-based specifications which allow use of market-driven
    structural systems and materials. This provides flexibility in design
    of building systems that do not impact the functionality of facilities
    and allows contractors to propose more cost effective design solutions,
    thereby allowing lower proposal costs.
        We are also instituting a portfolio management approach to MILCON
    acquisition in order to optimize project delivery methods through
    strategies such as increased proposal periods, 2-step Requests for
    Proposals (RFPs) where appropriate, and full and open competition where
    more advantageous.
        Additionally, standard designs and standard RFPs are being
    developed to consistently incorporate facility requirements and best
    practices, and reduce design efforts for future projects. Standard
    designs and RFPs will be utilized in an adapt-build acquisition
    strategy that will allow reduced design times and allow incorporation
    of lessons learned to reduce modifications during construction.
    Standard designs for five facility types are complete and eight
    facility types are in development.
        We have also instituted a more rigorous change order management
    policy that provides increased scrutiny and control of user-requested
    changes, as well as required changes, emphasizing strict control of
    cost growth.
        Regarding environmental cleanup, typically in the past at a given
    installation we have been awarding multiple time-and-material contracts
    or cost-plus-fee contracts, depending on the type of cleanup site and
    its phase within the Comprehensive Environmental Response, Compensation
    and Liability Act (CERCLA) process, with the goal to reach the next
    phase within that multi-phase CERCLA process. Under our new strategy we
    are now awarding a single performance-based, firm-fixed-price contract
    that encompasses all cleanup sites at a given installation with the
    goal of reducing our long-term life-cycle cost and taking us as close
    to site completion as soon as possible within the period of performance
    of the contract. By using a performance-based contract that is awarded
    based on who can meet Air Force and regulatory requirements to get us
    to site completion the soonest and at the lowest cost, we incentivize
    contractors to find efficiencies through innovation and effective
    management practices. In addition, by including all cleanup sites at a
    given installation into one contract we aggregate risks associated with
    individual sites into a broader risk pool and create economies of scale
    in both time and money, thus improving our expected savings.

                 encroachment on training in the united states
        14. Senator McCaskill. Dr. Robyn, Secretary Hammack, Secretary
    Pfannensteil, and Secretary Yonkers, all of the Military Services have
    to deal with constraints on training and training ranges around the
    country. These constraints, often referred to broadly as encroachment,
    take various forms, but have the general effect of limiting the ability
    of our military forces to train and prepare for military missions.
    Certain programs, like the Readiness and Environment Protection
    Initiative and the Army's Compatible Use Buffer Initiative are designed
    to help preserve training capacity while also protecting the
    environment. Nonetheless, the challenges of encroachment confront each
    of the Services. Could you please identify the biggest encroachment
    challenges they are currently facing?
        Dr. Robyn. DOD has a robust process in place to determine and
    manage encroachment issues. Though the issues vary by Service and even
    by installation, there are a number identified by all that need serious
    attention as DOD goes forward. The Sustainable Ranges Initiative (SRI)
    is an Integrated Product Team (IPT) composed of leadership from
    Installations and Environment, Readiness, and Test and Evaluation at
    the Office of the Secretary of Defense (OSD) level, as well as from
    each of the Services. The SRI IPT meets monthly at the senior staff
    level to address a wide variety of issues, today; there are five
    serious and ongoing encroachment issues before the SRI Team:

        (1)  Development near airfields, gunnery ranges, tank ranges,
    maneuver areas, outlying landing fields and under low level flight
    routes;
        (2)  Protection of threatened and endangered species and cultural
    artifacts on DOD training and testing ranges or operating areas, which
    can lead to modified use of lands;
        (3)  Projected future loss of critical spectrum--this is the major
    issue for the test community, but also a serious and increasing threat
    to the training community;
        (4)  Lack of dedicated airspace and the need for different types of
    airspace to support Unmanned Aircraft System training;
        (5)  Sitting of renewable or other energy projects on or near DOD
    training and testing areas so that they do not interfere with the
    military mission. In light of the evolving defense strategy and
    tightening budget environment DOD faces, it is even more important that
    we meet these encroachment challenges in order to sustain our ability
    to test and train effectively and efficiently and preserve the
    readiness of our Armed Forces.

        Ms. Hammack. Encroachment remains a challenge for the Army. The
    capacity of and accessibility of Army lands is decreasing while current
    and projected requirements for land exceed our training land holdings.
    There are significant encroachment challenges that must continue to be
    addressed in order to sustain training on Army land. The Army's top
    three encroachment challenges are: threatened and endangered species;
    cultural resources--specifically archeological sites; and air space.
        For threatened and endangered species and archeological sites,
    restrictions result from legal compliance responsibilities associated
    with the Endangered Species Act and the National Historic Preservation
    Act (NHPA). The Army has 213 threatened and endangered species and over
    80,000 archeological sites on our installations. Compliance with the
    Endangered Species Act and NHPA has resulted in managing military
    training areas for species conservation and archeological site
    preservation in addition to military training requirements. The
    environmental restrictions resulting from Endangered Species Act and
    NHPA compliance translate to overall reduced accessibility to training
    land. Such restrictions include; restricted time and duration of
    training events, restricted use or off-limits status placed on training
    lands and ranges; restricted or eliminated use of certain weapons,
    ammunition, pyrotechnics, or smoke.
        Air space challenges continue to emerge. The increased development
    and siting of wind farms are presenting issues for Army Airfields, as
    they can affect air corridors, low level maneuver areas, and
    surveillance radars. In some localities power companies are seeking to
    construct high-tension electrical wires across Army installation ranges
    which can affect training routes and range utilization. Additionally,
    home-station Unmanned Aircraft System accommodation is becoming a
    challenge as many Army Airfields are surrounded by densely populated
    areas which complicate FAA Certificate of Authorization approval. This
    is a critical concern, due to the fact that large Army Unmanned
    Aircraft System platforms must base out of Army Airfields due to runway
    length requirements. Installation airspace will be used to a much
    higher degree for returning manned and unmanned platforms. Unmanned
    Aircraft System platforms are being fielded in Brigade Combat Teams and
    at the company level. Commanders will seek to integrate these platforms
    into Force-on-Force and Force-on-Target scenarios, significantly
    increasing their employment at home-station and increasing the need for
    more frequent use of higher altitude restricted airspace.
        Ms. Pfannensteil. The Navy faces a variety of encroachment or
    compatible development pressures. Some of the larger challenges include
    the development of renewable energy systems, frequency loss within the
    electromagnetic spectrum, and proliferation of Ocean Observing Systems
    (OOS).

             Wind energy development continues to pose challenges
            to training, testing, and readiness ashore and in the maritime
            domain. Wind turbines have the potential to cause interference
            with air traffic control and navigational aid systems, or
            become a physical obstruction hazard for flight operations,
            which can adversely impact pilot safety and the quality of live
            instrument flight training. Offshore wind, oil, and gas
            development can interfere with naval freedom to maneuver,
            tactical weapons employment, and crew certification.
             The reallocation from primary Federal use to non-
            Federal use of radio frequency spectrum will likely impact
            Navy's testing, training, and operations on a global basis, as
            additional frequencies are made available to commercial
            wireless broadband developers. The reallocation of Federal
            radio frequency may require relocation, retuning, and in some
            cases, redesign of military systems which can disrupt current
            and planned capabilities.
             Proliferation of OOS on or adjacent to ranges and
            operating areas has resulted in unavoidable risk to Navy
            national security interests. Navy training and readiness is
            impacted due to longer training cycles and increased cost to
            mitigate the effects of OOS capabilities.

        Mr. Yonkers. The Air Force currently has three main areas of
    concern with respect to encroachment. The first is ensuring use of
    radio frequency (RF) spectrum for communications, navigation and other
    critical purposes are unhindered. A second concern is the balancing of
    Air Force mission compatibility with renewable energy efforts. Solar
    towers and wind turbines have the potential to introduce multiple
    compatibility considerations including physical obstruction, visual
    interference, and light emissions. In addition, such structures can
    also create Electromagnetic Interference (EMI) which disrupt ground and
    airborne radar. A third concern falls in the category of traditional
    compatibility issues at our airfields where incompatible development in
    our Clear Zones, Accident Potential Zones, and within noise contours
    can negatively affect public health and safety.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                          base realignment and closure
        15. Senator Ayotte. Dr. Robyn, DOD has asked Congress this year for
    the authorization to conduct two rounds of BRAC in 2013 and 2015. In
    your prepared remarks you state, ``force reductions produce excess
    capacity, only through BRAC can we align our infrastructure with our
    defense strategy.'' As you know, DOD has clearly stated that force
    reductions will be implemented with the idea of reversibility, which
    the Secretary of Defense has stated allows forces to ``surge,
    regenerate, and quickly mobilize capabilities needed for any
    contingency.'' How will DOD be able to quickly surge, regenerate, and
    mobilize without the capacity in facilities and infrastructure to
    absorb the additional forces?
        Dr. Robyn. 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 the
    Department 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.

        16. Senator Ayotte. Dr. Robyn, is reversibility defined by a series
    of excess facility requirements?
        Dr. Robyn. Yes. In essence, ``reversibility'' concerns whether,
    after closing installations under a BRAC round, the Department still
    has the flexibility to adapt to changing circumstances--particularly
    surge requirements that can arise from contingencies, mobilizations and
    extended changes in force levels.
        The Department develops closure and realignment recommendations in
    a manner that ensures it retains the flexibility to adapt to changing
    circumstances. Specifically, the Department uses a 20-year force
    structure plan and has specific selection criteria that capture the
    concept of the additional capacity it must retain to meet ``surge''
    requirements. Furthermore, the Department retains 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.

        17. Senator Ayotte. Dr. Robyn, you recently testified that, ``if
    Congress does not authorize additional BRAC rounds, DOD will be forced
    to use its authority to begin to close and realign bases.'' Is it DOD's
    position that you will attempt to close military bases even if Congress
    does not believe it is in the best interest for national security at
    this time?
        Dr. Robyn. The United States is at a strategic turning point after
    a decade of war. The global security environment presents an
    increasingly complex set of challenges and opportunities. In his
    testimony before the House Armed Services Committee to support the
    defense budget request, the Secretary outlined new strategic guidance.
    With changes in strategy come changes-in this case reductions-in-force
    structure. Simply stated, the cuts in force structure that we are
    implementing must be accompanied by cuts in supporting infrastructure,
    including military bases. Absent a process for closing and realigning
    bases, 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.
        Absent the requested BRAC authority, we will be forced to use our
    existing authorities to begin the realignment and closure process
    within the framework of the strategic guidance and our force structure.
    One reason we want to avoid that approach is that, if it acts outside
    of the BRAC process, DOD is severely constrained in what it can do to
    help local communities.

        18. Senator Ayotte. Dr. Robyn, do you have a list of bases that you
    want to close?
        Dr. Robyn. No. BRAC is a meticulous statutory process that does not
    have a predetermined outcome. In accordance with the BRAC process, DOD
    will consider all installations within ``the 50 States, the District of
    Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands,
    American Samoa, and any other commonwealth, territory, or possession of
    the United States'' equally for closure or realignment. Using statutory
    selection criteria that emphasize military value and a force structure
    plan looking out 20 years, DOD will complete a comprehensive review
    before it determines which installations should be realigned or closed.
    The list will then be reviewed by an independent commission that can
    (and has in the past) add to, delete from, or otherwise change DOD's
    recommendations. The commission then sends its recommendations to the
    President who must accept or reject them on an all or nothing basis. If
    approved, the President sends the commission's recommendations to
    Congress, which has 45 days to enact a joint resolution of disapproval
    (on an all or nothing basis). Absent such a resolution, DOD is bound by
    the BRAC Act to close and realign all installations as recommended by
    the commission. It is only after the completion of this thorough
    process that DOD will have a list of BRAC closures and realignments.

        19. Senator Ayotte. Dr. Robyn, what analysis has DOD conducted?
        Dr. Robyn. The Department has not undertaken an analytical effort
    to justify the President's request for two BRAC rounds because the need
    for BRAC is obvious. The math is straightforward: force structure
    reductions produce excess capacity; excess capacity is a drain on
    resources. Parametric techniques used to analyze various capacity
    measures in 2004 indicated that the Department 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 the
    Department's capacity, we believe we have significant excess capacity
    and force structure reductions will only exacerbate this condition.
    Furthermore, periodic examinations of our infrastructure allow us to
    adapt it to evolving threats, technologies and force structure changes.
        In any event, the BRAC statute includes a mechanism to verify the
    need for each BRAC round before that round may proceed. The Department
    must first develop a 20-year force structure plan and compile a
    comprehensive installation inventory. Using those documents, the
    Department prepares a report for Congress in which it must describe the
    infrastructure necessary to support the force structure, identify areas
    of excess capacity, and conduct an economic analysis of the effect of
    closures and realignments to reduce excess capacity. Then, based on all
    of that, the Secretary must certify that BRAC is needed and that it
    will achieve savings--only then is the Secretary authorized to proceed
    with the BRAC round.

                       kc-46a air refueling tanker basing
        20. Senator Ayotte. Secretary Yonkers, the Air Force is in the
    process of developing the criteria for the selection of bases to
    station the KC-46A air refueling tanker. As I discussed with the
    Secretary and Chief of Staff of the Air Force, as well as with General
    Johns of Air Mobility Command, it is important that the KC-46A basing
    decisions are made in an objective and transparent manner. The decision
    must be based on the merits of the many variables associated with an
    installation and the unit. This decision must be guided by objective
    metrics that will standup to the inevitable scrutiny that will follow
    the Air Force's KC-46A decisions. From an installations perspective,
    can you describe what priorities you are looking for with regard to
    tanker basing?
        Mr. Yonkers. The Air Force is currently developing criteria for the
    KC-46A and plans to brief the criteria to interested congressional
    staffers in the spring of 2012. While the criteria are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.

        21. Senator Ayotte. Secretary Yonkers, addressing installation
    environmental concerns can be a costly endeavor over the long-term. To
    what degree will the basing criteria for the KC-46A take into account
    environmental considerations?
        Mr. Yonkers. The Air Force is currently developing criteria for the
    KC-46A and plans to brief the criteria to interested Congressional
    staffers in the spring of 2012. While the criteria are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.
    Typically, the environmental criteria assess air quality, existing
    environmental issues, noise, encroachment, land use, et cetera.

        22. Senator Ayotte. Secretary Yonkers, will a lack of environmental
    concerns for a prospective KC-46A base be taken into account?
        Mr. Yonkers. While the basing criteria for the KC-46A are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.
    Typically, the environmental criteria assess air quality, existing
    environmental issues, noise, encroachment, land use, et cetera.

        23. Senator Ayotte. Secretary Yonkers, some potential candidates
    for the KC-46A have an existing KC-135 simulator which saves money and
    reduces environmental impact. Some of these existing KC-135 simulators
    could be easily converted to a KC-46A simulator at a much lower cost
    than building a new KC-46A simulator facility. To what extent will the
    presence of an existing simulator facility on the installation be taken
    into account in the basing criteria?
        Mr. Yonkers. The Air Force is currently developing criteria for the
    KC-46A and plans to brief the criteria to interested congressional
    staffers in the spring of 2012. While the criteria are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.

        24. Senator Ayotte. Secretary Yonkers, clearly, lengthening
    runways, expanding parking ramps, or building jet fuel storage at some
    potential bases would require the investment of millions of taxpayers'
    dollars. To what extent will the length of the existing runway, size of
    the existing aircraft parking ramp, or presence of large existing jet
    fuel storage be taken into account in the basing criteria?
        Mr. Yonkers. The Air Force is currently developing criteria for the
    KC-46A and plans to brief the criteria to interested congressional
    staffers in the spring of 2012. While the criteria are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.
    Installation capacity generally considers items such as runways and
    ramp space.

        25. Senator Ayotte. Secretary Yonkers, given the cargo capacity of
    the KC-46A, to what extent will the basing criteria consider an
    installation's proximity to deep water ports or major interstate
    highways?
        Mr. Yonkers. The Air Force is currently developing criteria for the
    KC-46A and plans to brief the criteria to interested Congressional
    staffers in the spring of 2012. While the criteria are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.

        26. Senator Ayotte. Secretary Yonkers, to what extent will the
    basing criteria take into account an installations proximity to other
    military installations that would provide cost-effective joint basing
    and efficiency opportunities?
        Mr. Yonkers. The Air Force is currently developing criteria for the
    KC-46A and plans to brief the criteria to interested congressional
    staffers in the spring of 2012. While the criteria are not yet
    finalized, they will assess areas such as mission requirements,
    installation capacity, cost, and environmental considerations.
        The KC-46A Fleet Basing Strategy dictates that associations exist
    at all operational locations. The Formal Training Unit (FTU) classic
    association will be worked through the Total Force Enterprise process.

                        u.s. marines on guam and okinawa
        27. Senator Ayotte. Dr. Robyn, 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
    are now negotiating changes to the agreement regarding moving marines
    off Okinawa, including delinking land returns from progress on the
    construction of a replacement facility for Marine Corps aviation
    resources stationed on Okinawa. Since 8,700 marines and their families
    will still be leaving Okinawa, where will they go?
        Dr. Robyn. Approximately 9,000 marines will relocate from Okinawa
    to Guam, Hawaii, Australia, and CONUS. Of these, roughly 5,400 are
    permanent personnel, not all of whom have dependents on Okinawa. The
    remaining 3,600 are rotational personnel who deployed to Okinawa under
    the Unit Deployment Program and in the future will deploy to Guam or
    Australia instead.

        28. Senator Ayotte. Dr. Robyn, the plans call for mostly rotating
    forces to Australia or Guam. How many rotational forces will be
    deployed to Guam and where will they come from?
        Dr. Robyn. Approximately two thirds of the nearly 5,000 marines
    that will occupy future Marine Corps Base Guam will be rotational
    forces deploying to Guam under the Marine Corps' Unit Deployment
    Program. They will deploy to Guam from bases in CONUS and Hawaii.

        29. Senator Ayotte. Dr. Robyn, how much will it cost to build
    facilities at the new locations announced by DOD?
        Dr. Robyn. The Department has developed a preliminary rough order
    of magnitude estimate as reflected in the chart below. This estimate is
    based on a per capita methodology at all locations other than Guam. The
    estimate for Guam is based on an actual project list. A refined cost
    estimate of budget level quality will require detailed facility
    planning, base master planning, determination of potential host nation
    support from the government of Australia and completion of
    environmental studies at all geographical locations.

                                  AFFORDABILITY TARGET (CONSTANT YEAR-FISCAL YEAR 2012)
                                                [In billions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                  Geo-Location                   Guam       Hawaii     Australia     Japan       CONUS       Total
    ----------------------------------------------------------------------------------------------------------------
    MILCON..................................     6.8 \1\         2.1         1.3         0.0         0.3        10.5
    Non-MILCON..............................         1.8         0.4         0.3     0.6 \2\         0.1         3.2
                                             -----------------------------------------------------------------------
      Total.................................         8.6         2.5         1.6         0.6         0.4       13.7
    ----------------------------------------------------------------------------------------------------------------
    \1\ Guam MILCON based on preliminary facility list at Finegayan cantonment. Potential savings from alternative
      DOD sites cannot be quantified at present.
    \2\ Japan preliminary non-MILCON estimates include U.S. Government O&M/Procurement for Iwakuni and FRF AIP
      execution

             U.S. contribution is $10.6 billion.
             Australia's contribution is undetermined.
             GOJ contribution is $3.1 billion.
             Non-MILCON costs include O&M, procurement
            requirements, and Guam Integrated Civil-Military Utilities.

        30. Senator Ayotte. Dr. Robyn, when will we get the updated plan
    for that facility construction?
        Dr. Robyn. The Department continues to work on the master plan for
    the relocation of marines from Okinawa to Guam now that we have
    negotiated a revised laydown with the Government of Japan (GOJ). We are
    now providing to the committees detailed estimates but budget level
    quality data will require detailed facility planning, base master
    planning, determination of potential host nation support from the
    Government of Australia and completion of environmental studies at all
    geographical locations.

        31. Senator Ayotte. Dr. Robyn, will DOD abide by the requirements
    in section 2207 of the National Defense Authorization Act (NDAA) for
    Fiscal Year 2012?
        Dr. Robyn. Yes, the Department will abide by the requirements in
    section 2207 of the NDAA for Fiscal Year 2012.

                     u.s. marine corps aviation on okinawa
        32. Senator Ayotte. Dr. Robyn, you write in your opening statement
    regarding Marine Corps aviation operations on Okinawa that, ``we remain
    committed to the construction of a replacement facility for Marine
    Corps Air Station Futenma as the only viable way forward. We believe
    the two sides must invest in the Futenma facility in the near-term, to
    ensure both safety and combat readiness.'' Since we've been trying to
    get a new base for the past 20 years, how is the announcement to
    separate the construction of a replacement facility from other moves on
    Okinawa considered a continued commitment?
        Dr. Robyn. Both the U.S. and GOJ defense representatives have. on
    numerous occasions, reconfirmed their view that the Futenma Replacement
    Facility (FRF) at Camp Schwab remains the only viable solution to the
    relocation of Marine Corps Air Station Futenma. In 2006, both sides
    agreed to link progress on the FRF to the movement of marines to Guam
    and the resultant return of land on Okinawa to the GOJ; the thought
    being this would provide positive incentives to move forward on both
    projects. However, the moves to Guam and the FRF have both proven to be
    difficult to implement, and the linkage has not provided the expected
    positive incentives, rather it was beginning to cause both projects to
    stall. In delinking these two actions. we remain committed to both, but
    they will be allowed to move forward separately. The GOJ is responsible
    for constructing the FRF, and understands that the U.S. Marine Corps
    will continue to operate out of Futenma until such a time as the FRF is
    operational.

        33. Senator Ayotte. Dr. Robyn, if we're committed to a replacement
    facility, why are we advocating for continued investment in a facility
    we all agree we are going to close?
        Dr. Robyn. Under a best case scenario, the FRF will not be
    operational for nearly 10 years. Since necessary maintenance and
    recapitalization of Marine Corps Air Station (MCAS) Futenma has largely
    been deferred since the original agreement in 1996, there are certain
    investments required to allow us to continue to operate safely with an
    acceptable quality of life at MCAS Futenma for the near future.

        34. Senator Ayotte. Dr. Robyn, are you proposing to use U.S.
    taxpayers' funds to invest in a facility to be closed?
        Dr. Robyn. Only for such repairs, refurbishments, and minor MILCON
    projects necessary to sustain safe operations and quality of life at
    MCAS Futenma for the near future.

        35. Senator Ayotte. Dr. Robyn, when do you believe the Governor of
    Okinawa will agree to the construction of a replacement facility?
        Dr. Robyn. The GOJ will only be able to submit the landfill permit
    request to the Governor of Okinawa after they have responded to the
    points he recently raised in the environmental reports. I understand
    that this is not likely to occur until the latter part of the year, but
    it is solely under the control of the GOJ in consultation with the
    Governor.

               funding non-dod requirements in the defense budget
        36. Senator Ayotte. Dr. Robyn, there is a proliferation of requests
    in this budget to spend DOD funds on programs that have not
    historically been the responsibility of DOD or a core mission of the
    military. Items like: $51 million to construct, renovate, repair, or
    expand schools that are owned and operated by local school districts;
    $106.4 million for civilian water and wastewater infrastructure capital
    improvements on Guam; and $33 million to construct regional public
    health laboratories and mental health facilities to serve local
    civilian beneficiaries with no military association. In addition, the
    Secretary of the Navy recently committed $170 million to spark
    development of the commercial biofuels industry. At the same time, the
    administration proposes to cut eight Army brigades and their enablers,
    over 120,000 military personnel, and numerous Air Force squadrons, all
    of which increase risk for our military forces in order to find savings
    within a constrained discretionary budget. When families or small
    businesses have a tight budget, they must establish priorities and make
    tough decisions about what they can afford and what they cannot afford.
    It should be the same way with the Federal Government and with DOD.
    While some of the initiatives I listed could be worthwhile, I think it
    is difficult to argue, for example, that we should be spending $170
    million on biofuels when we are slashing the size of our ground forces
    to save money. Why are these requests included in the DOD budget
    request in a year when the administration has cut the defense top line
    by $27 billion from last year?
        Dr. Robyn. The fiscal year 2013 funding request for Guam is part of
    DOD's share of the improvements needed to support the impact of the
    MILCON and force realignment program on the Territory. The Navy's
    ``Guam and Commonwealth of the Northern Marianas Islands Military
    Relocation Final Environmental Impact Statement'' acknowledges the
    direct, indirect, and induced impact the military build-up will have on
    Guam's social services including educational, medical, and artifact
    preservation facilities due to the added DOD military and civilian
    population demand.
        With respect to the $51 million request for schools, while the
    fiscal year 2011 and 2012 funding will address the most pressing needs
    as DOD works its way down the Priority List of capacity and facility
    condition deficiencies of public schools located on military
    installations, there are additional public schools on military
    installations with serious deficiencies that still must be addressed.
    While DOD does not own these schools, we do arguably have a vested
    interest in them because the respective student bodies are
    predominantly military-connected children.

        37. Senator Ayotte. Dr. Robyn, given the uncertain status of forces
    to be assigned or rotated to Guam, why is DOD requesting $139.4 million
    for improvements to civilian facilities and infrastructure on Guam?
        Dr. Robyn. This funding is part of the Department's share of the
    improvements needed to support the impact of the MILCON and force
    realignment program on Guam. The Navy's ``Guam and Commonwealth of the
    Northern Marianas Islands Military Relocation Final Environmental
    Impact Statement'' acknowledges the direct, indirect, and induced
    impact the military build-up will have on Guam's social services
    including educational, medical, and artifact preservation facilities
    due to the added DOD military and civilian population demand.

        38. Senator Ayotte. Dr. Robyn, who determined that they are
    priorities for our national security?
        Dr. Robyn. The fiscal year 2013 President's budget is based on an
    intensive review to establish defense priorities and to ensure adequate
    resource levels. This was achieved based on strategic guidance from the
    President, and reflects the recommendations of the DOD senior military
    and civilian leadership. A balanced approach evolved, which
    incorporates all areas from potential savings, to force structure
    enhancements, modifications and adjustments.

                     air force construction plans for guam
        39. Senator Ayotte. Secretary Yonkers, the Air Force has a plan to
    rotate global strike assets at Anderson Air Base. This plan calls for
    over $2.9 billion in new construction mostly on the north side of the
    runways to build hangars and squadron facilities that will be empty
    between deployments. Coincidentally, the Marine Corps is planning to
    build the same types of facilities right next door for Marine Corps
    aircraft being restationed from Okinawa. Considering the fact that the
    Air Force MILCON request for fiscal year 2013 is the lowest in over 25
    years, what is the status of this plan?
        Mr. Yonkers. The Air Force has been rotating global strike assets
    to Joint Region Marianas-Andersen for roughly 10 years, and will
    continue to do so in the future, although due to lack of dedicated
    facilities, work-arounds have been required. Independent of the Marine
    Corps Pacific laydown and despite the deliberate pause in MILCON in
    fiscal year 2013, the Air Force still requires infrastructure to
    support these assets at Andersen. While there may be some gaps in the
    Air Expeditionary Force rotation, there is a near-continuous deployment
    presence at Andersen. Marine facilities are being constructed to meet
    Marine requirements, and are not redundant to Air Force requirements,
    and vice-versa.
        Regarding the status of the Air Force plan, all facilities
    requested to date are necessary to operate from Andersen for the
    foreseeable future. But the Air Force is evaluating the need to harden
    facilities and to what level of protection, as there are vertical
    facilities that must be hardened, and the Air Force is taking steps
    within the Future Years Defense Plan (FYDP) to do this. The $2.9
    billion figure you reference is only an estimate at this point in time.

        40. Senator Ayotte. Secretary Yonkers, is it fully funded in the
    Air Force's 5-year spending plan?
        Mr. Yonkers. No. The Guam Strike program is an important enduring
    requirement, but in fiscal year 2013, we took a deliberate pause in
    MILCON and absorbed a large reduction in the overall MILCON program
    across the FYDP. Frankly, depending on the ultimate number of
    facilities constructed at Guam and the level of hardening required, the
    Guam Strike program could potentially absorb a very large portion of
    the FYDP. For the short term, the Air Force has placed $254 million in
    the FYDP against Guam Strike in fiscal year 2014 and fiscal year 2015,
    and will adjust this amount in the future, as necessary.

        41. Senator Ayotte. Secretary Yonkers, is this an example of
    wasteful duplication?
        Mr. Yonkers. No sir, not in the least. Marine construction is to
    meet Marine aircraft requirements, and the Air Force construction is to
    meet Air Force requirements, and neither service is building
    ``surplus'' space. Additionally, the Air Force and Marine aircraft
    infrastructure requirements are different. The Air Force has a mix of
    fighters, tankers, and bombers, while the marines will generally have a
    mix of fighters, helicopters, and MV-22 Ospreys. Marine facilities will
    not be sized and nor the pavements stressed to handle Air Force
    aircraft, nor should they be.

        42. Senator Ayotte. Secretary Yonkers, have the Air Force and
    Marine Corps explored the possibility of saving money by developing a
    joint facility at Anderson Air Base?
        Mr. Yonkers. We looked at the possibility of joint construction and
    shared infrastructure whenever it made sense. For example, the
    electrical, water, and sewer infrastructure for the North Ramp were
    sized to handle both Service's requirements. However, the Air Force and
    Marine facility requirements are service specific, and each service's
    construction program is geared to handle a specific number of different
    aircraft . . . no more, no less. But we will continue to be on the
    lookout for opportunities to save money wherever we can, be it within
    the Air Force program, or through joint efforts with the marines.

        43. Senator Ayotte. Secretary Yonkers, does the Air Force have a
    plan for strategic lift at Anderson Air Base to address the needs of
    Marine Corps forces coming to Guam, in addition to Air Force
    requirements?
        Mr. Yonkers. The Air Force will provide strategic lift of Marine
    Corps forces at Andersen AFB through the established priority-based
    system managed by Air Mobility Command as the air component to U.S.
    Transportation Command. Peace-time movements of forces will be
    scheduled and paid for by the Marine Corps per business rules
    established in the Transportation Working Capital Fund. Contingency
    scheduling will be in accordance with Time-Phased Force Deployment
    Document associated with the contingency or the Combatant Command's
    Request for Forces.

               funding for historical requirements on u.s. bases
        44. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannensteil, and Secretary Yonkers, the NHPA of 1966 requires all
    Federal entities to maintain all buildings that are on, or eligible for
    inclusion on, the National Register of Historic Places. DOD must ensure
    that repairs, renovations, or alterations to historic military
    facilities comply with requirements imposed by local and State historic
    preservation offices. This can result in higher than average costs,
    which detract from funding for other critical facility sustainment and
    repair requirements. The Military Services have established a
    monumental adjustment factor that requires a facility installation to
    have most of eight characteristics to qualify for funding. But in the
    case of the Portsmouth Naval Shipyard, as with most older bases with
    multiple historic facilities, about 25 percent of the buildings on or
    eligible for the registry meet the criteria, although most of these
    historic facilities are used for critical shipyard operations. Should
    installations have the resources to comply with the laws to sustain
    historic facilities without having to sacrifice other critical
    facilities projects?
        Dr. Robyn. The proper maintenance of historic properties does not
    need to sacrifice other critical facilities projects. DOD reviews
    annually its maintenance requirements in light of other important
    priorities and the degree of risk that is acceptable to ensure missions
    are not jeopardized.
        Ms. Hammack. Maintaining historic properties does not have to be at
    the expense of other critical facilities projects. The Army continually
    reviews all its maintenance requirements to determine the degree of
    risk that is acceptable to ensure missions are not jeopardized.
        Ms. Pfannensteil. The proper maintenance of historic properties
    does not need to sacrifice other critical facilities projects. However,
    the Navy annually reviews its maintenance requirements in light of
    other important priorities and the degree of risk that is acceptable to
    ensure missions are not jeopardized.
        Mr. Yonkers. The proper maintenance of historic properties does not
    need to sacrifice other critical facilities projects. However, the Air
    Force reviews annually its maintenance requirements in light of other
    important priorities and the degree of risk that is acceptable to
    ensure missions are not jeopardized.

        45. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannensteil, and Secretary Yonkers, why do the criteria for enhanced
    facility sustainment funding not allow full funding to meet this
    Federal mandate?
        Dr. Robyn. We assume that ``enhanced facility sustainment funding''
    refers to the ``monumental architecture'' premium within the DOD
    Facilities Sustainment Model (FSM), and that ``Federal mandate'' refers
    to the NHPA of 1966.
        The ``monumental architecture'' premium within FSM recognizes the
    additional cost of sustaining facilities that meet the criteria for
    monumental architecture-such as high ceilings and ornamental hardware.
    This cost applies whether or not the facilities are historical. FSM
    calculates a sustainment premium for these buildings, which increases
    the estimated overall sustainment requirement for the given DOD
    component. Historic facilities that do not meet the criteria for
    monumental architecture do not necessarily cost more to sustain than
    non-historic facilities. Therefore, the FSM makes no adjustments for
    historic buildings that are not monumental in nature.
        We do not think that our premium for monumental architecture in the
    FSM in any way inhibits our ability to meet Federal mandates of the
    NHPA for historic buildings.
        Ms. Hammack. The DOD FSM allows for an incremental increase in
    funding facilities that are monumental architecture. The monumental
    architecture premium within FSM recognizes the additional cost of
    sustaining facilities that meet the criteria for monumental
    architecture-such as high ceilings, thick walls, and ornamental
    hardware. This cost applies whether or not the facilities are
    historical. Historic facilities that do not meet the criteria for
    monumental architecture do not necessarily cost more to sustain than
    non-historic facilities.
        Ms. Pfannensteil. We do not think that our premium for monumental
    architecture in the DOD FSM in any way inhibits our ability to meet
    Federal mandates of the NHPA for historic buildings.
        The ``monumental architecture'' premium within FSM recognizes the
    additional cost of sustaining facilities that meet the criteria for
    monumental architecture-such as high ceilings and ornamental hardware.
    This cost applies whether or not the facilities are historical. FSM
    calculates a sustainment premium for these buildings, which increases
    the estimated overall sustainment requirement for the given DOD
    Component. On the contrary, historic facilities that do not meet the
    criteria for monumental architecture do not necessarily cost more to
    sustain than non-historic facilities.
        Mr. Yonkers. We assume that ``enhanced facility sustainment
    funding'' refers to the ``monumental architecture'' premium within the
    DOD FSM, and that ``Federal mandate'' refers to the NHPA of 1966.
        The ``monumental architecture'' premium within FSM recognizes the
    additional cost of sustaining facilities that meet the criteria for
    monumental architecture--such as high ceilings and ornamental hardware.
    This cost applies whether or not the facilities are historical. FSM
    calculates a sustainment premium for these buildings, which increases
    the estimated overall sustainment requirement for the given DOD
    Component. On the contrary, historic facilities that do not meet the
    criteria for monumental architecture do not necessarily cost more to
    sustain than non-historic facilities. Therefore, the FSM makes no
    adjustments for historic buildings that are not monumental in nature.
        We do not think that our premium for monumental architecture in the
    FSM in any way inhibits our ability to meet Federal mandates of the
    NHPA for historic buildings.

        46. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannensteil, and Secretary Yonkers, can you review the criteria for
    your Service and provide a response regarding whether you believe they
    are adequate to allow bases to be credited with the expense required to
    sustain all historic facilities?
        Dr. Robyn. We reviewed the criteria for monumental architecture to
    identify buildings with higher sustainment costs and believe them to be
    appropriate.
        Ms. Hammack. The Army participates in periodic reviews of the
    criteria for monumental architecture to identify buildings with higher
    sustainment costs.
        Ms. Pfannensteil. We reviewed the criteria for monumental
    architecture to identify buildings with higher sustainment costs and
    believe them to be appropriate.
        Mr. Yonkers. We reviewed the criteria for monumental architecture
    to identify buildings with higher sustainment costs and believe them to
    be appropriate.

                    resources for renewable energy projects
        47. Senator Ayotte. Dr. Robyn, it is apparent that a priority for
    this administration has been to advance renewable energy initiatives
    across all Federal agencies, including DOD. As a result, the second
    highest priority for the Secretary of the Navy is to sail the Great
    Green Fleet by 2016 on synthetic fuels. The Air Force has 131
    operational renewable energy projects and another 50 under construction
    across a wide variety of renewable energy sources. The Army is
    investing in 17 installations that by 2020 will consume only as much
    energy or water as they produce and eliminate solid waste to landfills.
    The Navy recently pledged defense funds of $170 million as their share
    of a $510 million effort to construct or retrofit biofuel refineries in
    order to create a commercially viable market. Are any of these
    initiatives subject to economic analysis to determine whether they are
    an efficient use of taxpayers' funds?
        Dr. Robyn. Energy projects funded with appropriations are evaluated
    using the Building Life Cycle Cost tool, which uses capital investment,
    operation & maintenance costs, local utility rates and projected cost
    savings to calculate savings to investment ratio (SIR) and simple
    payback. Typically, cost savings are derived from reduced utility
    payments or reduced maintenance. As a general rule, projects funded
    with direct appropriations have an SIR greater than 1.0. Occasionally,
    the Department funds renewable energy projects with SIRs less than 1.0,
    when those projects provide improved energy security at a military
    base.
        Much of the renewable energy investment is being made with initial
    capital financing by non-DOD entities through Power Purchase Agreements
    (PPAs), Energy Savings Performance Contracts (ESPCs), or Utility Energy
    Service Contracts. The other party finances and builds the project and
    the DOD pays for the projects over time either through its energy bills
    or, in the case of an ESPC, by applying the savings in its energy bill.
    Financial evaluation of such projects is more complex, but in all cases
    the projects are expected to have a positive ROI.

        48. Senator Ayotte. Dr. Robyn, do any of them demonstrate a pay
    back over a certain amount of time?
        Dr. Robyn. As described in the answer to question 47, nearly all of
    the projects funded with direct appropriations have SIRs over 1.0,
    meaning they have a positive pay back over time. On average, small
    scale renewable energy projects--such as those recently funded through
    the Energy Conservation Investment Program--have a SIR of 1.7 with a
    payback of less than 12 years, meaning projects break even at 12 years
    and return a total of $1.70 for every $1.00 invested over the life of
    the projects.

        49. Senator Ayotte. Dr. Robyn, can you provide a list of the
    renewable energy generation projects that will actually contribute to
    DOD's energy security goals, by being able to power critical military
    missions during a commercial power outage?
        Dr. Robyn. On-site energy is critical to making our bases more
    energy secure. The deployment of advanced microgrid systems along with
    on-base energy generation and energy storage systems will allow a
    military base to maintain its critical operations ``off-grid'' for
    weeks or months if the commercial grid is disrupted. There are multiple
    DOD Energy Test Bed projects integrating the elements of the microgrid
    model, including renewable energy generation. These include projects at
    Marine Corps Air Ground Combat Center Twentynine Palms and Fort Bliss,
    which are multi-year efforts. Future microgrids will enable other
    renewable energy projects across DOD to power critical loads.
        Currently, the existing renewable energy systems are grid-tied and
    must, for safety purposes, shut down when there is a commercial power
    outage. However, the Department is taking into consideration the
    integration of energy security into renewable energy projects. The
    Services are required to take energy security into consideration as
    they develop their renewable energy plans. The Department also is
    reviewing current industry standards that allow more flexibility into
    the design of renewable energy projects, such as the Institute of
    Electrical and Electronics Engineers (IEEE) Standard 1547.4, IEEE Guide
    for Design, Operation, and Integration of Distributed Resource Island
    Systems with Electric Power Systems.

        50. Senator Ayotte. Dr. Robyn, in December 2011, the Navy purchased
    450,000 gallons of biofuel at $26.75 a gallon, the single largest
    purchase of biofuel in government history. Do you believe this is an
    acceptable price to pay per gallon for military training?
        Dr. Robyn. For the long term, our military will need alternatives
    to petroleum, particularly for our legacy fleet of ships and planes,
    which will be with us for decades to come.
        Recent oil market volatility also emphasizes the need for these
    longer term solutions. DOD estimates that for every $1 increase in the
    price of a barrel of oil, we incur an additional $130 million in fuel
    costs.
        That is why the military departments have purchased test quantities
    to certify their platforms for use with advanced alternative fuels. The
    military services are positioning themselves to take advantage of these
    fuels when they are cost-competitive with conventional fuels.
        The test quantities that we've purchased are expensive because they
    are essentially prototype fuels and our domestic industry's production
    capability is still maturing. But looking beyond these testing and
    certification efforts or demonstrations, the Department will not pay
    such premiums for the purchase of large-scale, operational quantities
    of these fuels.

        51. Senator Ayotte. Dr. Robyn, what do you believe is an acceptable
    price to pay for a gallon of biofuels to be used for military
    operations or training?
        Dr. Robyn. The military services are positioning themselves to take
    advantage of these fuels when they are cost-competitive with
    conventional fuels.
        The test quantities that we've purchased are expensive because they
    are essentially prototype fuels and our domestic industry's production
    capability is still maturing. But looking beyond these testing and
    certification efforts or demonstrations, the Department will not pay
    such premiums for the purchase of large-scale, operational quantities
    of these fuels.

        52. Senator Ayotte. Dr. Robyn, can you describe the efforts across
    DOD to uses ESPCs and power purchase agreements to invest in billions
    of dollars of renewable energy projects?
        Dr. Robyn. The Military Services are using a variety of financing
    mechanisms to develop renewable energy. For large scale renewable
    energy projects, the Services are primarily pursuing contracts under
    the authority in 10 U.S.C. Sec. 2922a, and Enhanced Use Leases
    contained in the leasing authority of 10 U.S.C. Sec. 2667. The Services
    are also actively developing PPAs. Section 2922a contracts are
    different from PPAs. Under section 2922a, a developer installs a
    renewable energy system on agency property or private property under an
    agreement that the Department will purchase power generated by the
    system. Typically, PPAs are used for just the purchase of energy.
        ESPCs are primarily used to invest in energy efficiency projects;
    however renewable energy projects, on a smaller-scale, have been
    developed under ESPCs. ESPCs allow the Services to accomplish energy
    improvement projects without upfront capital costs. An energy services
    company (ESCO) designs and constructs the project and arranges
    financing to pay for it. The ESCO guarantees the improvements will
    generate savings sufficient to pay for the project over the term of the
    contract.
        In response to the President's 2 December, 2011 memo calling on the
    Federal Government to initiate $2 billion worth of these performance-
    based contracts over the next 2 years, the Department has established
    its own goal to meet at least half of that commitment. ESPCs will
    account for a large percentage of this goal and DOD plans to execute
    $1.2 billion worth of contracts by the end of fiscal year 2013.

        53. Senator Ayotte. Dr. Robyn, while these projects predominantly
    rely on private investment and private sector risk, what is the risk to
    the Federal Government by entering into these long-term contracts?
        Dr. Robyn. The nature of the liabilities the Department assumes
    with a project will depend on the terms of the individual project. For
    contracts under 10 U.S.C. 2922a, Enhanced Use-Leases (EULs), and PPAs,
    there is typically not a standard format or set of universal
    requirements. The consistent major requirement, a liability to some, is
    that the Department enters into these contracts for a longer than
    typical term, e.g., 20 or more years. This may include a requirement to
    have land encumbered and a purchase of energy at set rates for a
    lengthy period of time.
        The Department cannot cancel these obligations without assuming
    termination costs, which tend to be roughly equivalent to the cost of
    completing the contract. In other words, the Department is locked into
    the contract term. A benefit of this is that it allows the Department
    to plan for and lock in energy rates for the period of the contract.
    The reliability is that, the extent that the Department is not actually
    purchasing any energy but is simply a passive lessor, as in the case of
    an EUL, the land is encumbered for the period of the lease. Thus, if
    the Department wanted to take the property back before the lease has
    expired, it would have to pay the value of the leasehold plus
    improvements.
        ESPCs have contract terms that are significantly different from
    section 2922a contracts, PPAs, or EULs. The Department terms that pays
    off the cost of an ESPC through the savings realized from energy
    efficiency measures carious out under the contract. The ESCO is
    required to guarantee these savings and provides measurement and
    verification to demonstrate the savings. The liability for the
    Department is limited in that the ESCO guarantees the financial savings
    of the overall project. In accordance with the Federal Acquisition
    Regulation, ESPCs include a termination clause with a liability
    schedule.

                            overseas basing reviews
        54. Senator Ayotte. Dr. Robyn, DOD currently has at least four
    studies underway on the capacity and need for U.S. military bases
    overseas. Regarding force structure in Europe, you stated in your
    opening statement that, ``we are working with the European Command
    theater commander, his component commanders, and service leadership
    here in Washington to measure the capacity of all of our European
    installations. This inventory will allow us to analyze how much
    capacity can be shed and where.'' Do you anticipate that this study
    will be completed by the fall of 2012?
        Dr. Robyn. We expect to identify preliminary options and recommend
    next steps by fall of 2012. Comprehensive data collection, analysis,
    and recommendation development will require additional time.

        55. Senator Ayotte. Dr. Robyn, will this study result in another
    round of overseas BRAC?
        Dr. Robyn. We believe additional consolidation in Europe can and
    should be done in light of upcoming force structure changes.

        56. Senator Ayotte. Dr. Robyn, when do you anticipate these
    announcements would occur?
        Dr. Robyn. We expect to identify preliminary options and recommend
    next steps by Fall of 2012. Comprehensive data collection, analysis,
    and recommendation development will require additional time.

        57. Senator Ayotte. Secretary Hammack, aside from eliminating two
    Army Brigade Combat Teams that are currently located in Europe, do you
    have a firm indication of the number of Army forces to be removed from
    Europe?
        Ms. Hammack. The Army will reduce approximately 7,000 soldiers
    associated with the reduction of two Brigade Combat Teams (BCTs) over
    the next 2 years. An additional reduction of approximately 2,500
    soldiers associated with enabler units is anticipated over the next 5
    years.

        58. Senator Ayotte. Secretary Hammack, when will this be announced?
        Ms. Hammack. An announcement on specific force structure actions is
    expected sometime before, or in conjunction with, submission of the
    President's fiscal year 2014 Budget in early February 2013.

        59. Senator Ayotte. Secretary Hammack, how can DOD clearly identify
    excess capacity at military installations overseas without knowing for
    sure the number of U.S. forces that will be stationed overseas in the
    long term?
        Ms. Hammack. The United States is rebalancing priorities and
    seeking ways to improve U.S. presence in key regions to ensure access
    and assure allies. DOD utilizes Theater Posture Plans which provide a
    long term view to forecast force posture by region in accordance with
    national policy and strategy. Combatant Commands determine what is
    regionally required to shape, deter, and respond in order to defeat
    aggression and meet any future threats. Service components then conduct
    analysis to determine the appropriate number and mix of forces in order
    to best support the requirement while optimizing efficiency for
    training, maintenance, deployability, and quality of life. The Army
    will continue to make necessary adjustments to force posture in
    coordination with DOD to ensure our posture remains in line with
    current strategy and supportive of regional commitments. This process
    enables Army and DOD to appropriately posture forces at military
    installations overseas with a long-term view.

                              facility sustainment
        60. Senator Ayotte. Secretary Hammack, Secretary Pfannensteil, and
    Secretary Yonkers, regarding annual funding in the budget for the
    sustainment of facilities, DOD has established a goal that the Services
    budget for 90 percent of the known requirements for funds required to
    sustain facilities at an adequate level of preventative and recurring
    maintenance. The Army, ``views 90 percent sustainment funding as the
    absolute bedrock of proper facilities stewardship, and is an essential
    objective of the Army facilities investment strategy. The Army has
    chosen not to take risk in the sustainment of our facility inventory.''
    The other Services have chosen another course by underfunding the
    budget request for facility sustainment to only 80 percent of the
    requirement. This underfunding defers critical facility maintenance
    activities and drives larger bills for eventual facility repairs or
    replacement. Do you agree with the Army that 90 percent sustainment
    funding is the absolute minimum that can be allocated in order to be
    good stewards of our military facilities?
        Ms. Hammack. Fully funded and executed sustainment prevents
    deterioration of facilities. Sustainment funded at 90 percent of the
    modeled requirement assumes acceptable risk, while less than 90 percent
    funding can accelerate deterioration. Facility sustainment is critical
    in supporting Installation Readiness by providing resources for
    maintenance and repair activities necessary to keep facilities in good
    working order over their expected service lives.
        Ms. Pfannensteil. To resource critical warfighting capabilities and
    current readiness, Navy continues to take a deliberate and appropriate
    level of risk in our facilities sustainment posture by funding facility
    sustainment to 80 percent of the OSD FSM. We mitigate this risk by
    directing our sustainment investments toward the highest priority
    mission-critical infrastructure.
        In addition to investing in our facilities through Sustainment
    (O&MN/O&MNR), Navy uses MILCON (MCN/MCNR) and Restoration and
    Modernization (O&MN/O&MNR) funding to recapitalize existing
    infrastructure and provide major facility upgrades.
        Mr. Yonkers. Use of asset management principles allows us to be
    good stewards of Air Force facilities while funding Facility
    Sustainment at just over 80 percent of the FSM and funding Restoration
    and Modernization at 90 percent of historic levels.
        We use asset management principles to make more effective use of
    existing resources, thereby reducing facility risk. This requires
    improved asset visibility. Based on an increasingly fiscally
    constrained environment, the fiscal year 2013 budget focuses on
    ensuring investment in the most critical facility requirements to
    support Air Force priorities, while continuing to enable streamlining
    of business operations and enhancing operational efficiencies. The Air
    Force will fund Facilities Sustainment at just over 80 percent of the
    calculated OSD FSM to continue driving efficiencies while ensuring the
    proper level of support. Centralization and prioritization of
    replacement and repair projects using Asset Management tools will
    ensure investment in the most critical facility requirements.
    Additionally, the increased emphasis on consolidation and demolition
    will result in long-term avoidance of facility investment costs on
    unnecessary infrastructure and enable continued support to the Air
    Force and Joint warfighter missions.

        61. Senator Ayotte. Secretary Pfannensteil and Secretary Yonkers,
    for how long will the Air Force and the Navy continue to take this risk
    by underfunding facility sustainment?
        Ms. Pfannensteil. To resource critical warfighting capabilities and
    current readiness in fiscal year 2013, the Navy continued our fiscal
    year 2012 position to take a deliberate and appropriate level of risk
    in our facilities sustainment posture by funding facility sustainment
    to 80 percent of the OSD FSM.
        We are currently conducting several studies to determine the long-
    term impacts of reduced sustainment to our shore infrastructure. This
    analysis will be used to inform future budget submissions.
        Mr. Yonkers. We are not underfunding Facility Sustainment. We
    continue to fund Facility Sustainment at just over 80 percent of the
    FSM and we have funded Restoration and Modernization at 90 percent of
    historic levels.
        We use asset management principles to make more effective use of
    existing resources, thereby reducing facility risk. This requires
    improved asset visibility. Based on an increasingly fiscally
    constrained environment, the fiscal year 2013 budget focuses on
    ensuring investment in the most critical facility requirements to
    support Air Force priorities, while continuing to enable streamlining
    of business operations and enhancing operational efficiencies. The Air
    Force will fund Facilities Sustainment at just over 80 percent of the
    calculated OSD FSM to continue driving efficiencies while ensuring the
    proper level of support. Centralization and prioritization of
    replacement and repair projects using Asset Management tools will
    ensure investment in the most critical facility requirements.
    Additionally, the increased emphasis on consolidation and demolition
    will result in long-term avoidance of facility investment costs on
    unnecessary infrastructure and enable continued support to the Air
    Force and Joint warfighter missions.

        62. Senator Ayotte. Secretary Hammack, Secretary Pfannensteil, and
    Secretary Yonkers, doesn't this underfunding degrade readiness over
    time?
        Ms. Hammack. Yes, less than 90 percent sustainment funding may
    increase the Army's backlog and accelerate the degradation of
    facilities. Any reduction can severely impact the quality of Army
    infrastructure and cause an operational impact. Less than 90 percent
    sustainment funding will result in the reversal of the positive trend
    of reducing poor and failing infrastructure (Q3/Q4) which is contrary
    to impending OSD guidance to reduce Q3/Q4 infrastructure.
        Ms. Pfannensteil. To resource critical warfighting capabilities and
    current readiness, the Navy continued our fiscal year 2012 position to
    take a deliberate and appropriate level of risk in our facilities
    sustainment posture by funding facility sustainment to 80 percent of
    the OSD FSM. In addition to investing in our facilities through
    Sustainment (O&MN/O&MNR), Navy uses MILCON (MCN/MCNR) and Restoration
    and Modernization (O&MN/O&MNR) funding to recapitalize existing
    infrastructure and provide major facility upgrades.
        We are currently conducting several studies to better understand
    the long-term impacts of reduced sustainment to our shore
    infrastructure.
        Mr. Yonkers. We continue to fund Facility Sustainment at just over
    80 percent of the FSM and we have funded Restoration and Modernization
    at 90 percent of historic levels.
        We use asset management principles to make more effective use of
    existing resources, thereby reducing facility risk. Centralization and
    prioritization of replacement and repair projects using Asset
    Management tools will ensure investment in the most critical facility
    requirements. Additionally, the increased emphasis on consolidation and
    demolition will result in long-term avoidance of facility investment
    costs on unnecessary infrastructure and enable continued support to the
    Air Force and Joint warfighter missions.

        63. Senator Ayotte. Secretary Yonkers, can you assure me that the
    decision by the Air Force to take risk in both the facility sustainment
    accounts and in the MILCON accounts will not continue in the budget
    request for 2014?
        Mr. Yonkers. We continue to fund Facility Sustainment at just over
    80 percent of the FSM and we have funded Restoration and Modernization
    at 90 percent of historic levels.
        To meet 80 percent FSM, civil engineering transformation
    initiatives employ an enterprise-wide, centralized asset management
    approach. At each level (base, major command, headquarters Air Force),
    asset management plans with integrated priority lists developed to
    target limited resources on highest priorities. We also established
    multiple ``focus'' funds both in the fiscal year 2012 PB and in fiscal
    year 2013 PB. The ``mission critical, worst first'' approach balances
    risk across broad facilities/infrastructure portfolios looking through
    both a mission lens (how dependent is the mission on that facility/
    infrastructure system) and engineering lens (quality of the facility).
        Based on an increasingly fiscally constrained environment, the
    fiscal year 2013 budget focuses on ensuring investment in the most
    critical facility requirements to support Air Force priorities, while
    continuing to enable streamlining of business operations and enhancing
    operational efficiencies. The Air Force will fund Facilities
    Sustainment at just over 80 percent of the calculated OSD FSM to
    continue driving efficiencies while ensuring the proper level of
    support. Centralization and prioritization of replacement and repair
    projects using Asset Management tools will ensure investment in the
    most critical facility requirements. Additionally, the increased
    emphasis on consolidation and demolition will result in long-term
    avoidance of facility investment costs on unnecessary infrastructure
    and enable continued support to the Air Force and Joint warfighter
    missions.
        We anticipate returning MILCON to historical funding levels in
    fiscal year 2014 to accomplish National Military Strategy and support
    Air Force priorities while continuing to meet the pressures of the
    current fiscal environment.

                             housing privatization
        64. Senator Ayotte. Dr. Robyn, for years, many of our Active Duty
    servicemembers have been forced to live in substandard housing. When
    servicemembers and their families step forward and volunteer to defend
    our country, we owe it to them that their quality of life reflects the
    quality of their service and sacrifice. That is why I am pleased to see
    that the housing privatization program has provided our military
    members with significant improvements in the quality of family housing.
    We are in the process of shifting from the initiation of new ventures
    to the long-term maintenance and management of current partnerships.
    While many of these new housing complexes are impressive and provide
    the quality of life our servicemembers and their families have earned,
    if we do not manage these partnerships carefully, maintenance will
    suffer, the quality of life for our servicemembers and their families
    will decline, and we will ultimately waste the taxpayers' investment in
    this new housing. We must ensure that does not happen. What challenges
    do we face in the management of these partnerships over time to ensure
    our military families continue to have access to quality housing?
        Dr. Robyn. We agree that the long-term viability and health of
    these projects is critical in ensuring the continued availability of
    suitable, affordable housing to military members and their dependents.
    The greatest challenge facing these projects is uncertainty with
    respect to housing market conditions (e.g., demand/supply, operating
    costs, et cetera) over the long term. Recognizing this challenge, both
    OSD and the Services are taking an in-depth look at the current and
    projected health of these projects. We have multiple opportunities
    built into tracking how the partner is progressing with the physical
    work of turning substandard housing into housing that improves the
    quality of life for military members and their families. This is
    accomplished by keeping the military services involved in gathering and
    interpreting the data received from each of the 83 projects. This
    information is used to complete the Program Evaluation Plan (PEP)
    provided to Congress. There are frequent meetings held that allow the
    partners and the services housing leaders to discuss issues that affect
    the projects; ways to efficiently provide great customer services to
    the home renters; ways to reduce costs ensuring a future stream of
    funding; how best to collect rents owed by service members upon
    departure from an installation or from the service; and ways to help
    those injured in the line of duty. Services interact with the partners
    in reviewing their operating budgets, their financial reports, and
    their adherence to the business agreements in retaining funds in the
    lockboxes for future renovations or new construction to ensure housing
    remains in a desirable state for families to want to rent these
    facilities.
        In September 2011, our office started its analysis of how best to
    set out on a monitoring course to ensure that projects will maintain
    all privatized facilities, just as you suggest, so that military
    families continue to have access to quality housing. We are committed
    to continuing to review these projects and communicate with the
    Services and the partners to ensure the initial and changing
    requirements for housing are met and maintained.

        65. Senator Ayotte. Dr. Robyn, do you see any negative trends with
    the health and use of Reserve accounts in each deal? If so, how are we
    addressing the trend?
        Dr. Robyn. Because of the checks and balances that have been built
    into the government oversight, any trends that may negatively impact
    Reserve accounts are immediately noted and addressed. Major Decision
    processes are in place that will allow Reserve accounts, in rare cases,
    to be used for short term project health. These safeguards do not
    necessarily prevent issues, but they do alert us so that appropriate
    actions can be put in place. Additionally we work with the services to
    review their status of projects.

        66. Senator Ayotte. Dr. Robyn, are we extending the program into
    the construction and operation of unaccompanied personnel housing for
    the lower ranks?
        Dr. Robyn. DOD currently has two Navy projects that target
    unaccompanied service members in grades E1-E6. These projects, located
    at Hampton Roads, VA and San Diego, CA, were selected as pilots under
    10 U.S.C. 2881a, because unaccompanied junior (E1-E3) Sailors, assigned
    to sea duty, are not entitled to a Basic Allowance for Housing (BAH),
    this pilot authority was needed in order to use the privatization
    authorities to target this demographic need. This authority has since
    expired.
        The Army and its partners also used the privatization authorities
    to venture into providing accommodations for unaccompanied senior
    enlisted service members and junior officers. The four Army locations
    providing this service are at Fort Drum, NY, Fort Bragg, NC, Fort
    Stewart, GA and Fort Irwin, TX. Demand for these accommodations remains
    high.
        The Army, along with its partner at Fort Meade, MD, is currently
    reviewing the need to provide a more cost efficient solution to
    accommodate up to 816 single servicemembers. Many of these
    servicemembers are involved in national security duties, on the
    installation. This program would provide affordable housing vice
    requiring these junior enlisted servicemembers to seek housing outside
    the installation. The rents for available housing often exceed the
    member's housing allowances, causing financial hardships.

        67. Senator Ayotte. Secretary Yonkers, the Air Force has three
    planned family privatization projects underway. Can you provide an
    update on the status of these three remaining projects: Continental
    Group, Northern Group, and ACC Group III?
        Mr. Yonkers. Continental Group: In May 2011, the Air Force selected
    Picerne Military Housing as the Highest-Ranked Offeror (HRO) for the
    six-base project, which includes Edwards AFB, CA; Eglin AFB and
    Hurlburt Field, FL; Eielson AFB, AL; McConnell AFB, KS; and Seymour
    Johnson AFB, NC. In July 2011, protests were resolved/withdrawn;
    however, the project was placed on hold pending evaluation of potential
    force reductions which were announced in February 2012. On April 11,
    2012, Picerne was notified of the proposed personnel changes and of the
    Air Force's intent to resume exclusive project negotiations. Pending
    successful negotiations with Picerne and development of a viable
    revised project scope, the Air Force anticipates closing the
    Continental Group project by the end of calendar year 2012.
        Northern Group: In October 2011, the Air Force selected Balfour
    Beatty Communities (BBC) as the HRO for the six-base project, which
    includes Cavalier Air Force Station, Grand Forks AFB and Minot AFB, ND;
    Ellsworth AFB, SD; Cannon AFB, NM; and Mountain Home AFB, ID. The Air
    Force received two GAO protests which were resolved/withdrawn by
    January 2012. The Air Force is currently conducting exclusive
    negotiations with the BBC. OMB is currently reviewing the Scoring
    Report. Once approved, OSD will notify the Committees of the intent to
    transfer funds into the FHIF. The Air Force anticipates closing the
    Northern Group project with BBC no later than September 2012.
        ACC Group III: In October 2011, the Air Force selected BBC as the
    HRO for this project, which includes the second phase of housing
    privatization for Dyess AFB, TX; and Moody AFB, GA. The Air Force
    received a GAO protest on the project which was denied in March 2012.
    OSD is preparing the notification to the committees of the intent to
    transfer funds into the FHIF. Exclusive negotiations with BBC are on
    hold pending HAF decisions on scope (pending the validation of a new
    Housing Requirements and Market Analysis, which reduced the family
    housing requirement from 589 to 427), and potential siting changes,
    which could delay the current projected closing of the ACC Group III
    project beyond September 2012.

        68. Senator Ayotte. Secretary Yonkers, does the Air Force expect
    these projects to close in fiscal year 2012?
        Mr. Yonkers. The Air Force anticipates closing the Northern Group
    privatization project in fiscal year 2012. The Air Force anticipated
    closing the ACC Group III housing project in fiscal year 2012, but
    potential changes to the scope of the project may delay the closing
    into fiscal year 2013. At the same time, while exclusive negotiations
    with the Highest Ranked Offeror on the Continental Group just resumed,
    the Air Force anticipates closing the project by the end of calendar
    year 2012.

                     impact to dod from rulings by the epa
        69. Senator Ayotte. Dr. Robyn, on September 28, 2011, the EPA
    issued a contentious final health assessment for trichloroethylene
    (TCE) under its Integrated Risk Information System (IRIS) risk
    assessments. The assessment may require a potential revisiting of TCE-
    related cleanup standards at over 1,000 former and current military
    sites for soil, groundwater, and vapor intrusion at and adjacent to
    contaminated properties, including those previously granted regulatory
    closure. It may also require revision of the maximum contaminant levels
    for drinking water, allowable levels of emissions from industrial
    facilities, and from a variety of consumer products in which even small
    levels of TCE are typically used. The level of 1 part per billion in
    the final assessment is below the levels widely criticized by industry
    and DOD in the 2001 draft assessment and may result in an increase of
    cleanup costs by billions of dollars. Have you assessed the impact of
    this ruling on DOD's efforts and timeline to clean up and dispose of
    former military sites?
        Dr. Robyn. No, we have not fully assessed the impact of the change
    in Integrated Risk Information System (IRIS) toxicity value for TCE
    yet. Impacts must be determined on a site by site basis and this will
    take many years.
        We do not expect additional work to be required at every site where
    TCE has been detected, since in many cases the cleanup systems now in
    place will continue to be effective. For sites where we are still
    studying the contamination and developing the cleanup solution, we will
    consider the new IRIS TCE toxicity value in the development of the
    cleanup solution and cost estimate. For sites with cleanup systems
    already in place, DOD conducts a review at least every 5 years to
    determine if the site continues to protect human health and the
    environment. DOD will consider the new toxicity value during the 5 year
    review process. This assessment is part of the standard cleanup program
    process.

        70. Senator Ayotte. Dr. Robyn, what additional cost will DOD incur
    as a result of this ruling?
        Dr. Robyn. The Department cannot estimate any additional costs at
    this time because we need to assess the impact of the revised TCE
    toxicity value on a site-specific basis in collaboration with our
    regulatory partners.
        We do not expect additional work to be required at every site where
    TCE has been detected, since in many cases the cleanup systems now in
    place will continue to be effective. For sites where we are still
    studying the contamination and developing the cleanup solution, we will
    consider the new IRIS TCE toxicity value in the development of the
    cleanup solution and cost estimate. For sites with cleanup systems
    already in place, DOD conducts a review at least every 5 years to
    determine if the site continues to protect human health and the
    environment. DOD will consider the new toxicity value during the 5 year
    review process. This assessment is part of the standard cleanup program
    process.

        71. Senator Ayotte. Dr. Robyn, given competing requirements and
    declining budgets, what flexibility does DOD have in responding to the
    ruling?
        Dr. Robyn. The CERCLA and its implementing regulations offer
    sufficient flexibility for DOD to assess risk human health and the
    environment on a site-specific basis. Only if there is an increased
    risk to human health and the environment, would we be required to
    conduct additional cleanup actions. In other words, even though the
    toxicity level for TCE has changed, there may be no risk to human
    health and the environment for a specific site.

        72. Senator Ayotte. Secretary Hammack, Secretary Pfannensteil, and
    Secretary Yonkers, how would you characterize your Service's
    interaction and coordination with the EPA in your efforts to clean up
    or dispose of former or excess military sites?
        Ms. Hammack. The Army has generally had a cooperative relationship
    with EPA. As evidence of this cooperation, the Army expects to meet the
    goals set by the OSD for DOD cleanup programs; expecting to achieve
    greater than 90 percent ``response complete'' by 2018 and 95 percent
    ``response complete'' by 2021 at Active Army cleanup sites. ``Response
    complete'' is achieved with regulator concurrence. We continue to work
    with OSD and the Service components to establish new goals for BRAC
    installations.
        Recently the Army has been working with EPA to better understand
    their requirements under the Resource Conservation and Recovery Act
    (RCRA) regarding characterization of soil impacted by properly applied
    pesticides when property use changes. I have been in continuing dialog
    with Assistant Administrator Mathy Stanislaus of the Office of Solid
    Waste and Emergency Response of EPA regarding this topic. The
    discussions with EPA on the issue of properly applied pesticides have
    focused on two Army sites (Sunflower Army Ammunition Plant (AAP) and
    Kansas AAP). The financial impact to Federal and other land holding
    entities could be significant if EPA's current interpretation, that
    soil containing properly applied pesticide must be sampled and removed
    upon a change in use of a property, were adopted nation-wide.
        It is notable that EPA is not always the primary regulator at
    transferring sites; their direct involvement being limited to those
    sites on the National Priorities List (aka Superfund) and to those
    States where EPA has not delegated their RCRA authority. Currently, 43
    States and Territories have been delegated RCRA corrective action
    (remediation) authority. EPA regulatory policy and guidance has
    significant influence on State-level regulations and regulatory
    agencies, and are usually mandatory for delegated States and
    Territories.
        Ms. Pfannensteil. EPA and the Navy have a professional and cordial
    relationship. Most cleanups are managed under Federal Facilities
    Agreements that layout the steps and schedules for cleanup and describe
    the process for resolving disputes. This process is rarely needed, but
    has been effective. Our BRAC interactions have been primarily focused
    in EPA Regions I, IX, and X. EPA Region I BRAC interactions have been
    highly successful at returning property to productive economic reuse.
    EPA Region IX BRAC interactions have been successful at solving short
    term goals, while continuing efforts to reach site closure. Munitions
    cleanup at EPA Region X has been complicated and has required frequent
    coordination regarding cleanup decisions. Overall, Navy and EPA
    interactions have been effective at achieving clean up and disposal of
    former military sites.
        Mr. Yonkers. Air Force BRAC's interaction and coordination with the
    EPA has been successful in supporting site remediation for protection
    of human health and the environment to facilitate property transfer.
    EPA has been and continues to be instrumental in facilitating cleanup
    and property transfer actions for individual BRAC bases. EPA regional
    offices provide Remedial Project Managers who are directly involved in
    BRAC Cleanup Teams for individual bases. In addition, BRAC Program
    Managers meet with Headquarters EPA on a quarterly basis to discuss
    issues related to cleanup and property transfer.

        73. Senator Ayotte. Secretary Hammack, Secretary Pfannensteil, and
    Secretary Yonkers, is the interaction causing you to delay any
    transfers or to spend additional DOD funds to meet EPA's requirements?
    If so, can you provide examples?
        Ms. Hammack. Our ongoing discussions regarding pesticides have
    lengthened the process to transfer the Kansas Army Ammunition Plant
    (KSAAP) in Parsons, KS. While negotiations continue between the Army
    and the local reuse authority (LRA) to complete the transfer at KSAAP,
    the discussions regarding pesticides have not resulted in significant
    additional expenditures for the Army at this point, although it may
    adversely impact the LRA's costs and the marketability and use of the
    property.
        The clean-up effort at Sunflower AAP has been delayed as a result
    of significant resources being expended by the LRA to characterize and
    remove soil impacted by properly applied pesticides at the time of
    application. This requirement was placed on the LRA by Kansas
    regulators at the behest of EPA Region 7. This position on pesticide
    application could adversely impact the success of redevelopment. The
    Army's view is that pesticides applied properly around buildings to
    protect them from insect damage, do not require characterization and/or
    remediation upon transfer to others. Army is working with EPA to
    resolve requirements under the RCRA regarding characterization of soil
    impacted by properly applied pesticides when the buildings are no
    longer usable, are ``slated for demolition,'' or are transferred to a
    private entity such as an LRA who intends to demolish the buildings.
    The ongoing dialog between Army and EPA is aimed at avoiding future
    delays and/or expenditures.
        Ms. Pfannensteil Our professional and cordial interactions with the
    EPA have not caused a delay or significant cost increase to our
    transfer of BRAC properties. The Navy will continue to work effectively
    with the EPA to clean up and transfer the remaining BRAC properties as
    quickly and economically as reasonably possible.
        Mr. Yonkers. Generally, the interaction between Air Force BRAC and
    the EPA does not cause major delays or the expenditure of additional
    DOD funds over those anticipated by law or regulation. Over the past
    year, however, Air Force BRAC did experience one transfer delay
    stemming from this interaction. The issue causing the delay has been
    resolved (former Plattsburgh AFB, NY).

                 military construction scope of work variations
        74. Senator Ayotte. Dr. Robyn, on February 27, 2012, the DOD
    Inspector General (IG) issued a report titled: Guidance Needed to
    Prevent Military Construction Projects from Exceeding the Approved
    Scope of Work (DODIG-2012-057). The IG found that the scope of work
    variations permissible by section 2853, Title 10, U.S.C., is unclear
    and inconsistently applied within DOD. As a result, DOD officials and
    Congress do not have assurance that MILCON projects are built
    consistent with congressional intent and in accordance with legislative
    requirements. As you might imagine, the finding is unsettling for those
    of us on the committee who assume that DOD is faithfully and legally
    carrying out MILCON projects as specifically authorized by Congress.
    Have you assessed the source and extent of the problem throughout the
    Services and the contracting agencies? If so, please provide your
    assessment.
        Dr. Robyn. The Department did not conduct a comprehensive
    assessment of the findings in the February 2012 DOD IG report.
    Consistent with the recommendation in that report, I will be issuing a
    policy memo, which will be incorporated into a new DOD Instruction;
    clarifying the cost and scope requirements established in section 2853
    and establishing milestones for the DOD components to validate that
    each project's scope stays within the authorized limits.

        75. Senator Ayotte. Dr. Robyn, what are you doing to immediately
    address this problem to ensure that taxpayers' funds we authorize are
    carried out for their intended purpose?
        Dr. Robyn. I will be issuing a policy memo, which will be
    incorporated into a new DOD Instruction, clarifying the cost and scope
    requirements established in section 2853, and consistent with the
    findings in the DOD IG's February 2012 report. This clarifying guidance
    will be coordinated with the military departments to ensure DOD
    components design and construct facilities that do not exceed
    authorized scope levels.

        76. Senator Ayotte. Dr. Robyn, have you issued clarifying guidance
    as the IG recommended? If so, please provide that guidance.
        Dr. Robyn. We are in the process of developing a policy memo, which
    will be incorporated into a new DOD Instruction, clarifying the cost
    and scope requirements established in section 2853; and it is
    consistent with the findings in the DOD IG's February 2012 report. This
    clarifying guidance will be coordinated with the military departments
    to ensure DOD components design and construct facilities that do not
    exceed authorized scope levels.

        77. Senator Ayotte. Dr. Robyn, do you have any mechanisms in place
    to ensure that the clarifying guidance and other corrective measures
    will be effective and lasting?
        Dr. Robyn. Once I issue the policy memo, which will then be
    incorporated into a DOD Instruction, the military departments and
    defense agencies will establish the appropriate implementation
    mechanisms. The DOD IG report recognized this in recommending that the
    Commander, U.S. Army Corps of Engineers, and the Director, Air Force
    Center for Engineering and Environment develop and implement procedures
    to perform scope verifications to ensure compliance with the clarifying
    guidance. Although not addressed by the DOD IG report, the Commander,
    Naval Facilities Engineering Command, will develop implementing
    procedures as well.

                 leadership in energy and environmental design
        78. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannensteil, and Secretary Yonkers, the NDAA for Fiscal Year 2012
    restricted the use of MILCON funds to design and construct military
    facilities to a gold or platinum construction standard called
    Leadership in Energy and Environmental Design (LEED), unless the LEED
    certification imposes no additional cost to taxpayers. I am concerned
    by recent press statements that despite this restriction, the Services
    are continuing to direct funds to meet a LEED gold or platinum
    standard. Can you all confirm your intent to comply with the language
    in the NDAA for Fiscal Year 2012?
        Dr. Robyn. The Department understands and is abiding by the
    restriction. DOD components understand LEED Gold and Platinum are not
    to be specified in contract solicitations, and no fiscal year 2012
    money can be spent to design or construct to Gold or Platinum standards
    unless a waiver is granted by the Secretary of Defense and Congress is
    notified. No requests for a waiver have been submitted to date.
        Ms. Hammack. The Army will comply with the NDAA for Fiscal Year
    2012 for all fiscal year 2012 and beyond projects. The Act allows for
    higher levels of certification if there is no increase in cost. No
    project shall have a goal or objective to achieve anything other than
    LEED Silver. If a project arrives at Gold or Platinum, we will document
    costs, if any, that were incurred beyond those required for LEED
    Silver. The U.S. Army Corps of Engineers reissued an Engineering and
    Construction Bulletin that provides updates to High Performance Energy
    and Sustainability, LEED and Energy certification guidance to reinforce
    the objective of LEED Silver.
        Ms. Pfannensteil. The Department of the Navy (DON) is complying
    with the NDAA for Fiscal Year 2012 language pertaining to expenditure
    of funds for achieving LEED Gold or Platinum certification.
        Mr. Yonkers. The Air Force intends to comply with the NDAA for
    Fiscal Year 2012 restriction on the use of MILCON funds to design and
    construct military facilities to a gold or platinum construction
    standard called LEED.

        79. Senator Ayotte. Dr. Robyn, Secretary Hammack, Secretary
    Pfannensteil, and Secretary Yonkers, can you meet DOD goals for
    facility energy efficiency without achieving a LEED gold or platinum
    standard?
        Dr. Robyn. In most cases, a LEED Silver (or equivalent) level of
    certification will be sufficient to allow the DOD to meet statutorily
    mandated building performance targets. In other cases, DOD may design a
    facility to address a site specific energy or water challenge without
    regard to the resulting level of LEED certification.
        Ms. Hammack. Yes, the Army is working to meet DOD goals for
    facility energy efficiency and does not require LEED gold or Platinum
    certification. In order to meet DOD facility energy requirements, the
    Army must build high-performance buildings that include life-cycle
    cost-effective measures for energy and water efficiency. The Army has
    adopted American Society of Heating, Refrigerating, and Air
    Conditioning Engineers (ASHRAE) 189.1, which is a private sector
    developed, high performance building standard, providing detailed
    guidelines to achieve LEED Silver. This standard prioritizes energy and
    water efficiency measures and facilitates compliance with Federal
    energy and water efficiency mandates. On some projects, when complying
    with Federal mandates, the Army may incidentally achieve LEED Gold
    levels of building certification at no additional cost to LEED Silver.
        Ms. Pfannensteil. The Navy remains committed to achieving their
    energy and sustainment goals while remaining in compliance with the
    NDAA for Fiscal Year 2012 language pertaining to expenditure of funds
    for achieving LEED Gold or Platinum certification. In coordination with
    OSD and the other Services, DON is finalizing a formal facility energy
    sustainable design policy which will reflect the NDAA for Fiscal Year
    2012 LEED language and its limitations. As required by the NDAA, the
    DON is reviewing energy-efficiency and sustainability standards. The
    results of that review will be consolidated into the OSD report due to
    the congressional defense committees later this year.
        Mr. Yonkers. Yes, the USAF can achieve the energy efficiency
    mandates (Energy intensity reduction, specifically) without mandating
    LEED Gold or Platinum standards. The USAF has an internal policy to
    construct buildings to LEED Silver standard, when practicable, and have
    adopted ASHRAE 90.1 and High Sustainable building practices (E.O
    13514). The USAF is actively seeking to reduce facility energy usage by
    30 percent beyond industry standards on all major renovations and all
    MILCON. We are also seeking to divest ourselves of the most inefficient
    or excess buildings with a goal to demolish or divest of our 20 percent
    our real property inventory by 2020. These efforts achieve the energy
    intensity metric you alluded to, and do not constrain us as LEED Gold
    or Platinum would.

        80. Senator Ayotte. Dr. Robyn, I understand that your office is
    undertaking a review of DOD's current green building policy in order to
    update the Unified Facilities Code. Can you describe this new green
    building policy?
        Dr. Robyn. The new green building policy will be codified in the
    Unified Facilities Criteria (UFC) for High Performance Buildings and
    will define the minimum construction standards for new buildings, major
    renovations, or leased facilities. The UFC will be a tool for project
    manager, architects, and construction contractors to ensure new,
    recapitalized, or leased buildings meet all Federal mandates for energy
    and water efficiency, as well as sustainability.

        81. Senator Ayotte. Dr. Robyn, will it reference LEED, Green
    Globes, National Green Building Standard, or any other green building
    certification system?
        Dr. Robyn. Every new UFC document must first draw from existing
    commercial standards to the maximum practical extent. In this case the
    new UFC for High Performance Buildings will make reference to the
    ASHRAE 189.1 standard. It will not reference any third party rating
    systems.

        82. Senator Ayotte. Dr. Robyn, the ASHRAE has developed a standard,
    ASHRAE 189.1, to provide an objective total building sustainability
    package for the design, construction, and operation of buildings that
    incorporate site sustainability, water use efficiency, energy
    efficiency, indoor environmental quality, and the building's impact on
    the atmosphere, materials, and resources. Does DOD plan to adopt that
    standard?
        Dr. Robyn. While the new UFC for High Performance Buildings will
    make reference to ASHRAE 189.1, there are some elements of the standard
    that may not be cost effective for application in the DOD and therefore
    will not be incorporated in the new UFC. In a parallel effort, the
    Department has partnered with the National Research Council to study
    the cost-effectiveness of ASHRAE, LEED, and Green Globes as required by
    2012 NDAA, section 2830. The results of the study will be used to
    assess the cost effectiveness of future capital investments.

        [Whereupon, at 12:26 p.m., the subcommittee adjourned.]

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

                                  ----------

                             THURSDAY, MAY 10, 2012

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

                        CURRENT READINESS OF U.S. FORCES

        The subcommittee met, pursuant to notice, at 10:04 a.m. in
    room SR-232A, Russell Senate Office Building, Senator Claire
    McCaskill (chairman of the subcommittee) presiding.
        Committee members present: Senators McCaskill, Ayotte, and
    Inhofe.
        Majority staff members present: Jonathan D. Clark, counsel;
    John H. Quirk V, professional staff member; Peter K. Levine,
    general counsel; and William K. Sutey, professional staff
    member.
        Minority staff members present: Lucian L. Niemeyer,
    professional staff member; Bryan D. Parker, minority
    investigative counsel; and Christopher J. Paul, professional
    staff member.
        Staff assistant present: Mariah K. McNamara.
        Committee members' assistants present: Gordon Peterson,
    assistant to Senator Webb; Jason Rauch, assistant to Senator
    McCaskill; Anthony Lazarski, assistant to Senator Inhofe; and
    Brad Bowman, assistant to Senator Ayotte.

        OPENING STATEMENT OF SENATOR CLAIRE McCASKILL, CHAIRMAN

        Senator McCaskill. The Readiness and Management Support
    Subcommittee of the Senate Armed Services Committee will come
    to order.
        I will have brief opening remarks.
        Welcome to our important witnesses today. Thank you, all
    four of you, for taking time from what I know are heavy demands
    on your time to spend some time visiting with us this morning
    about the overall, holistic readiness of our military. We look
    forward to your testimony.
        We are pleased to be joined by General Lloyd J. Austin III,
    USA, Vice Chief of Staff of the Army; Admiral Mark E. Ferguson
    III, USN, Vice Chief of Naval Operations; General Philip M.
    Breedlove, USAF, Vice Chief of Staff of the Air Force; and
    General Joseph F. Dunford, Jr., USMC, Assistant Commandant of
    the Marine Corps. Gentlemen, I sincerely appreciate each of you
    adjusting your schedules at the last minute after we could not
    hold this hearing on the original date because we were voting.
        Turning to the issue at hand, after more than a decade of
    combat operations in Iraq and Afghanistan, reported readiness
    levels of our Armed Forces have steadily declined, even as
    defense spending has grown dramatically. Our non-deployed
    forces have experienced serious readiness shortfalls in terms
    of personnel, equipment, and training. Even our deploying units
    have struggled with not enough time to train for full-spectrum
    missions.
        Now we are entering an era of declining budgets, force
    structure, and new strategies. As a result, our Military
    Services face a new set of challenges as they seek to balance
    the drawdown of forces, vital reset of equipment and personnel,
    and continuing combat operations in Afghanistan. I am
    interested in hearing from the witnesses the extent of current
    readiness funding backlogs and the risks posed by these
    backlogs. We have been told in the past that the reset of our
    forces will require a few years of additional funding after the
    end of combat operations. I would like the witnesses to provide
    us with their latest estimates, timelines, and amounts in that
    regard.
        I am pleased that the Navy budget would fully fund the ship
    depot maintenance requirement for the first time in many years.
    It is my hope that this increased level of funding will lead to
    a decrease in the number of unsatisfactory inspection results
    from the Navy's Board of Inspection and Survey (INSURV). At the
    same time, I am disappointed that the Navy has failed to meet
    the 6 percent capital investment objective established by
    Congress, the only Military Service that has failed to do so. I
    would like to hear from the Navy what their long-term plans are
    for making up this gap in investment.
        I am also pleased that the Army and Marine Corps have
    funded facilities sustainment, restoration, and modernization
    (FSRM) at the 90 percent level, which is the Department of
    Defense (DOD) stated goal. Unfortunately, the Air Force and
    Navy funded this same FSRM at 82 and 80 percent, respectively.
    I would like to hear from the Air Force and the Navy what level
    of risk they are taking on as a result of these lower funding
    levels and what steps they plan to take to avoid large bills
    down the road.
        Finally, we have learned that DOD will face at least a $1.3
    billion bill as a result of the rise in fuel prices. This price
    increase has been exacerbated by the continued closure of the
    Pakistan border forcing supply convoys for our force in
    Afghanistan to use the northern distribution network (NDN) at
    an increased expense of about $38 million per month.
        Given all of these challenges we face, we must strive to
    protect our readiness accounts, but we can also do a better job
    in managing funds like operation and maintenance. We can
    improve the execution rates and unobligated balances in these
    accounts, in addition to our operational readiness models. As
    the Services continue to identify efficiencies in overhead,
    support, and other less mission-essential areas, I challenge
    you to better balance the difference between cost savings and
    cost avoidance, as we owe it to the American people to be much
    better stewards of their tax dollars.
        Gentlemen, I cannot thank you all enough for your dedicated
    service and the sacrifices you have made on behalf of our
    country, and the sacrifices your families have made. I thank
    you all for taking the time to have this critical discussion,
    and I look forward to your testimony. I know each of you have
    prepared statements, which will be included in the record. So
    we can have a full opportunity for an in-depth discussion, I
    would ask you to please try to summarize so we will have plenty
    of time for questions.
        Senator Ayotte, do you have a statement you would like to
    make at this time?

                   STATEMENT OF SENATOR KELLY AYOTTE

        Senator Ayotte. Thank you, Madam Chair. Thank you for
    calling this important hearing on the current readiness of U.S.
    forces in review of the Defense Authorization Request for
    Fiscal Year 2013 and the Future Years Defense Program (FYDP).
        I foremost want to thank the witnesses that are before us
    today. As we confront challenges around the world, I know that
    each of you have been tremendous leaders, and all of the
    soldiers that serve below you deserve our respect and
    admiration. I thank you all for what you are doing in very
    difficult times, both fiscally and also with the national
    security challenges we face, so thank you.
        On March 23, 1983, President Ronald Reagan delivered an
    important speech in the Oval Office. In his speech he said:
    ``What seems to have been lost in all this debate is the simple
    truth of how a defense budget is arrived at. It isn't done by
    deciding to spend a certain number of dollars. We start by
    considering what must be done to maintain peace and review all
    the possible threats against our security. There is no logical
    way that you can say, let's spend X billion dollars less. You
    can only say, which part of our defense measures do we believe
    we can do without and still have security against all
    contingencies? Anyone in Congress who advocates a percentage or
    a specific dollar cut in defense spending should be made to say
    what part of our defenses he would eliminate, and he should be
    candid enough to acknowledge that his cuts mean cutting our
    commitments to allies or inviting greater risk or both.''
        As I consider the national security threats facing our
    country and as I review the President's proposed fiscal year
    2013 defense budget, I worry that we are falling into the very
    trap that President Reagan warned us to avoid. I worry that
    President Obama's proposed defense budget is based more on, in
    my view, what was irresponsible in what we did in the Budget
    Control Act (BCA) and what the Office of Management and Budget
    has handed you in terms of a number that treats all Federal
    expenditures the same, rather than a clear-eyed, objective
    assessment of our U.S. national security interests and the kind
    of military that we need to protect those interests and the
    American people.
        As I consider this year's budget request, I have some
    serious concerns and a lot of questions that I look forward to
    discussing today. Let me quickly highlight some of my leading
    concerns for each of the Services.
        While we would certainly expect an Army end strength
    drawdown after withdrawal from Iraq and with a phased drawdown
    from Afghanistan, I would like to know what the reductions of
    72,000 from our Army end strength do for our forces and our
    national security needs. At a time when much of the Army has
    failed to achieve sufficient dwell time between deployments
    that is essential to allowing units to reset and retrain, I
    have serious questions about the 72,000 number. I am also
    concerned about the Army's plans to involuntarily separate
    thousands of mid-career officers and noncommissioned officers
    in order to achieve this drawdown. We talk about not breaking
    faith with our troops, and I am concerned that with this
    drawdown and with the position that we are taking in our plans
    to provide many of our mid-career officers involuntary
    separations--what does this do in terms of the morale of our
    All-Volunteer Force and also the strength of that force?
        At a time when there is consensus that our military needs
    to do more, frankly, with the risks around the world, that we
    need to be more agile and responsive, I am also concerned not
    only looking at the 72,000 reduction in the Army, but I would
    also like to have the same questions answered with respect to
    the 20,000 reduction of the Marine Corps, as well as the Marine
    Corps' decision to eliminate one maritime prepositioning
    squadron, which we have talked about at length before.
        At a time when we are increasing focus on the maritime-
    dominated Asia and Pacific region, when the Navy has
    approximately 30 fewer ships and subs than it has said
    previously our national security requires, and when the Navy is
    failing to meet 39 percent of our combatant commander
    requirements for attack submarines, I also remain concerned
    about postponing the procurement of the Virginia-class
    submarine. I am also concerned about the mismatch between our
    stated strategy that features an increased emphasis on the Asia
    Pacific and the Navy's continued shortfall in ships and
    submarines. I think these are important questions that we need
    to understand and the American people need to understand what
    risks we are incurring under this budget.
        At a time when the Air Force is working through the wear
    and tear of 20 consecutive years of combat operations with a
    fleet that is already 32 percent smaller and 43 percent older
    than in 1991, my concerns there are about our Air Force
    reducing their end strength by 10,000 airmen and cutting 246
    aircraft from the Air Force's inventory.
        To be clear, I am not one who opposes all cuts to the
    budget of DOD or our military. There is no question that there
    are reductions that need to be made. But as we seek to address
    our Nation's fiscal crisis and reduce Federal spending, there
    is no doubt that we need to understand what decisions are being
    made here, in light of our constrained resources, and what
    risks we are taking on as a Nation. I am concerned that there
    is a disconnect between our military capabilities and the
    number in the budget that you have been handed under the BCA
    from Congress.
        Secretary Panetta said, ``Let me be clear. You can't take a
    half trillion out of the defense budget and not incur
    additional risk. There is no margin for error.''
        As President Reagan said in 1983, we must make sure that
    any adversary who thinks about attacking the United States or
    our allies or our vital interests concludes that the risk to
    him outweigh any potential gains.
        I do not believe that creating a U.S. military with no
    margin for error is the best way to assure our allies or to
    deter our potential enemies, and that is what I am worried
    about. America and the world are safer and more prosperous when
    the United States maintains military power and strength beyond
    challenge.
        I think it is the preeminent purpose of this subcommittee
    and today's hearing, as much as is possible in this
    unclassified context, to drill down and ensure Congress and the
    American people understand the risk of this budget that we
    would incur with what you have proposed today and to our
    warfighters and to our country.
        Finally, Secretary Panetta has described the defense
    sequestration cuts as catastrophic, inflicting severe damage to
    our national defense for generations. He compared the cuts to
    shooting ourselves in the head. Even with these compelling
    statements, I am still amazed that Congress has not mustered
    the courage to make the tough decisions now to avoid these
    serious risks to our national security. Based on these
    statements by our Secretary of Defense, we need to hear from
    the witnesses and the leaders that are before us today about
    the impact of the $500 billion in defense sequestration cuts on
    each of your respective Services. I would also like to hear
    from each of the Services when you have to start planning for
    this, because I think there is a view around here that we can
    wait until December on the sequestration issue. But there is a
    lot of planning that would have to go into this, not only for
    you, but for the defense industrial base. So I would like to
    know how urgent this is in terms of Congress addressing this
    issue.
        While I recognize that DOD must play a responsible role in
    overcoming our debt and the spending crisis we face, which is
    no doubt, as Admiral Mullen said, the greatest threat to our
    national security, I am concerned that the size and scope of
    the budget cuts will expose our military forces to an
    unacceptable level of risk. This risk is being assumed at the
    precise time we are asking our military leaders to plan for an
    increasingly difficult set of circumstances around the world
    against a widening array of risks and question marks in terms
    of things that are happening around the world right now. We
    cannot repeat the mistakes of history by cutting our forces so
    much that we are unprepared for future contingencies. Our
    military and the American people deserve better, and it is my
    hope that today we can discuss these important issues.
        I thank all of the witnesses for being here, and I want to
    thank the chair for holding this important hearing.
        Senator McCaskill. Thank you, Senator Ayotte.
        We will begin the testimony now, and first we will hear
    from General Lloyd Austin, Vice Chief of Staff for the U.S.
    Army. Welcome, General Austin.

    STATEMENT OF GEN LLOYD J. AUSTIN III, USA, VICE CHIEF OF STAFF,
                               U.S. ARMY

        General Austin. Good morning, Chairman McCaskill, Ranking
    Member Ayotte, and Senator Inhofe, thank you for the
    opportunity to appear here today to discuss the current
    readiness of your U.S. Army. I have submitted a statement for
    the record and I look forward to answering your questions.
        These continue to be challenging times for our Nation's
    military, and we have been at war now for over a decade. In
    fact, at no other time in history have America's service men
    and women fought for so long a period with an All-Volunteer
    Force. As you are well aware, we are still heavily engaged in
    operations in Afghanistan. We recognize that our military and
    interagency efforts there are extremely important.
        In spite of the heavy demands placed on our personnel and
    equipment, I am pleased to report that ours remains a
    remarkably resilient force. Our soldiers are continuing to do
    an outstanding job, and they and their families have routinely
    done what we have asked of them. After more than a decade of
    war, hard fought in two separate theaters, America's All-
    Volunteer Force is highly capable and well led. This is due in
    no small part, to the encouragement and the strong support of
    Congress. I want to take this opportunity to thank all of you
    for your continued and steadfast commitment to our soldiers,
    Army civilians, and their families.
        We are certainly proud of all that we have accomplished as
    a national security team, which is comprised of our Military
    Services, our interagency partners, and allies and friends
    around the world. We also recognize that much work lies ahead
    of us, and while our priority continues to be the fight ongoing
    in Afghanistan, we are doing everything we can here at home to
    help heal and alleviate some of the stress on our personnel.
        Likewise, we have begun to retrograde, replace, and reset
    our equipment. The demands of the uncertain future security
    environment dictate that we continually prepare for the next
    fight, and accordingly, we are reshaping our Army and making
    necessary adjustments to our force structure and our training
    programs, recognizing that as the Army continues to adapt, we
    must be ready and capable of responding to a broader range of
    missions with fewer people.
        In the years ahead, America's Army will be smaller and
    leaner. Yet, it will also be sufficiently agile, adaptable, and
    responsive. This is critical to ensuring our ability to deter
    aggression and to decisively defeat any opponent. These
    characteristics will also enable us to grow capacity as needed
    in response to unforeseen contingencies.
        Key to our success, as you have frequently heard from our
    Secretary, Secretary McHugh, and our Chief of Staff, General
    Odierno, is balancing the three rheostats of force structure,
    modernization, and readiness, and that is where we are focusing
    our efforts.
        One area in particular where we will need Congress' help is
    ensuring continued overseas contingency operations (OCO)
    funding for end strength above 490,000. This funding is
    imperative to our ability to manage a gradual reduction to our
    end strength over the next 5 years from 560,000 to 490,000.
    Lack of OCO funding will drive us to a steeper drawdown,
    primarily through involuntary separations and other means, that
    could result in significant hardship for thousands of Army
    combat veterans and their families and generates a large bill
    for unemployment and other related costs.
        Likewise, we will need to fund reset for 2 to 3 years after
    we have completed the retrograde of equipment from Afghanistan.
    This is a request that this subcommittee has heard many times,
    but it bears a bit of repeating. Absent this funding, we will
    be required to accept risk in other areas at significant cost
    with a negative impact on readiness.
        We are confident that the strategy we have developed will
    enable us to achieve our objectives. That said, we must
    continue to work together to ensure our battle-tested Army
    remains the Nation's force of decisive action, ready today and
    prepared for tomorrow. I am confident that we are on the right
    path to do so at this time.
        Madam Chairman and members of the subcommittee, I thank you
    again for your continued support and demonstrated commitment to
    the outstanding men and women of the U.S. Army and their
    families. I look forward to your questions.
        [The prepared statement of General Austin follows:]
               Prepared Statement by GEN Lloyd J. Austin III, USA
        Chairman McCaskill, Ranking Member Ayotte, other distinguished
    members of the subcommittee, I thank you for the opportunity to appear
    before you today to discuss the readiness of your U.S. Army. This is my
    first opportunity to appear before this committee as Vice Chief of
    Staff of the Army. I look forward to working with you, and I pledge
    always to provide you with an honest and forthright assessment based
    upon my own experiences and best military judgment.
        On behalf of our Secretary--the Honorable John McHugh and our Chief
    of Staff--General Ray Odierno, I would also like to take this
    opportunity to thank all of you for your continued, strong support and
    demonstrated commitment to our soldiers, Army civilians, and family
    members. At no other time in history have our soldiers fought for as
    long a period. Throughout this decade of conflict their families have
    served alongside them, supporting them. In spite of the heavy demands
    placed on them, ours remains a remarkably resilient force. Today, our
    soldiers are better trained, better equipped, and more experienced than
    ever before. Our battle-tested Army remains the most agile, adaptable,
    and capable army in the world. This is largely due to the encouragement
    and congressionally-supported investment over the past 10-plus years of
    war. We thank you.
        Today, our shared focus remains to provide the best trained and
    most ready land forces necessary to win the current fight, while also
    maintaining adequate responsiveness for unforeseen contingencies. The
    reality is we have not fought the `war to end all wars.' While we
    recognize our force will be smaller and leaner in the years ahead, we
    must take the necessary steps to ensure it is still able to confront
    aggression and decisively defeat any opponent--anytime, anywhere.
    Ultimately our ability to do so will depend upon our overall level of
    readiness. Readiness is all about balance.
        The Army--operating as part of the Joint Force--is committed to
    providing combatant commanders with the capabilities, capacity, and
    diversity needed to be successful across a wide range of operations. To
    satisfy this enduring requirement, we have three rheostats that must be
    continuously assessed and adjusted: force structure, readiness and
    modernization. Clearly, these factors are interrelated. More
    importantly, decisions we make on each of them today will have a
    profound impact on the posture of the Army in the future. As I speak to
    you about readiness today, you'll see how providing for the readiness
    of the Army requires us all to retain the right perspective based upon
    our understanding of the past, present, and future.
        We are all well aware of the impact of prolonged demand and high
    operational tempo on our people and equipment. The strain on both,
    after fighting two wars in two separate theaters for more than a
    decade, is significant. A large percentage of our soldiers have
    deployed multiple times in support of operations in Iraq and
    Afghanistan, and other locations around the world. Many remain in
    Afghanistan where we are still heavily engaged in operations. Our
    primary focus as an Army continues to center on the fight ongoing in
    theater. We recognize that our military and interagency efforts there
    are extremely important. Likewise, the eventual transition out of
    Afghanistan will prove a very challenging, yet strategically important
    endeavor to the United States.
        Meanwhile, back at home we are focused on the many challenges and
    opportunities that we, as an Army, face after more than a decade of
    war. These include preserving and sustaining the health of the force--
    addressing issues, to include behavioral health injuries (e.g., post-
    traumatic stress, traumatic brain injury), the disability evaluation
    system, and transition services. The reality is the demand on our
    people and equipment over the past 10-plus years has been tremendous.
    We are taking the steps necessary to address the full range of health
    and discipline issues affecting our soldiers and family members. We
    also remain focused on strengthening soldiers' resiliency and coping
    skills through our Comprehensive Soldier Fitness and Master Resiliency
    Trainer programs. We must continue to be proactive in our efforts to
    help soldiers better deal with the stressors and challenges they are
    faced with in the current operational environment. Overall, our
    priority will continue to be providing soldiers and their families with
    a quality of life commensurate with their service. We also recognize
    that in coming years we will be required to retrograde, replace and
    reset much of our equipment. Ultimately, our goal in these parallel
    efforts is to sustain the high quality of our All-Volunteer Force--
    Active, Guard and Reserve--in order to defend the United States and its
    interests, while reshaping our force to prepare for a wider range of
    contingencies in the complex and unpredictable environments we find
    ourselves in today and for the foreseeable future.
        We also recognize we must accomplish all of these various tasks
    with limited resources and fewer people. We believe the strategy we
    have developed, based on the current situation and those future
    challenges we're able to identify, will enable us to achieve our
    objectives. Over time, as we transition out of Afghanistan, we will
    gain additional trade space and we will also continue to look for ways
    to do things more efficiently and more effectively. That said, as we
    prepare to address the next challenge or challenges facing us, we must
    ensure we always maintain the ability to regenerate capability very
    quickly. In other words, while we believe we are sufficiently resourced
    and prepared to meet the challenges currently ahead of us, adjustments
    may become necessary in the event that unforeseen contingencies or
    unexpected changes to the current situation arise in coming days.
        In the meantime, as you are all well aware, we are making
    reductions to our end strength and proceeding in a thoughtful, yet
    deliberate manner. As Secretary McHugh stated, ``What's critically
    important is that no matter what the force ultimately looks like, we
    have sufficient time to ramp down, to ensure that we do it in a
    balanced way, that we have what is necessary for training, equipment
    and resets.'' The Army must ultimately maintain the full capability to
    conduct Unified Land Operations: to seize, retain, and exploit the
    initiative through the decisive action of offensive, defense or
    stability operations. Our Nation demands we be prepared to operate
    successfully across this expansive mission set.
                                force readiness
        Readiness is non-negotiable and our top readiness challenge is to
    ensure that next-to-deploy units have the resources and training needed
    to accomplish their assigned missions. To date, we are meeting our
    priority requirements, specifically those requested by geographic
    combatant commanders in theater. However, due to sustained demand
    against programmed availability, Army units have been achieving the
    required levels of training and readiness closer and closer to required
    deployment dates. This has increased the risk to geographic combatant
    commanders by reducing operational flexibility.
        As demand for forces continues to decline we do expect the
    readiness of those next to deploy forces to improve earlier in their
    deployment cycle. Of course this is dependent upon a reduced demand on
    the force, and will continue to be carefully assessed especially given
    the projected reductions to end strength. As part of the new Department
    of Defense (DOD) Strategic Guidance (DSG), the Army will reduce end
    strength in two components. The Active component will draw down 79,000
    soldiers to 490,000 by the end of fiscal year 2017. In the Reserve
    component, by fiscal year 2018, the Army National Guard will draw down
    8,000 to 350,200. The Army has conducted extensive analysis and has
    concluded that we will maintain sufficient capability with end strength
    at 490,000 to meet the demands described in the DSG.
        The readiness of Army units is tied to the Army's Force Generation
    (ARFORGEN) model which allows units to build and synchronize readiness
    over time in order to meet mission requirements. The ARFORGEN model has
    served us well in recent years in support of operations in Iraq and
    Afghanistan. However, we recognize that we will have to modify this
    model to ensure we are able to effectively meet the demands of the
    future security environment. We envision a progressive readiness model
    which will better align our Active and Reserve component units to
    leverage their unique capabilities and be responsive to geographic
    combatant commander requirements.
        A key component of the ARFORGEN model is training. Training is the
    cornerstone of Army readiness. Over the past 10-plus years, Congress
    has provided the necessary resources to prepare our soldiers and our
    formations properly. For example, Overseas Contingency Operations (OCO)
    funding has allowed our brigade combat teams to execute mission
    rehearsal exercises at the Army's Combat Training Centers. The quality
    of pre-deployment training at the National Training Center, the Joint
    Readiness Training Center and the Joint Multinational Readiness Center
    has been extraordinary. These centers--which have transformed and
    adapted themselves--enable our leaders and soldiers to validate their
    tactics, techniques and procedures prior to deploying, leverage lessons
    learned and foster adaptability. Over the past decade of war, this
    training has undoubtedly saved lives in Iraq and Afghanistan.
        The Army must retain the flexibility to conduct a broad range of
    missions including: regular and irregular warfare, humanitarian
    assistance operations, security force assistance, and support to civil
    authorities in a hybrid environment marked by uncertainty and
    complexity. As pressures for cuts in defense spending and force
    structure increase, the Army will assess which capabilities to
    emphasize, how many of each, and at what level, recognizing that
    finding the right mix will be a challenge.
        Finally, our Reserve component (RC) forces are a crucial element of
    the Army's overall deployable strength and warfighting team. Over the
    past decade of war they have provided essential operational
    capabilities and specific functions in support of the Army. To ensure
    we are able to maintain the readiness of our RC forces, the Army
    included resources for the National Guard and Army Reserve within the
    fiscal year 2013 base budget, including additional resources for
    collective training, full-time manning, and medical/dental readiness.
    We remain committed to ensuring our citizen-soldiers and their families
    receive the support they deserve, both while they are serving on active
    duty and after they have returned to their communities back home.
                               materiel readiness
        Our ability to outfit the men and women of our Army with the best
    equipment in the world remains fundamental to our overall readiness.
    Over the past decade, we have maintained operational readiness rates in
    theater exceeding 90 percent for ground systems and 75 percent for
    aviation systems. Since November 2008, all three components--our Active
    component, National Guard, and Army Reserve--have significantly
    improved in terms of equipment-on-hand readiness. These improvements
    have come about as a result of your investment in our Army. Our
    soldiers, civilians, and contractors have done an exceptional job
    restoring the readiness of our equipment returning from harsh
    environments.
        As Commander of U.S. Forces-Iraq, I oversaw the transition of
    mission and the retrograde of people and equipment out of Iraq after
    nearly a decade of war. It was a complex endeavor from which we learned
    many valuable lessons. These lessons will certainly be applicable in
    Afghanistan, recognizing that the challenge there will, in all
    likelihood, be more complex--given the difficult terrain and the
    tyranny of limited infrastructure. The Army has carefully planned and
    refined our retrograde, reset, and redistribution process to be
    synchronized with the ARFORGEN process to ensure the right equipment
    gets repaired and redistributed to the right units.
        Reset is a cost of war and it prepares our equipment for an
    unpredictable future and evolving threats. The Army would not be as
    ready as it is today without the tremendous level of support received
    from Congress for equipment reset. In fiscal year 2012, Congress
    appropriated $4.3 billion for reset. For fiscal year 2013, the Army
    requested $5.445 billion for reset. The Army's reset request for fiscal
    year 2013 anticipates a higher level of effort than fiscal year 2012,
    due to the retrograde of equipment from Iraq and increasing need to
    recapitalize or replace combat equipment. Our need to reset does not
    end when troops leave the theater of operations. In fact, it will
    likely continue for 2 to 3 years after our troops return home to ensure
    equipment readiness is restored for future contingencies.
        Army Prepositioned Stocks (APS) remain a key strategic source for
    force projection. APS equipment sets have been used several times in
    the last 10 years and will continue to be a strategic asset in the
    future. Thanks to continuous support of Congress, the Army is on track
    and funded to reconstitute all APS sets by 2015. We are currently
    reassessing our APS strategy in light of new DSG and emerging needs of
    combatant commanders. The flexibility provided by these critical assets
    ultimately enables us to further reduce our strategic risk, thus
    contributing significantly to the future readiness of our Army.
                                future readiness
        As we transition the Army to align with new strategic guidance, we
    recognize that we must balance end strength/force structure, readiness,
    and modernization in order to maintain our ability to respond as needed
    to unforeseen contingencies and to achieve maximum operational
    strategic flexibility. Again, as our Chief--General Odierno has said,
    our force will be smaller and leaner in the years ahead, but also more
    agile, flexible, deployable and technologically advanced. It must be
    tailored to ensure it is capable of meeting a wider range of
    contingencies and emerging threats. In part, this will be achieved by
    strengthening our key alliances and partnerships through regional
    alignment, overseas rotational deployments, and other innovative ways
    identified to sustain our presence around the world.
        Equally important will be our continued investment in our training
    and modernization programs. The Army's ability to enter an operational
    environment and dominate hinges on the equipment available to our
    soldiers and the training conducted prior to joining the fight. Too
    often in our Nation's history our forces have found themselves
    unprepared for the first battle. As we look ahead and plan for the next
    fight, we must ensure we have resourced our training programs properly
    and invested sufficiently in our research, development, and
    modernization efforts to ensure that the Army is prepared to win the
    next first battle decisively. To be sure, this is not solely about
    resources. It is also about leadership, doctrine, and adapting training
    strategies. We must ensure we continue to take the necessary steps to
    ensure our soldiers' are trained, resourced, and equipped to succeed in
    the future.
                          where we need congress' help
        Critical to our success will be Congress' continued support of
    operations ongoing in theater. In particular, we will require OCO
    funding for end strength above 490,000 (Active component) in order to
    support a gradual ramp over the next 5 years. This will enable us to
    take care of our soldiers and maintain flexibility while providing
    necessary support to forces in Afghanistan. As I mentioned earlier, we
    will need to fund reset for 2 to 3 years after we have completed the
    retrograde of equipment from Afghanistan. Reset is a true cost of war.
    The length of reset depends upon the pace of retrograde, volume of
    equipment to be reset, and repair cycle time of major systems (e.g.,
    240 days for aviation assets). Likewise, future cost estimates
    ultimately depend upon force structure decisions, condition of
    equipment, and plans for redistribution of equipment to the Afghan
    National Security Forces.
        Overall, while recognizing the Nation's deficit challenges, it is
    imperative that any future reductions to the Army's budget be based on
    comprehensive strategic analysis. We must preclude hollowing the Army
    by maintaining balance in force structure, readiness, modernization
    efforts and commitments to our All-Volunteer Force. Simply stated, we
    must remain an agile Army able and capable of winning the current fight
    while also meeting future challenges.
        Necessary to maintaining this balance is avoiding sequestration
    that would subject the Army to massive cuts that will have a
    devastating effect and carry the very real risk of producing a hollow,
    unbalanced, or weaker force. Such reductions would adversely impact our
    modernization efforts, the defense industrial base, and ultimately, our
    ability to respond to worldwide threats and unforeseen contingencies.
    Additionally, we would be forced to reduce military construction and
    operations and maintenance which would result in risk to training and
    our overall readiness. Moreover, we risk breaking faith with our
    soldiers and family members who have performed superbly over 10-plus
    years of conflict. Sustaining the All-Volunteer Force is absolutely
    essential to our ability to support our Nation's defense.
                                   conclusion
        With Congress' support, we have built a remarkable force that has
    performed magnificently in all endeavors over the past decade of war.
    It is better trained and equipped and our young leaders are better
    prepared than at any other time in history. Your Army, together with
    our joint partners, will continue to serve as a bulwark against the
    compounding risks inherent in an uncertain and rapidly changing world.
    These continue to be challenging times for our military and for our
    Nation. Leaders throughout our Army remain focused on effectively
    addressing current challenges, particularly with respect to fiscal
    demands and health of the force, while also determining the needs of
    the force for the future.
        While we all recognize the requirement to make tough choices and
    necessary sacrifices in the days ahead, we also recognize that we must
    do so responsibly in order to ensure that what remains is a force able
    and capable of successfully meeting our national security requirements.
    Whatever its size, our Army must remain highly-trained, equipped, and
    ready. Maintaining credibility based on capacity, readiness, and
    modernization is essential to averting miscalculations by potential
    adversaries. Our Nation can accept nothing less.
        Madam Chairwoman, members of the subcommittee, I thank you again
    for your steadfast and generous support of the outstanding men and
    women of the U.S. Army, our Army civilians, and their families. I look
    forward to your questions.

        Senator McCaskill. Thank you so much.
        Next we will hear from Admiral Mark Ferguson, Vice Chief of
    Naval Operations, U.S. Navy.

    STATEMENT OF ADM MARK E. FERGUSON III, USN, VICE CHIEF OF NAVAL
                         OPERATIONS, U.S. NAVY

        Admiral Ferguson. Madam Chairman, Senator Ayotte, and
    distinguished members of the subcommittee, it is an honor to
    represent the men and women of the Navy and review the
    readiness of the force with you today.
        As we prepared our fiscal year 2013 budget request, our
    decisions were driven by the new defense strategy and our
    sailing directions for the Navy, emphasizing warfighting,
    operations forward, and readiness. We focused on funding the
    critical elements of readiness as we balanced our investments
    in future capability, operations and maintenance, personnel,
    training, and spares.
        Our budget proposes reductions in force structure and
    delays in the procurement of some new platforms to ensure the
    wholeness of our remaining force. Importantly, we invested in
    maintaining a sustainable deployment model to allow for the
    reset and stride of our forces between rotational deployments
    as well as in selected ordnance and training for the fleet.
        We also focused on enhancing our forward presence to
    mitigate a reduced force structure such as placing four Arleigh
    Burke-class destroyers in Rota, Spain, and planning for the
    forward stationing of littoral combat ships in Singapore.
        Quite simply, we prioritized readiness and capability over
    capacity to ensure we deliver a ready and relevant Navy now and
    in the future.
        This budget submission, which includes baseline and OCO
    funding, supports the requirements of the combatant commanders
    as adjudicated by the Joint Staff in the global force
    management (GFM) process with some available capacity to
    provide surge forces in support of our major operational plans
    and other emergent needs.
        It is important to note the combatant commander demand for
    naval forces is much higher than approved in the GFM process
    and is steadily growing. We have been operating at a wartime
    tempo for over 10 years and continue to stress the force as we
    draw down from two land campaigns. Our forces are ready but
    show the strain of this pace. Let me give you an example.
        Today, the Navy is surging to provide two aircraft carrier
    strike groups in the Middle East while at the same time
    sustaining a continuous carrier strike group presence in the
    western Pacific. In response to heightened tensions, we are
    augmenting our forces in the U.S. Central Command area with
    additional mine countermeasures assets, patrol craft, and a
    float-forward staging base support vessel, the refitted USS
    Ponce.
        This agility of naval forces to respond to crises is
    preserved through our investments in maintenance and training.
    Supporting this current level of surge above our program budget
    levels is not sustainable over the long term within our current
    level of resources. To sustain this high operational tempo
    (OPTEMPO), we will face the choice between reducing the
    maintenance on our platforms and shortening their expected
    service lives, reducing the training in our personnel, or
    increasing the stress on our force through longer deployments.
        Today, we are dependent upon the receipt of OCO or similar
    supplemental funding to sustain our readiness. This year, the
    added cost of providing these surge forces, given fuel cost
    increases, is placing added pressure on our readiness accounts
    and execution. We are working with DOD to address the challenge
    of these additional costs without affecting our overall
    readiness.
        Madam Chairman, Senator Ayotte, and distinguished members
    of the subcommittee, you can be proud of the exceptional
    service of the men and women of our Navy. Our sailors are the
    highest quality force in our history and they make us the
    finest Navy in the world. I appreciate the support of the
    subcommittee for our Navy and its readiness and appreciate the
    opportunity to testify and look forward to answering your
    questions. Thank you.
        [The prepared statement of Admiral Ferguson follows:]
              Prepared Statement by ADM Mark E. Ferguson III, USN
        Chairman McCaskill, Senator Ayotte, and distinguished members of
    the Senate Armed Services Subcommittee on Readiness and Management
    Support, it is my honor to appear before you to testify on the
    readiness of our Navy.
        Our fiscal year 2013 budget request seeks to meet operational
    requirements while sustaining the readiness of our ships and aircraft
    over the course of their expected service lives. We viewed readiness
    through the lens of Admiral Greenert's three tenets--``Warfighting
    First, Operate Forward, and Be Ready''--in his ``Sailing Directions''
    for the Navy. The new Defense Strategic Guidance and the fiscal limits
    dictated by the Budget Control Act of 2011, guided our choices. We
    reduced force structure and reduced procurement of new platforms to
    ensure ``wholeness'' of our existing force structure. We focused on
    enhancing our forward presence to mitigate reduced force structure,
    placing four Arleigh Burke class destroyers in Rota, Spain and planning
    for the forward stationing of Littoral Combat Ships (LCS) in Singapore
    and additional patrol craft and minesweepers in Bahrain. Our decisions
    prioritized readiness and capability against emerging threats over
    force structure to deliver a ready and relevant Navy now and in the
    future.
        We remain fully able to meet the combatant commander requirements
    as adjudicated through the Secretary of Defense-directed Global Force
    Management (GFM) process. As we respond to emergent requests for
    forces, the Navy is prepared to source these requests with combat-ready
    forces. To be clear, the global demand for naval forces is much higher
    than approved in the GFM process, and exceeds our sustainable capacity
    over the long term. Supporting this higher demand above programmed
    levels will require additional funding or reprogramming actions in the
    current year, and could impact the service life of our platforms should
    we compress maintenance timelines. Should this demand continue
    unabated, our potential risk would be reduced surged capacity in the
    future and increased stress on the force due to longer deployment
    lengths. As an example of the impact of this higher demand, the USS
    Bataan recently returned from a nearly 11 month deployment supporting
    operations in the European, African, and Central Command areas of
    operation. While sustaining our overall global presence levels, the
    Navy is also responding to the heightened tension in the Central
    Command region. We have deployed two Carrier Strike Groups, and are
    preparing to deploy additional staff, surface combatants, mine
    sweepers, mine clearance helicopters, patrol craft, and the USS Ponce
    as a deterrent force. The cost of providing these additional forces
    forward, together with fuel cost increases, have placed pressure on our
    readiness accounts. Every $1 increase in the price per barrel of fuel
    results in approximately $31 million of additional cost annually above
    our budgeted level. The deployment of additional forces forward will
    cause us to divert resources from other accounts to fund this bill. We
    are actively exploring means to ensure we can continue to provide the
    high levels of readiness we enjoy today while still meeting this demand
    within our budget.
                               a ready navy today
        We are ready today to respond to contingencies with the highest
    quality force in our history. As previously discussed, we continue to
    experience high operational tempo globally, and sustaining it remains
    dependent upon the receipt of overseas contingency operations (OCO) or
    similar supplemental appropriations. We are taking risk in the
    readiness of our nondeployed forces to maintain very high levels of
    readiness in our deployed forces. The fiscal year 2013 budget,
    including OCO funding, supports the anticipated needs of the combatant
    commanders, as adjudicated through the GFM process, with some capacity
    to provide surge forces in support of their major operational plans and
    other emergent needs. We are dependent on OCO funding in the near term
    to sustain these readiness levels.
        The Navy manages force generation using the Fleet Response Plan
    (FRP). This plan establishes a sustainable cycle of deployment,
    sustainment, maintenance, and training for individual units and task
    groups. With this process, the Navy generates the capacity to provide
    forces required to meet global presence demands and supports a force
    for surge response for contingencies, homeland defense, and training.
    The plan operates as a cycle, so that forces undergo maintenance,
    training, and then deployment periods in defined periods.
        For over 10 years, Navy forces have been operating at a war-time
    pace, which has resulted in more underway days, deferred maintenance,
    missed training, and increasing deployment lengths. A critical element
    of our fiscal year 2013 budget is the adjustment of the FRP cycle to
    ensure the long-term readiness of the fleet. This realignment provides
    additional time for training and maintenance while providing greater
    deployment availability. The flexibility of this approach enables the
    Navy to better surge forces in response to contingencies.
                                ship operations
        The baseline fiscal year 2013 budget request, plus OCO, funds the
    Ship Operations account at 96 percent of our projected requirement.
    This funding profile enables the Navy to meet the operational
    requirements of the combatant commanders for our forward forces and to
    conduct FRP training and certification requirements with manageable
    risk. It provides for a nominal 2.5 Carrier Strike Group presence, 2.6
    Expeditionary Strike Group/Amphibious Strike Group presence, and 34
    independent surface combatant presence with an average ship's OPTEMPO
    of 58 steaming days per quarter (deployed) and 24 steaming days per
    quarter (nondeployed). This level of funding also supports two Carrier
    Strike Groups ready to surge within 30 days and one Carrier Strike
    Group ready to surge within 90 days. Measures such as increased use of
    simulators, concurrent training and certification events while
    underway, and the judicious use of fuel, are used to mitigate this
    risk.
                      air operations (flying hour program)
        The fiscal year 2013 baseline budget, plus OCO, funds the Flying
    Hour Program (FHP) to 100 percent of our requirement for the operation,
    maintenance, and training of 10 Navy carrier air wings, 3 Marine Corps
    air wings, Fleet Air Support (FAS) squadrons, training commands,
    Reserve Forces, and support activities. It is resourced to achieve an
    operational availability of three Carrier Air Wings deployed, two
    Carrier Air Wings ready to surge within 30 days, and two Carrier Air
    Wings ready to surge within 90 days. Our individual Navy and Marine
    Corps aviation units are funded to achieve a defined training-rating
    level for deployment or surge operations. We are increasing the use of
    simulation to use non-deployed flying hours most effectively, and
    continuing to invest in new simulators. To preserve aircraft service
    life, we are also upgrading existing simulators to reduce aircraft
    flying hours.
                       fleet training and training ranges
        To support ready Navy, we continue to invest in new or improved
    training capabilities. Our budget submission requests funding for the
    upgrade of the Navy Continuous Training Environment (NCTE) network that
    supports our Fleet Synthetic Training program, and extends the NCTE to
    support the four ballistic missile defense-capable guided missile
    destroyers to be forward stationed in Rota, Spain. Live training is
    enhanced by the accelerated procurement of high speed maneuverable
    surface targets and electronic warfare threat emitters, while we
    continue development of threat representative enhanced air targets.
    This budget also supports expanded live fire training on our ranges
    with surface-to-air missiles to ensure operator proficiency.
        To ensure that proficiency and confidence in our ability to use our
    weapons and sensors, we shifted procurement, research and development,
    and readiness funds toward selected weapons systems, sensors, and
    tactical training that can be rapidly fielded to the fleet. Key
    investments include increases in quantity for Evolved Sea Sparrow
    Missile, MK 48 Heavy Weight Torpedo, sonobuoys, Advanced Precision Kill
    Weapon System, and Hellfire. We increased funding for exercise ordnance
    to increase live-fire training and improve operator proficiency across
    the force.
                             a ready navy tomorrow
        Our fiscal year 2013 Navy budget submission balances the need to
    meet today's operational requirements with the need to sustain our
    force and develop the capabilities needed for emerging threats. Our
    shipbuilding and aviation construction investment is focused on designs
    that promote readiness of the future force. This budget supports our
    proven sustainment models for nuclear aircraft carriers and submarines,
    continues our investment in the readiness or our surface combatants,
    and supports the transition and integration of new capabilities into
    naval aviation.
        There are three major attributes that we incorporated in the future
    force: adaptability, ability to remain forward, and inherent training
    capability. Platforms such as the Freedom and Independence class LCS,
    Virginia-class submarines, and the P-3A Poseidon maritime patrol and
    reconnaissance aircraft, incorporate adaptability to support future
    capability evolution through new payloads. LCS also improves our
    ability to remain forward through rotational crewing while Joint High
    Speed Vessels and Mobile Landing Platforms will be able to spend three
    times as long forward deployed as today's frigates and destroyer
    because of their rotational civilian crews. Our shipbuilding and
    aviation investments will also provide for onboard capability for
    simulation and training in platforms such as the P-8A and Arleigh Burke
    destroyers.
        Our baseline budget request, plus OCO, fully funds ship maintenance
    requirements and reduces surface ship maintenance backlog during mid-
    life availabilities. Reaching expected service life requires an
    integrated engineering approach to plan, fund, and execute the right
    maintenance. Over the last 2 years, we have made significant progress
    to better define the maintenance requirement necessary to improve
    surface ships material readiness and achieve expected service life.
        The Surface Maintenance Engineering Planning Program (SURFMEPP) has
    established ship maintenance requirements based on disciplined
    engineering processes, similar to those used by our carrier and
    submarine communities. Since its inception in 2010, it has developed
    Technical Foundation Papers for five of our seven major combatant ship
    classes. The last two, Mine countermeasures and LCSs, are scheduled to
    be completed by fiscal year 2014. These documents specify the
    periodicity, size, duration, and scope of the maintenance required for
    each class. The fiscal year 2013 budget submission was informed by this
    level of detail for CG-47, LPD-17, LHD-1, DDG-51, and LSD-41/49
    classes. Under this new process, availability planning, execution, and
    certification are codified; all required maintenance actions are
    tracked to completion; and all proposed maintenance deferrals are
    formally reviewed to ensure adjudication by the appropriate technical
    authority and rescheduling in a follow-on availability or other
    appropriate window of opportunity.
        The maintenance community has also focused on becoming better at
    ``condition-based'' planning through documentation and analysis. For
    example, ship tank condition has been identified as a key factor to
    reducing growth work and maintenance availability extensions, so it is
    now aggressively monitored. Tank corrosion prevention and repairs have
    been incorporated into individual ship life cycle maintenance plans.
    The goal is to document the condition of 95 percent of all tanks by the
    end of fiscal year 2014. The Navy is also continuing our partnership
    with the American Bureau of Shipping in performing detailed surface
    ship structural surveys using commercially proven processes and
    procedures.
        We have also addressed manpower concerns, restoring some billets
    previously removed from our ships to provide them with the capacity and
    capability to improve their operational and material readiness. This
    process began in fiscal year 2012 with an increase of 1,105 technically
    skilled sailors returning to sea duty. An additional 1,107 billets will
    be added to seagoing commands in the coming year. The increase in both
    sailor and civilian manning at our Regional Maintenance Centers (RMCs)
    also continues under this budget submission. This increased staff
    provides the RMCs with appropriate skill-sets to execute Navy
    maintenance, supports quality shore duty for Sea/Shore rotation, and
    establishes a journeyman training continuum for sailors that will
    increase a ship's capability to document and fix maintenance issues.
        Navy is also committed to the right level of ship maintenance at
    the most efficient cost. We continue efforts to reduce the total cost
    of ownership of the fleet, as we have done with SSN 688 and SSN 774
    class submarines, through continued analysis of engineered technical
    requirements and assessment of recently completed availabilities.
        The cyclic nature of ship and submarine depot availabilities from
    year to year continues to cause variations in budget requests and
    annual obligation levels. Surface ship availabilities are conducted
    almost exclusively in the private sector, while submarine and aircraft
    carrier availabilities are primarily conducted in the public sector,
    with selected availabilities completed by nuclear-capable private
    shipyards. Whenever practical, maintenance is performed in the ship's
    homeport to minimize the impact on our sailors and their families. The
    Navy recognizes maintenance organizations need a stable and level
    workload to maximize efficient execution. We continue to level the
    workload to the maximum extent practicable within operational
    constraints.
                              aviation maintenance
        The Naval Aviation Enterprise applies continuous process
    improvement (CPI) tools to deliver readiness with greater efficiency.
    CPI produces readiness by increasing the speed, reliability, and
    predictability of processes associated with integrated maintenance and
    supply chain replenishment. The fiscal year 2013 budget submission
    supports continuing CPI efforts, such as those which developed repairs
    for high cost consumable items for the FA-18 and MV-22, providing
    measurable savings. Additionally, our fiscal year 2013 budget request
    invests in long-term enhancements to the overall material condition of
    naval aircraft, such as corrosion prevention teams.
        Our budget request for depot airframe and engine workload supports
    94 percent of the aviation depot maintenance fleet and Reserve
    requirement. This achieves an acceptable balance between funding for
    the full range of Navy requirements and operational risk. It will
    result in 720 airframe and 2,070 engine depot inductions during the
    year, and a projected backlog of 14 airframes and 273 engine depot
    requirements. This is assessed to be an acceptable level of risk, and
    the program will be monitored during the execution year to ensure fleet
    readiness requirements are met.
                           navy expeditionary forces
        Although a smaller part of the overall Navy operations and
    maintenance budget, Navy expeditionary forces support global missions
    by deploying security, construction, logistics and training units. Our
    fiscal year 2013 budget request for Navy Expeditionary Combat forces,
    of which 50 percent is OCO, fully funds operational requirements, such
    as Explosive Ordnance Disposal, Maritime Expeditionary Forces, and
    Naval Construction Forces.
                                shore operations
        The Navy's shore infrastructure--both in the United States and
    overseas--provides essential support to our fleet. In addition to
    supporting operational and combat readiness. it is also a critical
    element in the quality of life and quality of work for our sailors,
    Navy civilians, and their families. The fiscal year 2013 budget
    submission emphasizes ship and air operations, as well as sailor and
    family readiness.
        Our fiscal year 2013 budget submission funds port and flight line
    operations, safety and security, and family support programs within
    Base Operating Support. Meanwhile, we continue to target our Facilities
    Sustainment, Restoration, and Modernization funding toward facilities
    directly supporting operations, such as airfields, hangars, piers. and
    barracks.
        The Navy's planned fiscal year 2013 shipyard investment of $248
    million is in compliance with the National Defense Authorization Act
    (NDAA) 6 percent investment requirement for infrastructure
    improvements. However, based on modifications to the accounting roles
    for minimum capital investment in the 2012 NDAA enacted December 2011,
    our Fleet Readiness Centers are below that level. Planned fiscal year
    2013 Navy average investment level is now 5.3 percent, and we are
    currently reviewing options to increase depot investment during fiscal
    year 2013 execution to ensure compliance. We continue to sustain and
    recapitalize our shipyards within today's fiscally constrained
    environment, focusing on mission-critical facilities such as production
    shops, piers, wharves, and dry docks. We mitigate the level of
    deliberate risk we take in the sustainments of our infrastructure by
    prioritizing projects for repair.
             family readiness programs and child and youth programs
        The Navy's Family Readiness programs enhance mission readiness by
    assisting commanding officers, sailors, and their families in managing
    the demands of the military lifestyle. This budget request increases
    funds for warfighter and family readiness programs to include child
    development centers, services for exceptional family members, sexual
    assault prevention, and Wounded, Ill, and Injured Warriors. Our Navy
    Child and Youth Programs provide high-quality educational and
    recreational programs for Navy children ages 6 weeks through 18 years
    in multiple venues. All programs are operated in accordance with the
    Military Child Care Act, and are Department of Defense-certified and
    nationally accredited. We recently expanded our childcare facilities by
    7,000 spaces, and will meet the Secretary of Defense's goal of
    providing for at least 80 percent of the ``potential need'' by the end
    of this year.
                                    housing
        Our budget request also sustains funding for quality housing which
    significantly impacts sailor retention, productivity, and individual
    and mission readiness. Our Bachelor Housing program is focused on
    providing Homeport Ashore housing for our junior sea-duty sailors by
    2016, and attaining the Office of the Secretary of Defense (OSD) goal
    of 90 percent of our bachelor housing evaluated as being ``adequate''
    on a quality scale rating. We have requested $195 million in fiscal
    year 2013 to improve the condition of our existing barracks to continue
    progress toward this goal.
        We maintained funding for the operation and maintenance of Navy
    Family Housing in this budget. Navy is on track to achieve OSD's goals
    of 90 percent ``adequate'' family housing inventory by 2017. Our fiscal
    year 2013 budget submission funds family housing improvements,
    planning, and design, in addition to the operation and maintenance of
    our approximately 10,000 Navy-owned and 3,000 leased homes. We have
    privatized 97 percent of our continental United States and Hawaii
    family housing inventory and continue to perform oversight of our
    privatized housing to ensure Navy sailors and their families benefit
    from quality housing and services.
                                   conclusion
        We will continue to ensure our Navy remains ready to meet the
    demands of the national security strategy with acceptable risk. Our
    sailors are the highest quality, most diverse force in our history and
    make us the finest Navy in the world. On behalf of all these men and
    women--Active, Reserve, and civilian--thank you for your continued
    support of the U.S. Navy.

        Senator McCaskill. Thank you, Admiral Ferguson.
        Next we will have General Joseph Dunford, the Assistant
    Commandant of the U.S. Marine Corps. Welcome, General.

       STATEMENT OF GEN. JOSEPH F. DUNFORD, JR., USMC, ASSISTANT
                     COMMANDANT, U.S. MARINE CORPS

        General Dunford. Madam Chair, Ranking Member Ayotte,
    members of the subcommittee, thank you for the opportunity to
    represent your marines this morning. I would like to begin by
    just making a few key observations regarding our current and
    our future readiness.
        Today, of the 197,000 marines on Active Duty and the 39,000
    in the selected Marine Corps Reserve, 26,000 are forward
    deployed, 18,000 of those are in Afghanistan.
        Our number one priority is ensuring that our forward-
    deployed forces are well-manned, trained, and equipped, and as
    a result of your support, I can assure you that those marines
    and sailors that are forward deployed are at the highest state
    of readiness.
        But our forward-deployed units have personnel and equipment
    requirements that exceed standard allowances. The additional
    equipment is due to the nature of the fight in Afghanistan and
    the very distributed nature of operations. The additional
    personnel are required to support staffs and trainers for
    Afghan security forces. We meet these additional requirements
    by pulling equipment and personnel from units at home station.
        As Madam Chair mentioned in her opening remarks, our units
    at home station continue to experience significant personnel
    and equipment shortages. In fact, over the past several years,
    approximately two-thirds of our units at home station have been
    in a degraded state of readiness. Home station readiness is a
    particular concern for the Nation's expeditionary force in
    readiness. The forces at home station represent our capability
    to respond to unexpected crises and contingencies. Over the
    past 2 years, units at home station have responded to several
    unplanned requirements. In these cases, marines have days and
    in some cases hours to respond, and we are reminded that crisis
    response is a ``come as you are'' event.
        As we draw down our forces in Afghanistan, we will begin to
    address these deficiencies at home station and improve our
    ability to respond to unexpected crises and contingencies. The
    critical element in improving our readiness is the reset of
    equipment coming out of Afghanistan. We currently estimate the
    ground equipment reset liability at $3.2 billion. This is our
    strategic reset liability. This forecast is primarily based on
    the replacement of combat losses, the restoration of items into
    serviceable condition, and the extension in service life of
    selected items. We believe it will take 2 to 3 years of
    overseas contingency funding to complete reset once our
    equipment returns from Afghanistan.
        In addition to the strategic reset, we have asked for $1.3
    billion in our fiscal year 2013 budget request, and this is to
    cover what we call operational reset. It addresses the current
    cost of war to include replenishing missiles, ammunition, depot
    level repair of certain equipment, and the replacement of
    destroyed equipment.
        As we work to meet current requirements and set the
    conditions to improve readiness, we are also ensuring that we
    have the right training, organization, and modernization to
    meet future challenges. Our current plan is to develop and
    maintain an Active Force of 182,000 marines and the selected
    Marine Corps Reserve of 39,500 marines. We believe that
    structure, filled with high-quality marines and combined with
    our aviation and ground modernization initiatives, will allow
    us to meet the requirements of the new strategy. With your
    continued support, that force will be manned and equipped as a
    force of readiness. It will be designed to be forward deployed
    and forward engaged and it will be prepared for a wide range of
    crises and contingencies.
        Thank you. I look forward to your questions.
        [The prepared statement of General Dunford follows:]
               Prepared Statement by Gen. Joseph F. Dunford, USMC
        Today's marines are thoroughly trained, combat proven and are
    meeting all Operation Enduring Freedom (OEF) and combatant commander
    requirements. The approximately 18,000 marines deployed in Helmand
    Province under Regional Command South-West remain our top priority.
    Rotation after rotation, their professionalism and morale remain high.
    In the last several years they have successfully created the conditions
    for the Afghan National Security Forces to grow and mature, and they
    have given the Afghan people an opportunity for a better future.
    Outside of Afghanistan, marines have been ready and able to respond to
    a range of incidents, from natural disasters to civil uprisings, and
    they stand ready and able to respond to future incidents that threaten
    our Nation's interests regardless of the location or the nature of the
    occurrence.
                               current readiness
        Readiness comes at a cost, and the high readiness of the deployed
    forces comes at the expense of our nondeployed units' readiness. The
    Marine Corps can sustain its current operational requirements on an
    enduring basis; however, to maintain the high readiness of our forward
    deployed units, we have globally sourced equipment and personnel for
    Afghanistan and other emerging threats from our non-deployed units. The
    nondeployed forces' principal readiness detractor is the reduced
    availability of equipment at home stations with which to outfit and
    train units. The manning of our home station units also suffers due to
    the need to properly resource deploying units and meet the personnel
    requirements for Individual Augments and Security Force Assistance
    Teams. The primary concern with the out-of-balance readiness of our
    operating forces is the increased risk in the timely response to
    unexpected crises or large-scale contingencies, since the nondeployed
    forces likely would be the responders.
                              resetting the force
        Reset is a subset of reconstitution and comprises the actions taken
    to restore units to a desired level of combat capability commensurate
    with the units' future missions. After more than a decade of combat,
    this will require an unprecedented level of effort. The Marine Corps is
    resetting its forces ``in stride'' while fighting the war in
    Afghanistan and transitioning to the new Defense Strategic Guidance
    (DSG). Unlike previous post-conflict periods, such as after Operation
    Desert Storm, we do not anticipate taking an ``operational pause'' to
    reset as we transition from OEF.
        The Marine Corps' Operation Enduring Freedom Ground Equipment Reset
    Strategy, released in January 2012, will serve to identify the
    equipment we will reset or divest. We currently estimate, subject to
    change, that the ground equipment reset liability is in excess of $3
    billion.\1\ This forecast is primarily based on the replacement of
    combat losses, the restoration of items to serviceable condition, and
    the extension in service life of selected items. The Strategy
    prioritizes investment and modernization decisions to develop our
    middleweight force, per the DSG.
    ---------------------------------------------------------------------------
        \1\ This $3 billion liability is our ``strategic'' reset liability;
    or simply, the cost to reset our Afghanistan equipment set to a zero-
    hours/zero-miles condition. In addition to strategic reset we have a
    $1.3 billion overseas contingency operations is requested in fiscal
    year 2013, primarily to cover cost of war issues, but some of which is
    slated for strategic maintenance for reset. How much of the $1.3
    billion will be used for reset is dependent upon both the quantity of
    equipment that flows out of Afghanistan and our depot capacity.
    ---------------------------------------------------------------------------
        Our reset effort is underway and it maximizes the Marine Corps'
    depot capacity, where we expect the bulk of reset execution to occur.
    Notably, the reset of our equipment is expected to extend 2 to 3 years
    beyond the end of our involvement in OEF due to the time it will take
    to bring all of our equipment back to the continental United States and
    move it through our depot system. The continued availability of our
    ground equipment depot capacity at both Barstow, CA, and Albany, GA, is
    essential for reset, for our ability to both self-generate readiness
    and surge in response to demand. Continued congressional support over
    the next several years will be critical to the Marine Corps' equipment
    reset efforts.
                                 reconstitution
        The Marine Corps has a strategic trajectory to reconstitute to a
    ready force by fiscal year 2017.\2\ Our reconstitution efforts will
    restore and upgrade our combat capability and will ensure our units are
    ready for operations across the range of military operations. To ensure
    we are organizing for the emerging security environment and its
    inherent and implied challenges, the Commandant of the Marine Corps
    directed a Total Force Structure Review in 2010. This Review aligned
    our force to meet the needs of the Nation and took into consideration
    the realities of constrained spending levels; the strategic defense
    guidance; and the lessons learned from 10 years of war, particularly
    the requirements to conduct distributed operations. Additionally,
    reconstitution will rebalance and sustain home station readiness so
    that our units are ready to deploy on short notice.
    ---------------------------------------------------------------------------
        \2\ Reconstitution consists of the actions beyond reset, taken
    during or after operational employment to restore and/or upgrade combat
    capability to full-spectrum operational readiness. Reconstitution
    includes personnel, equipment, and training. Force reconstitution spans
    activities from normal sustainment (rearm, refuel, recover (dwell),
    repair, and replace), through reorganization and regeneration of units
    to redeployment.
    ---------------------------------------------------------------------------
        To meet the DSG within the fiscal realities, we will decrease our
    Active Duty end strength from 202,100, beginning this fiscal year, to
    182,100 by the end of fiscal year 2016.\3\ We will retain our Reserve
    component at 39,600 marines. The Active Duty end strength reductions
    will occur at the rate of approximately 5,000 per year. We have no plan
    to conduct a reduction-in-force. These end strengths will retain our
    capacity and capability to support steady state and crisis response
    operations; while the pace of the reductions will account for the
    completion of our mission in Afghanistan and provide the resiliency
    that comes with sufficient dwell times. Reshaping the Active Duty
    component to 182,100 marines will entail some risk relative to present
    and future capacity requirements; but it's manageable, particularly as
    we maintain the Reserve component's operational capability.
    ---------------------------------------------------------------------------
        \3\ Our programmed fiscal year 2013 Active Duty end strength is
    197,300 marines.
    ---------------------------------------------------------------------------
        We are also examining future requirements with an ongoing
    comprehensive review of the Marine Corps' equipment inventories to
    validate reset strategies, future acquisition plans, depot maintenance
    programming, and modernization initiatives. This review will
    incorporate the lessons we learned from more than a decade of combat
    and will enable us to upgrade our tables of equipment to reflect the
    way we expect to conduct operations in the future.
                             five readiness pillars
        To achieve institutional readiness, sustain operational
    requirements, and be prepared for crisis and contingency response, we
    must restore and maintain a balance across five pillars:

             High quality people
             Unit readiness
             Capacity to meet combatant commander requirements
             Infrastructure sustainment
             Equipment modernization
                              high quality people
        The recruiting and retention of high quality people is essential to
    attain a highly ready and professional force. We need the right
    quantities and occupational specialties to fulfill our role as an
    expeditionary force in readiness. In fiscal year 2011, the Corps
    achieved 100 percent of its officer and recruiting goals for the Active
    and Reserve components, while exceeding Department of Defense quality
    standards for Tier 1 High School Graduates and Mental Categories I-
    IIIa. We expect to achieve the same in fiscal year 2012. The Marine
    Corps also achieved its retention mission in fiscal year 2011 and
    anticipates doing so again in fiscal year 2012. We rely on Congress'
    continued support with tools such as adequate compensation, incentive
    pays, and selective reenlistment bonuses to meet future recruiting
    challenges, position the force for the impending drawdown, and shape
    the All-Volunteer Force to meet the new defense strategy.
        Civilian marines are an integral part of our Total Force,
    supporting the Corps' mission and daily functions; they constitute less
    than 5 percent of our fiscal year 2012 budget. Already we have begun to
    shape this force by reducing it from 21,000 direct funded full time
    equivalents to 17,501, without drastic downsizing impacts. We will hold
    the civilian workforce at fiscal year 2010 end-of-year levels, with
    some exceptions for critical growth areas such as cyber, information
    technology, and security. Marine civilians are a ``best value'' for the
    defense dollar, are shaped to support the Corps into the future, and
    are the leanest civilian workforce within DOD, with only one civilian
    for every 10 marines.
                                 unit readiness
        This pillar upholds maintaining and shaping the readiness of the
    operating forces, to include the necessary operation and maintenance
    (O&M) funding to train to core missions and maintain equipment. The
    Marine Corps has, and always will, source our best trained, most ready
    forces to meet combatant commander requirements. The challenge is to
    maintain the readiness of the nondeployed forces so they can respond to
    crises and contingencies with the proper balance of equipping, manning,
    and training.
        As our forces return from Afghanistan, our focus will be on
    training to our core expeditionary and amphibious mission capabilities.
    We anticipate incremental increases in the core training readiness of
    units as marines and equipment flow back from Afghanistan over the next
    24-36 months.
        After the drawdown from Afghanistan, we expect to be increasingly
    engaged around the world--training, engaging, deterring, and responding
    to all manner of crises and contingencies. O&M funding is essential for
    our readiness to conduct steady state operations, including amphibious
    and Maritime Prepositioning Ships Squadron (MPSRON) operations, provide
    support to the combatant commanders, and provide for our supporting
    establishment's sustainment for the operating forces. As operations in
    Afghanistan wind down, we anticipate overseas contingency operations
    funding will correspondingly ramp down. However, we know that future
    requirements to maintain readiness will increase demand on O&M funding.
    The irregular battlefields of today and tomorrow necessitate more
    distributed operations and decentralized command--both of which will
    drive training costs higher.
        Sufficient O&M funding will be essential in the Pacific as we
    resume our unit deployment program in Japan; provide rotational forces
    in Australia and Guam; and engage throughout the region. It will also
    be needed to cover the transportation costs for bringing together the
    widely dispersed Marine Expeditionary Brigade and Marine Expeditionary
    Force (MEF) elements for training and exercises.
               capacity to meet combatant commander requirements
        Force-sizing to meet Geographic Combatant Commander requirements,
    with the right mix of capacity and capability, is the essence of our
    third readiness pillar. Decisions made in our Force Structure Review
    will provide a better depth of Marine forces capable of executing a
    single major contingency operation and optimized for current operations
    and crisis/contingency response. The capacities of our organic
    intelligence, surveillance, and reconnaissance; command and control;
    and unmanned aircraft systems will be increased. Our critical capacity
    versus requirement concerns include: shifting forces to III MEF in the
    Pacific, ensuring we retain a global crisis response capability, and
    the availability and readiness of amphibious shipping and maritime
    prepositioned assets to meet training and contingency requirements. We
    are also reshaping organizations, capabilities, and capacities to
    increase aggregate utility and flexibility across the range of military
    operations, to include enhanced support to U.S. Special Operations and
    U.S. Cyber Commands.
                           infrastructure sustainment
        Infrastructure sustainment is the investment in real property,
    maintenance, and base infrastructure to support the mission sets of
    tenant commands. We must adequately resource the sustainment of our
    bases and stations to maintain our physical infrastructure and the
    complimentary ability to train and deploy highly ready forces. As we
    rebalance toward the Pacific, we will ensure we make the proper
    investments in ranges and facilities to maintain the training readiness
    of deployed forces. Sustainment, recapitalization, and operations
    funding must also be balanced to maintain quality infrastructure. We
    request Congress' continued support for facilities sustainment and
    demolition funds, essential military construction funding (Joint Strike
    Fighter (JSF), MV-22, Marine Corps Security Forces, Marine Corps
    University), family housing, and environmental restoration.
                            equipment modernization
        In this austere fiscal environment, we are conducting only
    essential modernization, focusing especially on those areas that
    underpin our core competencies. We are mitigating costs by prioritizing
    and sequencing our equipment modernization and sustainment programs to
    maintain their readiness in a fiscally responsible manner. To maintain
    operational capabilities and readiness, modernization is critical in
    the areas of ground combat tactical vehicles; aviation; amphibious and
    pre-positioning ships; expeditionary energy; and intelligence,
    surveillance, and reconnaissance. Our modern expeditionary force will
    require fixed wing aircraft capable of supporting our Marine units. The
    JSF is the best aircraft to provide that support in the future security
    environment. Likewise, a core capability of our expeditionary forces is
    the ability to project forces ashore from amphibious platforms and to
    maneuver once ashore. We remain committed to developing and fielding an
    Amphibious Combat Vehicle that meets this critical need. We request
    Congress' continued support for modernization to maintain the high
    level of future readiness our Nation will need.
               prepared to support the defense strategic guidance
        The Navy-Marine Corps team and our inherent naval forward basing,
    crisis response capabilities, and theater engagement capacity make us
    ideally suited to support the new strategic defense guidance's focus on
    the Pacific Command region. The Marine Corps will rebalance its unit
    deployment program to 2001 levels during fiscal year 2013 and fiscal
    year 2014. We recently deployed a company of Marines from Hawaii to
    Australia to usher in a rotational presence that will grow to a Marine
    Expeditionary Unit sized Marine Air Ground Task Force, with associated
    units and equipment, during fiscal year 2016 to fiscal year 2017. Our
    rotational presence throughout Asia will serve to reassure our allies,
    strengthen our ties, and demonstrate our commitment to the region. The
    sea-basing capability provided by our MPSRONs provides the flexibility
    to deploy forces anywhere, without reliance on mature infrastructure to
    include ports and airfields. Simply, sea-basing is uniquely suited to
    this theater where a vast amount of the area is water and does not have
    readily available port infrastructure to support less expeditionary
    capability.
        Sea-based and forward deployed naval forces provide day-to-day
    engagement, crisis response, and assured access for the joint force in
    a contingency. Partnered with the Navy, we will continue to pursue
    innovative concepts for maritime expeditionary operations with
    platforms such as the Joint High Speed Vessel and the Mobile Landing
    Platform. As new maritime prepositioning force ships are integrated
    into the MPSRONs, they will provide additional operational benefits to
    the Combatant Commanders, such as an over-the-horizon surface connector
    capability and better selective access to equipment and supplies.
                            partnered with the navy
        A critical component in building and maintaining readiness for
    expeditionary, amphibious operations is the availability and readiness
    of amphibious ships. Amphibious ships are a foundational requirement
    for expeditionary force projection. The Navy has acknowledged that low
    amphibious ship readiness can present a significant challenge to the
    training readiness of our Marine units and it is addressing this
    maintenance readiness shortfall. The recent return of the Bataan
    Amphibious Ready Group, which was deployed for more than 300 days,
    demonstrates the imperative to maintain maintenance cycles. Continued
    congressional support for the Navy's shipbuilding and surface ship to
    shore connector plans will prove vital to the Nation's ability to
    retain and maintain an adequate fleet of modem amphibious ships and
    project power across the globe.
        Our prepositioning programs are a unique strategic capability,
    giving us the ability to quickly respond to a wide scale of global
    crises and contingencies. These programs, particularly the MPSRON, will
    require continued congressional support. In order for sea-basing to be
    effective, using both amphibious ships and MPSRONs, the amphibious
    connectors will also require modernization.
                                    summary
        On behalf of the marines and sailors that provide this Nation with
    its versatile, middleweight force in readiness, I thank Congress for
    its unwavering awareness and recognition of our challenges. Your
    continued support is requested to provide a balance across the five
    readiness pillars that maintain our institutional readiness.

        Senator McCaskill. Thank you, General.
        Finally, General Philip Breedlove, Vice Chief of Staff of
    the U.S. Air Force. Welcome, General.

      STATEMENT OF GEN. PHILIP M. BREEDLOVE, USAF, VICE CHIEF OF
                         STAFF, U.S. AIR FORCE

        General Breedlove. Thank you. Madam Chairman, Senator
    Ayotte, distinguished members of the subcommittee, thank you
    for the opportunity to be here today and tell our Air Force
    story. These are challenging times and I commend you for your
    leadership and for your efforts to ensure we have the best-
    equipped and best-trained military on the globe. It is an honor
    to be here on behalf of our 690,000 Active Duty, Guard,
    Reserve, and civilian airmen who selflessly serve our Nation
    alongside their fellow soldiers, sailors, marines, and
    coastguardsmen.
        I would like to take this opportunity to share two
    important items with you today. First, the readiness of your
    airmen after more than 20 years of continuous combat
    operations, and second, the steps we are taking to ensure a
    superbly trained and equipped force which is ready to support
    our new Defense Strategic Guidance (DSG) and bottom line, to
    avoid a hollow force while balancing risk.
        The American people are fully aware that our Nation has
    been at war for over a decade. For our Air Force, however, we
    have been conducting combat operations continuously for well
    over 2 decades. December 17, 2011, marked the first time in 20
    years that the Air Force did not fly an air tasking sortie over
    Iraq.
        Madam Chairman, Senator, I would like to point out that
    over two-thirds of our uniformed airmen that have taken an oath
    to defend our Nation have joined our Service during a time of
    war, during a time of continuous operations, and for that, I
    could not be more proud to serve alongside these dedicated
    airmen and Americans. These airmen are fully joined to the
    fight and consistently demonstrate their commitment to this
    joint team you see in front of you, and in support of our
    combatant commanders and our Nation's interests.
        Last year, we saw this commitment at full capacity as our
    airmen simultaneously provided humanitarian support to our
    friends in Japan, executed a large presidential airlift in
    South America, supported the North Atlantic Treaty Organization
    no-fly zone to protect lives in Libya, and all the while, fully
    employed with counterinsurgency operations in Iraq and
    Afghanistan. Our force capacity of the future may not support
    this high level of sustained, simultaneous operations. I am
    immensely proud of how our airmen have performed for the past
    20 years and across all spectrums and with what you have seen,
    a very high OPTEMPO.
        This intense level of performance has not come without a
    cost. Our force is stressed. We have continually gotten
    smaller. Next year we will be the smallest we have been since
    the inception of the U.S. Air Force in 1947. Our aircraft are
    old, older than they have ever been, with the average age of
    our fighters at 22 years, bombers at 35 years, and tankers, the
    oldest of the fleet, at 47 years.
        What really concerns me are the challenges we face to get
    our full-spectrum training. We are proficient in the current
    counterinsurgency fight. We have had to put high-end full-
    spectrum training on the back burner which has the greatest
    effect on our combat air forces.
        Other more recent concerns are the increase in fuel prices
    and higher-than-expected OCO costs. Together, they have
    resulted in a current year bill that is significantly greater
    than we expected. We are working hard with DOD leadership to
    address the shortfall to avoid actions that might harm
    readiness. But if we are unable to reallocate funds with
    congressional approval, we will have little choice but to shift
    resources within our operation and maintenance accounts which
    could have detrimental effects on our readiness.
        Despite these fiscal pressures, there continues to be an
    increasing demand for air, space, and cyber capabilities, which
    is evident in our Nation's new DSG. In order to keep faith with
    the American people and provide our unique capabilities upon
    which the entire joint team so greatly relies, it is imperative
    that we balance our force structure to preserve our readiness
    and maintain a risk-balanced force. In doing so, we must
    rebalance our Active and Reserve component mix to ensure we can
    meet Joint Force requirements while not exceeding deployed-to-
    dwell ratios across the Total Force.
        While no plan is free of risk, our analysis tells us that
    we are at an increased but manageable risk as measured against
    this new DSG. We are concerned that efforts aimed at retaining
    force structure are out of balance with our strategic guidance
    or not accompanied by sufficient support in funding will lead
    us to the road of a hollow force. Force structure is key to our
    future.
        As we responsibly rebalance this force, we remain committed
    to advancements in technology and future investments to
    continually sharpen our sword. Although we will be smaller, we
    will remain an effective and ready force.
        Madam Chairman and subcommittee members, I am confident in
    our ability to succeed through the tough times ahead because I
    believe in our Nation's airmen who, like their fellow soldiers,
    sailors, marines, and coastguardsmen, are dedicated to
    excellence, selfless service, and sacrifice. Thank you for your
    continued support of your U.S. Air Force and of your airmen. I
    look forward to your questions.
        [The prepared statement of General Breedlove follows:]
              Prepared Statement by Gen. Philip M. Breedlove, USMC
        After over a decade of sustained combat operations and faced with a
    continually evolving economic and security environment, the United
    States faces a moment of transition. As a result, the President and
    Secretary of Defense have provided strategic guidance to preserve our
    global leadership and defend our national interests now and in the
    future. The unique Air Force capabilities that are critical to the
    priorities of the new strategic guidance are: domain control of air,
    space, and cyberspace; global intelligence, surveillance, and
    reconnaissance (ISR); rapid global mobility; and global strike.
                               current operations
        The Air Force has demonstrated its commitment to supporting
    combatant commanders and their operations across the globe for over 2
    decades through continuous combat operations. Our enduring commitment
    to readiness and the joint fight is a reflection of our unique air,
    space, and cyberspace capabilities across the full spectrum of
    operations, capabilities upon which our Service partners and allies
    have come to rely.
        Since September 2001, the Air Force has flown more than 455,000
    sorties in support of Operations Iraqi Freedom and New Dawn and more
    than 350,000 sorties in support of Operation Enduring Freedom. Last
    year, our airman averaged approximately 400 sorties every day, with
    December 17, 2011, marking the first day in 20 years that the Air Force
    did not fly an air tasking sortie over Iraq.
        As a critical component of our Nation's strategic deterrence, we
    have maintained our Nation's 450 intercontinental ballistic missiles
    (ICBM) on continuous strategic alert at a greater than 99 percent
    readiness rate, exceeding U.S. Strategic Command's requirement. We have
    also achieved a record 84 consecutive successful National Security
    Space launches since 1999.
        Our Total Force of 690,000 Active Duty, Guard, Reserve, and
    civilian airmen continue to support daily combatant commander
    operations with over 30,000 airmen deployed to over 230 locations
    around the globe. Of our deployed airmen, 24,000 directly contribute to
    operations in the U.S. Central Command (CENTCOM) area of responsibility
    (AOR), including almost 9,000 airmen in Afghanistan. An additional
    57,000 airmen, 8 percent of the force, are forward-stationed overseas.
    From home stations in the United States, approximately 134,000 airmen
    provide daily support to worldwide operations: standing nuclear alert;
    commanding and controlling our satellites; analyzing intelligence,
    surveillance, and reconnaissance data; and much more. In total, 219,000
    airmen directly support combatant commanders every day.
        While this high operations tempo (OPTEMPO) has proven our level of
    commitment to today's joint fight, it has inevitably taken a toll on
    our weapons systems and people, putting a strain on the overall
    readiness of the force. We have continued to see a steady decline in
    unit readiness since 2003, the primary drivers being personnel and
    training. These factors continue to stress 17 key enlisted specialties
    as well as 9 officer specialties.
        In terms of deployments, 50 percent of the force is scheduled to
    rotate at a reasonable rate where they are home at a minimum of three
    to four times as long as they are deployed. Ten percent of the force is
    scheduled to rotate at our maximum targeted rate, meaning they are home
    twice as long as they are deployed. Twelve percent of our force is
    scheduled to rotate at a rate that keeps them home at or less than 50
    percent of the time, an exceptionally high rate. Twenty-five percent of
    our forces are enablers who simply deploy as needed (i.e., mobility
    aircrew and Special Operations Forces), which tends to be higher than
    most metrics.
        In spite of aircraft divestments and reduction in personnel, we are
    committed to ensuring that America's Air Force remains ready to execute
    its mission every day--a mission that is indispensable to carrying out
    current missions and overcoming existing and emerging threats as
    outlined in the new Defense Strategic Guidance.
                          weapons systems sustainment
        Over the past several years, the overall Air Force weapons systems
    sustainment (WSS) requirement has increased due to several factors such
    as our sustainment strategy, the complexity of new aircraft, operations
    tempo, force structure changes, and growth in the depot work packages
    for legacy aircraft. Although the Air Force plans to retire some
    combat, mobility, and ISR force structure, our overall WSS requirements
    continue to increase. This increase is primarily due to the cost of
    contract logistics support, as well as higher costs due to content
    increases in depot work packages for legacy aircraft. We are not
    procuring aircraft at a rate that is fast enough to even begin to
    reduce the average age of our aircraft inventory. In addition, our
    fleets are smaller than at the end of post-Cold War downsizing, with
    the average age of fighters at 22 years, bombers at 35 years, and our
    tankers--the oldest of the fleet--at 47 years. These cost increases
    have resulted in a slight decrease in the percentage of WSS
    requirements funded in the next 2 years. WSS is funded at 79 percent of
    requirement in the fiscal year 2013 budget.
        We maintained our readiness capability in the portfolio areas most
    directly affecting readiness, such as aircraft, engines, and missiles.
    We are taking some risk in areas that are less readiness-related in the
    short-term such as technical orders, sustaining engineering, and
    software. Additionally, the Air Force continues to conduct requirements
    reviews and streamline organizations and processes to reduce
    maintenance and material costs, develop depot efficiencies, and manage
    weapons systems requirements growth. The goal of these efforts is to
    sustain current WSS performance levels for the future.
        Despite our high OPTEMPO and ongoing contingency operations, the
    Air Force must continue to deliver and maintain combat ready forces at
    the highest level. For instance, maintaining aircraft availability
    rates, vehicles, and war reserve materiel requirements to meet
    operational demands is critical.
        Our Air Logistics Centers (ALC) continue to meet warfighter
    expectations, an example is how we monitor weapons systems due date
    performance, a metric that tracks how soon weapons systems are back to
    the warfighter after receiving routine or upgrade maintenance.
    Significant improvements have been made in this area resulting in 21 of
    24 weapons systems meeting their due date targets. The Air Force is
    focusing on lean processes to get these weapons systems to their
    target. In fiscal year 2011, Oklahoma City-ALC completed maintenance on
    64 KC-135s, more than any year since 1991, and reduced engine cycle
    time by 30 percent. Warner Robins-ALC produced 1.7 million hours of
    avionics upgrade maintenance, five percent above plan, performed
    upgrade maintenance on 30 C-17s (28 on-time and two early), and
    delivered software requirements at 97 percent at or below cost and 97
    percent on-time. Because of process improvements, in fiscal year 2012,
    three depots will produce as much as five depots produced in the late
    1990s.
              facility sustainment, restoration, and modernization
        The sustainment portion of facilities sustainment, restoration, and
    modernization was funded just over 80 percent of the Office of the
    Secretary of Defense facility sustainment model. Due to current fiscal
    realities and the revised strategic guidance, the Air Force is taking a
    deliberate pause in its military construction program, resulting in a
    nearly $900 million reduction from fiscal year 2012 enacted levels. To
    manage the risk associated with these actions we continue civil
    engineering transformation to employ an enterprise-wide, centralized,
    asset management approach to installation resourcing which maximizes
    each facility dollar.
                              flying hour program
        The emphasis on readiness in the new strategic guidance reinforced
    Air Force focus on the importance of maintaining our flying hour
    program (FHP). The fiscal year 2013 budget request removes flying hours
    where associated with the retirement of some of our oldest aircraft and
    divestiture of single-role mission weapons systems. In the remainder of
    the FHP, however, levels are consistent with fiscal year 2012 levels to
    prevent further erosion of readiness. The fiscal year 2013 baseline FHP
    remains optimized as we continue to fly a significant portion of our
    hours in the CENTCOM AOR. As these combat sorties decrease over the
    next few years, these overseas contingency operation hours will migrate
    back to our baseline program to ensure peacetime FHP requirements are
    met. We are also committed to a long-term effort to increase our live,
    virtual, and constructive operational training (LVC-OT) capability and
    capacity by funding improvements in our LVC-OT devices (e.g.,
    simulators and virtual trainers) and networks.
        Although the Air Force has no single rollup metric to measure FHP
    requirements, we are working toward a set of metrics that clearly
    articulate the training requirements needed to support desired
    readiness levels. The Air Force operates a wide variety of aircraft--
    including multi-role aircraft--that require differing training
    requirements in amount and type for each aircrew member. In addition,
    we have critical space and cyber units that involve no aircraft at all.
    As we develop FHP metrics, we will dovetail our efforts with the work
    being done at the Cost Assessment and Program Evaluation (CAPE) office
    at the Office of the Secretary of Defense to study the relationship
    between defense funding and military readiness and mature necessary
    metrics and assessment tools.
                                personnel shift
        History has shown that when we withdraw ground forces from an area
    of conflict, there is an increased requirement for residual Air Force
    presence to provide robust overwatch capabilities. In the past two
    months we have seen a measurable increase in tasking, and expect the
    same as we plan to responsibly transition the security of Afghanistan
    over to the Afghan security forces. This anticipated requirement,
    coupled with an ever smaller force, requires a close look at the
    composition of our forces that are capable of both high and low deploy-
    to-dwell ratios.
        Across our two components, the Active and the Reserve, we find both
    advantages and challenges. The Active component has a higher deploy-to-
    dwell capacity, and is immediately available. However, it is already
    stressed, with a deploy-to-dwell ratio in many areas approaching
    redline (more than 1:2). The Reserve component is characterized by
    great volunteerism and great aircrew availability. It is also committed
    to helping the country meet crisis and surge commitments at home and
    abroad. If our Active component is too small to meet its demands, we
    risk putting our Guard and Reserve Forces in the position of breaking
    other commitments to employers, communities, and families. As a result,
    in some of the high demand mission sets, we had to make a modest shift
    in force structure toward the more deployable force. This reduces our
    risk of overstressing all three components of the force.
        Analysis indicates that in balancing this equation, you cannot
    continue to reduce the highly rotating force (i.e., the Active
    component) without exceeding the rotational redlines of both groups. No
    solution was perfect, but when looking at the options, we decided that
    the most palatable choice was to execute a small shift from the Reserve
    component to the Active component. We also took this rebalancing
    opportunity to increase the Reserve component's exposure to emerging
    mission sets. This ensures that as our force gets smaller, it stays
    agile, lethal, and still ready to deploy at a high enough rate to
    combat current and emerging threat and contingencies.
                               training readiness
        While this generation of airmen is one of the most combat
    experienced forces in our history and has proven our capabilities and
    relevance in today's fight, our high OPTEMPO has not been without cost
    to the readiness of tomorrow's force. Since Operations Desert Shield
    and Storm, the Air Force has not come home, evolving from a garrison
    force to a forward deployed force. Since 2001, our fighter forces have
    supported contingencies in Iraq, Afghanistan, Libya, and other
    locations around the world. In addition, our special operators,
    security forces, ISR, and other forces have provided theater security
    presence and helped build partnership capacity in Asia, Europe, the
    Middle East, and elsewhere.
        As a result, the training readiness of our people has suffered.
    While our airmen have quickly adapted their training to incorporate
    counterinsurgency tactics, which has proven invaluable to today's
    mission, this focus has inevitably degraded our opportunity to train
    across the full spectrum of operations, including specialized training
    to prepare for high-end, future conflicts and to meet the requirements
    outlined in the new strategic guidance. As our force gets smaller, we
    must train our airmen to be the most lethal and effective force for the
    future across the full spectrum of conflict.
                                 strategic risk
        While no plan is free of risk, the Air Force has gone to great
    lengths to responsibly reduce excess force structure in order to
    preserve readiness. Last year, the Air Force was at maximum capacity
    when our airmen provided humanitarian support to our friends in Japan,
    executed a large airlift movement in support of national leadership,
    supported the NATO no-fly zone to protect civilian lives in Libya, all
    while remaining fully employed with counterinsurgency operations in
    Iraq and Afghanistan. These operations spanned the globe and the entire
    operational spectrum, from humanitarian relief to combat airpower. Our
    Nation and our allies have come to rely on the full depth of support
    the Air Force team brings. As we reduce our force, we will retain the
    capability to execute each of these missions, but will no longer have
    the capacity to execute them all in parallel. As a result, the days of
    engaging in two large scale wars, while simultaneously responding to a
    myriad of humanitarian crisis and engaging in short-notice campaigns
    will not be possible.
        The Air Force will be smaller but still very lethal, providing the
    Nation with the unique and enduring capabilities required to promote
    our National interests. We are committed and ready to support the new
    strategic guidance that anticipates one large scale, combined arms
    campaign and the ability to respond quickly to deny the objectives on
    an opportunistic aggressor or impose unacceptable costs.
                                   conclusion
        To both fulfill current commitments and curb emerging threats, the
    Air Force has made tough decisions to trade size for quality to
    maintain a superb and ready force. While we are a smaller uniformed
    force, in fact smaller than at our inception in 1947, we have mitigated
    risk through careful consideration of the proper rotating force mix,
    the appropriate level of investment in modernizations, research and
    development, and utilizing strategic partnerships to leverage resources
    and reduce redundancies to be a ready force during a time of
    diminishing resources.
        In support of this guidance, alongside our joint partners, the Air
    Force stands ready to defend and advance the interests of the United
    States by providing unique, agile, and flexible capabilities across the
    full spectrum of operations that are required to succeed in today's
    fight and future conflicts. The advancements our innovative airmen have
    pioneered and have continually sharpened have been essential in
    ensuring our Nation's security while reducing the overall casualty
    counts inflicted by war.
        Despite fiscal challenges and an evolving security environment,
    America's airmen, along with their fellow soldiers, sailors, marines,
    and coastguardsmen, remain committed to the security of our Nation.

        Senator McCaskill. Thank you very much, gentlemen.
        Since the turn of the century, we have been heavily
    involved in combat operations which have required our personnel
    to deploy frequently and has caused incredible wear and tear on
    both people and the vital equipment that we need for readiness.
    Frankly, we have had little time to train for anything other
    than counterinsurgency.
        Notwithstanding the steps taken by Congress to increase
    investments, reported readiness rates have significantly
    declined over the past 10 years, record funding and still a
    significant decline.
        In past Readiness and Management Support Subcommittees, we
    have been told by your predecessors that an increase in
    readiness will not occur until we see a decrease in operational
    tempo. Now we have the drawdown in Iraq and surge recovery in
    Afghanistan this year and phased drawdown thereafter.
        Can you give us today what your best projections are, as to
    when we will see a more positive readiness trend in light of
    the drawdown that is currently underway?
        General Austin. Thank you, Madam Chairman. I think from the
    Army's perspective, we are already beginning to see that as we
    have come out of Iraq, certainly we have more opportunities to
    train at home station. We are taking advantage of those
    opportunities. Again, as we retrograde our equipment and put
    that equipment through reset, more equipment is being made
    available. So we are already beginning to reap some of the
    benefits of that slowdown.
        I was the guy at the very end there in Iraq who was charged
    with overseeing that reposturing effort, and I can tell you
    that that was very well done, a magnificent job by our Joint
    Force to do that.
        But as General Dunford and I have both pointed out, it will
    take about 2 to 3 years beyond the complete retrograde of our
    equipment out of Afghanistan to reset that equipment, and we
    certainly need to be funded to do so and would appreciate any
    help that you could provide us in doing that.
        General Dunford. Madam Chair, as you pointed out, there are
    really three components of readiness: the training piece, the
    people piece, and the equipment piece. As we have started to
    recover forces from Afghanistan, our deployment-to-dwell has
    expanded. At one point, our squadrons and battalions were
    deploying for 7 months, home for 7 months, and redeploying for
    7 months. That time now has expanded to somewhere between 11
    and 13 or 14 months between deployments, and so that has helped
    us on the training side. As we recover the force, we will start
    to fill in some of the personnel gaps that we have had over the
    last couple of years.
        But I would emphasize again what General Austin said; the
    long pole in the tent before we start to actually see increased
    readiness reporting from our units at home station is going to
    be the equipment piece, and that is 2 to 3 years from the time
    the equipment actually gets home, not from the time the units
    actually redeploy. So our best estimate right now, based on a
    2014 drawdown from Afghanistan, would be sometime around 2017,
    is when we would start to see significantly increased
    reporting.
        I mentioned that 67 percent of our units at home station
    were in degraded readiness, and really what I was referring to
    was C-3 or C-4 on a scale of 1 to 4 in terms of readiness.
    Units report the lowest level of their readiness in manning,
    training, and equipping. So 61 percent of those units that
    report degraded readiness, report that degraded readiness as a
    result of equipment shortfalls.
        So not only do we have to get the equipment home, but we
    have to reset that equipment going through our depots and/or
    replace that equipment that has been destroyed. So a
    combination of the procurement process and the depot
    maintenance process. Our best estimate is again that 2 to 3
    years not from the time the marines come home, but from the
    time their equipment comes home from Afghanistan.
        Senator McCaskill. Do the Navy and Air Force disagree with
    the 2 to 3 year assessment, or does that sound about right from
    your perspectives also?
        Admiral Ferguson. Madam Chair, from our perspective, the
    force demand is a little different on the Navy as we withdraw
    out of the land campaigns. We have sustained training all our
    forces at a major combat operation level through this 10-year
    period, and what you saw in this budget is we invested in
    training, we invested in depot maintenance, brought it up to
    100 percent, but we remain reliant on that OCO funding and we
    see that it will take at least 2 to 3 years for a transition,
    perhaps longer for us, to sustain readiness levels.
        General Breedlove. Madam Chair, the difference for us is
    much as you saw after we came out of Operations Desert Storm I
    and II. Immediately following a change in mission like we are
    seeing in Iraq now, the actual requirement for air forces goes
    up in order to facilitate that retrograde, to cover with
    kinetic fires and intelligence, surveillance, and
    reconnaissance (ISR), to reduce the risk for those ground
    combat soldiers and marines as they do that mission. We are
    seeing that now. Even as we are coming out of Iraq, about 3
    months ago our deployed squadron, fighter squadron, requirement
    was about eight and a half. It is up to about 11 and a quarter
    now, and that is much what we expect.
        Also, on the lift side of the house, especially if we do
    not get movement in the Pakistan Ground Lines of Communication
    (PAK GLOC)--much of the job of bringing home all of the
    equipment that the Marine Corps and the Army need will fall to
    the backs of the Air Force to haul out. So there will be a
    considerable amount of time as we effect this retrograde,
    especially if it is increased before the Air Force will even
    begin to begin its retrofit and refit. So our start time could
    be significantly different than what you heard from my
    compatriots, and it will take us some period of time between a
    year and a year and a half after that to get through the
    training cycles and things we need.
        Senator McCaskill. Since you touched on the closure--the
    problems we are having on the border of Pakistan, General
    Breedlove, let me go to that question. It is relevant,
    obviously, to the drawdown as we pull equipment and men and
    women out of Afghanistan. It is obviously very important in
    terms of fuel costs. It is a huge bill that I think people
    forget, that nobody buys more fuel in the world than we do.
    When it is expensive, it really is a gut punch to the budgets
    of our military. I know that we have to pay almost three times
    the normal rate to go through the NDN than we would have to
    typically expend going through Pakistan.
        What effect is this closure going to have on getting
    everything out that we need to get out, and more importantly,
    on getting the fuel we need to continue to support the mission
    that we have ongoing in Afghanistan?
        General Breedlove. Ma'am, I will take the first shot at
    that. There are two effects on the Air Force and its ability to
    support the joint team that fuel brings.
        First of all, in this current year, as you are aware, the
    reprice on fuel is going to cost us approximately $1.3 billion
    that was not in our original plan, and that will be money that
    we will have to go in and find in other sources, assuming you
    approve them, inside of our budgets. So fuel reprice is a big
    deal for us.
        Second of all, as you mentioned, if the PAK GLOCs do not
    open, and we cannot count on the flow that was planned for when
    we originally budgeted for our fuel for this next year and now
    we have to increase the amount of fuel we use to begin to fly
    out much of this retrograde by air, that will again be an
    unplanned OCO bump in fuel requirements to the Air Force.
        General Dunford. Madam Chair, I would add one quick point
    to the point you made and the one General Breedlove made, and
    that is, it goes back to the previous question you asked about
    when would we be reset to a high level of readiness. Obviously,
    the longer it takes to get our equipment out of Afghanistan--
    and the NDN would take longer to get our gear out--the longer
    it will take us to restore the high level of readiness. So in
    addition to the implications of cost, the factor of time is an
    issue.
        Senator McCaskill. I think a lot of Americans do not
    understand that the stresses with Pakistan have many
    implications, and it is not just the direct implication of, are
    they our friend, are they our enemy, what exactly are they, and
    who can we trust within Pakistan, but it has a dramatic impact
    on the budgets of our military as it relates to operational
    requirements in Afghanistan and drawdown in Afghanistan.
        Thank you.
        Senator Ayotte.
        Senator Ayotte. Thank you, Madam Chair.
        I wanted to ask each of you in the conclusion of the
    Chairman of the Joint Chiefs of Staff's risk assessment that he
    submitted to us--he says that the Services will need to
    ``conceive of a new risk paradigm.'' Can you help me with what
    that means, conceiving of a new risk paradigm?
        General Austin. I think as you create a new strategy,
    certainly you look for ways to balance the risks that you are
    going to accept. Of course, you focus on the most dangerous
    things, and then also you consider the most likely things that
    are going to occur. So I think what the Chairman is getting to
    with that--at least my read of this--is that each time that you
    revamp your strategy, you are going to have to look at things
    through the lens of the context of today and what the threat
    offers in the future.
        Senator Ayotte. General, just as a follow-up on that, just
    listening to it from my perspective, I assume that is what we
    did whenever we issue a risk assessment. So when I hear the
    words ``new risk paradigm,'' it makes me wonder if our overall
    view of how we are going to meet risk or assess them has
    changed. Has it or has it not?
        General Austin. Certainly our methodology for conducting
    risk assessments has not changed but the context has changed a
    bit in terms of the state of the world. What we are seeing
    today is absolutely different from what we saw 2 years ago,
    actions in the Middle East, those types of things.
        Senator Ayotte. I appreciate your answer, and I am asking
    you to assess what somebody else means. But just to make it
    more helpful, let me direct my question more specifically,
    which I think will be relevant.
        So with the proposed $487 billion in reductions, obviously
    we are talking about the first year here for 2013 of those
    reductions over the 2010. You have proposed significant end
    strength reductions, combat unit eliminations, weapons systems,
    other cost-cutting measures that we are talking about today.
    There is no question that these reductions are going to impact
    the ability of each Service to respond to the request of their
    combatant commanders. What I think is important to understand
    is when you look at what the Secretary said and I quoted in my
    opening statement, ``you cannot take a half a trillion dollars
    out of the defense budget and not incur additional risk,'' and
    he said ``there is no margin for error.''
        What, in each of your opinions, in each of the Services are
    the risks that we are incurring to the extent you can talk
    about them? If you could, what are the risks that we are
    incurring here that keep each of you up at night? If we were to
    add money back in this budget to meet where we have just cut it
    right to the edge on no margin for error and you had that
    choice--I am not asking you to make the request of us, but if
    you could and you think about what keeps you up at night, what
    would you tell us?
        General Breedlove. Ma'am, I will take a shot at it first. I
    think I understand where you are trying to go.
        There are a few things that I think, as you mentioned, we
    are taking cuts right in 2013. In fact, in the Air Force
    budget, it is almost 200 aircraft in the first year and a
    number of people, that speaks to capacity. Our overall capacity
    is coming down, and in our new DSG, the ability to swing
    capacity from the first to the second conflict is a key to how
    well we will support the joint force.
        What keeps me up at night are two things. The first is the
    time to respond. If we are fully engaged in the first, will we
    have time to get to the objectives we need in the first
    engagement in order to properly support the second engagement
    with our reduced capacity, which is evident from the cuts in
    number of people and aircraft.
        Then the second thing that worries me has not changed much
    in relation to this strategy, and it is the same thing I spoke
    to in the readiness hearings last year. That is, that we do
    have pretty intense pressure on what we call our low-density/
    high-demand assets, the Joint Surveillance Target Attack Radar
    System, the Rivet Joints, the ISR fleet in its total, all of
    those things which are sized for about one conflict and not
    two. Now some of those ISR assets are deployed at less than 1-
    to-1 deploy-to-dwell ratio. The ability to respond from one
    conflict to the next with those low density/high demand assets
    keeps me up at night.
        Senator Ayotte. General?
        General Dunford. Senator, I would like to go back to the
    original question and just talk about the framework for risk a
    little bit because there are really two kinds of risks. There
    is a strategic risk that the Chairman largely talks about, but
    then he alludes to what I will describe as institutional risk,
    and that is the Services' ability to create balance between
    maintaining high quality people, meeting the combatant
    commanders' requirements, maintaining that home station
    readiness that I spoke about in my earlier comments,
    maintaining a proper modernization profile so that years from
    now we will have the capabilities that we need, and also
    properly maintaining our infrastructure, something that Madam
    Chair mentioned.
        We have done things differently in the sense that we
    project the next 8 to 10 years will be a period of austerity.
    So that has caused us to go back and take a look at all of our
    requirements and make sure we understand what we really have to
    have, and what is nice to have. We made some hard choices
    inside to extend some of our equipment out past what might have
    been its normal service life by service life extension programs
    and those kinds of things.
        For example, in our ground tactical vehicles right now, we
    only plan to modernize 20 percent of the fleet between now and
    about 2027 to 2028. We decided to go back, and we think it is
    manageable risk, we have decided to go back and look at the
    rest of the fleet and do some things that will extend that
    service life out for perhaps 5 or 7 years beyond what it might
    otherwise have been in terms of being in service.
        So managing institutional risk is frankly what keeps me
    awake at night. A piece of that--and we call it five pillars--
    is certainly meeting the combatant commanders' demands. The
    demands, as Admiral Ferguson mentioned, certainly exceed our
    supply at this particular time.
        But the other thing that keeps me awake at night, as I look
    out over the next 8 to 10 or 12 years, is actually maintaining
    balance on what I described as the institutional pillars of
    risk, and making sure that we do not inadvertently hollow out
    one of those pillars, only to fail to recognize the second and
    third order effects that folks will have to deal with 8 to 10
    years from now.
        Then the last thing that keeps me awake at night, is all of
    us came into the military in the late 1970s, and I was a
    platoon commander in the post-Vietnam days. I know what a
    hollow force is because I was a platoon commander in a hollow
    force. I will tell you that the number one thing that keeps me
    awake at night is being a part of anything that would cause the
    U.S. Marine Corps to look like it did in the 1970s as opposed
    to what it looks like in 2012. That is really what keeps me
    awake at night.
        Senator Ayotte. Thank you, General.
        Admiral Ferguson. Senator, what I focus a lot of my
    attention on is balancing the present versus the future. Those
    future capabilities that the U.S. Navy and Marine Corps will
    need going forward as we face increasing competition and anti-
    access/area denial technologies, and nations that develop
    technologies and capabilities trying to thwart our ability to
    operate from the sea. So that future balance investment has to
    be weighed against maintaining the current readiness of the
    force as we operate. What you saw us in our budget do, was we
    reduced force structure. We took out some older assets to make
    available those assets. We looked at our other investment
    accounts and made critical investments in the capabilities we
    needed, preserving research and development and the new
    technologies. We reduced procurement in some areas or delayed
    them to outside the FYDP for affordability, really focusing on
    preserving the force. These investments we made today were
    focused on more ordnance, more training for the fleet, and
    better depot maintenance to sustain the current readiness.
        So the risk really boils down to capabilities. Can we pace
    rising peer competitors' capacity? Do we have the forces
    available to flow the combatant commanders with an acceptable
    level of risk? Then how it affects certainly response times and
    what our presence levels are in the fleet. But we think that in
    this budget we tried to achieve that balance with an acceptable
    level of risk.
        General Austin. I will just add, Senator, that these remain
    challenging times, and we are faced with a variety of issues.
    For me, foremost among those issues is supporting the effort in
    Afghanistan, and then, while doing that, striking a balance in
    all of the other requirements that we are faced with. So I
    routinely work along with the Army Chief of Staff to make sure
    that we have a healthy balance between our efforts in
    modernization, end strength, and readiness, and just keeping
    that balance routinely is really what we are focused on.
        But also I worry a lot about the health of our force. Now,
    having said that, I also said earlier that I believe that we
    have the most resilient force that we could have ever imagined.
    If you told me 15 years ago that we were going to be in combat
    for a decade and be able to keep our soldiers and our family
    members with us, I would not have believed that. But as you
    look back and see how we have been able to adapt across the
    military, but specifically in the Army, to meet the demands and
    keep our force with us and take care of our troops, I think
    that is quite impressive. I am really concerned about our
    ability to continue to do that, and I will remain focused on
    that for the foreseeable future, because, as you well know,
    people is what the Army is all about. So our ability to do that
    and keep faith with our soldiers and families is something I
    remain concerned about.
        Senator Ayotte. Thank you.
        Senator McCaskill. Thank you, Senator Ayotte.
        Senator Begich.
        Senator Begich. Thank you very much, Madam Chair.
        I have a couple of broad questions and then, General
    Breedlove, as you can probably guess, I also have the Air Force
    on my mind, so I will come to you in a second. The first one is
    just a yes or no.
        Do you support the United Nations Convention on the Law of
    the Sea?
        Admiral Ferguson. I will go first and I do. Navy leadership
    supports it on the uniform side. It provides several positive
    benefits. First, a legal framework for interactions and
    resolution of disputes at sea. Second, it allows us to shape
    the resolution of those disputes as a member and a party of the
    treaty. Third, we feel comfortable that intelligence operations
    and military operations will not be subject to the jurisdiction
    of any international court or evolution. So we are comfortable
    and we support accession to the treaty.
        Senator Begich. Is there anyone else who would like to
    respond to that? The Navy knows it all on this issue. So I will
    hold there.
        Second, just in a nutshell, any comment in regards to the
    future of the Arctic and military need or positioning?
        Admiral Ferguson. I think we are looking at the Arctic very
    carefully. We have an ongoing effort in conjunction with our
    allies, the Canadians, Norwegians, and others, in discussing
    it. I think there are three aspects. There is a security
    aspect, there is a safety aspect, and certainly an
    environmental aspect that we are concerned about in the Arctic.
    The initial actions for us, as the area becomes free of ice
    during the summer months and we start to see shipping and oil
    exploration and other activities up there, will be a necessity
    for us to begin to think about having a maritime domain
    awareness of what is occurring in the Arctic. But I do not see
    at the present time or within several years a requirement for
    military operations up there.
        Senator Begich. Does anyone want to respond on that one?
        Admiral Ferguson. We routinely operate up there now with
    our submarines and have gained a lot in those operations.
        Senator Begich. Very good. Thank you very much.
        General Breedlove, let me go to you. You know where I am
    going. I want to talk to you a little about Eielsen Air Force
    Base. There is an effort to relocate the F-16s. My big concern
    is based on the volume of movement of the civilian force. I see
    this as a back door base realignment and closure without all
    the public process and the need.
        But here is the real question, this is what I ask everyone
    in every meeting I have, if you are the Air Force and you are
    wearing everything that indicates such, you get these
    questions, and I look for the answers. Did the Air Force
    conduct a comprehensive analysis and assessment to validate the
    cost savings? In the first year it is $3.5 million. I think
    over the 5 years, it is $169 million.
        When I say ``comprehensive,'' not just for the fiscal year
    2013, but for the spread, and then other Services that may be
    affected. For example, the joint training facility that is
    there, the mobility center that the Army uses to move people,
    the Stryker force, they all use it. It is on the Air Force base
    and Air Force personnel participate in that effort. When you
    reduce that force, then the Army is going to have to pick up
    the tab on this. I do not want to put you two in the middle of
    this. But I look at it from a DOD perspective not a Service
    perspective of these savings.
        So is there a comprehensive cost analysis, and then if the
    answer is yes, is it gross in the sense of what it saves, or is
    it net in what it saves? Because I believe it is not the
    latter. It is not net. It is a gross number.
        General Breedlove. Senator, we have talked a little bit
    about this with your staff, I think the turn of the discussion
    or the question is what you would call how detailed is that
    analysis. We did do a detailed analysis to make this decision,
    but I assure you it was not to the level that you are
    discussing now. That is why we have a team up there that has
    made a much more deep study of this, and we will soon see that
    next level of analysis which you asked for. As our Chief of
    Staff has said, if after this next level of analysis, the
    savings do not pan out as we thought they would, then we will
    relook at the decision to move that force.
        Senator Begich. I appreciate that. Here is the feedback,
    just so we have it on the record, from many people who met with
    the team that was up there. You've probably seen some of the
    reports. They felt the team came up and already had a program
    of dismantling versus what are the costs, what are the savings,
    are they real, are they not. So as you see that report come to
    you, I would hope that you would ask those hard questions
    because it was not just one or two folks that mentioned this to
    me, but it was everybody. They felt like it was not about,
    okay, does this make an economic sense, does it really have the
    savings. At the end of the day, this is an economic issue. It
    is not a strategic issue. It is about how much are we saving. I
    recognize that, and the response we received was somewhat
    surprising.
        So I would hope you or your folks would take that hard look
    of are these real savings and then making sure it is not just
    through the eyes of the Air Force, but stepping one more step
    out into DOD savings because they may be gross savings, but
    then you may have these other expenses. For example, the Army
    may have to pick up more costs which, okay, if that is part of
    that, that should be worked in because at the end of the day it
    is about how much money we need to save for DOD. Each Service
    has a requirement. So I want to make sure we look at that
    perspective.
        Then there is the construction budget. There may be needs
    in the Joint Base Elmendorf-Richardson and I want to see how
    that fits in and not just for the 2013 but for a longer span.
        I think we are on the same page. I do appreciate some of
    your folks coming in the last week and working with us. That is
    greatly appreciated.
        General Breedlove. Senator, I will assure you I will look
    at that report. I wrote down that you have a feeling that they
    arrived with a preconceived notion.
        Senator Begich. Yes.
        General Breedlove. So we will attack the report in that
    way. I clearly understand what you are talking about, about
    real savings over the long run and other unintended
    consequences. The team should be focused on those, and we will
    ask those questions.
        Senator Begich. Great. Again, I recognize the need. Through
    our markup we did last year, I offered some needs and some
    savings. Actually we tried to save the Army a lot of money on
    the Medium Extended Air Defense System, but it somehow got
    jacked back in, not by you guys. But now the House has taken it
    out. So we are trying to save you a few hundred million there.
    I think we are game to find those savings. But let us make sure
    they are sustainable savings, and that is how we look at this.
        So again, I have a series of other pieces, but I think you
    get the sense.
        General Breedlove. Fully.
        Senator Begich. Everything from the National Environmental
    Policy Act analysis when you have to build housing and all
    these other things, that is all a cost that has to be figured
    into this. So I appreciate that.
        Let me just end on one last question, and that is on the
    Red Flag Alaska operation. Whatever happens to Eielsen, where
    does that end up, at the end of the day? Is it third wing? Is
    it the 354th? Who will own that exercise at the end of the day?
    Because we know the commitment by the Air Force and the
    military is to continue that operation. It is very successful.
    So I just need to know where it lands.
        General Breedlove. As you said, Senator, the Red Flag
    Alaska is absolutely critical to the training we are about to
    do. As our new strategy talks of the shift to the Pacific,
    clearly this is a Pacific focused area. So we anticipate no
    changes now.
        Senator Begich. Thank you all very much and thank you for
    your service and for the Alaskans that are now starting to come
    back from Afghanistan. We had about 9,000 Alaska-based folks in
    the field in Afghanistan, and they are all starting to come
    back. Thank you for the service. It was a pleasure to see them
    in Afghanistan when I was there that last trip. Thank you all
    very much.
        Senator McCaskill. Thank you, Senator Begich.
        Senator Inhofe.
        Senator Inhofe. Thank you, Madam Chairman.
        We have these hearings and we all hear about the
    dedication, the fact of what our troops are doing over there in
    all the Services. General Austin, I am kind of like you. When I
    was in the Army, I never believed that we could reach the stage
    where we are today with an All-Volunteer Army. It was not an
    All-Volunteer Army. In fact, I was a product of the draft, and
    I still think it is a good idea.
        I look at this and I see what--to me it is just less of a
    concentration on defending America. When Senator Ayotte was
    talking about the new risk paradigm, I used to chair this
    subcommittee. When the Republicans were in the majority, I was
    the chairman of the Readiness and Management Support
    Subcommittee. I have always thought that risk equals lives.
    Does it not? If you are willing to increase your risk, you are
    willing to accept more loss of lives. Am I wrong?
        General Dunford. Senator, I think you are right. It is in
    part lives. It is also in part the accomplishment of the
    mission and loss of equipment. So, I think what you want to do
    is you want to have a force with the capabilities and
    capacities that allows you to accomplish the mission with
    minimal loss of life or equipment. That really is what we need
    to have.
        Senator Inhofe. Sure, I understand that. I love all you
    guys and I agree that is a problem.
        But we are changing right now. General Breedlove, I am
    reading now from your statement. You said as we reduce our
    force, we will retain the capability to execute each of these
    missions, but will no longer have capacity to execute them all
    in parallel. As a result, the days of engaging in two large-
    scale wars, while simultaneously responding to a myriad of
    humanitarian crises, and engaging in short-notice campaigns
    will not be possible. I agree with you. I appreciate that, you
    had some pretty strong statements in there.
        When you were talking about the age of your aircraft, I
    know that. I know how old the KC-35s are and the B-52s. I know
    that the American people really would expect more, but they do
    not really know. They do not know how bad this is.
        Let me mention one area that will make everyone
    uncomfortable, I served in the House with Secretary Panetta,
    and I know that what he said did not really come from his
    heart. Obviously, no one is going to be able to say that. But
    he said last week that DOD would wage war on global warming by
    promising to spend billions of taxpayers' dollars on more green
    stuff and all that. Right now, we are trying to survive this
    thing. When the Democrats and Republicans, all of them talked
    about this half trillion dollars and about sequestration coming
    along, it is a disarming of America.
        Now, I happen to be the ranking member, and when we were
    the majority, I was the chairman of the Environment and Public
    Works Committee. I know this obsession on all this global
    warming stuff. I also know that the trends have totally
    changed. It just came out the other day, only 19 percent of the
    TV meteorologists believe, number one, that global warming is
    taking place, and number two, that manmade gases are causing
    it.
        Yet, I read right here--and I appreciate very much,
    Admiral, when you were talking about--every $1 increase in the
    price per barrel of fuel is approximately $31 million of
    additional costs annually above the budgeted level. We are
    talking about huge amounts of money here. If the President--and
    he does--wants to use the military as a test tube for his green
    agenda, he can do it, but people need to know he does it. You
    guys are in the awkward position of having to say things that
    fortify the committee.
        Let me just ask you this; this is a direct quote from last
    week. ``In the 21st century, reality is that there are
    environmental threats that constitute threats to our national
    security.'' Do any one of the four of you want to volunteer to
    explain to me, because I do not understand, what are these
    environmental threats that are comparable to the terrorists who
    are out there? Anybody? [No response.]
        Yes, I do not know either.
        But anyway, I want to get into one thing here on the F-35s.
    By moving this program to the right, the President is able to
    say, we are not reducing the number of F-35s. However, during
    the cuts, it moves them over to the right so that the
    President's budget request cuts the F-35 budget by $1.6 billion
    in fiscal year 2013 and $15.1 billion over the FYDP. The fiscal
    year 2013 cut results in 179 fewer planes being produced during
    this FYDP period. Granted, later on down the road, they may be
    produced, but we are talking about right now is when the
    problem is.
        I gave a talk, it was on the Senate floor, and I researched
    it pretty well. I said it matches the figures we are getting
    from you all. In total since 2008, DOD has spent at least $4
    billion on climate change and energy efficiency activities that
    had nothing to do with the actual meeting of real defense
    needs. The same $4 billion could have been used to purchase 30
    new F-35s. It could have been used to purchase 28 new F-22s, if
    we had kept on the F-22s before the budget 4 years ago, and
    that program was axed. Or the C-135 aviation modernization
    program. I think we all agree--certainly you agree, do you not,
    General Breedlove, the significance of that program?
        General Breedlove. Yes, sir.
        Senator Inhofe. I think everybody does. So let me ask you,
    do you really believe that it is more important to be
    experimenting with this green stuff than it is to go ahead with
    that program, the aviation modernization program? That is axed.
    That is done in this budget.
        Admiral Ferguson. Senator, I cannot speak to the broader
    DOD programs including that amount. But on the Navy side, we
    are putting a significant amount of our investment in
    efficiency and making our forces more efficient.
        Senator Inhofe. I am all for efficiency. That is not the
    point. I am getting at how important this program is, which I
    think is very significant. I have a lot of quotes here from all
    of you talking about how significant this program is and the
    fact that that is knocked out in this budget for the benefit of
    a green test tube experiment that the military is being forced
    to do.
        Let me say this. I know my time has expired and I have to
    leave anyway. But I can remember back when Secretary Rumsfeld
    was before our committee, and it was a confirmation hearing. I
    said to him, ``the American people believe that we have the
    very best of everything, and we do not.'' Certainly, General
    Austin, you would agree. Our non-line-of-sight cannon, there
    are five countries that make a better one than what we have.
        So I said, if you are going to take over this position--and
    I could say the same thing to Secretary Panetta, but I did not
    during that confirmation hearing--you are going to be advised
    by a lot of smart generals. There are a lot of smart generals
    out there. All four of you are as smart as you can be. But you
    are going to be wrong. I recall that the last year I was in the
    House, on the House Armed Services Committee, with, I would
    say, our current Secretary who was seated next to me, we had
    someone testifying that in 10 years we would no longer need
    ground troops.
        So what is the answer? How can we meet the expectations of
    the American people that our number one concern should be
    defending America, not all this other stuff, and that we have
    the best of everything? Our kids go out in battle. They have
    the best equipment. His answer was this. He said we probably
    should go back to what we did over the last century. He said
    the average--in fact, it was right on this number--in times of
    war, in times of peace for 100 years in this country, that we
    spent 5.7 percent of our Gross Domestic Product on defending
    America. At that time, it was dropping down precipitously. This
    is after the Clinton administration. Now we are looking at
    about half of that.
        So I guess what I am saying--I am not asking any questions
    here. I am saying that you are doing a great job. We are doing
    a lousy job because we are not dealing you a hand. With the
    hand that you have, you are playing it right. You need to have
    a better hand.
        Thank you, Madam Chairman.
        Senator McCaskill. Thank you.
        I am going to resist the temptation to do any rebuttal of
    Senator Inhofe here because I want to stay focused on----
        Senator Inhofe. No. This might be a good time to do it.
        Senator McCaskill. I will wait until you leave. [Laughter.]
        I am not dumb. [Laughter.]
        I think what is really awkward is when people like you are
    pulled into some of the politics that swirl around this place.
    We all do this politics stuff all the time up here, and one of
    the things I admire so much about our military is the loyalty
    and support that you give one another and that you stay focused
    on your mission. You try, as much as you possibly can, to stay
    away from politics, and you understand that the Commander in
    Chief is the Commander in Chief. I have deep respect for you in
    that regard.
        I want to talk a little bit about non-standard equipment
    (NSE). The Services have invested billions of dollars in NSE
    since the beginning of combat operations, which have ranged
    from mine-resistant ambush protected (MRAP) vehicles to flat-
    screen TVs. I know there are various efforts to look at the NSE
    and to figure out future usefulness in that regard. This is one
    of those things that can get left in the corner of the cupboard
    as we focus on standard equipment and with all the protocols we
    have in place for standard equipment.
        What is your best estimate on the overall size of the NSE,
    and what are we going to do with all this stuff?
        What I am really worried about is--with my background as an
    auditor, I am really about the accountability piece on this. I
    am worried about whether or not we are doing anything in a way
    that could even resemble joint and whether or not we are having
    duplicative efforts to try to track down the NSE load that we
    have and figure out how we are going to transition it out of an
    OPTEMPO to a different kind of tempo. Could you all address the
    NSE issue for me?
        General Austin. Thank you, Senator. Certainly I share your
    concern about how much NSE we are able to maintain over time.
    As you well know, 60 percent of our life cycle costs is
    sustainment. So we have to be able to afford to keep what we
    have on hand or we have to choose to transition it to some
    other place. We are very concerned about that in the Army.
        So we are taking a hard look at the numbers of vehicles and
    the numbers of weapons that we are going to keep on hand. We
    are going through that assessment right now. I have even gone
    down to visit a company arms room here recently to take a look
    at what our soldiers are actually required to maintain. Of
    course, when the Vice Chief of Staff shows up in a company arms
    room, it is typically an emotional event for that unit. But my
    focus was to----
        Senator McCaskill. I think calling it an ``emotional''
    event is one of those diplomatic words. [Laughter.]
        I do not think they would call it ``emotional,'' General.
    Probably something other than that.
        General Austin. But I have a real concern about how much
    equipment we are asking our troops to maintain that may not be
    useful to us anymore and we may not be able to afford to
    sustain. So we are going through a very deliberate process of
    making sure that we keep what we need and we transition things
    that we do not need and cannot afford. It will take us some
    time to work through that. But clearly we share your concern.
        Senator McCaskill. What about the MRAPs? Do we have repair
    parts in the supply? Are we going to have to continue to rely
    on contractor logistics? That is, I think, a big question mark
    right now. What is the answer on the MRAP issue?
        General Austin. Certainly we will not be able to afford to
    rely on contractor logistics for the foreseeable future because
    that is very expensive. So we are going through doing an
    assessment on how many MRAPs we are going to keep and what the
    disposition of those is going to be, and then again, we will
    outline what the maintenance and supply chain will be as a
    result of that.
        Senator McCaskill. Thank you, General, for that.
        I want to get to Guam before we leave.
        Did anybody else have anything on NSE that you wanted to
    weigh in on? General Breedlove?
        General Breedlove. Ma'am, it is really less about NSE, but
    a worry I have is, we have had a period of time where some
    really good ideas have been brought forward to the battlefield
    and quickly adopted to help our soldiers and marines on the
    ground. The MC-12 Liberty aircraft is a shining example of
    getting it right. But also, we have some examples where we have
    multiple starts to try to get to capabilities in dirigibles and
    others where we have several that are competing and many in the
    same mission space. I am concerned that we are able to get to
    the right number and type, and then transition them into long-
    term use. We have been able to do some of this work because of
    OCO money, and now as the OCO money goes away, we have to start
    making prudent decisions about some of these multiple starts in
    similar mission sets.
        Senator McCaskill. I think that is really a good point,
    General, because when you have OCO money, it is almost embedded
    in that that you keep looking around and trying different
    things, and it almost breeds a certain inefficiency that is
    required by the nature of the mission. But now, it is really
    imperative that we decide which of those starts are worth
    continuing.
        As I have said before, one of the biggest problems our
    military has, if you want to call it a problem, is there is
    nothing that you guys do not think you can do. So when you are
    going down a road and you are hitting bumps, sometimes you just
    keep deciding you are going to go over the bumps and keep going
    down the road instead of saying, maybe we need to pull the plug
    on this journey, maybe this is a road we cannot afford to go
    down.
        I am hopeful that what you are talking about there, General
    Breedlove, is exactly that. We cannot afford to go down
    multiple paths, especially if there is overlay and duplication,
    which I do not need to tell you has happened just a few times.
        General Dunford. Senator, I would just like to quickly
    follow up and give you some degree of confidence that we
    recognize the challenge that you have raised and we actually
    have a process in place to look at it.
        In our case, just on order of magnitude, we have about 600
    pieces of NSE as a result of the last 10 years. We have gone
    through, and we are in the process of continuing to go through,
    each and every item to determine which ones would be
    transitioned to programs of record. To give you some idea, we
    probably will have transitioned about one-third of those 600 to
    programs of record to date.
        The other question you asked, which I think is an important
    question, is where are we with regard to integration in the
    joint world. I think we all sit on the Joint Requirements
    Oversight Council. We also have subordinate organizations, the
    Army-Marine Corps board, for example, that take a look at
    things that are unique to ground forces. I am pretty confident,
    particularly in the case of NSE, that we have the right
    processes in place to look at that equipment, and make the
    proper decisions about transition as General Breedlove alluded
    to.
        We are now, as a result of our pretty significant
    experience, identifying those programs that had some promise
    some years ago, but absolutely do not have a future, and in
    those cases, recognizing again the period of austerity that we
    are in, and recognizing the tail associated with some of those
    programs, we are making sure those programs are ended and we
    properly dispose of the equipment that has been useful in
    Afghanistan but perhaps will not be useful and not be a part of
    our future.
        Senator McCaskill. Good luck if that equipment is built in
    more than 25 States. [Laughter.]
        Which seems to be a habit that some of our contractors
    have. They figure if they can have pieces of it in more than 25
    States, they immediately have 50 Senators that are protective
    and parochial. But I know you guys have never witnessed that in
    all of your time that you have been here.
        My time is up. I know that both my colleagues have more
    questions.
        I do want, General Dunford, to make sure that if I do not
    have an opportunity to question again, that we address the
    Marine Corps as it relates to Guam. As we look at our budget, I
    really am anxious that everyone stays in the corral, so to
    speak, until we are certain what the future is in Guam. I do
    not want to waste one dime doing anything in Guam until we get
    the reconsideration of the agreement to a place that we think
    it makes sense for the United States, for our military, and for
    the people of Guam and Japan. So thank you for that.
        Senator Ayotte.
        Senator Ayotte. Thank you, Madam Chair. I appreciate your
    raising the issue of Guam. I think it is an important one with
    what we need to do in markup.
        I wanted to ask each of you--and I raised it in my opening
    statement, we know that defense sequestration is coming in
    January if Congress fails to act to come up with other
    responsible budget savings. I am a strong advocate for us doing
    that. We have heard from each of the Services, as well as from
    our Secretary of Defense, the devastating impact of defense
    sequestration, including hollowing out our forces, along with
    all the other consequences.
        But what I would like each of you to address for me is
    timing because I am worried that there is a general feeling
    around here that we can kick this can until December to make
    the decision on how to avoid defense sequestration and
    undermining our national security. I met with a group of our
    defense industrial base the other day, and they pointed out to
    me that there are things that they are going to be required to
    do, for example, issue layoff notices under the Warren Act and
    other legal requirements, that they will have to undertake.
        Can you help me, each of you? If we wait until December,
    what are the disadvantages and consequences of doing that as
    opposed to resolving this issue much sooner, particularly for
    each of our Service branches? Because I think this timing issue
    is very important for people around here to understand.
        General Austin. I agree with your assessment, Senator, that
    if this does come to pass that it would be devastating. Because
    of that, I think it would drive us to go back and redo some of
    our planning, certainly make new assessments. That takes time,
    and it certainly consumes a lot of organizational energy. So we
    are a bit concerned about that.
        I think from an Army perspective, again, we have not done
    any planning on this, as you indicated. But the back-of-the-
    envelope calculations are such that this would probably mean a
    loss of probably another 100,000 troops, 50 percent of those in
    the Guard and Reserve. With those kinds of impacts, that
    probably would drive us to go back and relook at our planning
    efforts here.
        Senator Ayotte. So, General, that would be in addition to
    the 72,000 that we are looking at in terms of end strength
    reductions?
        General Austin. Right.
        Senator Ayotte. Another 100,000.
        General Austin. Right.
        Senator Ayotte. Thank you.
        Would that not take time? Obviously, thinking about this
    concept, first of all, if we are going to reduce our forces
    another 100,000, how do we not break the faith there? I do not
    know how you could possibly not break faith. But even the
    implementation of something so devastating, would it not be
    more productive if we could tell you sooner that we have
    resolved this for you? Is there not an urgency? I think that is
    what we need to appreciate around here. Would you agree with me
    that there is some urgency that you are not having this hanging
    over your head?
        General Austin. Absolutely. If we did not have that sword
    of Damocles hanging over our head, we would be in much better
    shape.
        Senator Ayotte. Thank you.
        Admiral?
        Admiral Ferguson. Senator, I think there are two
    significant impacts. If you look at sequestration, the impact
    on the Navy from the $600 billion defense reduction would be
    about $15 billion per year. That is the amount of the entire
    ship construction account that we would have to figure out how
    to spread in our budget and reduce. Waiting until December and
    then not having a resolution at that point would allow a very
    short cycle for planning. It would not allow us to make
    efficient or effective choices. It would also cause us to go
    back and relook at the strategy because the force that comes
    out of sequestration is not the force that can support the
    current strategy that we are operating under.
        The second concern would be the industrial base impacts
    that you alluded to. Our industrial shipyards and our providers
    and corporations have to start making some investment decisions
    with respect to notification of employees if there are
    furloughs, if we are forced to break contracts and not be able
    to execute them under a sequestration scenario. So I would
    indicate that the uncertainty in our industrial base would
    affect our suppliers and then, if it were to occur, would
    greatly affect our industrial base sustainment over the long-
    term.
        Senator Ayotte. Admiral, if we lose some of those small
    employers, isn't the risk that they do not come back?
        Admiral Ferguson. That risk certainly exists. In many of
    our more complex procurement programs, we are down to single
    vendors or single suppliers and we are their predominant
    customer. So, it would be very difficult for some to recover.
        General Dunford. Senator, I would like to start this by
    going back to your opening comments when you quoted President
    Reagan. We have a tendency to view sequestration as a budget
    issue, but it really is not a budget issue. It is a reordering
    of our national priorities. It is what we will not be able to
    do, and certainly at the strategic level, I think what the
    Secretary said is, we will not be able to implement the
    strategy as currently written if sequestration goes into
    effect.
        I can tell you from a Marine Corps perspective, we are at
    182,000 right now. We are at the margin of being able to meet
    the strategy. In other words, we have balanced the risk. I have
    talked to you in private that we believe that with 182,000
    marines, we can meet the strategy that Secretary Panetta has
    articulated. But just as General Austin mentioned, there is an
    automatic 10 percent personnel cut unless personnel is
    exempted. There is an automatic 10 percent personnel cut on the
    Marine Corps. That is another 18,000 right away if we were to
    be reduced. If we were to be cut another 18,000, we would not
    have adequate capabilities and capacities to meet a single
    major contingency operation. So that is fairly significant.
        I think the other point that you raise that is absolutely
    true is we would absolutely not be able to keep faith with our
    people. If sequestration were to go into effect, not only would
    we have to cut that additional 18,000 people if a flat 10
    percent was executed, but we right now are only budgeted in
    fiscal year 2013 for 182,000 marines. We are relying on
    overseas contingency funds to have a ramp to take us from the
    202,000 marines we were authorized in 2012 down to the 182,000
    marines that we are going to be at in fiscal year 2016.
        If sequestration went into effect and we were not given the
    opportunity to have that ramp, that would be an immediate
    reduction from 202,000 to something on the order of 168,000. At
    that number, there is absolutely no way we would keep faith
    with people. We would be breaking contracts and sending people
    on their way who believed they had a commitment from us to
    remain on Active Duty. These are the very people we talked
    about earlier who are in Afghanistan today, forward deployed,
    forward engaged, in harm's way, and their reward when they come
    home will simply be to dismiss them and shake their hand. I
    think that would be a mistake.
        Senator Ayotte. Thank you, General.
        General Breedlove. Senator, just to reiterate a couple of
    things my compatriots have said, we think that we would
    definitely not be able to execute the existing strategy if we
    have to go through sequestration. We echo your remark that it
    would be devastating. We simply cannot afford this one.
        As we have talked about several times, the Air Force is the
    oldest it has ever been in terms of its iron. We desperately
    need to recapitalize our flying fleet, and if we see
    sequestration, we will not be able to maintain capacity and do
    recapitalization of those fleets. So we will have to make very
    tough decisions to either come way down in the number of units
    or to give up the modernization of those units.
        I want to echo something also said regarding the industrial
    base. There are some very key capabilities out there that are
    already very much at risk. In the aviation business, the number
    of facilities that can do stealth have reduced, and another cut
    to the capability and the effort that we are putting into those
    stealth capabilities could cause us severe problems in that
    industrial base.
        Senator Ayotte. I thank all of you. I know that my time is
    up.
        Can you just give me a quick yes or no? Yes, is there an
    urgency that we do this before December? General Austin?
        General Austin. Yes.
        Senator Ayotte. Admiral Ferguson?
        Admiral Ferguson. I affirm, yes.
        Senator Ayotte. General Dunford?
        General Dunford. Yes.
        Senator Ayotte. General Breedlove?
        General Breedlove. Absolutely.
        Senator Ayotte. Thank you.
        Senator McCaskill. Senator Begich?
        Senator Begich. Madam Chair, thank you very much.
        I hold my other questions, but first, I am sorry that
    Senator Inhofe is not here. We actually do a lot of stuff
    together, especially around general aviation. But on the issue
    of, as he called it, ``the green test tube,'' let me ask a few
    questions.
        I was in Afghanistan. I was visiting a forward operating
    base where I saw marines utilizing new technology around solar
    energy so they do not have to hump in a lot of equipment, which
    I know the marines do not like to do. They have only a certain
    type of equipment that actually saves their lives. What I saw
    there was incredible technology development from these huge
    trucks of energy that they would have to bring in, maybe fuel
    and otherwise, now down to small compact packs.
        Is that not of value to the marines to have that new
    technology when they are out on forward operating bases, such
    as in Afghanistan, where they do not have to have all this fuel
    being brought in, but they can now spend 3 days out in the
    field? Is that a good thing?
        General Dunford. Senator, the focus of our energy
    initiatives are exactly along the lines of what you just talked
    about. They are designed to make us more operationally
    effective and reduce the load on our individual marines. We
    have fielded to all of our battalions in Afghanistan the solar
    panels that you saw. That replaces hundreds of pounds of
    batteries that marines would otherwise have to carry. We have
    conducted 7-day patrols without the extra weight of batteries
    because we have had those solar panels. So all of our
    interaction with industry is designed--we are spending money in
    places where we can have an immediate impact.
        In fact, I was just down at Camp Lejeune, NC, last week. We
    have what we call an experimental forward operating base. It is
    an annual event where we bring in partners from industry and we
    articulate what we need. This year, we happened to focus on
    things like potable water and how we could create potable water
    without the big reverse osmosis purification units that
    typically are associated with our units that weigh a great
    deal. That is absolutely the focus of our energy efforts,
    enhancing our operational effectiveness and increasing our
    ability to operate in expeditionary and austere environments.
        Senator Begich. In an efficient and ready way too. You move
    quicker with less of those batteries, for example. I was amazed
    how much the old battery technology weighs.
        General Dunford. Senator, we are fielding that equipment
    because when we fielded it to the first battalion, all the
    other marines saw it and there was a demand signal that
    immediately was raised as the other units wanted to have that
    equipment as well. In fact, the only critical piece to this is
    making sure that we get it to our marines early enough in the
    predeployment cycle where they are proficient at using it
    before they deploy. The thing that we have sometimes relearned
    is that when you field equipment when marines are already
    deployed, it is not going to be very effective. So we have
    really worked very hard to make sure that we get that equipment
    to our marines before they deploy. But when we do, they
    absolutely have found that to be extraordinarily useful.
        It goes beyond just the batteries. It goes to energy
    efficient tent liners, lights, things you have seen.
        Senator Begich. Also from the Air Force end, the
    alternative fuel development, all your technologies now making
    sure that you are not just on a certain type of aviation fuel,
    but new technologies so you can become more self-sufficient and
    less dependent from a national perspective on foreign oil from
    countries that hate us. Is that a fair statement?
        General Breedlove. Sir, our focus there, as you know and
    you have alluded to, is to make sure that our fleet is ready to
    accept those fuels such that when they become economically
    viable, then our fleet will be ready to go and we are
    proceeding with that.
        Senator Begich. Also from the Navy perspective, if I
    remember reading a report, one of your big concerns, and why
    you have the Task Force Climate Change, is because if you have
    a change in sea levels, it has a direct impact on all of your
    ports.
        Admiral Ferguson. That is certainly true.
        Senator Begich. Am I mistaken there?
        Admiral Ferguson. No. That is certainly true.
        Senator Begich. We have invested billions in these ports
    around the country and around the world, and it is in our
    interest to make sure if there is--we can argue over the
    science and all that. No disrespect to my folks who do the
    weather on TV, but I would prefer to put all that aside. The
    fact is, we are having some changes and you are looking at
    those as infrastructure costs potentially. Is that a fair
    statement?
        Admiral Ferguson. I think that is fair that some are
    looking at that. We are also looking in relation to the Arctic
    about what are the future challenges up there as that opens up.
    Similar to the Air Force, we are operating and certifying
    alternative fuels for our ships and aircraft in order that when
    they do become economically viable----
        Senator Begich. You are ready.
        Admiral Ferguson.--we are certified and ready to use them.
    Again, the focus on efficiency in our OPTEMPO--our fuel bills
    alone are consuming our readiness accounts, so we need to look
    at alternatives.
        Senator Begich. From the Army, one of the highest incidence
    of fatalities and injuries is protecting those fuel sources
    coming into Afghanistan, for example. So the more efficient
    they become, the less of that fuel you will have to haul, you
    probably will save lives. Am I wrong about that?
        General Austin. Clearly, Senator, becoming more efficient
    is all about saving lives from the Army's perspective. Three
    tours in Iraq, one in Afghanistan, and I can tell you that
    every time that I can do something to not put a soldier on the
    road, whatever it is, I want to do it because it saves lives.
        It is also about, as General Dunford mentioned earlier,
    maintaining our soldiers. It is about soldier load and
    decreasing the burden on them, increasing their endurance. If
    they can go out with batteries with longer life and if it is
    easier to recharge them, if they can harvest energy that is
    left over in batteries and put that energy in other places, I
    think that is all good. That all contributes to saving lives
    and becoming more effective on the battlefield.
        Senator Begich. The last comment, then I will just do one
    more last thing on a separate issue.
        The energy costs, because of our dependency on diesel and
    other types of fuels, are draining your accounts and over-
    expending because the cost of fuel has gone up. So you then
    make choices because you have to have the fuel, and those
    choices are not necessarily fun choices to make. So the less we
    spend in that area, the less stress you will have on other
    budget elements within your own divisions. Is that a fair
    statement?
        Admiral Ferguson. Yes.
        Senator Begich. Let me also just end on this, and I
    appreciate Senator Ayotte's comments in her questioning to you,
    but I want to, for the record--the automatic cuts, if I were
    sitting in front of another group here--maybe it is my
    Veterans' Affairs Committee--the Department of Veterans Affairs
    would say some similar things. If I were sitting in front of
    the infrastructure groups, roads, water, sewer guys would say,
    everyone is having a pinch here. The thing that Congress is
    missing--this is more through you to the larger audience. You
    do not have to respond to this. We always talk about in order
    to replace these cuts, we have to have more cuts. The reality
    is you cannot cut your way out of this problem, there is no
    possible way. After 2 decades of poor management around this
    place, Republican and Democratic Presidents who are here and
    past, we have a deficit and a debt that is staggering. Everyone
    is to blame.
        The question is, are we going to do the right thing here?
    When I was mayor and we had the same problem, it is a three-
    pronged attack: you are going to cut budgets; you are going to
    deal with revenues; and you are going to invest in the right
    infrastructure, whatever that might be. In my case, I think it
    is education; I think it is energy; and I think it is basic
    core infrastructure we have to invest in. We have to deal with
    revenues. No one wants to talk about it. It scares everyone to
    death here. But the fact is, it's the only way--and I am happy
    to say the city that I was mayor of survived this economic
    crash without a hiccup. As a matter of fact, we had a rise in
    prices in our housing. We have a strong economy. It is moving.
    It actually was rated by Business Week as one of the economies
    that would move and recover very quickly in the bad recession
    because we did a three-pronged attack on this issue: revenues,
    expenses, and investment.
        What this place has a habit of doing, because it makes good
    political sound bites, is it is always about we got to cut or
    we got to revenue or we got to infrastructure. Never the three.
    All three are going to make this problem get resolved. But
    until this Congress gets real about it--and no disrespect to
    Senator Ayotte here--you cannot cut more to then save the cuts
    that are over here. It is going to be a combination of things.
    If you think we can cut our way out of this budget, you are
    dreaming. There is no way to do that. We will have significant
    cuts. We will have to do that. We have things that we have to
    get rid of that we can no longer do. That is clear. But the gap
    is so large because of 2 decades of poor management around this
    place and getting your go-lucky days. Well, those days are
    over.
        But we have to be honest with the public. It is a three-
    pronged attack. That is how we are going to solve this and we
    should be realistic about it. Because what is going to happen,
    just so you know the politics, I hear it already. No
    disrespect, Senator Ayotte. We have to do it now to save the
    military. That is what is going to happen. We are going to be
    in this political battle on the Senate floor, yelling at each
    other. Who is going to be more pro-defense, who is not? I love
    the military. Let me tell you that. Based on everything we did
    when I was mayor, what my wife does every day to support the
    military, none of us are going to see the military degrade its
    capacity. But we are going to protect this country economically
    and do it the right way so all of us are successful in the
    long-term.
        So there is my rant. I get frustrated when I hear this
    because it is a three-pronged attack. We have to be serious
    about this and honest with the public.
        Senator McCaskill. Okay. We will end with a rant.
        Senator Ayotte. I want you to know I would have a strong
    rebuttal, and I would say this, that what I am really worried
    about is our defense industrial base too because they have to
    make decisions upfront. So we can wait until December, but
    those decisions are being made as we speak here.
        Senator Begich. I agree, and we should have made the
    decision last year and honestly talked about all three pieces,
    but we did not and you know that because it is politics as
    usual around this place.
        Senator McCaskill. First of all, let me step in here and
    say that maybe now is the time I should do my rebuttal of
    Senator Inhofe. [Laughter.]
        I think this would be a perfect time for that.
        I think it is a perfect time to thank you all for your
    service to your country and to all the people in the room. I am
    going to resist the temptation to ask why there are so many of
    you in the room, because as some of you who have been to these
    hearings before know, it is one of my pet peeves that we have
    to be careful about how many people we have tasked to how many
    tasks and whether we need as many people sometimes in
    attendance at these hearings since they are televised. But I
    know everybody in the room cares very deeply about their
    country and is committed, and I appreciate that.
        We are struggling with trying to correct mistakes that have
    been made over the last 20 years as to the way we fund what we
    must fund as a Federal Government. But there is no disagreement
    between Democrats and Republicans that the most important
    priority of the Federal Government is our national defense.
    There is absolutely no disagreement, regardless of Democrat or
    Republican, that we have the best military in the world, and
    that we must keep the best military in the world.
        How we get there--we are going to need help and input from
    you, but we are also going to have to realize that we cannot
    give you everything you ask for in the future because we have
    tried that, and taking OCO out, the base budget of DOD, taking
    out health care--so you cannot even use the health care
    increase--has gone from $270 billion to north of $600 billion
    in 10 years. We have doubled the amount of money going to DOD
    in 10 years. That is not counting OCO. You add OCO on top of
    that and that is a huge piece.
        So can we keep the best military and do it smarter with a
    little less money? I am confident we can. I am especially
    confident we can because of the leadership we have in the
    military which is represented here today very well.
        Thank you very much. There will be, obviously, more
    questions for the record that some of us did not get to, and we
    look forward to a continuing dialogue as we keep our military
    as ready as we possibly can and also figure out a way that we
    do not drown in debt about 15 or 20 years from now. Thank you
    all very much. This hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Claire McCaskill
                                readiness trends
        1. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, since the turn of the century, the
    Services have been heavily engaged in combat operations which, among
    other things, have required personnel to deploy frequently and have
    little time to train for anything other than counterinsurgency
    missions, and caused heavy wear and tear on both people and equipment.
    In addition, units that are not deployed have had to transfer equipment
    and personnel to deploying units, causing serious equipment readiness
    shortfalls. Notwithstanding steps taken by Congress to increase
    investments, reported readiness rates have significantly declined over
    the past 10 years. What are the public indicators of an increase in
    readiness we can expect to see?
        General Austin. The readiness of Army units is tied to our force
    generation model which allows Army units to build readiness in order to
    meet mission requirements at predictable periods in time. Army units
    receive specific training and execute mission rehearsal exercises
    tailored to the operational requirements the unit will execute on
    deployment. Readiness, in fact, has improved over the past several
    years. We are just now witnessing improvements on critical investments
    made over the years. Growth in unmanned aerial systems, new
    helicopters, expanded training bases for new and critical skills and
    many others have contributed to improvements in Army readiness.
    Currently, the readiness of those units executing operations in support
    of combatant command requirements (i.e., deployed units) remains at the
    highest levels. As demand for forces continues to decline, we expect
    the readiness to improve earlier in the force generation cycle. In the
    second quarter of fiscal year 2012, the Army met its dwell goal of 1:2
    for individual soldiers. In the future, we anticipate the potential to
    reach 1:3 boots-on-the-ground (BOG)/dwell around the end of fiscal year
    2016 as forces continue to redeploy from Afghanistan. As the Army
    adjusts to a peacetime footing, soldiers will deploy less often,
    lowering the stress on the individual and the strain on equipment. We
    will better measure our ability to recruit and assess the number of
    quality soldiers needed each year. Likewise, the retention rate for
    quality soldiers who become the leaders of tomorrow is an important
    measure of sustaining high readiness. It is through this continued
    investment in personnel, training, and equipment across all three
    components that the Army of 2020 will be able to satisfy the
    requirements of the National Military Strategy (NMS).
        Admiral Ferguson. Since the Navy is inherently a rotational force
    and we reset in stride, the primary stresses on our force in terms of
    readiness have been longer deployments, compressed maintenance and
    training between deployments, and greater deferred maintenance. Public
    indications of increased readiness would include consistent adherence
    to our Fleet Response Plan (FRP) with a sustainable cycle of
    deployment, sustainment, maintenance, and training for individual units
    and task groups. For Carrier Strike Groups, this entire cycle would be
    32 months with approximately 7-month long deployments. Other indicators
    would be a reduction in deferred maintenance, sustained high recruiting
    and retention of quality sailors, improved manning levels, and higher
    unit readiness ratings.
        General Dunford. The principal readiness detractor for Marine Corps
    nondeployed units is the reduced availability of equipment with which
    to outfit and train. Because the reset of Marine Corps equipment will
    continue 2 to 3 years after it returns from Afghanistan, the Corps'
    best estimate, based upon a 2014 drawdown from Afghanistan, is that
    unit readiness levels will increase around 2017. Incremental increases
    in the core training readiness of Marine Corps units are expected over
    the next 24 to 36 months as some equipment and personnel flow back from
    Afghanistan. These changes in unit readiness resource and training
    levels will be reported in the Defense Readiness Reporting System
    (DRRS).
        General Breedlove. The specific status and trends of Air Force
    readiness are only reported through classified channels. However, there
    are general public indicators of actions taken to focus on readiness;
    actions taken to modernize aging weapons systems, focus on full-
    spectrum training, and reduced operations tempo (OPTEMPO). The
    modernization of aging weapons systems is critical to the Air Force's
    ability to support the National Defense Strategy (NDS). Investments in
    high priority programs such as the F-35 Joint Strike Fighter (JSF),
    Long-Range Strike Bomber, KC-46 refueling tanker, service-life
    extension of the F-16, preferred munitions, capability modernization
    programs, Space-Based Infrared and Advanced Extremely High Frequency
    satellites, and space launch capability are among the most important
    public indicators of an increase in readiness.

        2. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, how did these priorities and readiness
    data influence your budget submissions? More specifically, how do you
    use readiness information to determine where to make investments?
        General Austin. Readiness is measured based on the status of the
    Army's manning, training, equipping, and sustaining resources
    reflecting the ability of units to accomplish core functions as
    designed. Assessments are based upon requirements established by
    doctrine in support of the NMS and the NDS. We know from our experience
    what it will take to maintain the readiness of our organizations and
    equipment. By forecasting readiness concerns across the Future Years
    Defense Program (FYDP), we ensure our investments strike a balance.
    During the year of execution we adjust resources, if necessary, to make
    sure the next deployers and units in the available phase of the Army
    Force Generation (ARFORGEN) process are ready.
        Admiral Ferguson. The Navy uses historical and current year
    readiness data to inform our readiness models for developing our
    requirements. We continuously measure modeled requirements against
    actual results to inform future investments. In the fiscal year 2013
    budget request, we increased our investments in our readiness accounts,
    maintenance, and training as well as a sustainable deployment cycle to
    maximize readiness.
        General Dunford. In order to sustain operational readiness and be
    prepared for crisis and contingency response, the Marine Corps balances
    readiness across five pillars: high quality people, unit readiness,
    capability and capacity to meet combatant commander requirements,
    infrastructure sustainment, and equipment modernization.
        The first pillar that the Marine Corps sustains is high quality
    people. Recruiting and retaining high quality people plays a key role
    in maintaining our high state of readiness. Further, the Marine Corps
    must always be faithful to the obligations we have made to those who
    serve honorably, and guard against breaking the chain of trust that
    exists with them. The Marine Corps has a plan for, and is conducting a
    measured drawdown to meet end strength of, 182,100 marines; if
    resources remain consistent, our current plan has the Marine Corps
    completing its drawdown by the end of fiscal year 2016. This drawdown
    will be undertaken while simultaneously supporting our forward presence
    mission, combat operations in support of Operation Enduring Freedom
    (OEF), combatant commander requirements, and ensuring we keep faith
    with marines and their families. In order to accomplish this, the
    Marine Corps has requested Overseas Contingency Operations (OCO)
    funding in fiscal year 2013 to support our overstrength and expects it
    will be necessary to continue funding this overstrength in OCO until
    the drawdown is complete. It is also important to note the critical
    role our civilian marines play in ensuring the Marine Corps
    accomplishes its myriad of missions; the Marine Corps has budgeted to
    support its current civilian workforce and relies on the experience and
    knowledge of these individuals to ensure mission success. The Marine
    Corps has a ratio of 1 civilian to every 10 marines, and the
    contribution made by this lean workforce cannot be overstated.
        Unit readiness is the second pillar, and it is measured in how we
    maintain readiness of the operating forces. Over the past several
    years, approximately two thirds of our units at home station have been
    in a degraded state of readiness in order to support forward deployed
    units. Accordingly, 10 years of constant combat operations has come at
    a cost, as we have seen a reduction in the overall readiness of our
    nondeployed forces. Our nondeployed unit readiness has been the
    billpayer for deployed unit readiness to ensure marines in combat had
    the very best equipment. It is now critical that the Marine Corps reset
    the force following the past decade of combat operations; as such, the
    Marine Corps has requested $1.3 billion in our fiscal year 2013 OCO
    request for operational reset. While this funds our operational, or
    near-term, reset costs, the Marine Corps also has approximately 95,000
    principal items in Afghanistan that will be reset following the end of
    combat operations; this is our long-term, or strategic reset cost.
    Using the lessons learned from Iraq, the Marine Corps anticipates a
    strategic reset cost of over $3 billion over a 2- to 3-year period
    following the return of all our equipment from Afghanistan. As the
    Marine Corps resets the force, we are simultaneously committed to
    supporting our operational requirements and our mission as the Nation's
    expeditionary force in readiness.
        Force-sizing to meet geographic combatant commander requirements
    with the right mix of capacity and capability is the essence of our
    third readiness pillar. The Marine Corps must maintain a force that
    meets our ongoing operational requirements in Afghanistan, while
    simultaneously maintaining our forward presence across the globe.
    Marine Air Ground Task Forces (MAGTF) are in high demand due to their
    flexibility, operational reach, and ability to be tailored to meet the
    mission requirements, and the Marine Corps is committed to properly
    training and equipping its forces in order to ensure they are prepared
    to meet combatant commander requirements. Currently, we are taking
    steps to rebalance in the Pacific, resuming the Unit Deployment Program
    and beginning rotational deployments to Australia. We are also engaged
    in numerous security cooperation and engagement activities such as
    Special Purpose MAGTF-12 in support of U.S. Africa Command (AFRICOM)
    and our Black Sea Rotational Force in support of U.S. European Command
    (EUCOM).
        The Marine Corps' fourth pillar is infrastructure sustainment.
    Despite budget reductions in the fiscal year 2013 budget, the Marine
    Corps has requested to fund facility sustainment, restoration, and
    modernization at the 90 percent level--the Department of Defense's
    (DOD) stated goal. Our infrastructure must be maintained, as it plays a
    direct and complementary role in our ability to train and deploy ready
    forces in support of mission requirements.
        Finally, in order to equip our marines to match the needs of the
    emerging security environment, the Marine Corps must invest in
    equipment modernization. However, in this austere fiscal environment,
    the Marine Corps is only conducting essential modernization to support
    our core competencies, and we are mitigating costs by prioritizing and
    sequencing our modernization and sustainment programs. To maintain
    operational capabilities and readiness, modernization is critical in
    the areas of ground combat vehicles, aviation, and amphibious and pre-
    positioning ships.
        Through it all, we will make the hard decisions and redouble our
    commitment to our traditional culture of frugality. We will continue to
    ask only for what we need, not what we want. Ultimately, we will build
    the most capable Marine Corps the Nation can afford.
        General Breedlove. The Air Force made hard choices to closely align
    its fiscal year 2013 budget submission with the new Defense Strategic
    Guidance (DSG). We will be a smaller but superb force that maintains
    the agility, flexibility, and readiness to engage a full range of
    contingencies and threats. We remain committed to our ongoing
    responsibilities, ranging from nuclear deterrence to operations in
    Afghanistan, counterterrorism, and global intelligence, surveillance,
    and reconnaissance (ISR). Although smaller, we will sustain global
    operations through our continuing presence in the Asia Pacific and
    Middle East theaters, while tailoring our presence in Europe. Air Force
    capabilities are fundamental to the major priorities of the new DSG,
    such as deterring and defeating aggression, power projection in anti-
    access and area denial (A2/AD) environments, preventing the spread of
    weapons of mass destruction (WMD), space and cyber operations, and
    strategic deterrence.
        It took innovative and adaptive thinking using regular readiness
    reports from more than 2,500 Air Force units in order to rebalance Air
    Force investments over the next several years in ways that will enable
    our essential contributions to the NDS. Confronted by a more complex
    and dynamic security environment, as well as a significant reduction in
    defense resources, the Air Force determined the best path forward was
    to become smaller in order to protect a high quality force that will
    improve in capability over time. To avoid a hollow force, we will
    protect readiness regardless of the size of our force and strengthen
    the integration of our Total Force Team of Active, Guard, and Reserve
    airmen.

                   equipment concerns and funding shortfalls
        3. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, I understand that you simply cannot
    fund every readiness requirement in your budget and that there will
    always be an inherent amount of accepted risk in military operations.
    However, in the past this committee has attempted to authorize your
    unfunded requirements, particularly as they relate to improving
    readiness. A recent example would be the backlog of the Navy's ship and
    aircraft depot maintenance. Please briefly quantify your current
    readiness funding backlogs and tell me what your highest priorities
    are, given your assessment of the current state of readiness in your
    Service.
        General Austin. As the Army's budget is reduced over the next
    several years, it is imperative that we balance force structure/end
    strength, modernization, infrastructure/installations needs, and
    readiness to avoid becoming a hollow force and to ensure that we meet
    the demands of our combatant commanders under the new national security
    strategy. We believe the fiscal year 2013 budget to include OCO
    request, as submitted, strikes just the right balance. Adjusting
    funding in one of these areas would impact funding in the others and
    upset the careful balance we think we've achieved. This budget provides
    adequate funding for resetting equipment coming out of theater, allows
    us to ramp down end strength in a deliberate and methodical way while
    taking care of soldiers and their families, and provides adequate
    funding to modernize. Of course, we will constantly be assessing and
    adjusting priorities throughout the year and will certainly inform you
    if our needs change.
        Admiral Ferguson. The Navy appreciates the continuing support of
    Congress and this committee for our readiness requirements. Considering
    both baseline and OCO funding in this budget submission, the Navy has
    fully funded ship maintenance and funded aviation depot maintenance to
    94 percent which will result in a limited projected backlog of 14
    airframes and 273 engine depot requirements. This funding is within
    acceptable risk and supports our ongoing efforts to improve surface
    ship readiness and the continuing introduction of new type/model/series
    aircraft to our inventory. Current Navy readiness remains dependent on
    OCO funding, and will require funding for reset following the end of
    OEF to support enduring baseline requirements.
        General Dunford. The new DSG provides a framework by which the
    Marine Corps will balance the demands of the future security
    environment with the realities of the current fiscal constraints.
    Though the choices of the last year have been difficult, we are
    confident that we have carefully managed risk by balancing capacity and
    capability. To that end, the Marine Corps' 2013 budget request ensures
    that we maintain the high levels of readiness the Nation has come to
    expect of its marines.
        General Breedlove. Confronted by a more complex and dynamic
    security environment, as well as a significant reduction in defense
    resources, the Air Force determined the prudent path forward is to
    become a smaller more capable force over time. To avoid a hollow force,
    we will protect readiness regardless of the size of our force and
    strengthen the integration of our Total Force Team of Active, Guard,
    and Reserve airmen. We are slowing modernization and terminating or
    deferring numerous acquisition programs, while protecting key programs
    most critical to future Air Force capabilities. A top readiness concern
    for the Air Force in the fiscal year 2013 President's budget was to
    match peacetime flying hours to training requirements. Another priority
    is lowering fuel consumption; the rising cost of fuel prices has
    negatively impacted our operations and maintenance (O&M) budget. For
    example, in fiscal year 2012, the Air Force requested authority to
    reprogram approximately $1.1 billion to shortfalls due to rising fuel
    costs. Additionally, the Air Force remains concerned about replenishing
    stocks of preferred munitions. The Air Force requires approximately
    $1.3 billion to reconstitute various types of preferred munitions to
    quickly meet combatant commander's needs. Weapons systems sustainment
    (WSS) also requires attention. Our depot maintenance requirements will
    continue despite a drawdown in OCO requirements. The Air Force will
    require approximately $4.1 billion in the future years to transition
    from OCO funding and continue depot maintenance operations. Depot
    maintenance will become more critical to ensure a smaller force remains
    available and capable. Although Air Force contributions to the Joint
    Force have increased in relevance over time, there has been no
    corresponding increase in resources to fund this increasing demand. The
    Air Force has entered this era of fiscal austerity significantly
    smaller, with aging equipment, and the smallest budget share of any
    military department in half a century.

        4. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, the Government Accountability Office
    (GAO) has previously reported that the Military Services tend to build
    their reset budget requirements on the basis of the equipment it
    anticipates will actually return from overseas in the next year, rather
    than prioritizing or targeting its reset requirements to address
    equipment shortages or other needs. What are your current estimates and
    timelines for the amounts of funding required for reset?
        General Austin. The Army estimates that the reset of equipment used
    in Iraq and Afghanistan will conclude 2 to 3 years following completion
    of operations in Afghanistan. If contingency operations ceased today,
    the Army would need $10 billion to $15 billion to complete reset over
    the next 2 to 3 years.
        Admiral Ferguson. The Navy reassesses reset requirements annually
    as part of its budget submission as our assets reset in stride between
    deployments. The President's budget includes a fiscal year 2013 reset
    requirement of approximately $2 billion.
        General Dunford. In January 2012, the Commandant of the Marine
    Corps signed the Marine Corps OEF Ground Equipment Reset Strategy which
    identifies what equipment we will reset and what we will divest. It
    prioritizes investment and modernization decisions in accordance with
    the capabilities of our middleweight force construct.
        The reset of our equipment after more than a decade of combat
    requires an unprecedented level of effort, and our depots stand ready
    to meet the challenge. Reset is composed of strategic and operational
    reset; our fiscal year 2013 near-term operational reset cost is $1.3
    billion and is included in the OCO request.
        Strategic reset costs will not be finalized until OEF operations
    have ceased. Our current strategic reset estimate is $3.2 billion over
    a 2- to 3-year period following the return of our equipment from
    Afghanistan. This estimate is continually revised based on the 182,100
    Marine Corps force structure, modified acquisition objectives, and
    condition of gear returning from Afghanistan, much of which was
    retransferred directly from Iraq to support the Afghanistan surge of
    2009.
        General Breedlove. The total Air Force fiscal year 2013 requested
    reset level is $2.183 billion. Air Force total equipment reset is
    calendar driven and/or event driven. Major weapons systems, such as
    aircraft and engines, are reset at depots. Support equipment and
    vehicles are primarily reset in theater. Air Force total equipment
    reset has been ongoing and will continue while the Air Force is engaged
    in combat operations and beyond. Combat operations drive reset costs.

        5. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, to what extent are the Services
    planning to include funding for reset into their base budgets?
        General Austin. The Army participates in annual assessments of
    reset liability in coordination with the Office of the Secretary of
    Defense (OSD) for Cost Assessment and Program Evaluation (CAPE) in
    order to identify and estimate our future reset requirements stemming
    from operation in the U.S. Central Command's (CENTCOM) theater.
    Currently, both the Army and OSD CAPE intend to fund such requirements
    with contingency funds.
        Admiral Ferguson. The Navy will continue to fund reset requirements
    from the OCO budget, based on Office of Management and Budget (OMB)
    criteria. Our fiscal year 2013 reset request is $2 billion.
        General Dunford. The Marine Corps does not anticipate funding for
    reset in the base budget. Funding for our near-term operational reset
    has been requested in the fiscal year 2013 OCO request; our longer-term
    strategic reset will commence following the return of equipment from
    Afghanistan and is expected to cost $3.2 billion over a 2- to 3-year
    period. During this time, the Marine Corps will be rebalancing in the
    Pacific, conducting training at home station, and providing for our
    marines and their families. In order to balance these myriad
    requirements while simultaneously conducting strategic reset, the
    Marine Corps anticipates a need for OCO funding for 2 to 3 years after
    the end of operations in Afghanistan and the return of all equipment to
    home station.
        General Breedlove. As we transition from continuous OCOs, the Air
    Force is taking a deliberate approach as it plans for reset. The Air
    Force is actively estimating the one-time and enduring requirements to
    provide and sustain the necessary capabilities and capacity to support
    the defense strategy.

        6. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, do 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?
        General Austin. The Army takes every opportunity to synchronize
    returning equipment from contingency operations through the reset
    process for redistribution based on priority. We do this utilizing a
    very deliberate Retrograde, Reset, and Redistribution (R3) process for
    equipment, focused on transitioning from the needs of the current
    conflict to full spectrum operations and training. The R3 process
    identifies retrograde priorities to assist Army Central (ARCENT) in
    their retrograde planning. This process synchronizes retrograde of
    equipment out of theater with its repair, and subsequent redistribution
    to support training and equipment readiness based on Army priority
    requirements.
        While reset of equipment does not fill equipment shortages that
    existed prior to a unit's deployment, our efforts have been successful
    in both maintaining historically high equipment readiness rates and
    bringing the Army into materiel balance. The Army is projected to have
    92 percent of its equipment on hand by the end of October 2012.
        Admiral Ferguson. The Navy resets in stride, relying upon regular,
    rotationally scheduled maintenance of our ships and aircraft between
    deployments to sustain the long-term material condition of our force.
    Reset requirements are assessed annually, and Navy maintains the
    planning assumption of approximately 2 years to complete reset
    maintenance for equipment used ashore in Iraq and Afghanistan. Ground
    equipment reset will be integrated within equipment modernization
    objectives, long-term support costs, and strategic investment plans.
    The rapid reset of the force will be balanced against the need for
    depot level overhauls, industrial capacity, and refresh actions or full
    replacement of end items in order to protect the long-term health of
    critical ground equipment. Ground equipment reset will occur in
    parallel with force reconstitution to ensure operating forces and
    strategic programs are outfitted with mission capable equipment as soon
    as possible; balancing the rate of return to the operating forces with
    optimal locations of repair.
        As ground forces were removed from Operation New Dawn (OND) and are
    reduced in OEF, CENTCOM demand for Naval Forces has remained constant
    and even increased in some areas of the Persian Gulf. Until official
    drawdown decisions are made for U.S. Forces and Navy Forces in
    particular, reset requirements are assumed to be similar to previous
    years. This reset is intended to be funded each year with OCO funds as
    long as the Navy continues to provide support to these operations.
        General Dunford. Yes. The Marine Corps continually assesses its
    force reconstitution plans to ensure the requirements for equipment
    reset remain relevant.
        The Marine Corps has developed a comprehensive Ground Equipment
    Reset Strategy that maximizes Congress' investment in the reset of the
    post-Afghanistan reconstituted force. Our strategy calls for a detailed
    assessment of the specific equipment items requiring reset, those items
    it will divest from its inventories, the optimal facility to conduct
    reset actions on each item and how those determinations relate to the
    final positioning of a particular equipment item within the
    reconstituted force.
        General Breedlove. Yes, as the current contingency begins to wind
    down, Air Force equipment managers at the base level conduct equipment
    inventories and condition surveys prior to sending equipment back to
    home station or to fill vacancies in other areas. These base level
    equipment management actions provide the fidelity of information as to
    how the Air Force can ensure reset dollars address equipment shortages
    and home station unit readiness.
        Additionally, for retrograde of support equipment, the Air Force is
    conducting a 100 percent inventory of all assets in Afghanistan,
    scheduled to be completed in Fall 2012. For all support equipment
    assets, to include war readiness material (WRM) (prepositioned), the
    Air Force has developed a comprehensive process to identify if there
    are enduring area of responsibility (AOR) requirements (to include
    WRM), existing Air Force requirements worldwide (to include WRM in
    other AORs), or if excess to the Air Force. Once this determination is
    made, the Air Force will then carry out the proper disposition of the
    assets.

                               operational energy
        7. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, in fiscal year 2011, DOD spent $19.4
    billion on energy, of which 79 percent, or $15.3 billion, was for
    operational energy related to flying, steaming, driving, and training,
    which comes to about 330,000 barrels of oil used per day. In
    Afghanistan, about 80 percent of ground convoys are dedicated to
    carrying fuel and water to our troops where they are exposed to deadly
    roadside bombs. While there are many concerns over DOD's heavy reliance
    on fuels to sustain operations on the battlefield in locations such as
    Afghanistan, GAO has recommended that the combatant commanders and the
    Military Services establish requirements and guidelines to maximize
    operational capabilities while reducing fuel demand. What are the
    Services doing to formally incorporate requirements related to fuel
    demand management at forward-deployed locations into policy and
    guidance?
        General Austin. The Army views operational energy solutions as a
    means to reduce fuel and resource use, but more importantly as an
    avenue to increase mission capability. We are currently deploying
    strategies, policy, and guidance to reduce fuel demand at forward
    operating locations on several levels. At the Army Division
    Headquarters level, operational energy and contingency basing have been
    incorporated as major objectives in the Army Campaign Plan (ACP).
    Through the ACP, the Army tracks progress on these objectives on a
    regular basis. Results are briefed to senior Army leaders.
        We have published and are in the process of publishing several
    policies aimed at reducing fuel demand. These include our Contingency
    Basing Policy, published on June 1, 2011, which promotes resource
    efficiency through efficient planning, establishing, managing,
    sustaining, and transitioning of a contingency base throughout its life
    cycle. Additionally, we are currently finalizing our Operational Energy
    Policy which focuses on increasing tactical and operational endurance
    and effectiveness through effective energy conservation practices. We
    are focusing our efforts in three key areas: soldier, basing, and
    vehicle power.
        In addition to these high level policies aimed at long-term
    progress, the Army has developed and deployed a range of energy-related
    solutions to include more efficient environmental control systems;
    energy-efficient shelters; water purification, recycling, and packaging
    capabilities; operational energy system analysis and measurement tools;
    an automated fuel management system; micro-grid solutions; and several
    renewable energy systems for individual soldiers to reduce fuel
    consumption at the tactical level. One example of such technologies is
    the minigrid, which improves the overall efficiency of Army base camps
    by optimizing generator usage. Minigrids that have been completed or
    have been funded will save the Army an estimated 50 million gallons of
    fuel annually. That is equivalent to removing 20,000 heavy expanded
    mobility tactical truckloads or 55 trucks from the road per day. The
    Army's Rapid Equipping Force (REF) is deploying such technologies to
    Forward Operating Bases (FOB) on the tactical edge, with their Energy
    to the Edge (E2E) program. Through E2E, the REF identifies bases in
    austere environments in which resupply is difficult and dangerous. They
    assess these bases and deploy technologies and other efficiencies to
    improve base safety and reduce the frequency of resupply. Recently, the
    REF worked with a FOB using balanced generator load, hybrid power, and
    renewables to reduce fuel use by 33 percent, therefore reducing the
    number of resupply airdrops from one in every 3 days to one in every 10
    days.
        Admiral Ferguson. Fuel demand at forward-deployed locations depends
    on a host of factors, many of which are driven by the cognizant
    combatant command. While there is a well-established structure to
    capture and report fuel consumption for maritime and aviation assets
    (nearly 99 percent of the Navy's operational fuel consumption), it is
    more challenging to track and report fuel consumption for expeditionary
    forces for a variety of reasons. Some of these include use of temporary
    infrastructure outside the continental United States (OCONUS), the wide
    variety and numbers of equipment operated, and the complex fuel
    delivery network that exists for supplying forward deployed
    expeditionary units. Additionally, the line between the Military
    Services is frequently blurred during retail transactions at the
    tactical level in the theater of war. Navy Expeditionary Combat Command
    (NECC), Naval Facilities Command, and the Office of the Chief of Naval
    Operations (OPNAV) are developing a system that will provide more
    accurate fuel consumption that will not unduly burden forward deployed
    personnel.
        As initial guidance, the Secretary of the Navy and Chief of Naval
    Operations (CNO) have issued goals reflecting this emphasis on energy
    conservation. Additionally, in June 2011 the Assistant Secretary of the
    Navy (Research, Development, and Acquisition) issued guidance
    concerning the use of energy-related factors in acquisition planning,
    trade-off analyses, technology development, and competitive source
    selections for platforms and weapons systems. Included in this guidance
    are a mandatory calculation of fully burdened cost of energy, the
    establishment of an energy component of the affordability target,
    energy considerations in acquisition plans, energy considerations in
    the Gate Review process, and energy review of legacy systems.
        General Dunford. The Marine Corps is aggressively moving to address
    the issues with policy and leadership guidance to increase our combat
    effectiveness by changing the way we use energy on the battlefield. We
    have:

             Issued the U.S. Marine Corps Expeditionary Energy
            Strategy and Implementation Planning Guidance, March 2011,
            providing a framework to institutionalize a more energy
            efficient, combat effective force;
             Issued foundational requirements to guide energy-
            related investments: the Marine Corps Expeditionary Energy
            Water and Waste Initial Capabilities Document/Capabilities
            Based Assessment, signed September 2011, providing a
            prioritized roadmap in materiel and non-materiel investments to
            increase effectiveness of the force through greater energy
            performance; and
             Published the 2012 Marine Corps Science and Technology
            Plan, for the first time establishing Science and Technology
            Objectives for expeditionary energy.

        We are already integrating energy performance into our materiel
    requirements, for example:

             Ground-based Operational Surveillance System; energy
            key performance parameters (KPP) using gallons per hour (fuel)
            for each variant and across the fleet; sources of power key
            system attributes (KSA) that includes ability to use renewable
            and hybrid power sources.
             Joint Light Tactical Vehicle (JLTV); includes Fuel
            Efficiency KSA (static gallons per hour; dynamic payload ton-
            miles per gallon), attributes for Exportable, On-board, and
            Silent Watch power.
             Combat Operating Center (V) 1 Energy Performance KSA
            (gallons per day); additional attributes for thermally
            efficient shelters, energy efficient lighting, sources of
            power, energy monitoring and measuring.

        General Breedlove. The Assistant Secretary of Defense for
    Operational Energy Plans and Programs issued the DOD Operational Energy
    Strategy in May 2011 and the supporting implementation plan in March
    2012. The Air Force is in the process of updating its policies,
    guidance, and strategic plans to reflect this approach. While only a
    portion of Air Force aviation fuel usage is to support forward
    operations, the Air Force has an overall goal to reduce its aviation
    fuel usage 10 percent by 2015.

        8. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, how can the Services improve the way
    they track fuel consumption at forward-deployed locations?
        General Austin. The Army recognizes the need to improve fuel asset
    visibility, inventory management, and accountability at forward
    locations. The lack of an automated petroleum management capability is
    one of the high risk capability gaps in the approved Army Petroleum and
    Water Capability Based Assessment. The Army is working on a system-
    solution that will provide better visibility on fuel consumption and
    accountability to our commanders.
        As an interim step, we fielded Tactical Fuels Manager Defense
    (TFMD) to 36 sites in Afghanistan. TFMD is currently used to track
    about 45 percent of Army fuel transactions in Afghanistan. The Army is
    also experimenting with Automated Information Technology data capture
    devices to input customer and transaction information at six of those
    locations, and automated collapsible fuel tank gauging at four
    locations.
        The results from TFMD are being used to inform the longer-term
    solution, the Army Fuel Automated Management System (AFAMS). The AFAMS
    will be the Army standard software system for automated fuel management
    and accountability. AFAMS will include the ability to manage bulk
    storage and bulk distribution, and will also track platform
    consumption. The Army is currently developing the operational
    architecture for AFAMS, and it will include interfaces with our
    standard logistics management systems--Battle Command Sustainment and
    Support System and Global Combat Support System (GCSS)-Army.
        Admiral Ferguson. There is a well-established structure to capture
    and report fuel consumption for maritime and aviation assets which
    accounts for the nearly 99 percent of the Navy's operational fuel
    consumption. This reporting structure, by hull number for ships and
    type/model/series for aircraft, informs the Navy's decisions on how to
    focus efforts to reduce fuel consumption.
        It is more challenging to track and report the remaining
    consumption by expeditionary forces for a variety of reasons. Some of
    these include use of temporary infrastructure OCONUS, the wide variety
    and numbers of equipment operated, and the complex fuel delivery
    network that exists for supplying forward deployed expeditionary units.
    Additionally, the line between the Military Services is frequently
    blurred during retail transactions at the tactical level in the theater
    of war. NECC, Naval Facilities Command, and OPNAV are developing a
    system that will provide more accurate fuel consumption that will not
    unduly burden forward deployed personnel.
        General Dunford. The Marine Corps is focused on tracking fuel
    consumption to improve accountability, and critically, to provide the
    operational commander the ability to better manage and plan resource
    use for the purpose of increasing combat capability in operations.
        Currently the Services are working with Defense Logistics Agency
    (DLA) Energy on several pilot programs to automate fuel consumption
    reporting. The emergence of disaggregated operations in OEF strains the
    current manual aggregation of data on the battlefield, particularly
    when hundreds of small outposts (Combat Outposts and Patrol Bases)
    compound the reporting process. Reporting moves from the consuming unit
    through the chain of command to the Marine Corps component commander
    and U.S. Forces-Afghanistan (USFOR-A).
        This year, the Expeditionary Energy Office, in conjunction with
    Deputy Commandant for Installations and Logistics, created a Fuel
    Accountability Working Group with Naval Supply Energy and DLA Energy to
    address this challenge. This working group is putting together a
    proposal to conduct a pilot project to explore the automation of fuel
    keys in CONUS operations with the goal to transition the reporting
    method to the battlefield.
        General Breedlove. The Air Force uses the DLA fuel accounting
    system to track consumption at many forward deployed sites.
    Unfortunately, not all deployed sites have this system employed for all
    products stocked and sold. At locations where the Air Force does not
    have the DLA system, the Air Force tracks fuel consumption using a
    manual accounting process. The best way to improve fuel accounting/
    consumption tracking is for DLA to take ownership of all bulk fuel
    worldwide to include contingency locations, therefore allowing the use
    of the DLA fuel accounting system. Currently DLA Energy does not own
    (capitalize) fuel at all contingency locations.

                     national guard and reserve components
        9. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, over the past 10 years, the Services
    have relied heavily on its National Guard and Reserve components to
    deploy in support of operations in Afghanistan and Iraq, as well as
    other operations worldwide. To supply ready forces, the Army, for
    example, implemented a rotational readiness model where Reserve units
    would be equipped to readiness levels that mirror the Active Force. The
    2012 DSG also stressed the need for a robust Homeland defense. To what
    extent do you believe you are able to fully address all requirements
    for the domestic mission, including Homeland defense, civil support,
    and all of the general and specialized capability requirements
    associated with them, and provide the right balance of National Guard
    and Reserve capabilities and forces to meet those requirements?
        General Austin. Strategic guidance directs the Army to retain the
    capability to respond to a host of possible threats from general war to
    civil support and Homeland defense. The Army addresses these different
    threat scenarios within established component end strengths. The Army
    supports the DSG by maintaining capabilities that meet current
    requirements and emerging threats. The Army provides the right balance
    of National Guard and Reserve capabilities to meet U.S. projected
    requirements. The force generation process ensures these capabilities
    maintain the right readiness level to provide a consistent supply of
    ready forces to combatant commanders and civil authorities. We believe
    that the Army has the right balance of Reserve component forces to
    fully address all of the domestic mission requirements.
        Admiral Ferguson. The Navy is well-postured to support our
    requirements for Homeland defense and civil support. Navy Emergency
    Preparedness Liaison Officers are all Reserve officers that work with
    their regional civilian counterparts on a regular basis. Within both
    the Active and Reserve Forces, we have specialized capabilities such as
    the SEABEES as well as first responders to include helicopter squadrons
    and medical personnel, all of which can contribute to civil support
    operations. While our Maritime Homeland Defense forces are primarily
    ships from the Active component, we also have Active and Reserve
    aviation squadrons and maritime security forces that routinely support
    Homeland defense operations.
        General Dunford. The Marine Corps is a total force organization
    that is manned, trained, and equipped to be capable across the full
    range of military operations. The Marine Corps Reserve is structured to
    mirror the capabilities of the Active Force in order to augment and
    reinforce the Active component MAGTF across the range of military
    operations when required. The Marine Corps Reserve is resourced
    appropriately to meet that mission. The sourcing of Reserve Forces is
    managed within established Global Force Management (GFM) processes in
    order to provide appropriate Total Force sourcing solutions that are
    both relevant and timely. The readiness of the Marine Corps Reserve is
    currently, and will continue to be, a managed priority for the Service,
    and the Marine Corps will continue to diligently apply the standards
    that are derived from the Chairman of the Joint Chiefs of Staff (CJCS)
    Instruction for Force Readiness Reporting.
        General Breedlove. The Air Force recognizes that the first
    responsibility of U.S. Forces is to defend U.S. territory from direct
    attack by state and non-state actors. Additionally, when directed by
    the President or requested by the Department of Homeland Security, the
    Air Force is fully prepared to participate in defense support of civil
    authorities--to assist at all levels in preventing, protecting against,
    mitigating the effects of, and responding to manmade or natural
    disasters. In support of these critical missions, the proposed fiscal
    year 2013 Active and Reserve component mix is poised to maintain the
    Air Force's combat and defense support capabilities.
        To fully analyze the effects of impending reductions, the Air Force
    conducted analyses of wartime scenarios, with consideration for
    Homeland defense and support to civilian authorities, consistent with
    the new January 2012 DSG. In support of the Homeland defense mission,
    the Air Force continues to meet mission requirements and taskings
    through the GFM process that prioritizes all combatant commanders'
    (U.S. Northern Command, CENTCOM, U.S. Pacific Command (PACOM), et
    cetera) requirements.

        10. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, how can the missions of the Reserve
    Forces be expected to change to meet new priorities?
        General Austin. Reserve Forces will continue to provide select
    operational capabilities and strategic depth in support of national
    defense. As mission requirements change, we will examine the Total
    Force and make adjustments, if necessary, to meet the needs of the
    Nation. As priorities and missions shift, combatant commanders, in
    support of the DSG, will request capabilities and forces to meet their
    specific demands. The Reserve component contains many of the wide range
    of capabilities required by combatant commanders to meet their
    requirements, and the Army must leverage all capabilities in the Total
    Force in order to be the agile, responsive, tailorable force capable of
    responding to any mission, anywhere, anytime.
        Admiral Ferguson. The Navy Reserve is ready, innovative, and agile
    and is fully aligned with Navy mission requirements. As new missions
    emerge and current missions evolve, Active component/Reserve component
    mix solutions within a given mission area are carefully and continually
    examined. As we reduce the demand for mobilized reservists in theater,
    we will look to missions that integrate with the Active Force, provide
    surge capacity, and can be adequately sustained in the Reserves. We
    anticipate some potential reductions in Reserve end strength as we
    realign missions and reduce capacity in land-support missions. Reserve
    component sailors provide full and part-time operational capabilities
    and strategic depth to ensure the Navy is always ready to respond
    globally to crisis situations while maintaining fiscal efficiency
    across the spectrum of operations. For example, Reserves could fill new
    requirements in cyber warfare, ISR detachments, and Littoral Combat
    Ship (LCS) mission modules in the future.
        General Dunford. We believe the mission of the Marine Corps
    Reserve--to augment and reinforce the Active component--will remain
    unchanged regardless of the recent strategic shift in Service and DOD
    priorities. Marine Forces Reserve will continue to prepare and provide
    units, detachments, and individuals to support requirements that are
    tasked to the Total Force Marine Corps. We are well-positioned to
    continue to contribute forces to OEF, albeit not in the numbers we have
    provided in the past, but commensurate with the overall downsizing of
    the overall military presence in Afghanistan. We are already planning
    participation in joint and partner-nation exercises in each of the
    geographical combatant commanders' AORs during fiscal year 2013 and
    will be looking forward to the same in fiscal year 2014. This does not
    depart from the 3,000 to 4,000 Reserve marines per year who participate
    in regional security cooperation and crisis prevention activities in
    support of the various geographical combatant commanders. Additionally,
    fiscal year 2013 will see continued employment of Reserve Special
    Purpose MAGTFs in the AFRICOM AOR. The Marine Corps Reserve will
    continue to serve as an integral part of the Total Force as we continue
    to employ them as an operational force.
        General Breedlove. Shaping the optimum Active component/Reserve
    component balance within a fiscally challenging environment will
    continue to be a major focus. The Air Force seeks to ensure its
    capabilities and readiness meets the operational needs of the combatant
    commanders while at the same time providing the support and flexibility
    our State Governors have come to depend on in times of domestic crisis.
    The Active component/Reserve component mix is not a static number; it
    does and should change as circumstances and demands are placed upon the
    force change. As missions are reexamined, we will properly balance
    those changing mission requirements to best support the combatant
    commands and the strategic guidance with sustainable capabilities.

                              navy ship readiness
        11. Senator McCaskill. Admiral Ferguson, in recent years, the Navy
    has stood up a number of different organizations to monitor, maintain,
    or improve the readiness of its surface fleet. Most recently, the Navy
    Regional Maintenance Center (RMC) was established to oversee the
    operations and management of the RMCs and lead the regional centers in
    developing and executing standardized maintenance and modernization
    processes, instituting common policies, and standardizing training to
    provide cost-effective readiness to the Navy's surface ship fleets. To
    what extent, if any, has the Navy seen improvements in the readiness
    and inspection reports of its non-nuclear ships since these
    organizations were established in light of the fact that the Navy fully
    funded its ship depot maintenance requirement in fiscal year 2013?
        Admiral Ferguson. To improve surface ship maintenance performance,
    Surface Maintenance Engineering Planning Program (SURFMEPP) and
    Commander, Navy Regional Maintenance Centers (CNRMC) established
    standardized procedures for work package development, maintenance
    execution and certification, formalized work deferral processes, and
    training improvements. These initiatives are being used for the first
    time for availabilities starting in fiscal year 2012, so the trends in
    readiness and inspection reports have not yet appreciably changed.
        Ultimately, recovering surface ship material condition will require
    both the improved training and standardized procedures developed by
    SURFMEPP and CNRMC, and a reduction of OPTEMPO to sustainable levels,
    to allow reset of the surface fleet's material condition.

        12. Senator McCaskill. Admiral Ferguson, how, if at all, will the
    stand-up of these organizations affect the projected or actual service
    lives of non-nuclear surface ships?
        Admiral Ferguson. CNRMC and SURFMEPP are providing the surface
    fleet with the maintenance oversight and technical rigor necessary to
    accurately identify and oversee the execution of the required
    maintenance needed to achieve expected service life.
        Since being established in 2010, CNRMC initiatives include improved
    training for RMC personnel and the Total Ship Readiness Assessment
    program. These programs are focused on preparing ships for depot
    availability maintenance periods.
        Already, SURFMEPP has: (1) revised surface ship class maintenance
    plans to better define the engineered maintenance and inspection
    requirements (tasks and periodicities); (2) standardized procedures for
    work package development, maintenance execution, and certification; and
    (3) formalized the work deferral process.
        This focus, along with fully funding surface ship maintenance
    requirements, will ensure the Navy is able to achieve non-nuclear
    surface ship expected service life.

        13. Senator McCaskill. Admiral Ferguson, as the Navy is looking to
    achieve efficiencies by reducing the size of headquarters and support
    organizations, how will these new organizations contribute to Navy
    readiness, cost savings, and efficiencies?
        Admiral Ferguson. CNRMC will ensure all subordinate RMCs follow the
    same processes for contractor management and oversight, availability
    execution, and testing and certification. The end result is in an
    improvement in maintenance quality (reduced rework) while ensuring post
    availability documentation of ships' material condition.
        The SURFMEPP will provide the single technical focus for surface
    ship maintenance requirements, documenting material condition, and
    adjudicating deferral requests. Each organization, working in
    conjunction with the type commander, will ensure the right maintenance
    is performed at the right time in the ship's life cycle, to minimize
    cost, provide the highest material readiness possible, and ensure
    achievement of expected service life.

        14. Senator McCaskill. Admiral Ferguson, what specific metrics are
    you using to measure the effectiveness of these new organizations?
        Admiral Ferguson. Effective execution of surface ship maintenance
    requires accurate work package definition and compliance with the
    maintenance planning timeline. These new organizations are intended to
    drive a disciplined surface ship maintenance planning and execution
    process. They provide dedicated oversight with metrics to measure
    compliance with the planning timeline and work package accuracy.
    Maintenance planning metrics are key indicators of how our new
    organizations are performing. During maintenance execution, metrics
    track production completion and testing, monitoring both the new
    maintenance organizations and contractor performance. Finally, work
    package accuracy metrics compare the cost of work actually performed to
    scheduled work items and projected costs. Key metrics will therefore be
    the accuracy of the organization to capture depot maintenance and the
    ability of the industrial base to complete the scheduled availability
    within budget and schedule.

                              navy manning issues
        15. Senator McCaskill. Admiral Ferguson, a number of Navy and
    external studies have found that the optimal manning initiatives of the
    past decade lacked a firm analytical basis, and contributed to
    deteriorating maintenance of the Navy's surface fleet. The Navy is now
    planning to add additional crew members to its cruisers, destroyers,
    and several of its amphibious ships. It is also planning to add 285
    shore billets to reestablish the sea-shore flow between ships and
    intermediate maintenance activities. Do the current increases in ship
    crew sizes and the size of the intermediate maintenance activities have
    a firm analytical basis or are they also being driven by budgets or
    other factors?
        Admiral Ferguson. Current manpower increases to ship's crews and
    intermediate maintenance activities were in response to the findings of
    the 2010 Fleet Review Panel assessment of surface force readiness. The
    assessment panel determined that readiness of optimally-manned ships
    was suffering and decreased organic shore intermediate repair
    capability and capacity further exacerbated shipboard material
    readiness concerns. The Navy is gradually increasing manning in these
    areas as resources allow.

        16. Senator McCaskill. Admiral Ferguson, according to DOD's fiscal
    year 2012 budget estimates, the Navy is projecting that it can save
    $470 million in fiscal year 2012 and $4.7 billion across the FYDP by
    reducing ashore manpower, reassigning personnel to operational ships
    and air units, adjusting special pays and advancements, and eliminating
    duplicative functions. To what extent are the increases in cruiser,
    destroyer, and amphibious ship crew sizes tied to these efficiency
    initiatives?
        Admiral Ferguson. Within the President's fiscal year 2012 budget,
    Navy realigned manpower from shore units to afloat units, specifically
    addressing critical fleet requirements. These actions were aligned with
    a DOD-wide effort to shift resources from tail-to-tooth. Most manpower
    shifted from shore activities was utilized to support increased billets
    across the Navy's surface force to improve damage control/firefighting,
    safety of navigation, preservation, material condition, and underway
    watch standing.
        Specifically, the President's fiscal year 2012 budget will increase
    manning as follows:

             LPD 17 class  12 sailors per hull;
             LSD 41 class  14 sailors per hull;
             LHD 1 class  33 sailors per hull;
             DDG 51 class  21 sailors per hull; and
             CG 47 class  17 sailors per hull.

        17. Senator McCaskill. Admiral Ferguson, to what extent are the
    increases in the size of the intermediate maintenance activities tied
    to these efficiency initiatives?
        Admiral Ferguson. The increase in military manning of the
    intermediate level maintenance component of the RMCs is not directly
    tied to the fiscal year 2012 efficiency initiatives. Rather, it was
    based on the recognition that having shore maintenance billets will
    produce sailors with enhanced maintenance skills that will improve
    shipboard maintenance when those sailors return to sea. The result will
    be better trained crews that are able to identify and accomplish
    emergent corrective maintenance before it becomes beyond the ship's
    capability to correct. These recommendations were developed in the 2010
    Fleet Review Panel.

        18. Senator McCaskill. Admiral Ferguson, what billets are being cut
    to support these increases?
        Admiral Ferguson. The President's fiscal year 2012 budget
    submission supported DOD and CNO priorities to enhance Navy warfighting
    capabilities by reducing overhead ashore billets to fund critical fleet
    manpower requirements. Specifically, the Navy consolidated warfare
    centers, eliminated overlapping functions between organizations, and
    reduced the size of operational and shore staffs reducing end strength
    by 568 (384 in the Active component and 184 in the Reserve component).
    This included combining 2nd Fleet with U.S. Fleet Forces Command;
    disestablishing Surface Warfare Development Group; merging the Center
    for Naval Engineering into Surface Warfare Officer School and the
    Center for Naval Intelligence into Center for Information Dominance;
    and disestablishing the staffs associated with one Carrier Strike
    Group, three Submarine Squadrons, and one Destroyer Squadron.

                             navy ship service life
        19. Senator McCaskill. Admiral Ferguson, the Navy has set a goal of
    a 313-ship fleet. Despite the fact that it is short of the goal, it is
    decommissioning a number of ships while they still had serviceable life
    remaining and plans to decommission additional ships in the next few
    years. Recently, it has also deferred a number of maintenance
    availabilities, due to funding constraints. What steps is the Navy
    taking to ensure it makes steady progress toward its 313-ship fleet
    while facing an uncertain budget situation and ongoing maintenance
    requirements?
        Admiral Ferguson. The Navy's proposal to retire a number of ships
    before the end of their expected service life was a fiscal decision to
    balance risk and available resources across the Navy to maintain a
    ready force today and in the future. This is consistent with the
    Secretary of Defense's statement that ``a smaller, ready, and well-
    equipped military is preferable to a larger, ill-prepared force.'' The
    Navy is working to reverse the negative trend in surface ship readiness
    by investing in mid-life availabilities to work off the identified
    surface ship maintenance backlog to enable ships and submarines to
    reach their expected service lives. The total President's fiscal year
    2013 budget request (baseline plus OCO) fully funds the fiscal year
    2013 ship maintenance requirement for the Navy's remaining ships and
    submarines, and sustains the force structure required to support the
    Maritime Strategy.
        To mitigate structure shortfalls, the Navy will use spiral upgrades
    to existing ships to the maximum extent possible, extend the service
    lives of specific classes of ships, and maintains ships to enable them
    to reach their expected service life. These measures will help maintain
    the size of the battle force inventory during the heavy ship retirement
    period expected in the 2020-2030 timeframe.
        The ultimate size of the fleet will be informed by the completion
    of a formal Force Structure Assessment (FSA) and the ongoing DOD review
    of its operational plans for potential regional contingencies.

        20. Senator McCaskill. Admiral Ferguson, how does the Navy intend
    to redistribute the personnel billets on the ships that are the most
    recent to be decommissioned, i.e., the seven cruisers and the two
    amphibious ships identified as part of the fiscal year 2013 budget
    request?
        Admiral Ferguson. The billets associated with the proposed
    reduction of seven cruisers and two amphibious ships were cut, rather
    than redistributed, in the President's fiscal year 2013 budget request
    as part of the DOD-wide budget reduction effort. The individual sailors
    will be distributed to other ships as these platforms are
    decommissioned.

        21. Senator McCaskill. Admiral Ferguson, given the adjustments in
    the strategic guidance, which appears to emphasize the importance of
    building partnerships and maintaining presence, what impact will this
    have on the demand for naval presence and the Navy's ability to
    maintain readiness of its fleet given a potential increased demand?
        Admiral Ferguson. The Navy is committed to meeting combatant
    commander demand as adjudicated in the DOD GFM process, while also
    balancing the required maintenance on each ship and aircraft in order
    to avoid reducing their service lives. To achieve that goal, we are
    adjusting our Fleet Readiness and Training Plan to establish a
    sustainable OPTEMPO and complete required maintenance and training
    between deployments. This will constrain the number of ships and
    aircraft available to combatant commanders at times, but ensures ships
    and aircraft reach their expected service lives and avoids a further
    decrease in fleet capacity.
        The cumulative impact of ship deliveries, projected operating
    patterns, and forward stationing ships yields an increase in day-to-day
    naval presence in the Asia-Pacific region from about 50 ships today to
    about 58 ships by 2020. Specifically, this increased presence results
    from forward stationing LCSs in Singapore, integrating forward
    operating Joint High Speed Vessels (JHSV) into the Pacific Fleet, and
    increasing amphibious ship and destroyer (DDG) presence in the Asia-
    Pacific region. More amphibious ships and DDGs will become available
    for other missions because the theater cooperation and maritime
    security missions they fulfill today will be taken on by JHSV, LCS, and
    Afloat Forward Staging Bases (AFSB). Collectively, these changes will
    help us meet the demands for partnership and presence that are so
    essential to the DSG while we simultaneously address our maintenance
    and readiness concerns.

                               overall readiness
        22. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, DOD's new DSG released in January 2012,
    as well as the Secretary of Defense's accompanying document, ``Defense
    Budget Priorities and Choices'', make a number of statements which have
    implications for the readiness of the force. 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 have the Services developed
    plans and established priorities for rebuilding readiness?
        General Austin. The Army has established priorities to resource
    units as they build readiness. Additionally, the Army is revising the
    force generation process which will better enable the Army to provide
    ready forces necessary to meet the Army's requirements from the NMS.
        Admiral Ferguson. Sustaining our readiness remains a top Navy
    priority in our fiscal year 2013 budget request. In building our
    budget, we focused on funding critical elements of readiness and
    balanced our investments in future capability, O&M, personnel,
    training, and spares. Another element of our fiscal year 2013 budget is
    the adjustment of the FRP cycle to provide dedicated time for training
    and maintenance while providing greater deployment availability. Our
    shipbuilding and aviation maintenance investments are focused on
    promoting readiness and support proven sustainment models by fully
    funding ship maintenance requirements. The fiscal year 2013 budget,
    including OCO funding, will sustain the Navy's readiness levels to
    support the anticipated needs of the combatant commanders, as
    adjudicated through the GFM process, with some capacity to provide
    surge forces in support of major contingencies or other emergent needs.
        General Dunford. The Marine Corps has a strategic trajectory to
    reconstitute and reset to a ready force by fiscal year 2017. The Marine
    Corps' Total Force Structure Review, begun in 2010, aligns the Marine
    Corps to meet the DSG, constrained budgets, and lessons learned from 10
    years of war--particularly lessons with respect to distributed
    operations. The Marine Corps' Operation Enduring Freedom Ground
    Equipment Reset Strategy, published in 2012, identifies the equipment
    that will be reset or divested and prioritizes investment and
    modernization decisions. The Marine Corps' budget requests achieve a
    necessary balance across its five readiness pillars (unit readiness,
    capacity versus requirements, high quality people, infrastructure
    sustainment, and modernization) to support institutional readiness,
    sustain operational requirements, and prepare Marine Corps Forces for
    crisis and contingency response. An ongoing comprehensive review of
    Marine Corps equipment inventories will validate reset strategies,
    future acquisition plans, depot maintenance programming, and
    modernization initiatives.
        General Breedlove. The Air Force has made hard choices to better
    align with the new DSG by trading size for quality. We will be a
    smaller, but superb, force that maintains the agility, flexibility, and
    readiness to engage a full range of contingencies and threats. Air
    Force readiness is comprised of complementary components such as flying
    hours, WSS, and facilities and installations; an acceptable readiness
    posture depends on good health in all of these key areas.
        The emphasis on readiness in the new DSG reinforced Air Force focus
    on the importance of maintaining the flying hour program (FHP) as the
    foundation of our flying training. The fiscal year 2013 budget removes
    flying hours where associated with the retirement of some of our oldest
    aircraft and divestiture of single-role mission weapons systems. In the
    remainder of the FHP, however, levels are consistent with fiscal year
    2012 levels to prevent further erosion of readiness. The fiscal year
    2013 baseline FHP remains optimized as we continue to fly a significant
    portion of our hours in the CENTCOM AOR, but still poses a measured
    risk to our full spectrum training and readiness levels. We are also
    committed to a long-term effort to increase our live, virtual, and
    constructive operational training (LVC-OT) capability and capacity by
    funding improvements in our LVC-OT devices (e.g., simulators and
    virtual trainers) and networks.
        During previous budget cycles the overall Air Force weapons system
    sustainment requirement increased each year due to sustainment
    strategy, the complexity of new aircraft, OPTEMPO, force structure
    changes, and growth in depot work packages for legacy aircraft. In
    fiscal year 2013, although the Air Force is retiring some combat,
    mobility, and ISR force structure, our overall WSS requirements and
    costs continue to increase. WSS is funded at 79 percent of requirement
    in the fiscal year 2013 budget. We maintained our readiness capability
    in the portfolio areas most directly affecting readiness such as
    aircraft, engines, and missiles, while taking some risk in areas that
    are less readiness-related in the short-term such as technical orders,
    sustaining engineering, and software. Additionally, the Air Force
    continues to conduct requirements reviews and streamline organizations
    and processes to reduce maintenance and material costs, develop depot
    efficiencies, and manage weapons systems requirements growth. The goal
    of these efforts is to sustain fiscal year 2012 WSS performance levels
    for fiscal year 2013.
        The sustainment portion of facilities sustainment, restoration, and
    modernization was funded at just over 80 percent of the OSD facility
    sustainment model. Due to current fiscal realities, the DSG, the Air
    Force is also taking a deliberate pause in its military construction
    (MILCON) program, resulting in a nearly $900 million reduction from
    fiscal year 2012 enacted levels. To manage the risk associated with
    these actions we continue civil engineering transformation to employ an
    enterprise-wide, centralized, asset management approach to installation
    resourcing which maximizes each facility dollar.

        23. Senator McCaskill. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, specifically, have the Services
    assessed the manning, equipping, and training priorities for a smaller
    force, and are these priorities reflected in the fiscal year 2013
    funding request?
        General Austin. Yes. The Army's fiscal years 2013 to 2017 program
    resources a force decreasing in size yet maintaining the capabilities
    critical to providing flexibility for the National Command Authority in
    an uncertain future. The fiscal years 2013 to 2017 program reflects a
    ramp reducing our Active component end-strength to 490,000 soldiers by
    fiscal year 2017. The fiscal year 2013 budget request reflects a
    portion of that ramp. The costs for Active component soldiers exceeding
    490,000 are carried in the OCO request. This additional end-strength
    represents our need to man forces to meet the demands of continuing
    operations in Afghanistan. In addition to the Active component
    reductions, the Army is also reducing its National Guard end strength
    to 353,200 soldiers in fiscal year 2017 and its Army Reserve end
    strength to 205,000 soldiers in fiscal year 2013. The Army has also
    adjusted its training and equipping strategies and resourcing to
    reflect these end strength reductions.
        Admiral Ferguson. Yes. The Navy's fiscal year 2013 budget
    submission reflects the priority we placed on readiness--manning,
    equipping, and training--over force structure in support of the new
    DSG. We managed the size and composition of the force, while investing
    in required manpower, selected ordnance, and training for the Fleet to
    ensure our force does not become hollow. The Navy will continue to
    prioritize readiness and ensure we do have more force structure than we
    can afford to man, equip, train, and maintain.
        General Dunford. Yes, the Marine Corps accounted for its personnel
    drawdown when assessing its manning, training, and equipping priorities
    in the fiscal year 2013 budget submission. Marine Corps end strength
    reductions are a result of right-sizing the Marine Corps to meet the
    anticipated security environment after the drawdown in Afghanistan and
    to address the impacts of the Budget Control Act on DOD budgets. The
    force funded in the 2013 budget is fully capable of executing all
    assigned mission in the new DSG and is optimized for forward presence,
    engagement, and rapid crisis response. Fiscal year 2013 is only the
    beginning of the drawdown, and this will be a multi-year, phased
    approach that is expected to be complete at the end of fiscal year
    2016. Through a measured drawdown in end strength, we will keep faith
    with our marines and return to more sustainable deployment to dwell
    ratios. The drawdown plan ensures the Marine Corps remains the Nation's
    expeditionary force in readiness while simultaneously keeping faith
    with our marines and their families who have excelled during the last
    10 years of combat operations.
        When budgeting for training, the Marine Corps carefully constructs
    our O&M budget to complement all activities associated with preparing
    marines for deployment. It is important to note that O&M costs are not
    linearly related to changes in end strength and, as such, both a
    quantitative and qualitative approach is necessary in the development
    of the O&M budget. While some O&M costs will fluctuate as a function of
    end strength, the majority of O&M costs are tied to unit equipment and
    training readiness and will change based on force structure (i.e.,
    number and type of units) and operational requirements/tempo vice end
    strength. In other cases, some O&M functions may be independent of both
    end strength and force structure (i.e., base security) and will remain
    constant regardless of the drawdown.
        In the case of our investment accounts, the Marine Corps reviewed
    our tables of equipment as part of our force structure development to
    ensure our marines have the required equipment to execute all assigned
    missions. In some cases, the deactivation of units will be directly
    tied to reduced approved acquisition objectives (AAO), which results in
    purchasing less equipment. An example is in our Light Armored Vehicle
    (LAV) fleet; a force structure reduction of three LAV companies has
    yielded a reduction in the LAV AAO and an estimated cost avoidance of
    $140 million in fiscal year 2013 that we have asked Congress to realign
    to other critical shortfalls. However, it is important to point out
    that costs associated with modernization and reconstitution efforts are
    not directly linked to the drawdown and are independent of end
    strength.
        The Marine Corps maintains a longstanding reputation in DOD as
    being a frugal, lean Service that delivers the best value for the
    defense dollar. As such, the Marine Corps has adapted to budgetary
    reductions by continuing our tradition of streamlining operations and
    reinvesting savings in order to get the most out of every dollar. Our
    fiscal year 2013 budget submission reflects this mentality, and it is
    this commitment that has allowed us to continue to provide the best
    trained and equipped Marine Corps units to Afghanistan, even in this
    era of constrained resources.
        General Breedlove. The Air Force's fiscal year 2013 budget request
    reflects aggressive prioritization of limited resources, heavily
    informed by the new DSG, with regard to both capability and capacity
    for a smaller, ready force. To retain critical core Air Force
    capabilities and the ability to rapidly respond to mission demands, the
    Air Force balanced risk along with manning, equipping, and training
    priorities across all mission areas.
        Fiscal realities and strategic direction means the Air Force will
    continue the long-term trend of accepting a smaller force to ensure
    high quality. In planning for a smaller force, Air Force decisions
    favored retention of multi-role platforms over those with more narrowly
    focused capabilities--for example, F-16s over A-10s and F-15Cs, and C-
    130s over C-27Js. Where feasible, we sought to divest smaller fleets of
    highly specialized aircraft and stressed common configurations for key
    platforms in order to maximize operational flexibility and minimize
    sustainment costs. In correlation to the reductions in our aircraft
    force structure, we are also adjusting our end strength numbers.
    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. Over the years, we have adjusted the
    mix between Active and Reserve components to ensure we maintain a ready
    and sustainable force and can meet surge and rotational requirements.
    In spite of aircraft divestments and reduction in personnel, we are
    committed to executing the defense strategy and will ensure America's
    Air Force remains ready to perform its mission. By properly funding
    areas such as flying hours, weapon system sustainment, and facilities
    and installation, we can ensure training requirements are met to
    support desired readiness levels.

                           marine corps move to guam
        24. Senator McCaskill. General Dunford, the United States and Japan
    are reconsidering some of the terms of the agreement to move about
    8,000 marines from Okinawa to other parts of the Asia-Pacific region,
    including to Guam, Hawaii, and possibly other locations. Earlier plans,
    specifically the plans articulated in the 2006 Roadmap for Realignment
    agreement, contemplated a distribution of marines which was not
    preferred by the Marine Corps. Has the Marine Corps been involved in
    this latest reconsideration of the terms of the agreement and are you
    satisfied that this renegotiation will result in a distribution of
    marines on Guam and elsewhere that will be consistent with the Marine
    Corps' preferred laydown and will be one that the Marine Corps can
    support?
        General Dunford. The Marine Corps was involved with the
    renegotiation of the U.S. Government/Government of Japan 2006
    Realignment Roadmap and assisted in the development of the April 27,
    2012 Bilateral Security Consultative Committee statement.
        The new Pacific laydown plan, termed Distributed Laydown, has been
    designed to achieve a more geographically-distributed, operationally-
    resilient, and politically-sustainable force structure in the region
    while still adhering to the basic tenants of the 2006 agreement.
    Assuming the availability of additional amphibious, strategic, and
    intra-theater lift to support the corresponding PACOM concept of
    operations, the Marine Corps is fully supportive of the Distributed
    Laydown.

        25. Senator McCaskill. General Dunford, the plans that are shaping
    up for marines in the Asia-Pacific will results in marines spread
    throughout the region in places like Okinawa, Guam, Hawaii, Australia,
    and possibly the Philippines. At a recent Marine Corps Association
    event, in reference to these plans for the laydown of marines in the
    Pacific, you were quoted as saying that ``the Marine Corps logisticians
    will have to figure out how to sustain a force that's distributed in a
    way that's much greater than anything we've done before.'' Could you
    expound on this challenge and talk about what the Marine Corps is doing
    now, and will have to do in the near future, to address these new
    challenges?
        General Dunford. The Marine Corps initiated logistics support for
    this significant challenge in 2005 through the development of
    Distributed Operations (DO) and now the Enhanced MAGTF Operations (EMO)
    concepts. From the start, our logisticians have been involved in
    developing the requisite logistics concept of operations to support
    these new operating environments. Additionally, these challenges are
    seen today in Afghanistan and the lessons learned are influencing the
    development of new techniques, tactics, and procedures.
        Current Marine Corps Expeditionary Unit (MEU) operational
    experience further emphasizes the importance to plan for potential
    distributed and disaggregated operations. MEUs have been tasked and
    have responded simultaneously to geographic combatant command
    requirements across multiple AORs in support of missions ranging from
    non-combatant evacuation, theater security cooperation, disaster
    relief, and air combat operations.
        In the very near future, the Marine Corps will complete initial
    fielding of our modernized logistics information system, GCSS-MC. It
    will be deployed with our forces across the globe and enables the
    ability to source, track, expedite, and receipt for sustainment
    supplies at any location--afloat and ashore.
        One system of note that is proving very capable in this environment
    is the Immediate Cargo Unmanned Aircraft System (UAS) initiative. A
    Military Utility Assessment (MUA) is underway now in Afghanistan. The
    Cargo UAS has the potential to be a transformational platform that
    provides a flying truck capability to deliver equipment and support to
    remote/austere locations when threat or weather precludes the use of
    ground convoys or manned aircraft. Cargo UAS is reducing sustainment
    requirements and vulnerability of logistics lines of communication.
        The Marine Corps is also expanding the capability to provide
    initial expeditionary logistics from a sea-base outside the range of
    potential adversarial A2/AD capabilities. Our forward deployed
    amphibious ships and Maritime Prepositioning Squadrons (MPSRON) provide
    our MAGTFs with initial expeditionary logistic capacities needed and
    play key roles in our Concept of Operations (CONOP) for expeditionary
    sustainment in the littorals.
                                     ______

                   Questions Submitted by Senator Mark Begich
                          reduction-in-force authority
        26. Senator Begich. General Austin, as you may know, Army
    Installation Management Command has recently requested reduction-in-
    force (RIF) authority to reduce civilian personnel numbers back down to
    2010 levels. I appreciate the Army's initial attempt to utilize
    voluntary measures to implement the reductions. However, I am concerned
    about the utilization of a RIF to implement reductions, especially when
    certain actions would alleviate the need for the layoffs and preserve a
    qualified workforce at some locations, specifically, earlier
    implementation of the Army's materiel enterprise--which transfers
    operational control of some functions to Army Materiel Command (AMC)
    from the Directorate of Logistics (DOL). For example, at Fort
    Wainwright and Fort Richardson the transfer of the functions and
    personnel to AMC is not scheduled to occur until fiscal year 2013. Yet,
    the personnel must come off DOL books by the end of fiscal year 2012.
    Essentially, people in these functions will be laid off, when they will
    be needed by AMC. Has the Army considered transferring the DOL
    functions to AMC earlier--even by a few days--to avoid a RIF and
    maintain a qualified workforce? Why or why not?
        General Austin. The Installation Management Command (IMCOM) is
    working closely with AMC to develop strategy to avoid or minimize the
    loss of DOL employees at all locations. In the case of Fort Wainwright
    and Fort Richardson, specifically, there will be no RIF to affect the
    mission transfer. IMCOM is using all available voluntary tools to
    reduce our strength to the civilian personnel reduction target directed
    by the Secretary of Army.

                               asia-pacific pivot
        27. Senator Begich. General Austin, as the Services implement the
    new DSG with a renewed focus on the Asia-Pacific region, our posture in
    the region will become increasingly important. Would you agree Alaska
    and Hawaii--two States strategically located to enable the basing,
    staging, and training of forces to promote U.S. interests in the Asia-
    Pacific region--are critical and significant to the new guidance?
        General Austin. Basing in Alaska and Hawaii will continue to
    provide vital staging and training areas for forces assigned to the
    Pacific, and is critical to the execution of our Asia-Pacific Strategy.
    In light of this, the Army has made major investments in the training
    infrastructure in Alaska and Hawaii. Since 2000, these investments have
    included the acquisition of 24,000 acres for training in Hawaii, the
    construction of four training and simulation facilities totaling $59
    million (MILCON), and 31 ranges including small arms, crew, collective
    live fire, and urban training ranges totaling $549 million (MILCON).
    Three additional small arms ranges totaling $47 million were included
    in the fiscal year 2013 budget. Both Alaska and Hawaii will receive the
    Army's integrated training environment by fiscal year 2016 and U.S.
    Army, PACOM is assessing what is required beyond those investments to
    address the new DSG. There are also four installation projects in the
    fiscal years 2013 to 2017 Program Objective Memorandum (POM) to help
    develop infrastructure and quality of life. Our forces based in Alaska
    and Hawaii will be crucial in deterring conflict and, when necessary,
    winning our Nation's wars in the region. They will also play an
    important role in expanding our presence in the region through
    exercises and training with our regional partners and the execution of
    other operations that will build relations throughout the region and
    reinforce our commitment to our Asia-Pacific partners.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                             patriot modernization
        28. Senator Ayotte. General Austin, what is the status of the PAC-3
    Patriot modernization program?
        General Austin. The Army's Patriot modernization has been a
    continuous effort that has increased in scope in the last 2 years. The
    Army's broad Patriot modernization effort encompasses synchronized
    research, development, testing and evaluation and procurement
    investments that will enhance Patriot communications, interoperability,
    electronic protection, and supportability; provide training equipment
    updates at the school; and meet threat evolution to keep Patriot
    operationally relevant in the field. Modernization is also synchronized
    with ongoing Patriot sustainment activities to keep fielded systems
    viable.
        The Army is initiating multiple modernization efforts to the
    Patriot program. This includes interoperability with Terminal High
    Altitude Area Defense, Upper Tier Debris Mitigation, and multiple
    software upgrades to defeat emerging threats and leverage new hardware
    capabilities. Internet protocol communications will continue to be
    modernized with significant investments in 2014 and 2015. The radar
    modernization currently underway procures the bulk of hardware in 2013
    and 2014 with continued support and spares purchased through 2017. The
    Modern Man Station procurement in 2013 and 2014 will bring in greatly
    needed upgrades to the command shelters that also address obsolescence.
    Software upgrades are planned for release to the field every 3 years
    that increase radar and other system capabilities developed to defeat
    threat evolution and interoperate with other air and missile defense
    systems.
        Development continues to evolve Patriot software and the ground
    system in the face of the changing threat. Modernization of Patriot
    will enable integration of the system into the Integrated Air and
    Missile Defense (IAMD) Architecture. The President's budget 2013
    request supports the Army efforts to keep Patriot reliable and
    tactically relevant against current and near-term future threats, until
    at least 2040.

        29. Senator Ayotte. General Austin, what is the Army's current plan
    for the development and procurement of upgrade packages for the Patriot
    communications, command and control, radar surveillance, and missile
    guidance systems, particularly the missile segment enhancement program?
        General Austin. The Army has an integrated long-term plan to
    develop and procure Patriot upgrades based on evolving threats and
    requirements established by the warfighter. Patriot modernization
    efforts, in coordination with reliability and maintainability
    modifications, depot recapitalization, and software upgrades enable the
    use of new hardware to meet evolving threats and protect critical
    assets.
    Communications
        The Army is investing in communications, command, and control
    upgrades from fiscal year 2012 to fiscal year 2017 and beyond.
    Communication enhancements will improve beyond line-of-sight
    communications within the Patriot battalions and transition to more
    modern interface protocols, providing additional capability to the
    warfighter and enabling migration to the IAMD architecture.
    Command and Control
        The Modern Man Station will replace the original monochrome
    displays (long out of production) in the crew stations with modern flat
    panel displays and enable future improvements in the man-machine
    interfaces.
        Battery Command Post Tactical Command System improves software
    upgrade efforts by increasing capabilities to the warfighter, and
    reduces logistics support to maintain these command shelter systems
    well into the future. This effort includes re-hosting software on the
    new workstations, providing spares, provisioning fielding packages,
    logistics support, software validation and verification, engineering
    input to technical manuals, and field service engineering support.
        In fiscal year 2016, the Army will begin to incorporate the
    Integrated Battle Command System (IBCS) into the Patriot command and
    control architecture. The IBCS is the gateway to integrate Patriot into
    the IAMD, which will allow Patriot to leverage non-organic sensors and
    will unite Army Air and Missile Defense under a common command and
    control architecture.
    Radar Surveillance
        The Army radar upgrade investment is significant from fiscal year
    2012 to fiscal year 2017 and beyond. The Radar Digital Processor
    replaces obsolete analog components no longer produced with current
    supportable technology, enabling critical capability enhancements such
    as the Identification Friend or Foe Mode 5, Levels 1 & 2 (further
    reducing the potential for fratricide) and allows further improvements
    in Combat Identification techniques. The digitization of the radar
    enables several electronic protection techniques previously unavailable
    to Patriot. The digitization of the radar is a key requirement to put
    the Patriot radar on the network as part of the migration to the IAMD
    architecture. Increased radar sensitivity and threat sensing capability
    takes advantage of Missile Segment Enhancement (MSE) interceptor's
    increased range and altitude.
    Missile Guidance Systems
        The PAC-3 MSE missile is the next generation Patriot missile.
    Fiscal year 2013 funds complete Initial Production Facilitization. The
    MSE missile is now a medium to low risk effort with a production
    decision scheduled for the end of fiscal year 2013 and first deliveries
    scheduled to begin in the 4th quarter of fiscal year 2015. This
    interceptor has a similar guidance system to the current PAC-3 missile,
    but has upgraded software, increased range and maneuverability that
    allow for more optimal trajectories. The radar digital processor ground
    system improvements, in combination with the missile capabilities, give
    MSE longer range target engagement capabilities, enabling it to defeat
    more advanced threats at a greater distance.
        Launcher upgrades are required for the PAC-3 and MSE missiles.
    Enhanced Launcher Electronics Systems (ELES) upgrade kit procurement is
    underway. ELES upgrades enable the launcher to fire the PAC-3 missile.
    A modified ELES kit will enable MSE launch capability as well. The Army
    goal is to upgrade all U.S. Patriot launchers to PAC-3 capable as soon
    as feasible, prior to the retirement of the PAC-2 and GPS Embedded
    Module family of missiles. Approximately 23 percent of launchers
    fielded to operational units today are PAC-3 capable. The President's
    budget 2013 request includes funding for 38 ELES upgrade kits, with
    additional kits to follow in fiscal year 2014 and beyond.

                   military risk from the defense budget cuts
        30. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, the budget request for fiscal year 2013
    represents the first year of $487 billion in defense budget cuts over
    the next 9 years. The Services have responded with significant proposed
    end strength reductions, combat unit eliminations, weapons systems
    terminations, and other cost-cutting measures. These reductions will
    impact the ability of each Service to respond to the requirements of
    combatant commanders. In your opinion, in which areas is each Service
    incurring the most military risk that you would recommend mitigating
    through the restoration of funding?
        General Austin. DOD and the President released a new set of defense
    priorities in January 2012. Those priorities contain an acknowledgement
    that there will be some missions that DOD will no longer be sized to
    accomplish. In our fiscal year 2013 budget, the Army responded to those
    new priorities. We have developed a ramp for the drawdown in Army end
    strength that is very methodical and deliberate, and which will allow
    us to transition soldiers in a reasonable manner. With our scheduled
    rate of reduction we are confident that we can continue to meet our
    commitments in Afghanistan and our other requirements will ready
    rotational forces, and the fiscal year 2013 budget request will meet
    our needs in that regard.
        If there is a significant and sustained demand for deployable
    forces above what is envisioned in the new defense priorities, it is
    likely that we would incur additional risk. However, we believe that we
    can mitigate that risk through what we call regeneration and
    investment. Regeneration will give us the ability to change course to
    surge, regenerate, and mobilize forces quickly, if needed. Investment
    means managing the force in a way that protects the Army's ability to
    regenerate capabilities that might be needed to meet future, unforeseen
    demands. These 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 experience noncommissioned and
    mid-grade officers, and preserving the health and viability of the
    Nation's industrial base.
        Admiral Ferguson. The projected Navy battle force is fully capable
    of meeting the strategic guidance found in Sustaining U.S. Global
    Leadership: Priorities for 21st Century Defense. The Navy prioritized
    readiness and capability against emerging threats over force structure
    in our budget request to ensure our Navy is ready and relevant not only
    today but also in the future.
        General Dunford. We are currently performing impact assessments of
    sequestration that consider some of these factors. However, we are
    heavily focused on turning off sequestration rather than assessing its
    impacts.
        The Marine Corps recognizes the fiscal realities that currently
    confront the United States, and we have already made hard choices
    inside the Service to ensure that we ask only for what we need as
    opposed to what we may want. The Marine Corps is currently taking steps
    to rebalance the force while simultaneously posturing it for the
    future; additionally, we are continuing to maintain our forward
    presence and provide Marine Corps combat forces to Afghanistan.
        The Marine Corps have accepted risk in the budget. Reduced end
    strength creates risk in warfighting capacity as the operating force
    manning levels will go from 99 percent for both officer and enlisted
    ranks to 95 percent for officers and 97 percent for enlisted. However,
    this risk is manageable and provides an affordable solution that
    maintains a ready, capable, and more senior force in support of the new
    DSG. This enduring strength level and force structure ensures that the
    Marine Corps retains the necessary level of noncommissioned officer and
    field grade officer experience and warfighting enablers to support the
    future security environment and needs of the Nation after the drawdown
    in Afghanistan.
        General Breedlove. The Air Force continually looks for ways to
    minimize risk, given the current fiscal environment. We've balanced
    risks in light of new DSG trading size for quality and putting a
    premium on readiness to prevent a hollow force. Our partnership with
    the Navy to pursue Air-Sea Battle is one way we will sustain our
    Nation's military advantage as a smaller joint force faces emerging A2/
    AD threats. Discussion on levels of risk, specific to our enduring
    capabilities and core functions, are classified and I can provide those
    details to you in a separate forum.

        31. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, to the best of your knowledge, have the
    combatant commanders had an opportunity to review their operational
    plans to make adjustments based on the decreased availability and
    timeliness of resources?
        General Austin. As part of the Joint Planning and Execution
    process, the Services and Joint Staff have the opportunity, along with
    the combatant commanders, to routinely review and assess the
    feasibility of operational plans and our readiness to support them.
    Based on these assessments, the combatant commanders have the
    opportunity to adjust plans while the Services make decisions on the
    allocation of resources to ensure that we can realistically provide
    combatant commanders the resources needed to execute, if required.
    Additionally, the CJCS has conducted a series of strategic seminars
    that have explored how we might adjust our plans based on the new DSG
    and with resources programmed in the most recent President's budget.
        Admiral Ferguson. The Navy annually updates the forces available
    for planning purposes in the GFM Implementation Guidance Apportionment
    tables. These tables document the number of forces that can be deployed
    to support the combatant commanders during a major contingency and
    reflect the current constraints. In turn, the combatant commanders
    review current forces availability from the Services through the Joint
    Staff-led Joint Combat Capability Assessment (JCCA) process and update
    their plans biannually. As an initial step in the implementation of the
    new DSG, DOD conducted three strategic seminars where the combatant
    commanders met personally with the Service Chiefs to discuss force
    structure adequacy for current plans. Detailed combatant commander
    review of their specific plans is ongoing.
        General Dunford. The Marine Corps annually updates the forces
    available for planning purposes in the GFM Implementation Guidance
    Apportionment tables. These tables document the number of forces that
    can be deployed to support the combatant commanders during a major
    contingency and reflect the current constraints. In turn, the combatant
    commanders review current forces availability from the Services through
    the Joint Staff led JCCA process and update their plans biannually. As
    an initial step in the implementation of the new DSG, DOD conducted
    three Strategic Seminars where the combatant commanders met personally
    with the Service Chiefs to discuss force structure adequacy for current
    plans. Detailed combatant commander review of their specific plans is
    ongoing.
        General Breedlove. Yes, the combatant commanders and their
    subordinate Service component commands review their plans annually as
    part of the JCCA process. In addition to the JCCA process, DOD conducts
    a quarterly Joint Forces Readiness Review of the level of current risk
    relative to our forces capability to carry out their wartime mission.

                           risk in operational plans
        32. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, in the military drawdowns after World
    War II, Vietnam, and the Cold War, we went through a period of hollow
    forces, in which combat capability on paper was not supported by the
    manning and training of actual units. To avoid this same fate, the
    Services have taken steps with the drawdown proposed in this budget to
    actually reduce units along with end strength to ensure the remaining
    units can be manned at full strength. But now, we run the risk that
    major combat units are dual or triple tasked by combatant commanders,
    which leaves us with the same capability gaps. In your opinion, have
    the Services worked with combatant commanders to ensure that the
    reduction of major combat units is reflected in updated operational
    plans?
        General Austin. Yes, and we continue to do so. Army commands
    continually update and refine operational plans to identify capability
    gaps, shortfalls, and training requirements. The Army is improving how
    it apportions forces to combatant commanders to provide trained and
    ready forces to meet any contingency. The Army is also regionally
    aligning forces to combatant commands to provide increased capabilities
    to execute theater shaping operations and contingencies.
    Simultaneously, the Army is also developing investment and regeneration
    strategies which posture the force to reconstitute capabilities and
    formations in response to crisis or war. Most recently, the Army has
    worked with the other Services and all the combatant commands through
    the CJCS Strategic Seminar Series to identify capability gaps and
    assess our ability to meet requirements to execute top priority plans.
        Admiral Ferguson. The Navy annually updates the forces available
    for planning purposes in the GFM Implementation Guidance Apportionment
    tables. These tables document the number of forces that can be deployed
    to the combatant commanders during a major contingency and reflect the
    current constraints. Additionally, the combatant commanders review
    current forces availability for their plans through the Joint Staff-led
    JCCA process and update their plans biannually. Furthermore, DOD
    recently conducted three Strategic Seminars where the combatant
    commanders met personally with the Service Chiefs to discuss force
    structure adequacy for current plans. The Navy has an ongoing dialogue
    with the combatant commanders regarding projected force structure as
    they review details of their operational plans.
        General Dunford. The Marine Corps, via its Service components and
    the Joint Staff, has and will continue to work closely with the
    combatant commanders as operational plans are updated, developed, and
    assessed. The new DSG provides the framework for DOD, and the Services
    as force providers for the Joint Force, to balance the demands of the
    future security environment with the realities of our current fiscal
    constraints. We expect ongoing and future updates of operational plans
    will reflect this guidance. Additionally, we expect insight gained
    through recent and ongoing senior level discussions, in which the
    Marine Corps has participated, regarding executing the new military
    strategy with the programmed force will inform updates of operational
    plans.
        General Breedlove. The Joint Forces Readiness Review requires a
    quarterly assessment of our capability to carry out operational plans.
    If the combatant commands assess that they do not have the required
    forces, they report this to Congress by means of the Quarterly
    Readiness Report to Congress and DOD via the Chairman's Risk
    Assessment.

        33. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, what metrics do the Services have in
    place to ensure that the budget cuts over the next 10 years do not lead
    to a hollow force in terms of equipment and training? In other words,
    how will we know a hollow force when we have one?
        General Austin. A balanced force maintains a proportional
    distribution of available resources against three equally important
    components: manpower, modernization, and readiness. ARFORGEN
    establishes clear, quantifiable aim points for manning, equipping, and
    training units as they move through the progressive readiness model.
    These aim points along with monthly reporting, commander comments and
    trend analysis of manning, equipping, and training will help identify
    potential future shortfalls. The Army has coordinated efforts with the
    other Services, the Joint Staff, and OSD to identify medium- and long-
    term indicators to help identify future potential readiness issues as
    well as the strategic levers we can adjust to correct these issues. The
    Army will continue to use and refine these metrics and the analysis
    associated with manning, equipping, and training to measure readiness.
    By closely monitoring these metrics and ensuring the fidelity of the
    systems the Army uses the Army will maintain visibility on any
    hollowing of the Force. The Army will continue to invest its resources
    to ensure readiness aim points are met through increased training and
    modernized equipment.
        Admiral Ferguson. The Navy uses multiple sets of metrics to measure
    equipment and training readiness. FRP Operational Availability reflects
    ready forces available for presence and surge, while DRRS-Navy (DRRS-N)
    resource area metrics assess the overall readiness of the force. A
    decline in the operational availability of our forces, a decline in
    individual unit readiness metrics, or a significant increase in
    deferred maintenance may be seen as early indicators of declining
    readiness.
        General Dunford. Hollow forces were typically the result of
    reductions in defense spending without concomitant reductions in
    forces--and thus there was not enough equipment to train those levels
    of manning. The Commandant established as a guiding principle for the
    Marine Corps, as it prepares for the future, the metrics to monitor
    manning, equipment, and training levels in the Marine Corps' manpower,
    supply, and maintenance systems and in the DRRS. Additionally, the
    Chairman's JCCA process provides near-term analyses of readiness,
    assesses DOD's ability to execute required priority plans, provides a
    framework for conducting commanders' readiness assessments, and renders
    visibility with respect to readiness issues across the combatant
    commands, Services, and combat support agencies.
        General Breedlove. Preserving readiness and avoiding a hollow force
    was a non-negotiable priority for the Air Force and DOD in developing
    the fiscal year 2013 budget. We accomplished this by prioritizing
    readiness over force structure. A smaller ready force is preferable to
    a larger force that is ill-prepared because it lacks adequate
    resources. We will avoid a hollow force by protecting readiness at any
    force level, and strengthen the integration between our Total Force
    team of Active Duty, Guard, and Reserve airmen. We are slowing
    modernization, terminating, or deferring numerous acquisition programs,
    but at the same time, protecting the key programs most critical to
    future Air Force capabilities.
        Currently the Air Force Directorate of Studies & Analyses,
    Assessments, and Lessons Learned (A9) is building a framework to codify
    our metrics and the RAND Corporation has started a study on this
    effort. The new DSG and fiscal realities necessitate setting new
    thresholds for failure and success in our force structure and mission
    accomplishment. The Air Force Chief of Staff's deadline is to develop
    metrics and leading indicators by October 1, 2012. The Air Force
    Readiness Management Group has taken on the task of validating the
    results of the A9-led effort. We will then determine the measurements
    for a hollow force. As the Air Force works to mitigate budget cuts over
    the next 10 years, our leaders will continue to closely watch readiness
    trends to ensure we remain responsive and effective.

        34. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, what are the warning signs?
        General Austin. A hollow force is a military force that appears
    mission-ready but, upon examination, suffers from a shortage of
    personnel, equipment, and maintenance or from deficiencies in training.
    A hollow force occurs when decisions are made that take a
    disproportionate share of resources from one or more components of
    personnel, equipping, and training, or that take too many resources too
    quickly so that reductions are forced at a pace that precludes force
    readiness. In conjunction with DOD, the Army is conducting a review of
    the indicators that could signal trends for strategic readiness. The
    Army has coordinated efforts with the other Services, the Joint Staff,
    and OSD to identify medium- and long-term indicators covering manning,
    training, sustaining, and infrastructure needs to help identify future
    potential readiness issues as well as the strategic levers we can
    adjust to correct these issues. By being aware of these indicators and
    understanding how to quantitatively measure them the Army can begin to
    address shortfalls and warning signs to keep from becoming a hollow
    force.
        Admiral Ferguson. The Navy uses the FRP Operational Availability
    across the FYDP to provide a ready reference to measure Navy
    performance in achieving both presence and Major Combat Operations
    response in support of the combatant commanders. The exact FRP
    Operational Availability required for each type of combat power the
    Navy generates each year depends on the projected GFM plan for the
    year, plus surge requirements. It is stated in three terms (the number
    of units forward, plus the number of units ready to surge within 30
    days, plus the number of units ready to surge within 90 days). This can
    also be applied as a hollow force indicator.
        For individual units, The DRRS-N provides an indication of the
    readiness levels of individual units.
        General Dunford. Throughout the sustained deployments of Operation
    Iraqi Freedom, Operation New Dawn (OND), and OEF-Afghanistan, the
    Marine Corps has participated in several Chairman of the Joint Chief's
    JCCAs. These assessments provided a snapshot of service operational and
    strategic readiness and determination of the ability to support the
    NMS.
        Although the uniqueness of individual JCCA plan assessments did not
    permit for cumulative trend analysis, there were reoccurring inputs to
    Service plans that when addressed holistically did offer warning signs
    that Marines Corps support to a combatant commander's operational plans
    offered risk. Specifically, the Marine Corps identified three signs of
    risk in its support to operational plans.
        First, in every JCCA plan assessment the Marine Corps identified
    significant numbers of units as sourcing solutions that were in a
    reduced capacity (C3) due to a lack of personnel, training, or
    equipment. Additionally, in several JCCA plan assessments there were
    specific unit requirements that the Service was unable to source, as
    all available units (not deployed and not in dwell) were in a non-
    mission capable (C4) status due to personnel, training, or equipment.
        When challenged by an unsourced operational plan requirement, the
    Service offered the Joint Staff and combatant commander a mitigating
    solution by way of ``in lieu of'' sourcing. This additional step to
    fulfill requirements increased Service risk to source, as the in lieu
    of force was not fully trained to the plan's mission requirement.
        The second sign of risk to combatant commander operational plans,
    highlighted by a JCCA plans assessment, was no single Marine
    Expeditionary Force (MEF) capable of independently sourcing all
    requirements of a major contingency operation. As a result of reduced
    unit readiness and availability, contingency sourcing of a combatant
    commander's requirements mandated global sourcing. This reduced the
    cohesion of the overall organization; hindered command relationships
    based on shared experiences and training, and required the Marine Corps
    to establish unity of effort and unity of command prior to initiating
    tactical or operational action.
        Finally, with the global sourcing of units, a third sign of risk to
    operational plans was the Marine Corps' inability to train and equip to
    specific regional requirements. Units were unable to focus on their
    assigned mission, become familiar with a region, or deploy to the area
    for training.
        A further risk to the operational plans, not addressed here, was
    combatant commanders adjusting their mission requirements, thereby
    sacrificing their plan, as a result of the global sourcing shortfalls
    and reduced readiness of the Marine Corps. This risk can only be
    addressed by the combatant commander.
        Unit cohesion is a service risk incurred in supporting operational
    plans. Our forward deployed units have equipment and personnel above
    standard allowances. Ensuring our committed forces are properly
    supported we pull people and equipment from home station units.
        General Breedlove. In general, risk may be viewed in terms of
    capacity, capability, and readiness. Risk increases when: the force
    lacks the capacity to source all requirements and execute the assigned
    mission; the force does not have the technologically advanced platforms
    and weapons to dominate the fight; or the force is not ready because it
    is inadequately resourced and sustained in terms of personnel,
    training, and equipment (i.e., the force is hollow). Warning signs can
    generally be found in funding shortfalls in these key areas relative to
    capacity and capability requirements, as well as negative readiness
    trends identified in the DRRS or the Status of Resources and Training
    System. The Air Force closely monitors these and other leading
    indicators and applies predictive analytic tools to forecast future
    readiness and risk.
        The specific Air Force risks to operational plans are reported
    through classified channels.

           readiness risks associated with the size of the navy fleet
        35. Senator Ayotte. Admiral Ferguson, earlier this year, in his
    prepared statement for the Navy posture hearing, referring to the size
    of the Navy, Secretary Mabus wrote that quantity has a quality of its
    own. He also wrote that building up the number of ships in our fleet
    has been a priority for this administration from day one. In 2011, the
    CNO testified that the Navy requires a minimum of 313 ships to meet
    operational requirements globally. Does the Navy still have a valid
    requirement for 313 ships?
        Admiral Ferguson. The requirement for 313 ships is based on the
    2005 Quadrennial Defense Review (QDR). We are preparing a FSA based on
    the new DSG to validate the minimum number of ships to meet operational
    requirements and capabilities globally. The FSA is currently being
    staffed within DOD.

        36. Senator Ayotte. Admiral Ferguson, currently the Navy has 285
    ships. Is it correct that the Navy is not projected to increase the
    number of ships to 300 until 2019?
        Admiral Ferguson. Yes. The Annual Report to Congress on the Long-
    Range Plan for Construction of Naval Vessels for Fiscal Year 2013
    projects the battleforce inventory to reach 300 ships in fiscal year
    2019.

        37. Senator Ayotte. Admiral Ferguson, what specific readiness risks
    are we incurring by maintaining a fleet well short of the requirement?
        Admiral Ferguson. Specific risks include response time, capacity to
    meet contingency plans, and capability to pace emerging threats. Our
    assessment is the projected Navy battle force is fully capable of
    meeting the strategic guidance found in Sustaining U.S. Global
    Leadership: Priorities for 21st Century Defense. In addition, our
    construction plan must sustain the national shipbuilding design and
    construction base.

        38. Senator Ayotte. Admiral Ferguson, what has changed in the world
    to convince the Navy that it needs fewer ships and submarines?
        Admiral Ferguson. Our assessment is our projected Navy battle force
    is fully capable of meeting the strategic guidance found in Sustaining
    U.S. Global Leadership: Priorities for 21st Century Defense. The Navy
    completed a FSA based on the new DSG to validate the minimum number of
    ships to meet operational requirements and capabilities globally. The
    FSA is currently being staffed within the Navy and once approved by the
    Secretary of the Navy, it will be reviewed by the Secretary of Defense
    for approval.

        39. Senator Ayotte. Admiral Ferguson, how will the Navy support a
    shift to the Asia-Pacific region as described in the administration's
    NMS while the budget request calls for a reduced requirement for ships
    and submarines?
        Admiral Ferguson. The Navy is resourced and aligned to sustain its
    ability to assure access to the entire Asia-Pacific region and
    implement the missions outlined in the DSG. In the Navy's fiscal year
    2013 budget submission, we retained the carriers and large-deck
    amphibious ships and the end result in fiscal year 2017 will be the
    same number of combat ships as today (285 ships). The Navy is
    conducting a careful review of our strategic laydown and dispersal of
    ships and aircraft in support of the 2012 DSG emphasis on the Asia-
    Pacific region. This review balances ship decommissions and deliveries
    (outlined in the Shipbuilding Plan) with operational, infrastructure,
    and maintenance requirements and ensures dispersal of critical assets.
        The Navy is renewing its emphasis in the Asia-Pacific region in
    four ways: the ship and air forces built and deployed to the region;
    the capabilities developed and fielded for the region; the intellectual
    capital applied to Asia-Pacific security challenges; and in the
    homeporting balance of U.S. ships toward the Pacific coast and the
    Asia-Pacific region.
        First, the cumulative impact of ship deliveries, projected
    operating patterns, and forward stationing ships will yield an increase
    in day-to-day naval presence in the Asia-Pacific region from about 50
    ships today to about 58 ships by 2020. The Navy's shipbuilding and
    aviation plans also sustain today's level of carrier and large-deck
    amphibious ship operations. Specifically, this increased presence
    results from forward stationing LCS in Singapore, integrating forward
    operating JHSVs into the Pacific Fleet, and increasing amphibious ship
    and DDG presence in the Asia-Pacific region. More amphibious ships and
    DDGs will become available because the theater cooperation and maritime
    security missions they fulfill today in other regions will be
    increasingly conducted by JHSV, LCS, and AFSBs. These new ships enter
    the fleet over the next several years.
        Second, using relevant aspects of the Air-Sea Battle concept, the
    Navy will continue integrating capabilities essential in the Asia-
    Pacific region, particularly those needed to assure access. The Navy is
    also preferentially deploying platforms with the newest capabilities to
    the Asia-Pacific region.
        Third, increasing the Navy's emphasis on the Asia-Pacific region
    also means rebalancing intellectual capital and leadership attention
    toward the region. There are three main initiatives to accomplish this.
    The Navy is sharpening its focus on the warfighting missions that are
    most important in the Asia-Pacific--ISR, ASW, strike, ballistic missile
    defense (BMD), air defense, and electronic warfare. The Navy is also
    developing its people to serve in the Asia-Pacific region, emphasizing
    the requirement to understand its unique geopolitical and operational
    environment. And, the Navy has increased efforts to reassure our allies
    and strengthen partnerships in the Asia-Pacific region.
        Finally, the Navy continues to rebalance homeports toward the
    Pacific. In conjunction with the fiscal year 2013 procurement and force
    structure changes described above, the Navy completed an overall
    assessment of strategic homeporting. We will be adjusting the homeports
    of ships to support the Navy's goal of 60 percent of the fleet being
    homeported in the Pacific by 2020.
        With new ships and aircraft, advanced capabilities to meet emerging
    threats, and new concepts to employ them, the Navy's effectiveness and
    presence in this region will increase over the next several years.
    Along with this trend, our network of maritime partnerships is
    expanding in recognition of shared security and economic interests,
    affording us additional places from which to operate on a sustainable
    basis.

                         logistical challenges in asia
        40. Senator Ayotte. General Dunford, the Marine Corps recently
    announced its future force posture in Asia. You are quoted as saying
    this force posture will consist of about 2,500 marines in Australia.
    Hundreds of them are training in and around Southeast Asia on a daily
    basis, hundreds of marines are training in the Philippines, about 5,000
    marines are in Guam, about 11,000 on Okinawa, and another 4,000 on
    Iwakuni. You have also said that you have been lying awake at night
    worrying about the logistical challenges associated with the future
    Marine Corps posture in Asia. Under this planned force posture in the
    Pacific, what exactly are the logistical challenges the Marine Corps
    will confront to maintain readiness while meeting the requirements of
    the combatant commanders?
        General Dunford. As the Marine Corps reorients forces throughout
    the PACOM AOR in support of combatant commander requirements, the
    logistical challenges will be many and we do not have all the answers
    at this time; however, the tyranny of distance associated with the
    Pacific laydown will be the most challenging logistical issue the
    Marine Corps will confront.
        Current proposals have Marine Forces in the Pacific operating from
    mainland Japan, Okinawa, Guam, Hawaii, Australia, and in CONUS. We are
    looking at this challenge from the tactical, operational, and strategic
    levels and planning is ongoing within HQMC, III MEF and Marine Forces
    Pacific (MARFORPAC) to further define requirements and develop Courses
    of Action/Concepts of Logistical Support. Force laydown will drive the
    concept of logistics support.
        In addition to maximizing organic Marine Corps logistic support to
    units across the region, the Marine Corps looks to continuing our
    partnerships with U.S. Transportation Command and the U.S. Navy for
    movement of personnel/equipment/supplies. Additionally, leveraging a
    combination of Host Nation and other Contract Support, Acquisitions and
    Cross Servicing Agreements, Commercial Logistical Services (ie: FedEx),
    and dedicated Marine Corps government employees will be necessary to
    meet logistics support requirements.

        41. Senator Ayotte. General Dunford, what will you need from the
    Navy, including amphibious ships and maritime prepositioned assets, to
    meet training and contingency operational requirements in that region?
        General Dunford. The planned Marine Corps redistribution in the
    Pacific provides new challenges for the movement and maneuver of
    forces. Rotational forces in Australia and Guam will require amphibious
    shipping in order to accommodate annual seasonal patrol requirements
    within the PACOM AOR. In addition to amphibious warships, other types
    of vessels such as JHSVs, high speed transports, and maritime
    prepositioning ships will all be required to augment and support the
    movement of Marine Forces.
        Current and future Marine Expeditionary Brigade/Expeditionary
    Strike Group (MEB/ESG) aggregation capability and closure rates need to
    be in concert with Operational Plan requirements. Adequate lift assets,
    in all forms, will be a prerequisite in expanding the naval capability
    to provide contingency response and deterrence. The expansion and
    distribution of forces in this region will also provide an increased
    theater security cooperation capability, while retaining the ability to
    transition as a ready force to respond to contingencies and other
    operational requirements.
        The increased demand for amphibious lift in the PACOM AOR must be
    balanced against enduring Amphibious Ready Group/Marine Expeditionary
    Unit (ARG/MEU) requirements in other AORs, particularly CENTCOM, as
    well as requirements for routine large-scale (MEB/ESG) amphibious
    exercises and independent single-ship deployments (outside of the ARG/
    MEU program) such as Africa Partnership Station and Southern
    Partnership Station. These increasing requirements place an added tax
    on the current inventory of amphibious ships and must be considered
    alongside global operational demands.
        Maritime Prepositioning Force (MPF) shipping will play an increased
    role in supporting movement of equipment and forces for the combatant
    commander with regard to theater security cooperation events, annual
    MPF exercises, and support of contingency and operational plans in the
    AOR. Funding for the exercise of these assets is essential to meeting
    operational requirements and maintaining a high level of readiness to
    support the PACOM commander.

        42. Senator Ayotte. General Dunford, are you confident the defense
    budgets over the next 5 years will be able to support your logistical
    requirements in the Pacific theater?
        General Dunford. The Marine Corps is confident that we will be able
    to support our logistical requirements in the Pacific theater as the
    Navy-Marine Corps team is ideally suited to support the new DSG's focus
    on the PACOM AOR. To do so, however, will require continued investments
    in amphibious shipbuilding, ship-to-shore connectors, maritime
    prepositioning capabilities, and O&M funds to support operational and
    strategic maneuver in the Pacific. The Marine Corps understands that
    future requirements in the Pacific will necessitate more distributed
    operations and decentralized command--both of which will result in
    higher training costs. Also, as the Marine Corps rebalances toward the
    Pacific, we must make the proper investments in facilities and ranges
    to maintain the training and readiness of deployed forces.
        As our security strategy looks increasingly toward the Pacific, the
    Marine Corps, partnered with the Navy, remains the most economical,
    agile, and ready force immediately available to deter aggression and
    respond to crises. Amphibious ships are a foundational requirement for
    expeditionary force projection and crisis response. Further, our
    prepositioning ships are a unique strategic capability allowing us the
    ability to quickly respond to a wide scale of contingencies. The Marine
    Corps is committed to sound stewardship of funding in order to meet the
    logistical requirements in the Pacific.

                                amphibious ships
        43. Senator Ayotte. Admiral Ferguson, the Navy has acknowledged
    that low amphibious ship readiness can present a significant challenge
    to the training readiness of Marine Corps units and it is addressing
    this maintenance readiness shortfall. I understand that the optimal
    force structure for amphibious lift requirements is 38 amphibious ships
    to support the operations of 2 MEBs. But, because of fiscal
    constraints, the Navy will not buy 38 amphibious ships. I also
    understand that the minimum number of operationally available ships
    necessary to meet the assault echelon requirement is 30 and, to achieve
    this availability, the Navy needs 33 amphibious ships. How many
    amphibious ships do we have now?
        Admiral Ferguson. At the end of fiscal year 2012, we will have 30
    amphibious ships in the inventory to include 1 LHA, 8 LHDs, 9 LPDs, and
    12 LSDs. The Navy remains committed to providing sufficient amphibious
    lift for day-to-day presence as well as large-scale expeditionary
    operations; however, we are fiscally constrained to 32 amphibious ships
    in the mid- to long-term. The 32-ship amphibious force we are procuring
    will optimally be comprised of 11 LHA/Ds, 11 LPDs, and 10 LSDs. Our
    proposed delivery/decommissioning profile will meet historical sourcing
    for Amphibious Ready Groups.

        44. Senator Ayotte. Admiral Ferguson, what was the average
    operational availability of the current amphibious fleet for fiscal
    year 2011 and fiscal year 2010?
        Admiral Ferguson. The average operational availability for fiscal
    year 2010 was 81 percent, based on an average of 31-ship amphibious
    fleet, with an average of 25 ships available. For fiscal year 2011 it
    was 76 percent based on an average of 29-ship amphibious fleet with an
    average of 22 ships available.

        45. Senator Ayotte. Admiral Ferguson, what is the average
    operational availability assumed in the 33 amphibious ship mix?
        Admiral Ferguson. The average operational availability assumed in a
    force of 33 amphibious ships is 90 percent. This provides 30 ships in
    support of a 2 MEB assault echelon, with an acceptable level of risk in
    combat support vehicle and sustainment capacity, versus the full 38-
    ship requirement.

        46. Senator Ayotte. Admiral Ferguson, if the operational
    availability for the current fleet is different from the future
    amphibious fleet, how and by when will the Navy increase the
    operational availability of these ships?
        Admiral Ferguson. The operational availability of the amphibious
    fleet has recently averaged approximately 80 percent due to several
    factors. This includes the LSD Midlife program, taking ships out of
    service for extended periods (as long as a year) and the challenges of
    bringing the LPD 17 Class online (e.g. unscheduled maintenance
    availabilities). In the fiscal year 2016 to fiscal year 2022 timeframe,
    as the LHD Class ships enter their midlife availabilities, we expect a
    similar temporary decline in operational availability for this class.
    While this maintenance will adversely affect operational availability
    in the near-term, it will extend the service life of these ships to 40
    years by upgrading combat systems to pace threats, propulsion plant
    improvements to ship's fuel efficiency, replace obsolete equipment, and
    integrate new Marine Corps airframes. Overall, amphibious fleet
    operational availability is expected to improve to approximately 90
    percent upon completion of LSD and LHD midlife availabilities and as
    the LPD-17 construction process continues to mature.
        The Navy remains committed to providing 30 operationally available
    amphibious ships to meet naval amphibious lift demand.

                     risk in the national military strategy
        47. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, the DSG released by the administration
    in January 2012 abandoned the concept we have supported since the end
    of the Cold War to maintain sufficient military forces and readiness to
    successfully conduct two separate major contingency operations. This
    strategy was intended to deter an adversary and reduce the risk of a
    threat to U.S. interests even if we were engaged in a major contingency
    operation elsewhere. In its place, the administration proposes enough
    forces to deny an aggressor's objectives across all domains of
    operations in one region while inflicting an unacceptable cost on an
    opportunistic aggressor in a second region. In other words, we have
    announced to our adversaries that we have enough forces to win one
    major contingency operation, while being able to hold in a second major
    contingency. In your opinion, with the range of unstable areas we have
    around the world, does our reduction in forces actually increase the
    risk the likelihood of eventually having to engage in two major
    contingency operations?
        General Austin. We will maintain the ability to address two major
    contingencies, we will simply go about it differently. Consistent with
    the DSG, and the Defense Planning Guidance (DPG), the Army is taking
    steps to increase our engagement with important regions of interest.
    Through the CJCS's Strategic Seminar Series we are investigating ways
    to address risk, including increasing the regional alignment of the
    Army, which will provide us with more region-specific capabilities that
    enable us to shape the security environment and deter conflict. We will
    increase combined exercises of all types, build partner capacity,
    support military sales, and conduct key leader engagements and
    conferences with partner nations. We will increasingly rely on air and
    BMD to deter threats. We are also reinvigorating our rapid deployment
    ability in response to global crises to demonstrate our resolve to
    counter threats and deter aggression.
        Admiral Ferguson. We do not believe the DSG mandate to ``deny
    objectives or impose unacceptable costs'' on an opportunistic aggressor
    in a second region increases the likelihood of having to engage in two
    major contingency operations or reduce our ability to deter
    adversaries. Reductions in force size are mitigated by targeted
    improvements in capability and posture. This includes placing a premium
    on presence in the Asia Pacific and Middle East, as well as support to
    partner nations in and around those regions. We also prioritized
    investments in capabilities to counter adversary A2/AD strategies,
    including improvements in space and cyber, ensuring we maintain a force
    that is ``agile, flexible, ready, and technologically advanced.'' Given
    the level of presence and surge forces we will sustain under the new
    strategy, we do not feel the risk of engaging in two major contingency
    operations has increased.
        General Dunford. The new DSG, which provides the framework for DOD
    to balance the demands of the future security environment with the
    realities of our current fiscal constraints, calls for a future force
    that will ``remain capable across the spectrum of missions, fully
    prepared to deter and defeat aggression and to defend the Homeland and
    our allies in a complex security environment.''
        To that end, the Marine Corps, as an element of the larger Joint
    Force, and in support of maintaining that Force's fully credible
    deterrent value, has and will maintain a quality force, fully ready and
    capable of executing our assigned missions. This will ensure we are
    capable of continuing to meet global challenges, and that potential
    adversaries continue to believe that attempting to achieve their
    objectives by militarily confronting America is not a viable option.
        Additionally, the Marine Corps, as a forward deployed and forward
    engaged force, will continue to be postured to mitigate potential
    causes of conflict through our Theater Security Cooperation and
    Building Partner Capacity efforts, and to respond quickly to crises in
    order to prevent their escalating into major contingencies.
        General Breedlove. Perhaps. If the United States engages in one
    major combat operation, there is the potential another state will see
    an opportunity for offensive actions elsewhere. The risk imposed by
    operating with a smaller force places an increased need to manage the
    timing and phasing of an appropriate U.S. response. Given the
    unpredictable will of potential adversaries, this risk can be mitigated
    by shaping a force that is more agile, flexible, ready, and
    technologically advanced. When U.S. forces are committed to a large-
    scale operation in one region, they will be capable of denying
    objectives or imposing unacceptable costs on an opportunistic aggressor
    in a second region and maintain stable deterrence. By leveraging the
    reach and power inherent in our air, space, and cyberspace forces, we
    can hold a second adversary and give the National Command Authority an
    opportunity to decide how to apportion forces in the most advantageous
    manner. Additionally, fiscal realities require the United States to
    partner closely with like-minded states to help manage global stability
    in the 21st century. We must build partnership capacity in some of the
    most unstable regions while pooling, sharing, and specializing
    capabilities with our closest allies.

        48. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, if we were engaged in a major combat
    operation in Asia, for example, what message would this reduction from
    a two to one and a half major contingency operations capability send to
    a country like Iran?
        General Austin. Consistent with the DSG and the DPG, the Army is
    taking steps to increase our engagement with important regions of
    interest. We will still maintain the ability to address multiple
    contingencies, we will simply go about it differently. We are
    investigating ways to increase the regional alignment of the Army,
    which will provide us with more region-specific capabilities that
    enable us to shape the security environment and deter conflict. We've
    been participating in the CJCS's Seminar Series to assist in
    identifying what the Total Force can do to mitigate any risk associated
    with change to our strategic guidance. We will increase combined
    exercises of all types, build partner capacity, support military sales,
    and conduct key leader engagements and conferences with partner
    nations. We will increasingly rely on air and BMD to deter threats. We
    are also reinvigorating our rapid deployment ability in response to
    global crises to demonstrate our resolve to counter threats and deter
    aggression.
        Admiral Ferguson. The DSG does not commit to a one and a half major
    contingency operations strategy, but rather directs the Joint Force to
    ``deny objectives or impose unacceptable costs'' on an opportunistic
    aggressor in a second region. We believe the DSG provides sufficient
    supporting direction to fulfill this objective, including emphasis on
    capability and posture improvements that directly convey U.S. resolve.
    For example, the DSG is very clear in its emphasis on the Middle East.
    The Navy has already responded to this guidance with plans to deploy
    additional staff, surface combatants, mine sweepers, mine clearance
    helicopters, patrol craft, and the USS Ponce as a deterrent force. We
    are also making targeted investments in new capabilities that apply to
    this unique geographical region. The Navy will continue to partner with
    the Joint Force to present an opportunistic adversary with a daunting
    array of capabilities to deny their objectives and impose costs.
    Together, we believe our posture adjustments and capability
    improvements send a clear message of resolve and determination.
        General Dunford. Regardless of whether the United States is engaged
    in a major combat operation in Asia, Iran should not perceive the
    attempt to achieve its objectives by military means is a viable option.
        The new DSG states that ``even when U.S. forces are committed to a
    large-scale operation in one region, they will be capable of denying
    the objectives of--or imposing unacceptable costs on--an opportunistic
    aggressor in a second region.''
        Based on insight gained through recent and ongoing senior level
    discussions regarding executing the new military strategy with the
    programmed force, I am confident that the Joint Force, to include
    Marine Corps forces, if involved in a major combat operation in Asia,
    would retain sufficient capability and capacity to rapidly project
    sufficient combat power to deny Iran's objectives or impose
    unacceptable costs, without incurring unacceptable risk to operations
    in Asia.
        General Breedlove. The new DSG is clear that ``U.S. policy will
    emphasize Gulf security . . . to prevent Iran's development of a
    nuclear weapon and counter its destabilizing policies.'' As such, we
    have no intention of abandoning the Middle East and there is sufficient
    power projection capability in remaining Air Force and Navy assets to
    rapidly respond to aggression anywhere in the world and deny an
    adversary victory. Finally, the United States is not only confident in
    its own ability, but the ability of its allies and partners, to repel
    any aggression.

        49. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, wouldn't this reduced readiness--this
    reduced capability--make Iran, for example, more likely to take risks
    and to engage in provocative or aggressive actions? In other words,
    doesn't this change in strategy--and the associated reduction in combat
    capability--make war more likely?
        General Austin. We are active in examining ways we can increase our
    capabilities in a variety of areas, though we may reduce our capacity
    in some areas such as major combat operations. This is based in part on
    our assessment of the likely scenarios the Army would have to support
    in the event of a contingency. We are mitigating this risk by
    maintaining sufficient readiness to respond to a major combat
    operation, as well as maintaining the capacity for a robust combat
    surge. We are also engaging partners and allies in each region in order
    to meet the challenges of a new century, or essentially being
    preemptive in peace. To meet the complex challenges of the early 21st
    century, the Army will frame its efforts into three interdependent
    roles: prevent, shape, and win. First, we must prevent conflict with a
    credible force with sufficient capacity, readiness, and modernization.
    Second, our Army must help shape the international environment so that
    our friends are enabled and our enemies contained. The Army shapes the
    global security environment by building and maintaining relationships
    with allies and partners, increasing allied and partner capacity for
    self-defense and coalition operations, and ensuring access for U.S.
    Forces. Finally, the Army's mandate is to ``overcome any nations
    responsible for aggressive acts that imperil the peace and security of
    the United States.'' This is non-negotiable; the Army will be able to
    win, and to win decisively.
        Admiral Ferguson. The Navy does not believe the DSG will make war
    more likely. The new strategy directs specific improvements in both
    capability and posture that signal U.S. determination and resolve
    against an opportunistic aggressor. For example, the DSG places a
    premium on presence in the Middle East and support to partner nations
    in and around the region. In alignment with this strategy, the Navy
    will maintain a persistent presence in the Middle East, including the
    forward stationing of additional patrol craft in Bahrain. The Navy will
    also make the investments necessary to operate effectively in anti-
    access/area-denial environments, such as increasing our near-term mine
    warfare capability and improving near-term capability to counter fast
    attack craft. We prioritized readiness and capability against emerging
    threats over force structure to deliver a ready and relevant Navy now
    and in the future.
        General Dunford. The new DSG states that ``even when U.S. forces
    are committed to a large-scale operation in one region, they will be
    capable of denying the objectives of--or imposing unacceptable costs
    on--an opportunistic aggressor in a second region.'' Therefore, Iran
    should not perceive the attempt to achieve its objectives by military
    means is a viable option, and thus should be no more likely to take
    risks or engage in provocative or aggressive actions.
        Based on insight gained through recent and ongoing senior level
    discussions regarding executing the new military strategy with the
    programmed force, the Joint Force, to include Marine Corps forces, if
    involved in a major combat operation in Asia, would retain sufficient
    capability and capacity to rapidly project sufficient combat power to
    deny Iran's objectives or impose unacceptable costs, without incurring
    unacceptable risk to operations in Asia.
        Additionally, the Marine Corps, as a forward deployed and forward
    engaged force in the CENTCOM AOR, will continue to mitigate potential
    causes of conflict through our Theater Security Cooperation and
    Building Partner Capacity efforts, and to respond quickly to crises in
    order to prevent their escalating into major contingencies.
        General Breedlove. Hostile states will consider risk versus reward
    prior to taking action. Our ability to rapidly mass the capabilities of
    our force and the size of the force were all balanced to minimize risk
    and preserve our ability to dominate an adversary. The force structure
    in our strategy leverages the U.S. Air Force's asymmetric advantages in
    air, space, and cyberspace to rapidly respond to aggression globally
    and, in turn, deter that aggression in the first place.

        50. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, doesn't the new DSG reduce America's
    deterrence of potential aggressors, and if so, what is each Service
    doing to address this increased risk?
        General Austin. Consistent with the DSG and the DPG, the Army is
    taking steps to increase our engagement with important regions of
    interest. We are investigating ways to increase the regional alignment
    of the Army, which will provide us with more region-specific
    capabilities that enable us to shape the security environment and deter
    conflict. We've been participating in the Chairman's Strategic Seminar
    Series to assist in identifying what we can do to mitigate any risk
    associated with change to our strategic guidance. We are examining ways
    to increase our capabilities in a variety of areas. We are mitigating
    this risk by maintaining sufficient readiness to respond to a major
    combat operation, as well as maintaining the capacity for a robust
    combat surge. We are engaging partners and allies in order to meet the
    challenges of a new century. The Army remains a globally responsive
    force, capable of operations in multiple theaters. Our readiness
    remains the cornerstone of our conventional deterrent to prevent
    conflict. Our intent through actions such as regional alignment and
    building partner capacity is to enhance our ability to influence
    outcomes before overt deterrence becomes necessary. If events reach
    such a point, the integration of all of the Services in the Joint Force
    continues to provide a wide range of options for policymakers.
        Admiral Ferguson. The Navy does not believe the DSG reduces our
    ability to deter adversaries. The Navy remains committed to deterring
    aggression, and if deterrence fails, winning our Nation's wars.
    Consistent with the new DSG, we are implementing targeted initiatives
    in both posture and force structure to be capable of denying objectives
    or imposing unacceptable costs on an opportunistic aggressor in a
    second region even while forces are engaged in a large-scale operation
    in a primary theater. This includes forward-deploying BMD destroyers in
    Rota, Spain, forward-stationing LCSs to Singapore, and increasing the
    number of patrol coastal ships stationed in Bahrain. We believe these
    initiatives will have a powerful deterrent effect, bolster our forward
    presence, and clearly demonstrate our commitment to allies and
    partners.
        This budget proposal invests in our aircraft carriers, ships,
    aircraft, attack, and ballistic missile submarines. We believe the Navy
    retains the appropriate capabilities to deter potential aggressors.
        General Dunford. The new DSG calls for a future force that will
    ``remain capable across the spectrum of missions, fully prepared to
    deter and defeat aggression and to defend the Homeland and our allies
    in a complex security environment.''
        Based on insight gained through recent and ongoing senior level
    discussions regarding executing the new military strategy with the
    programmed force, I am confident that the Joint Force, to include
    Marine Corps forces, if involved in a major combat operation, would
    retain sufficient capability and capacity to rapidly project sufficient
    combat power to deny an adversary's objectives or impose unacceptable
    costs without incurring unacceptable risk. This will ensure that
    potential adversaries are deterred by the continued belief that
    attempting to achieve their objectives by militarily confronting
    America is not a viable option.
        The Marine Corps, as a forward deployed and forward engaged force,
    will continue to be postured to mitigate potential causes of conflict
    through our Theater Security Cooperation and Building Partner Capacity
    efforts, and to respond quickly to crises in order to prevent their
    escalating into major contingencies.
        General Breedlove. Even with declining budgets, the Air Force
    continues to provide the essential force structure and capabilities
    with armed forces that are agile, flexible, and ready to face a full
    range of contingencies and threats. The fundamentals of deterrence are
    demonstrating the capability to impose a cost or to deny a benefit, and
    the Air Force remains committed to these fundamentals. The Air Force's
    strategy is an integrated, balanced, and comprehensive one that is a
    solid, cost-effective implementation of high-priority programs that
    will ensure our ability to rapidly respond to global crises well into
    the future. The Air Force continues to seek innovative concepts to
    counter adversary investments in denying our forces access. Fiscal
    constraints require the Air Force to slow the pace and scope of
    modernization while protecting programs critical to future warfighter
    needs, such as the F-35, KC-46, Long Range Strike-Bomber, and Air-Sea
    Battle concept. The strategy maintains our Nation's readiness and
    deterrent capability.

        51. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, how are we compensating for this
    reduction in deterrence?
        General Austin. We are examining ways we can increase our
    capabilities in a variety of areas. We are mitigating risk by
    maintaining sufficient readiness to respond to a major combat
    operation, as well as maintaining the capacity for a robust combat
    surge. We are engaging partners and allies in each region in order to
    meet the challenges of a new century. By building partner capacity, we
    are expanding the abilities of our allies and partners which will help
    to shape the international environment to our advantage. We are
    achieving this through regional alignment of forces. This allows us to
    maintain presence and a posture that provides a credible deterrence
    while enhancing our allies' and partners' abilities. It also sets the
    conditions for us to gain access, if needed, to rapidly provide forces
    to respond to crises.
        Admiral Ferguson. The Navy does not believe the DSG reduces our
    ability to deter adversaries. Consistent with the new DSG, we are
    implementing targeted initiatives in both posture and force structure
    to be capable of denying objectives or imposing unacceptable costs on
    an opportunistic aggressor in a second region even while forces are
    engaged in a large-scale operation in a primary theater. In addition,
    we are sustaining our nuclear deterrent capabilities at an acceptable
    level. We believe these initiatives will continue to present an
    effective deterrent.
        General Dunford. Although the Marine Corps does not believe a
    reduction in deterrence has, or will, occur, as a forward deployed and
    forward engaged force it will:

             Be postured to mitigate potential causes of conflict
            through our Theater Security Cooperation and Building Partner
            Capacity efforts; and
             Respond quickly to crises in order to prevent their
            escalating into major contingencies, while maintaining the
            capability and capacity to support major contingency
            operations.

        Additionally, in order to better posture itself for the current and
    future security environments as an element of the Joint Force, the
    Marine Corps is executing the following initiatives:

             Distributed laydown in the Pacific Area of Operations
            provides for operationally resilient, geographically disbursed,
            and politically sustainable forces;
             Increasing the number of marines to U.S. Marine Corps
            Special Operations Command (SOCOM) as the Service component of
            SOCOM;
             Increasing the number of cyber marines to U.S. Marine
            Corps Forces Cyber Command as the Service component of U.S.
            Cyber Command;
             Providing SPMAGTFs such as the Black Sea Rotational
            Force and the SPMAGTF-fiscal year 2012 to EUCOM and AFRICOM;
             Increasing the number of Foreign Area Officers and
            Regional Area Officers; and
             Resetting the force in stride to ensure we are ready
            to meet contingency and crisis response requirements.

        General Breedlove. The Air Force is maintaining our Nation's
    conventional and nuclear deterrent capability by investing in the next
    generation of strike aircraft, tankers, bombers, and intercontinental
    ballistic missiles (ICBM). In the context of current fiscal
    constraints, force reductions are necessary to avoid becoming a hollow
    force. Guided by its core functions, the Air Force must recapitalize
    our fleet with an emphasis on maximizing operational flexibility and
    minimizing sustainment costs. Development of our next generation of
    strike aircraft, tankers, and preferred munitions ensure we remain
    capable of operating in emerging A2/AD environments. Additionally, we
    will continue to build partnership capacity to increase the collective
    capability of our friends and allies to support operations.

                          navy fleet operations tempo
        52. Senator Ayotte. Admiral Ferguson, it has been recently reported
    that the Navy's pace of fleet operations is surging and unsustainable
    as high demand for ships and submarines continues to take its toll. CNO
    Admiral Greenert was quoted as stating that, ``we can't run at that
    rate,'' explaining that the Service doesn't believe it can sustain this
    through the next 5 years. You stated in your written statement that,
    ``supporting this higher demand above programmed levels will require
    additional funding or reprogramming actions in the current year, and
    could impact the service life of our platforms should we compress
    maintenance timelines.'' Are fleet readiness rates dropping in the
    Navy? If so, what can be done to reverse this trend?
        Admiral Ferguson. The Navy is taking measures to ensure we sustain
    an appropriate level of readiness. This includes prioritizing readiness
    over capacity and shifting to a more sustainable deployment model in
    our fiscal year 2013 budget submission:

             Fully funding ship maintenance and midlife
            modernization periods, and continuing a series of actions to
            address surface ship material condition;
             Increasing investment in training and adjusting the
            Fleet Readiness Training Plan (FRTP) to be more sustainable and
            provide units adequate time to train, maintain, and achieve the
            needed fit and fill in their manning between deployments;
             Forward basing and forward deploying ships to reduce
            transit time, so that the Navy-Marine Corps team can continue
            delivering the rapid response our Nation requires of us; and
             Employing rotating crews on Mine Countermeasures,
            Patrol Coastal class ships, and soon LCSs as the force grows,
            and further studying the benefits and costs of expanding and
            using rotational crewing.

        The Navy is also in the process of conducting a FSA based on the
    new DSG. The FSA will evaluate the capabilities needed to execute the
    DSG, the ships and aircraft needed to deliver these capabilities, and
    the resulting inventory requirements. Overall, the proper mix of
    critical capabilities necessary to support the DSG will prove more
    significant than the exact number of ships in the fleet.

        53. Senator Ayotte. Admiral Ferguson, how does the budget request
    for fiscal year 2013 address this issue?
        Admiral Ferguson. The Navy prioritized readiness and capability
    over capacity to ensure our Navy is ready and relevant not only today
    but also in the future. We also invested in maintaining a sustainable
    deployment model to allow for the reset-in-stride of our forces between
    rotational deployments.
        Specific efforts in our fiscal year 2013 budget submission to
    address the stress on the force resulting from operating at a war-time
    tempo for over 10 years include:

             Fully funding ship maintenance and midlife
            modernization periods, and continuing a series of actions to
            address surface ship material condition;
             Increasing investment in training and adjusting the
            FRTP to be more sustainable and provide units adequate time to
            train, maintain, and achieve the needed fit and fill in their
            manning between deployments;
             Forward basing and forward deploying ships to reduce
            transit time and mitigate reduced force structure, ensuring the
            Navy-Marine Corps team can continue delivering a rapid response
            capability; and
             Employing rotating crews on Mine Countermeasures,
            Patrol Coastal class ships, and soon LCSs as the force grows,
            and further studying the benefits and costs of expanding and
            using rotational crewing.

        54. Senator Ayotte. Admiral Ferguson, where do you need additional
    funding?
        Admiral Ferguson. The President's budget submission for fiscal year
    2013 adequately supports expected fiscal year 2013 operations and
    reflects the best balance of risk and available resources across the
    Navy portfolio. Additional funding could be required for repairs to the
    USS Miami due to the 23 May fire in Portsmouth Naval Shipyard.

        55. Senator Ayotte. Admiral Ferguson, how many ships would be
    required to fully satisfy combatant requirements under the current NMS?
        Admiral Ferguson. The Navy continues to meet 100 percent of the
    adjudicated requirements tasked through annual Joint Staff-led GFM
    process which balances competing combatant commander demand with the
    available resources and priority requirements. The requests for forces
    from combatant commanders are not constrained by force provider
    inventory, NDS, or other demands from other combatant commands. It is
    estimated that to source 100 percent of combatant commander demand it
    would require an excess of 500 ships. Although the current force
    structure does not meet all peacetime demands, our presence meets most
    important requirements for war plans and security cooperation.

                                 f-22 readiness
        56. Senator Ayotte. General Breedlove, currently, the F-22 fleet's
    operational availability remains disappointingly low, at 60 percent.
    And, for the first few months of fiscal year 2012, its mission
    capability rate was similarly only about 61 percent. Why are the F-22
    readiness rates still disappointingly low?
        General Breedlove. Low observable (LO) panel restoration caused by
    subsystem failures is the number one F-22 readiness issue. The F-22
    aircraft availability (AA) rate is 60 percent and measured against an
    AA standard of 66.7 percent. Currently, 30 percent of the reportable
    non-mission capable issues are attributed to the LO system.
        F-22 readiness rates were also negatively affected by planned
    improvements to the Air-to-Air Interrogation system cables which are
    designed to increase cable reliability between system components.
    Another factor affecting the F-22 readiness rates is the ongoing
    modification to the F-22 oxygen system as a result of last year's
    safety investigation. The Air Force is designing new sensors to ensure
    pilots are able to monitor and react to any changes in the oxygen
    supply system. This modification is scheduled to be completed in late
    2012.
        Despite these negative trends, the F-22 mission capable rate
    trended upward during the past 6 months and achieved a 70 percent
    average against the 74 percent standard. With aggressive corrective
    actions in place, the Air Force is confident these are temporary
    negative readiness conditions well on their way to resolution.

        57. Senator Ayotte. General Breedlove, what plan does the Air Force
    have to improve the F-22's readiness?
        General Breedlove. The Air Force is executing the F-22 Aircraft
    Availability Improvement Program (AAIP) with the goal of improving F-22
    readiness across the fleet. AAIP achieves its objectives by focusing on
    a broad range of factors impacting F-22 readiness. These factors
    include technical data, maintenance procedures, diagnostics capability,
    and hardware reliability and maintainability. As an example, the
    Reliability and Maintainability Maturation Program (RAMMP) is conducted
    under the AAIP umbrella and is focused on increasing aircraft
    availability by designing, developing, and retrofitting more reliable
    and maintainable parts on the F-22. By addressing readiness factors
    with programs such as RAMMP, the Air Force is actively engaged in
    improving F-22 readiness.

                          contractor logistics support
        58. Senator Ayotte. General Breedlove, how will the Air Force more
    effectively drive affordability into its contractor logistics support
    (CLS) contracts--specifically in the areas of greater contractor cost
    visibility, increased contract flexibility and scalability, and
    enhanced opportunities for competition?
        General Breedlove. The Air Force continues to make improvements in
    all these areas. The Active Air Force's fiscal year 2013 President's
    budget justification documents contain increased visibility into CLS
    costs, based on the program offices' estimates of requirements in CLS
    expense categories. The Air Force expects to achieve the same level of
    visibility in the fiscal year 2014 President's budget submission for
    the Reserve Forces. In the fiscal year 2013 budget execution, the Air
    Force is developing new cost element details in our financial system to
    track CLS obligations for over 30 different cost elements instead of
    the current single CLS cost element. This additional detail will allow
    greater visibility of actual costs attributable to individual contract
    line items.
        For increased contract flexibility, the Air Force is continuing to
    establish pricing matrices to support variable throughput in CLS
    contracts. We are also increasing contract flexibility by using a fixed
    price per event methodology for recurring requirements that do not have
    set quantities. Scalability increases are being achieved by breaking
    out tasks from larger contracts and dividing them into smaller
    contracts to enhance competition.
        The Air Force has also expanded the use of business case analyses
    (BCA) and is utilizing the Navy Price Fighter program to ensure a best
    value approach for CLS contracts. The BCAs have led to reduced contract
    costs as well as the decisions to move some contract work to organic
    sources. The Navy Price Fighter program leverages a should-cost
    approach and has generated an average of 16 percent savings/cost
    avoidance in contract negotiations. In addition, several CLS programs
    have separated sole source engineering support from maintenance repair
    and overhaul efforts to allow enhanced competition in areas of depot
    repair and contractor operated maintenance and supply. Finally, the Air
    Force is placing increased emphasis on acquiring rights in technical
    data and software in the initial procurement to allow more work to be
    done organically or be put out for full and free competition down the
    road. The measures we are taking to enhance competition will result in
    more opportunities for small business participation as well.

                 contractor support for contingency operations
        59. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, the Military Services have since World
    War I relied to varying degrees on the use of contractor support to act
    as a force multiplier on the battlefield. Can you provide an assessment
    on what extent the readiness of your forces are impacted by having
    access to contractors who provide support services during contingency
    operations?
        General Austin. The Army's use of contractors for the provision of
    contingency support services reduces military footprint and increases
    the availability and overall readiness of the force. The Army's role is
    to provide ready ground forces to the combatant commanders in support
    of their assigned missions and objectives. Contractors have provided
    logistics services such as dining and transportation, support services
    such as linguists and analysts, and maintenance services through Field
    Service Representatives (FSR) and other contracted support.
    Unquestionably, contract support is critical to the sustained
    availability of select equipment on the battlefield and to maintain
    operational capabilities for high-demand, low-density skills for which
    maintaining an adequate force structure is neither feasible nor
    fiscally viable.
        Admiral Ferguson. Contractor support has been critical to the
    success of deployed Navy Expeditionary Forces engaged in Iraq and
    Afghanistan. The direct support of contractors fills gaps that exist
    within the expeditionary logistics support area to include FSR for
    maintenance, engineering, and configuration management support for the
    Navy's expeditionary equipment. This includes tactical vehicles,
    construction equipment, combatant craft, and large-scale tactical
    communications. In addition to overhaul and depot level support,
    contracted services provide urgent equipment modifications and
    assessment as well as retrograde/redeployment support in theater for
    units. It has greatly enhanced Navy Expeditionary units' ability to
    refurbish and overhaul tactical and construction equipment within the
    CENTCOM area of operations. The Marine Corps and Army contracts
    leveraged by the Navy's reduced turn-around time, shortened maintenance
    availability time, and put valuable equipment back into the hands of
    forward expeditionary units sooner without having to ship additional
    equipment from CONUS.
        General Dunford. Contract support is a force multiplier. Our recent
    combat experiences in Iraq and Afghanistan have demonstrated the
    utility of contract support and have ensured marines were focused on
    their combat mission, maintaining the highest level of combat
    effectiveness in the most austere combat conditions. Contracted
    services such as facilities support (laundry, electrical, messing, et
    cetera); internal physical security, FSR and other contracted services
    are manpower intensive.
        Forward deployed marines will always be given top priority where
    readiness is concerned; however, without contracted support, combat
    effectiveness would be diminished as the result of having to use
    marines to provide these essential services. Contracting these vital
    services remains critical to the success of combat operations.
        General Breedlove. Access to contractor support during contingency
    operations has had a significant impact on force readiness. Contractors
    provide spares, ground support equipment, and materials for essential
    technology like the F-15C Active Electronically Scanned Array Radar.
    Contractor FSR embedded with SOCOM units provide nearly all fielded
    system support, including flight-line maintenance, spare and repair
    parts, and depot maintenance.

        60. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, how would the readiness and
    effectiveness of your forces be affected if the use of contractors in
    contingency operations were limited or curtailed?
        General Austin. Without the ability to leverage operational
    contract support, the Army's effectiveness would be severely
    compromised. Without contract support, the Army would have far fewer
    combat troops available. Commanders would be forced to use military
    personnel to perform many functions currently performed by contractors.
    In addition, the Army would be required to maintain a large cadre of
    military personnel trained in niche capabilities, such as linguists,
    for every region in which the Army might conceivably be called to
    operate, further reducing the number of combat troops available.
    Finally, prolonged military engagements in austere environments without
    the capabilities provided by contracted support would increase strain
    on military personnel in low-density skill-sets while also decreasing
    quality-of-life for combat troops. This would unquestionably have a
    detrimental effect on the ability to sustain America's All-Volunteer
    Army.
        Admiral Ferguson. The loss or reduction of support provided by
    contractors in support of contingency operations will adversely affect
    operational readiness and add additional stress to military operators,
    logisticians, and maintainers. Navy expeditionary units are not staffed
    with dedicated logisticians and support personnel or trained to provide
    all the intermediate and depot level maintenance actions required in
    extended contingencies, so we remain reliant on contract support.
    Without this logistics support, the Navy would experience increased
    maintenance turn-around time and decreased availability time for
    equipment. This would result in increased maintenance, transportation,
    procurement, and other logistics costs for the Navy.
        General Dunford. The Marine Corps expeditionary ethos demands that
    we maintain the highest level of combat effectiveness in the most
    austere combat conditions. As the Nation's Expeditionary Force in
    Readiness, the marines are well-prepared to be first to the fight as a
    self contained MAGTF to win the Nation's battles.
        Contracted support over the past 10 years has been a force
    multiplier. Forward Operating Base construction, rapid fielding of new
    capabilities (e.g. Mine Resistant Armored Protected (MRAP) vehicles),
    and other demands unique to the current fight could not have been
    sustained without the support of contracted services.
        Although the Marine Corps stands ready today to meet the Nation's
    demands, contracted support has proved invaluable to ensuring combat
    forces are relieved of the manpower-intensive support and
    administrative functions in order to remain focused on combat
    operations. Contracted support also allows USFOR-A to remain below the
    mandated number of forces permitted on the ground.
        General Breedlove. Limiting or curtailing contractor support in
    contingency operations would negatively affect force readiness and
    effectiveness due to supply and maintenance issues. Supply and
    maintenance effectiveness would be degraded without the technical
    expertise provided by CLS on a majority of weapon systems. Aircraft
    relying on total CLS for sustainment and maintenance for the aircraft
    itself or critical components would have reduced effectiveness and
    availability in direct support of combat operations. Forces utilizing
    embedded field service representatives performing duties such as on-
    site operational ground checks and inspection and repair of prime
    equipment and systems would also be affected.

                         maritime prepositioning force
        61. Senator Ayotte. General Dunford and Admiral Ferguson, last
    year, the Navy announced plans to place 6 of 16 ships from the 3-
    squadron MPFs for the Marine Corps into reduced operating status
    beginning in fiscal year 2013. General Panter of the U.S. Marine Corps
    has stated in testimony that that decision needed additional analysis.
    When I asked General Panter last year about this decision to place six
    ships on reduced operating status, he said that placing portions of
    Squadron 1 in the Mediterranean on a reduced operating status would
    translate to a potentially slower response time in support of the
    combatant commands. Based on these readiness concerns, I introduced an
    amendment last year that was included in the final National Defense
    Authorization Act (NDAA) that asked DOD to look at the risk this move
    would incur. Yet, this year, the Navy wants to go a step further and
    actually wants to eliminate 1 of the 3 MPSRONs and to reduce the number
    of maritime prepositioning ships to 12 in fiscal year 2013. The MPSRON
    that would be eliminated is the MPSRON in the Mediterranean. Last
    month, General Mills testified in response to my questions that the
    elimination of a MPSRON increases risk. How specifically does the
    elimination of the prepositioning squadron in the Mediterranean
    increase risk?
        General Dunford. The MPF is a core (essential) element of the
    Navy's readiness, strategic mobility, and global responsiveness
    posture. MPF is comprised of military sealift command ships, naval
    equipment and sustainment, and sailors and marines that provide our
    Nation with a responsive, relevant, and scalable capability.
        Historically, MPF has focused on major combat operations in order
    to support the deployment of a MEB in response to combatant commander
    operational plans. However, within the FYDP, MPF will transition to a
    seabasing-enabled capability with the completed fielding of large,
    medium-speed roll on/roll off vessels, and the introduction of mobile
    landing platforms and the dry cargo/ammunition (T-AKE) ship. MPF
    (seabasing-enabled) will provide a limited employment option in low-
    spectrum operations while retaining high-end deployment capability,
    thereby allowing MPF (seabasing-enabled) to be scalable across the full
    range of military operations. Based upon the President's budget for
    fiscal year 2013, the MPF program will divest one MPSRON and will
    increase the capacity of the two remaining MPSRONs, each of which
    currently holds 58 percent of a MEB equipment set. Though short of the
    Marine Corps' goal of 80 percent, each enhanced MPSRON will be capable
    of prepositioning 69 percent of MEB equipment set.
        The risk associated with this strategy is that there will be no
    maritime prepositioning coverage in EUCOM, AFRICOM, and Southern
    Command, thereby limiting global coverage and forward presence, and
    increasing crisis response timelines to these AORs. The new DPG focuses
    on PACOM and CENTCOM, while assuming risk to the EUCOM and AFRICOM
    AORs. The remaining two MPSRONs fully support PACOM and CENTCOM
    Operational Plans.
        Balancing operational risk with programmatic necessity, both the
    Navy and OSD believe the risk associated with loss of MPSRON-1 is
    acceptable. However, the acceptance of that risk is predicated on
    increasing the capacity in the remaining two MPSRONs, the continued
    fielding of T-AKE and mobile landing platforms, and funding annual MPF
    exercises.
        Admiral Ferguson. Risk is increased in terms of the number of days
    that it will take to respond to a major combat operation in EUCOM or
    the west coast of Africa. However, this risk is acceptable and
    mitigated by the following:

             There will be no loss of aggregate sealift capacity
            since five roll-on/roll-off ships will remain part of total
            force via transfer to CONUS-based Strategic Sealift Fleet and
            maintained in the same 5-day readiness status.
             The Commandant of the Marine Corps, PACOM, EUCOM, and
            AFRICOM have all testified before Congress the level of risk
            assumed is acceptable.
             The 2011 NMS focuses on PACOM and CENTCOM, while
            assuming risk to the EUCOM and AFRICOM AORs. The remaining two
            MPSRONs will be enhanced and capable of fully supporting
            requirements. Peacetime and contingency demands in EUCOM and
            AFRICOM can be supported by Surge Sealift or other Naval
            Forces, e.g. Amphibious Readiness Groups.
             CONUS-based Strategic Sealift ships can be loaded with
            a wider variety of equipment and/or humanitarian supplies
            tailored to a broader mission set than previously realized
            through the traditional Marine Corps ground combat focused
            MPSRON-1--thus adding flexibility and efficiency.

        62. Senator Ayotte. General Dunford and Admiral Ferguson, the
    Norway Marine Corps Prepositioning Program (MCPP) has been cited as a
    major mitigation factor for the risk we are incurring by eliminating a
    squadron. I asked General Mills last month about the equipment in
    Norway. He was able to answer some of my questions and said he would
    get back to me on others. From a readiness perspective, I would like to
    ask you a few questions as well. Since the equipment in Norway is in
    caves and not on ships, how long would it take to get that equipment on
    ships?
        General Dunford. The Marine Corps response to section 1013 of House
    Resolution 1540, the NDAA for Fiscal Year 2012 stated, ``Achieving the
    appropriate ship mix and embarked equipment sets and density is ongoing
    to optimize operational capability and mitigate risk. Additional
    mitigation is provided by MCPP-Norway (MCPP-N): a task-organized
    equipment set forward deployed in the EUCOM AOR.'' MCPP-N does not
    replace MPSRON-1 in depth or breadth of equipment. Stating that MCPP-N
    is a major mitigating factor for the risk incurred by eliminating
    MPSRON-1 would be incorrect.
        Surge sealift ships can be activated and sail to Norway in about 2
    weeks. An additional option is to call upon U.S.-flagged ships from the
    Maritime Security Program (MSP). Some of these MSP ships conduct trade
    in northern Europe, thus can likely respond in days.
        It will take 7 to 10 days to load the equipment in Norway onto
    ships once they arrive. However, MCPP-N is versatile, and ground, rail,
    and air are all possible modes of transportation. Strategic air was
    used for MCPP-N support of the Russian wildfires in 2011 and
    humanitarian assistance to Turkey following the earthquakes in 2011,
    allowing equipment and supplies to be delivered very quickly.
        Current MCPP-N on hand, ground and aviation equipment will require
    two ships, and a fully attained prepositioning objective will require
    three ships. It takes 5 days to load each ship and ships can be loaded
    concurrently if berths and required personnel are available.
        Current MCPP-N munitions on hand, and a fully attained
    prepositioning objective, will require one ship. It will take 5 days to
    load the current on hand munitions and 9 days to load a fully attained
    prepositioning objective. Munitions conduct load out from a different
    port than ground and aviation equipment.
        Admiral Ferguson. Surge Sealift ships can be activated from CONUS
    and arrive in Norway in approximately 2 weeks. U.S. flagged merchant
    ships from the MSP may also be called upon on short notice. Since some
    of the MSP ships already trade in Northern Europe, their response time
    can likely be reduced to a matter of days.

        63. Senator Ayotte. General Dunford and Admiral Ferguson, how much
    slower would this response be than if we maintained the first MPSRON in
    the Mediterranean?
        General Dunford. A CONUS-based response using strategic sealift
    could take up to 4 weeks. This depends on the location of the conflict
    or humanitarian crisis; the number and type of ships required; speed of
    the ships; and availability of the equipment and/or humanitarian
    supplies required.
        Depending on the scenario, the required equipment set may take less
    time to load, thereby reducing the response time from MCPP-N reflected
    below. Port Said, Egypt, and the Gulf of Guinea are used as arbitrary
    points of reference for comparing response times to EUCOM and AFRICOM,
    respectively.

             MPSRON-1 to Port Said = 5 days
             MCPP-N to Port Said = 26-29 days

             MPSRON-1 to Gulf of Guinea = 7 days
             MCPP-N to Gulf of Guinea = 26-29 days

        Twenty nine-day response time for MCPP-N to Port Said and the Gulf
    of Guinea includes 10 days for sourcing (surge sealift and/or
    commercial charter) and movement of ship(s) to Norway, an estimated 7-
    10 days to load ships in Norway, and 9 days transit to destination.
        Admiral Ferguson. CONUS-based response using Strategic Sealift will
    take an estimated 2 to 3 weeks longer than a Mediterranean-based
    squadron. The exact timeline will be dependent on the location of the
    conflict or humanitarian crisis, the number and type of ships required,
    speed of the ships, and the desired equipment and/or humanitarian
    supplies required. The advantage to employing surge sealift is this
    allows for tailored loading of equipment and/or humanitarian supplies,
    vice traditional pre-stowed equipment in a MPSRON, which is tailored
    for the higher end of military operations. With the exception of Marine
    Corps ground combat operations, it may be timelier and more efficient
    for EUCOM scenarios to employ Surge Sealift vessels from CONUS with the
    right mix of ships containing exactly the right equipment and/or
    humanitarian supplies.

        64. Senator Ayotte. General Dunford and Admiral Ferguson, if a
    national security crisis develops in the Mediterranean that requires
    maritime prepositioning assets, would the second MPSRON be sent through
    the Suez Canal?
        General Dunford. It is possible that the second MPSRON, whether in
    total or partial, could be sent through the Suez Canal to respond to a
    crisis in the Mediterranean. MPSRON forces (in total or partial number
    of ships) retain the flexibility to respond globally as the situation
    warrants.
        Admiral Ferguson. It is possible the second MPSRON could be sent
    through the Suez Canal to respond to a crisis in the Mediterranean.
    There is also the capability to employ a tailored mix of Strategic
    Sealift ships, equipment, and/or humanitarian supplies from CONUS to
    meet the specific requirements of an emerging threat. MPSRON forces (in
    total or partial) retain the flexibility to respond globally as the
    situation warrants. In some cases, Strategic Sealift ships surged from
    an east coast port could arrive in the same amount of time as MPSRON
    ships from the Pacific or Indian Ocean, and could do so without
    negative impact on the PACOM or CENTCOM operational plans.

        65. Senator Ayotte. General Dunford and Admiral Ferguson, in light
    of changes in Egypt, can we assume we would have unimpeded transit
    through the Suez Canal?
        General Dunford. We know of no mainstream Egyptian political
    movement that advocates restricting access and our assessment is that
    the Egyptian military and foreign policy sectors will strive to
    maintain unimpeded access to the Suez Canal.
        Admiral Ferguson. We have no indication of an impending change in
    the ability of the U.S. Navy to transit the Suez Canal as we do today.

            marine corps readiness--maritime prepositioning training
        66. Senator Ayotte. General Dunford, in Admiral Stavridis's written
    testimony earlier this year, he discussed Austere Challenge 11, which
    is a joint exercise with the Israelis. Admiral Stavridis wrote that
    this exercise focuses on crisis response as well as amphibious and
    maritime prepositioning objectives. Admiral Stavridis said these
    exercises sustained warfighting skills, strengthened important theater
    relationships, and conducted vital interaction with EUCOM and the North
    Atlantic Treaty Organization (NATO). In this climate in which Israel
    faces unprecedented security threats, how will U.S. Forces in the EUCOM
    AOR work on maritime prepositioning objectives if there is no longer a
    MPSRON in the region?
        General Dunford. The Marine Corps, as part of its Force
    Synchronization Process, conducts an annual Prepositioning Exercise
    Working Group. For 2012, this working group met on 21 June. Through
    this process, the Marine Corps develops and refines a prepositioning
    exercise schedule over a 5-year planning horizon to support the
    development of Service core competencies, expeditionary capabilities,
    enable seabasing experimentation and doctrine development, while
    synchronizing efforts with the Navy and across the Marine Corps.
    Regional Marine Force component headquarters to include Marine Force
    Europe participate in this process to synchronize the Marine Corps
    prepositioning exercise schedule with geographic combatant commanders'
    theater requirements.
        Based upon requirement prioritization, timing, funding, and ship
    scheduling, the Marine Corps seeks to support prepositioning exercise
    requirements across all the geographic combatant commander AORs, to
    include the EUCOM AOR, making best use of forward positioned maritime
    prepositioning platforms in MPSRON-2 and MPSRON-3 located in the PACOM
    AOR, platforms retained in a reduced operating status and exploiting
    the capabilities of MCPP-N.
        MPSRON-2 and MPSRON-3 remain postured in the PACOM AOR to
    facilitate timely response to PACOM and CENTCOM contingencies, but are
    also postured for response to EUCOM and AFRICOM contingencies.
    Additionally, the Marine Corps continues efforts to transform MCPP-N
    for crisis response to support the most likely response operations up
    to the mid-intensity conflict level of the range of military operations
    while retaining the ability to support the aggregation of a MEB. Use of
    MCPP-N leverages a mature European multi-modal transportation network
    to utilize intra-theater lift in addition to strategic lift to equip
    and sustain crisis response forces. Crisis response forces can be
    formed using a MEU (from amphibious ready group shipping), the
    designated global response force, or a fly-in echelon.

        67. Senator Ayotte. General Dunford, how will this negatively
    impact U.S. and Israeli joint amphibious and prepositioning
    capabilities?
        General Dunford. As acknowledged in previous testimony, we accept
    additional risk in the EUCOM AOR when MPSRON-1 is no longer physically
    present. The Marine Corps actively seeks to mitigate (or reduce) these
    risks through best use of transiting maritime forces for theater
    engagement, training, and exercises in addition to execution of the 5-
    year prepositioning exercise schedule and active employment and
    exercise of MCPP-N.

                                fleet readiness
        68. Senator Ayotte. Admiral Ferguson, what is your assessment today
    of the fleet's material condition and readiness?
        Admiral Ferguson. Navy forces operating forward are ready and
    certified for their missions. We are ready today to respond to
    contingencies with the highest quality force in our history, but are
    strained due to a high operational tempo. Our forces are stressed after
    over 10 years of combat operations and continued high global demand for
    naval forces. We see this stress across the nondeployed force and in
    our readiness and capacity to surge additional forces for emergent
    operations. The primary stressing factor for our nondeployed forces is
    a reduced time available in homeport to conduct maintenance and
    training as they prepare to redeploy to respond to the high demand
    signal. As an inherently rotational force, the Navy relies on reset-in-
    stride between deployments and this principle has sustained our
    readiness above minimum requirements over 10 years of combat
    operations.
        We are addressing previously identified deficiencies in surface
    ship maintenance planning, crew size, and training. We are also
    shifting to a more sustainable deployment model to ensure we sustain
    our force at an appropriate level of readiness in the future.

        69. Senator Ayotte. Admiral Ferguson, what are your readiness
    priorities with the fiscal year 2013 budget request?
        Admiral Ferguson. Our priority in the Navy fiscal year 2013 budget
    submission was to deliver a ready and relevant Navy now and in the
    future. We focused on funding the critical elements of readiness as we
    balanced our investments in future capability, O&M, personnel,
    training, and spares. To do so, we reduced force structure and reduced
    or delayed procurement of new platforms to ensure wholeness of our
    existing force structure. The decisions were guided by the CNO's
    Sailing Directions and the three tenets he provided:

             We prioritized ``warfighting first'' in the readiness
            accounts by providing the requisite operations funding (flying
            hours and steaming days) to meet the operational requirements
            of the combatant commanders for our forward forces and to
            conduct training and certification requirements with manageable
            risk;
             We focused on ``operating forward'' globally, forward
            basing and forward deploying ships to reduce transit time and
            mitigate reduced force structure; and
             In order to ``be ready,'' we fully funded ship
            maintenance requirements to ensure our ships reach their
            expected service life. We also invested in maintaining a
            sustainable deployment model to allow for the reset-in-stride
            of our forces between rotational deployments.

                                ship retirement
        70. Senator Ayotte. Admiral Ferguson, how does retiring seven
    Ticonderoga Aegis-class cruisers early and putting two dock landing
    ships in reduced operating status support the Secretary of Defense's
    new DSG, which puts renewed emphasis on the Asia-Pacific region?
        Admiral Ferguson. The Navy has certified to the Secretary of
    Defense that we will meet the fiscal year 2013 GFM Allocation Plan and
    requirements in the DSG with the current and projected force structure
    provided in the Navy's fiscal year 2013 budget submission.
        The fiscal year 2013 budget reflects the Navy's strategy to build
    ships better suited for current and future needs. The Navy is funding
    this effort, in part, by deactivating older, less-capable ships that
    are increasingly expensive to maintain, operate, and upgrade to remain
    relevant. Keeping these ships in service would divert funding from
    other programs vital to the Navy's mission, including the modernization
    and procurement of ships critical to fleet needs, and compete for
    scarce O&M dollars to sustain fleet readiness.
        The cumulative impact of ship deliveries, projected operating
    patterns, and forward stationing ships will yield an increase in day-
    to-day naval presence in the Asia-Pacific region from about 50 ships
    today to about 58 ships by 2020. We are planning for the forward
    stationing of LCSs in Singapore, will integrate forward operating JHSVs
    into the Pacific Fleet, and will support the deployment of marines to
    Darwin, Australia. More amphibious ships and destroyers will also
    become available for other missions as the theater cooperation and
    maritime security missions they fulfill today will be taken on by JHSV
    and LCS.

        71. Senator Ayotte. Admiral Ferguson, what are the potential
    operational implications of these early retirements?
        Admiral Ferguson. The potential operational impact caused by early
    ship retirements is less presence and fewer surge forces for the
    combatant commanders. Our assessment is that the current and planned
    Navy battle force is capable of sourcing combatant commanders' demands
    with manageable risk.

        72. Senator Ayotte. Admiral Ferguson, what would be the cost to
    keep these ships and not retire them?
        Admiral Ferguson. The cost to restore the CGs and LSDs proposed for
    decommissioning goes beyond actual costs to retain, modernize, and
    maintain the ships. The decision freed resources made available by
    these retirements to allow increased funding for training and
    maintenance across the force. Restoring the funding would present more
    force structure than we can afford to man, train, and equip within
    current fiscal constraints. Six of the seven CGs proposed for early
    decommissioning are not BMD-capable and would require modernization
    investments. The seventh, USS Port Royal (CG 73), is BMD-capable;
    however, repairs and modernization would be markedly more expensive due
    to the damage caused by her previous grounding. The current estimated
    cost to retain and fully modernize the following three CGs scheduled
    for decommissioning in fiscal year 2013--USS Cowpens (CG 63), USS Anzio
    (CG 68), and USS Vicksburg (CG 69)--to include BMD upgrade and MH-60R
    helicopter procurement is:

             Fiscal year 2013: $640 million
             Fiscal year 2014: $590 million
             FYDP: $2.7 billion

        The cost to retain and fully modernize the remaining cruisers will
    be dependent upon the decisions to be made in fiscal year 2013.
        The current estimated cost to retain and modernize, maintain, man,
    and equip the two LSDs proposed for decommission is:

             Fiscal year 2013: $63 million
             Fiscal year 2014: $105 million
             FYDP: $512 million

        73. Senator Ayotte. Admiral Ferguson, DOD has cited reversibility
    in connection with its new DSG. What is the Navy doing to enable it to
    reactivate at a later date the seven cruisers it plans to retire early?
        Admiral Ferguson. In the Addendum to the Report to Congress on the
    Long-Range Plan for the Construction of Naval Vessels in Fiscal Year
    2013, the seven cruisers are designated to be retained in an Out of
    Commission In Reserve (OCIR) status. Ships in OCIR status are retained
    on the Naval Vessel Register and assigned Maintenance Category B.
    Category B ships receive a standard inactivation lay-up which
    determines the amount of maintenance and repair that will be performed
    prior to and during the inactivation. The ship and its equipment will
    be preserved in an as-is condition with the application of
    dehumidification and cathodic protection to minimize long-term
    degradation and maintain the ship's condition at decommissioning. All
    C-3/C-4 Casualty Report deficiencies will be corrected before
    decommissioning unless waived by the responsible Ship Resource/Platform
    Sponsor.

                             marine corps readiness
        74. Senator Ayotte. General Dunford, in your written statement
    about the readiness of non-deployed Marine Corps combat units, you
    stated that the primary concern with the out-of-balance readiness of
    our operating forces is the increased risk in the timely response to
    unexpected crises or large-scale contingencies, since the non-deployed
    forces likely would be the responders. This country relies on the
    Marine Corps as our 9-1-1 emergency responders. I am concerned that a
    significant majority of our non-deployed Marine Corps forces are in a
    degraded state of readiness and will remain so through fiscal year
    2017, according to your testimony. How do you propose we reduce the
    risks associated with a degraded state of readiness?
        General Dunford. The Marine Corps is resetting ``in-stride''
    without an operational pause, while fighting OEF and transitioning to
    the new DSG. The new DSG provides a framework by which the Marine Corps
    will balance the demands of the future security environment with the
    realities of current fiscal constraints. The Marine Corps has a
    strategic trajectory to reconstitute and reset to a ready force by
    fiscal year 2017. Reconstitution will restore and upgrade the Corps'
    combat capability and ensure its units are ready for operations across
    the range of military operations. Reshaping the Active-Duty Force will
    entail some risk relative to present and future capacity requirements;
    but it's manageable with the retention of the Reserve component's
    operational capability. Our current strategic reset estimate is $3.2
    billion over a 2- to 3-year period following the return of our
    equipment from Afghanistan and it is critical that the Marine Corps
    reset the force following a decade of continuous combat operations. The
    Marine Corps' 2013 budget request maintains the high levels of
    readiness the Nation has come to expect of its marines by balancing
    capacity and capability.

        75. Senator Ayotte. General Dunford, would additional funding
    improve the readiness of nondeployed marine units? If so, in what
    accounts?
        General Dunford. The new DSG provides a framework by which the
    Marine Corps will balance the demands of the future security
    environment with the realities of the current fiscal constraints.
    Though the choices of the last year have been difficult, we are
    confident that we have carefully managed risk by balancing capacity and
    capability. To that end, the Marine Corps' 2013 budget request ensures
    that we maintain the high levels of readiness the Nation has come to
    expect of its deployed Marine forces. Continued funding from OCO
    appropriations will ultimately help us reset the force and improve home
    station readiness.

        76. Senator Ayotte. General Dunford, I have heard that the Marine
    Corps originally set an end strength goal of 186,000 marines, but due
    to the reduction in defense accounts, had to drop to 182,000 marines.
    Is this true?
        General Dunford. To ensure the Marine Corps is best organized for a
    challenging future security environment, we conducted a comprehensive
    and detailed force structure review aimed at identifying a balanced
    force that is postured for the future. Using the lessons learned from
    10 years of constant combat operations, the review, which released its
    results in the summer of 2011, arrived at end strength of 186,800
    marines in a post-Afghanistan security environment. The Marine Corps
    affirms the results of this initial effort, but has readjusted its
    parameters based on the fiscal realities of spending cuts and is moving
    to a final end strength of 182,100. While taking additional risk in
    capacity, this force provides affordability while maintaining a ready
    and capable Marine Corps fully capable of executing all assigned
    missions in the new DSG. It is optimized for forward-presence,
    engagement, and rapid crisis response and balances capacity and
    capabilities while maintaining the high levels of readiness for which
    the Nation relies on the Marine Corps.

        77. Senator Ayotte. General Dunford, would a higher end strength
    for the Marine Corps beyond that proposed in the budget request reduce
    risk and improve readiness of our forces over the long run?
        General Dunford. The Marine Corps' budget request achieves a
    necessary balance across the five readiness pillars of high quality
    people, unit readiness, and the capacity to meet the requirements of
    combatant commanders, infrastructure sustainment, and equipment
    modernization. These pillars support institutional readiness, sustain
    operational requirements, and prepare Marine Corps Forces for crisis
    and contingency response. The Marine Corps' 2013 budget request
    maintains the high levels of readiness the Nation has come to expect of
    its marines by balancing capacity and capability.

                           attack submarine shortage
        78. Senator Ayotte. Admiral Ferguson, during the Navy posture
    hearing, the CNO confirmed for me that the Navy was only able to
    support 61 percent of combatant commanders' requirements for attack
    submarines in fiscal year 2011. The CNO confirmed that the Navy has a
    requirement for 48 attack submarines. He also confirmed that, in 2030,
    based on low submarine build rates in the 1990s and normal life cycle
    retirements of the Los Angeles-class submarines over the coming 15 to
    20 years, the Navy projects that it will only have 39 attack
    submarines--9 submarines short of what our Nation needs. What impact
    will this attack submarine shortfall have on the forward presence of
    attack submarines and undersea strike volume?
        Admiral Ferguson. The Navy continues to meet 100 percent of the
    adjudicated requirements tasked through annual Joint Staff-led GFM
    process which balances competing combatant commanders' demand with the
    available resources and priority requirements. While unable to meet all
    combatant commanders' submarine demand, the Navy sources all
    adjudicated requirements for SSN presence covering critical
    intelligence and warfighting requests from the combatant commands.
        The Long-Range Plan for Construction of Naval Vessels for Fiscal
    Year 2013 results in an SSN force structure below the minimum 48 SSN
    requirement from 2022 until 2034--with a low point of 43 SSNs in 2028.
    During this period, SSN forward presence and undersea strike volume
    will be reduced.

        79. Senator Ayotte. Admiral Ferguson, Secretary Mabus has said that
    the decision to delay the procurement of a Virginia-class submarine
    from 2014 to 2018 was made to help free up budget resources in the
    FYDP. Earlier this year, Vice Admiral Blake testified that if the Navy
    were provided additional resources, its top priorities would be to
    restore the guided missile destroyer and the Virginia-class submarine
    that we had to give up in 2014. How has the Virginia-class submarine
    performed?
        Admiral Ferguson. To date, delivered ships are exceeding
    expectations and performance on deployment has been extremely
    successful. USS Virginia (SSN 774), USS Texas (SSN 775), and USS Hawaii
    (SSN 776) all completed their first full length deployment with high
    OPTEMPO (84.6 percent for SSN 774, 85 percent for SSN 775, and 84
    percent for SSN 776). The first ship of the class, USS Virginia,
    recently completed a successful Extended Docking Selected Restricted
    Availability (EDSRA). Lessons learned will be shared with Pearl Harbor
    Naval Shipyard as they prepare to conduct the next EDSRA on USS Texas.
    Further details may be provided in a classified forum, if desired.

        80. Senator Ayotte. Admiral Ferguson, in light of the inability to
    meet combatant commanders' requirements for attack submarines, how
    helpful would it be to the Navy to not have to postpone the procurement
    of the second Virginia-class submarine?
        Admiral Ferguson. The Navy continues to meet 100 percent of the
    requirements tasked through annual GFM adjudicated process. No Service
    has sufficient force structure to source every geographic combatant
    commanders' request for forces. While unable to meet all submarine
    demand, the Navy continues to source all critical intelligence and
    warfighting requests within the sustainable FRP.
        The projected Navy battle force is fully capable of meeting the
    strategic guidance found in ``Sustaining U.S. Global Leadership:
    Priorities for 21st Century Defense.'' The current construction plan
    will build that force, while sustaining the national shipbuilding
    design and industrial base. Removing the second fiscal year 2014 SSN
    and shifting its procurement to fiscal year 2018 was purely a financial
    decision. In the current budget environment, the Navy must carefully
    prioritize its commitments in various AORs. Buying additional SSNs in
    the near-term, provided they are affordable and do not disrupt other
    priorities, would help address this growing gap between the supply of
    these multi-purpose warships and the combatant commanders' demand for
    more assets.

                            risk from sequestration
        81. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, the Secretary of Defense has described
    the defense sequestration cuts as catastrophic, inflicting severe
    damage to our national defense for generations. He compared the cuts to
    shooting ourselves in the head. What would be some specific impacts of
    defense sequestration on each of your Services?
        General Austin. To echo Secretary Panetta, the magnitude of these
    cuts would be catastrophic. The indiscriminate nature of the reductions
    would not give the Army flexibility to provide a force that is ready to
    deal with unknown contingencies. However, we are bound by the OSD and
    OMB to wait for specific budget guidance before determining and
    providing definitive impacts.
        Admiral Ferguson. A detailed review directed by OMB would be
    required to determine the specific impacts from sequestration. Under
    sequestration, automatic percentage cuts are required to be applied
    without regard to strategy, importance, or priorities, resulting in
    adverse impact to almost every operation within DOD.
        General Dunford. Sequestration will create unacceptable risk to the
    Marine Corps' mission as America's Force-in-Readiness; these cuts will
    negatively affect the Marine Corps' operations abroad, stagnate the
    reset of the forces coming out of Afghanistan, and reduce or halt
    modernization and procurement. Imposition of sequestration cuts would
    require a fundamental reassessment of what the Nation expects of the
    Marine Corps and what we are capable of providing.
        In all cases, sequestration-imposed cuts would fundamentally alter
    the manner in which we recruit, train, and fight, and would have a
    lasting impact on the Marine Corps.
        General Breedlove. Sequestration would drive additional major
    reductions to the Air Force fiscal year 2013 budget request. As Air
    Force leadership has testified, the proposed fiscal year 2013 budget is
    a balanced and complete package with no margin of error. Under
    sequestration, additional programs would need to be restructured,
    reduced, and/or terminated to implement the across-the-board
    reductions.

        82. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, what would be the most significant
    military risk?
        General Austin. Sequestration will cause a reduction in total force
    readiness, limiting our ability to surge, regenerate, and mobilize to
    confront and defeat aggression anywhere in the world. This significant
    military risk requires a new security strategy to redefine the
    appropriate balance among the objectives sought, the methods to pursue
    those objectives, and the limited resources available.
        Admiral Ferguson. The proposed methodology for execution with
    automatic percentage cuts across each major investment and construction
    program would cause significant risk to the Navy, and depending on
    available transfer authority to consolidate these cuts, would severely
    limit the ability to preserve operations and major acquisitions
    programs.
        General Dunford. Sequestration would impact our ability to procure
    equipment, modernize the force, and train our marines. Accordingly, our
    ability to maintain our forward presence may be impacted and possibly
    result in a lack of access and an inability to influence areas of the
    world that our country believes to be important.
        General Breedlove. DOD has not begun any planning for sequestration
    per OMB guidance. Once OMB issues guidance, deliberate planning will
    begin with all actions aligning to the new DSG, ``Sustaining U.S.
    Global Leadership: Priorities for 21st Century Defense.'' The Air Force
    assesses risks through a corporate process aligning each budget item
    and platform with the DSG. The Air Force's budget proposal for fiscal
    year 2013 is the culmination of an intensive, collaborative, and
    inclusive process to balance risk across all the Air Force core
    functions. This comprehensive effort resulted in an increased but
    manageable risk to the Air Force's ability to meet the revised DSG.
    Under sequestration, additional programs would need to be restructured,
    reduced, and/or terminated to implement additional across-the-board
    reductions.

        83. Senator Ayotte. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, in light of the lack of progress to
    date to address the threat of sequestration, what DPG has been issued
    to the Services for preparation of the 2014 defense budget?
        General Austin. The Services have been directed by the Secretary of
    Defense to not plan for sequestration.
        To develop the fiscal year 2014 budget, each Service received
    topline guidance in March 2012 based on the fiscal year 2014
    discretionary caps. As we develop our fiscal year 2014 budget request,
    we will ensure it supports the President's NDS and reflects the
    guidance set forth by the Secretary of Defense's DPG.
        Admiral Ferguson. No DOD guidance has been provided regarding
    sequestration and no planning has occurred. Any planning for
    sequestration would be a government-wide effort guided by OMB.
        General Dunford. The Marine Corps is developing its fiscal year
    2014 budget in order to meet its mission as prescribed in the DSG while
    guided by the fiscal realities we face today. We will build the best
    Marine Corps the Nation can afford, and we will only ask for what we
    need.
        General Breedlove. DOD has not begun any planning for sequestration
    per OMB guidance. Once OMB issues guidance to OSD, the Air Force will
    begin the deliberation process to prioritize programs to try and meet
    the new DSG, ``Sustaining U.S. Global Leadership: Priorities for 21st
    Century Defense.'' It is difficult to predict the effect that such a
    major disruption would have on funding requirements for fiscal year
    2014 and beyond.

        84. Senator Ayotte. General Austin, how much further might the Army
    have to reduce its Active component and Reserve component end
    strengths?
        General Austin. If military personnel funding is sequestered, then
    we would have to take highly disruptive steps: halt most accessions,
    stop promotions, end most permanent change-of-station (PCS) moves, and
    halt discretionary bonuses and pays. Again, we need to turn off
    sequester for both defense and non-defense.

        85. Senator Ayotte. General Austin, would the Army have to make
    increased use of involuntary separations?
        General Austin. Involuntary separation of military personnel would,
    for most individuals, result in added costs in fiscal year 2013 because
    of separation pays, lump sum leave, and PCS moves home. Involuntary
    separation is not a viable tool to meet sequester of military personnel
    funding. Also, involuntary separation is a highly complex process
    requiring the convening of Separation Boards coupled with a careful
    analysis of what skill sets are required to sustain mission readiness--
    not something that can be done quickly.

        86. Senator Ayotte. General Dunford, would the Marine Corps be able
    to support one major combat operation if defense sequestration goes
    forward?
        General Dunford. We believe sequestration would have devastating
    effects, both because of the size of the cuts and the across-the-board
    manner in which they must be applied in fiscal year 2013. While we
    would seek to protect wartime operating budgets, this would lead to
    heavy cuts in training and operations funding--particularly in the
    Marine Corps. Training would be adversely affected and units would be
    available later in the event of an unexpected contingency. There would
    also be adverse effects on other types of training.

        87. Senator Ayotte. General Dunford, would defense sequestration
    require a fundamental reassessment of what our Nation asks the Marine
    Corps to do?
        General Dunford. We know that readiness would be adversely
    affected, but we do not have the specific estimates for each category
    of readiness inputs. Again, we believe we should focus on turning off
    sequestration rather than planning a new budget.

        88. Senator Ayotte. General Breedlove, which major acquisition
    programs would be at risk if defense sequestration goes forward?
        General Breedlove. Sequestration will affect every single defense
    program and project--more than 2,500 of them across DOD. We will be
    forced to institute costly delays and cuts in buys that increase unit
    costs. We may have to cancel or renegotiate some contracts within a
    program. But I would not expect that sequestration itself would lead to
    widespread cancellations of entire programs in fiscal year 2013. Among
    other reasons, each program must be cut by the same percent, so the law
    will make cancellation impossible unless we reprogram. However, if
    sequestration cuts continue beyond fiscal year 2013, we would be forced
    to consider program cancellations.

        89. Senator Ayotte. Admiral Ferguson, the CNO testified during the
    Navy posture hearing that defense sequestration would force the Navy to
    cut 50 to 55 ships, bringing the total fleet size down to about 230 to
    235 ships. Is that your estimate as well?
        Admiral Ferguson. This is our estimate. A more detailed review
    directed by OMB would be required to determine specific details
    regarding additional impacts to the Navy.

        90. Senator Ayotte. Admiral Ferguson, what readiness risks would a
    fleet of 230 ships incur?
        Admiral Ferguson. The Navy would be unable to meet the requirements
    of the current NDS. A smaller force of 230 ships would provide less
    presence, longer response times for crises, and greater risk to current
    contingency plans.

                                tanker readiness
        91. Senator Ayotte. General Breedlove, I note that in your opening
    statement, you stated that the Air Force tanker fleet averages 47-
    years-old, and that we are not procuring aircraft at a rate that is
    fast enough to even begin to reduce the average age of our aircraft
    inventory. I have been following the procurement of the KC-46A tanker
    as replacement for our aging tanker fleet. The specter of congressional
    sequestration required under the BCA exposes the new KC-46A tanker
    replacement program to considerable risk. Can you elaborate on that
    risk?
        General Breedlove. I cannot elaborate at this point, because much
    is still unresolved. Any reductions imposed by sequestration rules
    could adversely impact the Air Force's ability to perform its missions.
    At this point, however, it is too early to determine the specific
    impacts to the KC-46 program because such cuts could require the Air
    Force to rebalance its entire portfolio of programs.

        92. Senator Ayotte. General Breedlove, if sequestration goes
    forward, will the Air Force have to break the KC-46A contract and
    renegotiate a new contract?
        General Breedlove. Any reductions imposed by sequestration rules
    could adversely impact the Air Force's ability to perform its missions.
    At this point, however, it is too early to determine the specific
    impacts to the KC-46 program because such cuts could require the Air
    Force to rebalance its entire portfolio of programs.

        93. Senator Ayotte. General Breedlove, what would be the impact of
    breaking the existing contract on our taxpayers?
        General Breedlove. At this point, it is too early to determine the
    specific impacts to the KC-46 program because such cuts could require
    the Air Force to rebalance its entire portfolio of programs.

        94. Senator Ayotte. General Breedlove, what would be the impact on
    the KC-46A fielding timeline?
        General Breedlove. At this point, it is too early to determine the
    specific impacts to the KC-46 program because such cuts could require
    the Air Force to rebalance its entire portfolio of programs.

        95. Senator Ayotte. General Breedlove, what operational risk would
    a delayed fielding of the KC-46A incur for the Air Force's air
    refueling capability?
        General Breedlove. Delayed fielding of the KC-46A extends the
    short-term risk the Air Force initially accepted by retiring KC-135E
    fleet and expanded with the retirement of an additional 20 KC-135R
    models in fiscal year 2013. Delayed fielding of the KC-46A would mean
    an increased investment in KC-135 depot to keep more KC-135s flying
    into the 2024 timeframe. For war planners, continued reliance on the
    KC-135 equates to an increased number of KC-135s airborne to meet the
    missions planned for the KC-46A. The KC-46A brings increased air
    refueling capability and an anticipated higher aircraft availability
    rate.
        A 2009 RAND report on aging aircraft indicated that: ``The
    preponderance of the evidence analyzed by RAND is consistent with an
    expectation that well before 2040 a combination of fatigue cracking,
    corrosion, and other aging mechanisms will drive the need for
    inspections, repairs, and materiel replacement to unsustainable levels
    in terms of both aircraft downtime and costs.'' Because of its multi-
    role mission, our global force posture simply cannot operate without a
    reliable tanker force.
        Additionally, from a fiscal stewardship perspective, DOD was able
    to very effectively leverage competition, resulting in an exceptional
    contract with our industry partner. Delaying the current engineering
    and manufacturing development effort could require us to renegotiate
    the contract and the government would forgo the pricing achieved under
    competitive pressure. The resulting renegotiation would occur in a
    sole-source environment which would likely result in a higher overall
    cost of the program. There is some flexibility built into the follow-on
    production effort which allows for variable quantities of aircraft for
    each lot. As long as the quantity adjustments are within the bounds of
    the pre-established variable quantities, the procurement of aircraft
    could be delayed without requiring a costly price renegotiation;
    however, it is important to note that the individual unit cost of each
    aircraft will be higher at these lower quantities. Aircraft reductions
    beyond what is captured in the pre-established variable quantities
    would result in a price renegotiation where we could potentially lose
    billions of dollars in savings that the competitive source selection
    provided. Simply stated, there could be an exceptionally burdensome
    cost impact, on DOD and the Nation, if the decision were to delay
    fielding of the KC-46A.

        96. Senator Ayotte. General Breedlove, even with this
    acknowledgement of risk in weapons systems acquisition, the Air Force
    continues to take a more immediate risk by underfunding the sustainment
    of these aging weapons systems including requesting funds for only 79
    percent of the requirement in the fiscal year 2013 budget. Knowing the
    strain of over 20 years of contingency support on these airframes, why
    is the Air Force taking risk in WSS?
        General Breedlove. As a whole, the Air Force WSS is funded at 79
    percent, including OCO funds. The total Air Force KC-135 and KC-10
    tanker fleets are funded at 94 percent, including OCO. The tanker WSS
    for aircraft and engine depot level maintenance is funded at 95 percent
    and 100 percent, respectively. In 2008, the Air Force instituted the
    Centralized Asset Management (CAM) process to manage WSS requirements
    and funding. The CAM process provides a degree of flexibility, within
    congressional limitations, to manage any remaining risk during the
    execution year. The Air Force is confident that, with the proposed WSS
    budget, we can adequately support WSS for the tanker fleet without
    grounding aircraft due to funding shortfalls.

                              delay of the ssbn(x)
        97. Senator Ayotte. Admiral Ferguson, from a national security
    perspective, how important is the sea leg of the nuclear triad to our
    Nation's nuclear deterrent?
        Admiral Ferguson. Each leg of the triad possesses inherent
    advantages. Nuclear-powered ballistic missile submarines (SSBN)
    represent the most survivable leg of the U.S. nuclear triad. Today,
    there appears to be no viable near- or mid-term threats to the
    survivability of U.S. SSBNs. The April 2010 Nuclear Posture Review
    concluded that ensuring a survivable U.S. response force requires
    continuous at-sea deployments for SSBNs in both the Atlantic and
    Pacific oceans, as well as the ability to surge additional submarines
    in crisis was of vital importance to the Nation.

        98. Senator Ayotte. Admiral Ferguson, the current budget proposes
    to delay the replacement ballistic missile submarine by 2 years. This
    follows prior-year statements from the Navy that the procurement
    schedule for 12 follow-on ballistic missile submarines is inextricably
    linked to legacy, i.e. Ohio-class, ballistic missile submarine
    retirements and there is no leeway in this plan to allow a start or any
    delay in the procurement plan. By delaying the replacement ballistic
    missile submarine by 2 years, what additional risk is the Navy assuming
    in its ability to maintain the same at-sea availability rates required
    under current nuclear force posture?
        Admiral Ferguson. As a result of the 2-year delay in the Ohio
    Replacement Program, there will be less than 12 SSBNs from 2029 to 2042
    during the transition from the current Ohio class to the Ohio
    Replacement SSBNs. During that timeframe, a force of 10 SSBNs will
    support current at-sea presence requirements but provides little margin
    to compensate for unforeseen issues that may cause reduced SSBN
    availability and poses some challenges to meeting U.S. Strategic
    Command strategic deterrent requirements. There are no major SSBN
    overhauls planned during this timeframe, and the Navy will be closely
    managing risk during this transition period. As the Ohio Replacement
    SSBNs begin their first docking availability in 2049, 12 SSBNs will be
    required to offset ships in planned maintenance.

        99. Senator Ayotte. Admiral Ferguson, what is the strategic
    rationale for this delay?
        Admiral Ferguson. The decision to delay the procurement of the Ohio
    Replacement SSBN by 2 years reflects the need to balance total
    battleforce procurement requirements in a period of increased fiscal
    austerity. Based on current at-sea presence requirements, the Navy will
    be able to meet its operational SSBN requirements despite the delay
    with some increased operational risk. Additionally, design work will
    continue, albeit at a slower pace, which will support start of
    construction for the first Ohio Replacement SSBN in 2021.

        100. Senator Ayotte. Admiral Ferguson, is this purely budget
    driven?
        Admiral Ferguson. The decision to delay the procurement of the Ohio
    Replacement SSBN by 2 years reflects the need to balance total
    battleforce procurement requirements in a period of increased fiscal
    austerity. Based on current at-sea presence requirements, the Navy will
    be able to meet its operational SSBN requirements despite the delay
    with some increased operational risk. Additionally, design work will
    continue, albeit at a slower pace, which will support start of
    construction for the first Ohio Replacement SSBN in 2021.

                           f-35 joint strike fighter
        101. Senator Ayotte. Admiral Ferguson, General Dunford, and General
    Breedlove, what is the difference in terms of capability between legacy
    aircraft and a fifth generation fighter like the F-35?
        Admiral Ferguson. The primary difference between the F-35 and
    fourth generation fighter aircraft is the ability to effectively engage
    a wide range of missions, targets, and threats in contested air space
    with far fewer support assets. JSF's core missions include Strategic
    and Tactical Destruction of Enemy Air Defenses, Suppression of Enemy
    Air Defenses, Strategic Attack, Offensive Counter Air, Defensive
    Counter Air, Close Air Support, Interdiction, and Armed Reconnaissance.
        The fundamental capability and attribute differences that
    distinguish a fifth generation fighter include:

        1.  Very low observable stealth with a full combat load of weapons
    and fuel;
        2.  Fully fused multi-spectral and multi-ship sensor integration
    that supports air-to-air and air-to-ground target detection, track, and
    identification, as well as overall situational awareness;
        3.  Multi-function Advanced Data Link is an advanced high band-
    width data-link, which is extremely jam-resistant and essential to
    support multi-aircraft operations and multi-spectral fusion in
    contested jamming environments;
        4.  Advanced electronic protection capability that effectively
    counters the most stressing jammer threats, which was demonstrated in
    Exercise Northern Edge in 2011;
        5.  Integrated electronic attack/offensive jamming capability
    combined with very low observable stealth provides a synergistic effect
    that severely complicates the air-to-air and surface-to-air threats
    ability to engage F-35s; and
        6.  Advanced sustainment and maintenance capabilities that reduce
    logistics footprint, support personnel and equipment requirements,
    while improving overall aircraft availability.

        General Dunford. Fifth generation aircraft like the F-35 provide a
    combination of stealth, sensor power, networking, and survivability
    that our legacy aircraft do not have nor can attain cost effectively
    with continual upgrades. Stealth provides access and offensive
    capability in a denied environment that our legacy aircraft cannot
    achieve. In addition, due to this inherent access, fifth generation
    aircraft will require fewer support aircraft to accomplish their
    missions in these environments. Modern computers driving the most
    capable networked sensors on a fighter aircraft provide increased
    awareness throughout the spectrum of warfare. The addition of a robust
    defensive suite combined with the previously mentioned stealth ensures
    enhanced aircraft survivability in all situations over legacy aircraft.
    Lastly, the combination of all of the above attributes on a Short
    Takeoff/Vertical Landing (STOVL) aircraft provide the MAGTF commander
    superior flexibility and capability when compared to any current 4th
    generation Marine Corps aircraft.
        General Breedlove. Fifth generation capability is a mix of
    maneuverability, fused advanced sensors, multi-role capability, and low
    observability. These capabilities afford our Nation's leaders the
    ability to provide air dominance and deliver precision engagement in
    A2/AD environments where fourth generation aircraft lack survivability.
    The fifth generation capability is required to address currently-
    fielded and rapidly-evolving threats which are specifically targeted to
    neutralize the superiority delivered by our Air Force.

        102. Senator Ayotte. Admiral Ferguson, General Dunford, and General
    Breedlove, what additional capabilities does the F-35 provide that the
    legacy aircraft the F-35 is replacing do not?
        Admiral Ferguson. The F-35 is an effective weapon system platform
    for improving interoperability and jointness between U.S. Forces and
    our allies because of design and mission systems commonality. In
    addition, by sharing these advanced technology capabilities of the F-35
    with our allies, combatant commanders will be able to effectively task
    more of our allies to carry a greater share of the operational tasking
    and risks in coalition endeavors. Commonality between air vehicles,
    mission systems, and interoperability systems helps improve the ongoing
    drive for improved jointness and commonality across DOD, especially
    with supporting systems like future weapons, communication systems,
    support, and training systems.
        General Dunford. First and foremost, the stealth characteristics of
    the F-35 provide offensive capability, access, and superior
    survivability in all environments. Modern threat upgrades have made it
    increasingly difficult to ensure our legacy F-18s, AV-8Bs, and EA-6Bs
    can operate in all environments as required without large numbers of
    supporting assets. Due to the powerful suite of networked sensors, the
    F-35 will provide increased awareness to the Joint Force across the
    full-spectrum of conflict. Our legacy aircraft, while capable, cannot
    provide the same amount and quality of data to the Joint Force. The F-
    35 also provides tremendous growth potential for decades to come;
    whereas our legacy aircraft are rapidly reaching the limits of their
    spiral development capability. Finally, the F-35B provides the MAGTF
    commander with all of the above capabilities on a STOVL aircraft.
    Legacy aircraft cannot provide this combination of lethality and
    survivability with the flexibility of STOVL.
        General Breedlove. The F-35 provides:
             Low observable airframe with advanced countermeasures
            to ensure survivability;
             Multi-role avionics with advanced electronic attack/
            electronic protection attributes;
             Advanced multi-spectral detection and situational
            awareness;
             Ability to first detect, locate, identify, and kill
            next generation air-to-air and surface-to-air threats;
             Real-time threat awareness via advanced data link
            networks;
             Autonomous combat identification to reduce reaction
            times; and
             Significantly smaller logistics foot-print than legacy
            aircraft.

        103. Senator Ayotte. Admiral Ferguson, General Dunford, and General
    Breedlove, why does our Nation need a fifth generation fighter
    aircraft?
        Admiral Ferguson. A fifth generation fighter aircraft brings the
    ability to effectively engage a wide range of missions, targets, and
    threats in contested air space with far fewer support assets. It
    provides day-one strike capability enabling the tactical agility and
    strategic flexibility required to counter a broad spectrum of threats
    and win in operational scenarios that cannot be addressed by current
    legacy aircraft, to include operations in an A2/AD environment.
    Additionally, the aircraft's fused sensors improve upon and leverage
    many other, already existing systems and capabilities across the
    Services.
        General Dunford. Our Nation needs a fifth generation fighter in
    order to gain access; enable follow-on forces; and provide operational
    flexibility and capability in a dynamically broad spectrum of
    environments and venues against widely proliferating next generation
    air threats and integrated air defense systems.
        The F-35 is the only aircraft that can provide the required
    combination of lethality, flexibility, and survivability that meets
    this requirement in the emerging and future security environment.
        General Breedlove. Fifth generation fighters provide the Nation
    combat command-required air dominance and precision strike capabilities
    in an A2/AD environment. In addition to advanced avionics and fused
    sensors, the fifth generation aircraft are defined by stealth
    characteristics which enable our First Look, First Shot, First Kill
    capability against rapidly evolving threats. The level of stealth
    required to meet and defeat these threats in the denied airspace we may
    be required to operate in is a characteristic that simply cannot be
    added on to our existing fleet of fourth generation aircraft. Without
    fifth generation aircraft, we can't operate and survive against the
    current and forecast threats.

        104. Senator Ayotte. General Breedlove, are the Russians or the
    Chinese working on their own fifth generation fighter capabilities?
        General Breedlove. Yes, both Russia and China are developing their
    own fifth generation fighter capabilities. Prototypes of the Russian T-
    50 (PAK-FA) and the Chinese J-20, with technologies and capabilities
    similar to the United States' F-22 and F-35, are currently in flight
    test with initial operation likely by the end of this decade. Both
    aircraft are designed to provide Russia and China with advanced air-to-
    air combat lethality, plus an unprecedented long-range precision strike
    capability against land and sea targets. These aircraft introduce a
    leap forward in Russian and Chinese combat aircraft technology due to
    advanced avionics and sensors, longer range weapons, stealth design,
    and aerodynamic capability. Both countries plan to sell their
    respective aircraft on the global arms market to compete with the F-22
    and the F-35.
    PAK-FA
        The PAK-FA is a result of a tender issued by President Putin for a
    next generation fighter in 2001. In January 2010, the twin-engine heavy
    fighter, designed by Sukhoi, conducted its first flight. Three flying
    prototypes have been built to date and more than 150 flights have been
    conducted. A fourth prototype is expected later this year. When fully
    mature, the PAK-FA will combine low-observable technology, super
    maneuverability, an active electronically-scanned array radar,
    integrated avionics, and super cruise capability, and prove Russia's
    first operational stealth aircraft. According to Russian Air Force
    public statements, they hope to begin initial serial deliveries to the
    force in small numbers between 2015 and 2016, with an initial
    operational capability (full squadron) by the end of the decade.
    Additionally, Russia is working with India to develop a two-seat
    variant for Indian Air Force operation after 2020. India is
    contributing design concepts and subsidiary funding. While total
    production plans remain unclear, the Russian Air Force expects to
    acquire 250 aircraft. Russia will also likely produce a variant for
    export as well.
    J-20
        The January 2011 initial flight test of the J-20 next-generation
    fighter prototype highlights China's aggressive ambition to produce a
    fighter that incorporates stealth attributes, advanced avionics, and
    super cruise-capable engines within their air defense network to
    challenge the United States for air dominance. Launched in the late
    1990s, the program won the People's Liberation Army Air Force (PLAAF)
    endorsement in 2008. To date, two flying prototypes have been built and
    are in flight testing. When fielded, the J-20 will incorporate fifth
    generation attributes including low-observability (stealth), super
    maneuverability, super cruise, and sensor fusion. In late 2009, PLAAF
    Deputy Commander Gen He Weirong stated that the J-20 will be
    operational between 2017 and 2019. Like the PAK-FA, total production
    plans are unknown at this time, though either the J-20 itself or a
    variant could eventually be offered on the export market.

                          army combat force readiness
        105. Senator Ayotte. General Austin, I was very surprised that your
    written statement did not mention the Army's goals for dwell time.
    Providing enough time between deployments has for years been the
    foundation of the balance of training and manpower readiness for the
    Army. What is the impact on readiness when there is insufficient time
    at home between deployments?
        General Austin. The high operational demand on Army units of the
    previous 10 years significantly stressed our military personnel and
    their families. To fully reconstitute our units, soldier, and their
    families must be given the time and resources they need to reintegrate
    and reverse the effects of the sustained operational tempo. Experience
    indicates that soldiers require a proper balance of time at home
    station between deployments to fully recover, both mentally and
    physically, from the rigors of a combat deployment. The Army's goal is
    to achieve and maintain a dwell time of at least 2 days at home for
    every day deployed for the Active component soldier and 4 days at home
    for every day mobilized for the Reserve component soldier. In the
    second quarter of fiscal year 2012, we met the dwell goal of 1:2 for
    individuals. Given the expected reduced demand for forces deployed to
    OEF, assuming we reduce Army combat brigade requirements by the end of
    fiscal year 2014 to a minimal degree, and assuming there will be no
    other large-scale deployments in the foreseeable future, we can expect
    individual dwell time for the Active component to continue to improve.
    Considering these current assumptions, we anticipate we will reach an
    individual BOG-to-dwell ratio of 1:3 sometime in fiscal years 2017 to
    2018. We expect to reach a unit BOG-to-dwell ratio of 1:2 in fiscal
    year 2015.
        The withdrawal of forces from Iraq has contributed to restoring
    operational depth and strategic flexibility in our formations.
    Additionally, the ongoing drawdown of forces in Afghanistan will
    continue to increase the time at home for our soldiers. As recovery
    time at home station increases, the Army will be able to focus on
    training units to effectively perform unified land operations.

        106. Senator Ayotte. General Austin, what are the Army's current
    dwell time goals for the Active component and for the Reserve
    component?
        General Austin. The Army plans to achieve a 1:2 BOG-to-dwell ratio
    for the Active component and 1:4 BOG-to-dwell ratio for the Reserve
    component beginning in 2015.

        107. Senator Ayotte. General Austin, is this goal for units or for
    individuals?
        General Austin. The Army tracks the dwell time of both soldiers and
    units. The current plan of 1:2 for the Active component and 1:4 for the
    Reserve component applies to both individual soldiers and units.

        108. Senator Ayotte. General Austin, what military specialties and
    types of units are receiving the least time at home between
    deployments?
        General Austin. Military specialties such as aviation,
    intelligence, military police, engineers, psychological operations,
    civil affairs, and special forces are stressed and receive the least
    time at home station between deployments. For example, aviation has a
    historical BOG-to-dwell ratio average of 1:1.3. In an effort to improve
    that ratio, the Army is adding an additional Combat Aviation Brigade
    beginning in fiscal year 2013. The Army and SOCOM have developed new
    initiatives to grow and synchronize special forces capabilities to
    reduce stress on the force. The Army is projected to meet global
    requirements and achieve its BOG-to-dwell goal of 1:2 for Active
    component units and 1:4 for Reserve component units beginning in 2015.

        109. Senator Ayotte. General Austin, what are the current dwell
    times for these specialties and units?
        General Austin. These low density and high demand units (aviation,
    civil affairs, intelligence, military police, psychological operations,
    engineers, and special forces) remain just above the Secretary of
    Defense's mandated 1:1 BOG-to-dwell ratio.

        110. Senator Ayotte. General Austin, do you believe the Army should
    be reducing its end strength before achieving its dwell time goals?
        General Austin. The Army is programmed to meet peacetime and
    contingency plan requirements, supplemented with OCO dollars while
    ramping down to a force structure of 490,000. This ramp is in synch
    with a corresponding reduction of OCO demands. The Army recently met
    the goal of 1:2 for individual soldiers and will meet a unit BOG-to-
    dwell of 1:2 in fiscal year 2015. Reductions beyond 490,000 will
    challenge the Army's ability to meet timelines for current identified
    requirements and to maintain necessary dwell for units and soldiers,
    thereby imposing a significant readiness risk to the force and
    strategic risk to the Nation.

                    national guard as an operational reserve
        111. Senator Ayotte. General Austin, in your written statement you
    state that we envision a progressive readiness model which will better
    align our Active and Reserve component units to leverage their unique
    capabilities and be responsive to geographic combatant commanders'
    requirements. I am wondering how this statement relates to the standing
    of the Army National Guard as an operational reserve or a strategic
    reserve?
        General Austin. The Army National Guard plays a pivotal role as an
    operational force conducting missions around the world in support of
    America's effort to deter and defeat our enemies. Through the
    progressive readiness model, Army units build readiness to accomplish
    directed missions and support any operational plan requirements. This
    model allows sustainable and predictable programming to ensure
    geographic combatant commanders have the forces and capabilities they
    require to accomplish their mission.

        112. Senator Ayotte. General Austin, in the New Defense Strategy,
    does the Army consider the National Guard a part of its operational
    reserve?
        General Austin. The Army consists of the Active component and the
    Reserve component forces (Army National Guard and U.S. Army Reserve)
    providing operational capabilities and strategic depth to meet U.S.
    defense requirements in support of combatant commanders' missions. The
    Reserve component complements and supplements the Active component
    ensuring the Total Force remains capable of providing trained and ready
    forces to rapidly meet sustained operational requirements, surge to
    unforeseen contingency operations, and support to Federal, State, and
    local governments for Homeland defense and defense support to civil
    authorities missions, as needed.

        113. Senator Ayotte. General Austin, if the National Guard is to be
    ready to respond to combatant commanders' requirements, then they
    should be resourced, trained, and ready, like any other operational
    unit. Is that the Army's plan?
        General Austin. The Army's force generation model ensures
    progressive readiness for the Total Force, to include the National
    Guard. Through the progressive readiness model, units move through
    resourcing gates over time, meeting manning, equipping, and training
    goals before the unit is considered available for deployment. Army
    National Guard units being prepared for operational deployments will be
    resourced to meet the same readiness requirements as an Active
    component unit, consistent with the 5-year progressive readiness model
    established for the Reserve component. We have resourced their
    equipment, ensured adequate training resources, opportunities for
    leader development in Army schools, and improved health and dental
    readiness to improve the readiness of Guard units.

        114. Senator Ayotte. General Austin, will those resources come from
    the base budget in future years or from supplementals?
        General Austin. Forces scheduled to be available for combatant
    commanders and other missions should be resourced in our base program
    at a level that will allow them to attain the levels of readiness
    required to meet the mission.
        However, if additional forces are required to meet contingency
    operations that would present demands for forces that exceed the
    production of the force generation model, we would need help to ready
    those additional forces.
                                     ______

                 Questions Submitted by Senator James M. Inhofe
                               alternative energy
        115. Senator Inhofe. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, I believe DOD can and should improve
    efficiencies in energy use and expand in the use of alternative energy
    sources; however, it should not come at the cost of manning, training,
    or equipping the force. Do you agree?
        General Austin. The Army's investments in energy efficiency and
    renewable energy enhance the Army's ability to man, train, and equip
    its force. These investments enhance mission capability and reduce
    reliance on outside sources of energy. Reduced reliance means reduced
    risk to missions due to supply disruption, price volatility, and
    increased mobility achieved by not being tethered to supply lines and
    foreign suppliers. Investment in energy capabilities, including
    renewable energy and energy efficient technologies, will help ensure
    the Army can meet mission requirements today and into the future.
        Admiral Ferguson. Yes. The Navy will not let our force become
    hollow, and will balance current requirements to man, train, and equip
    our forces against requirements to make the future fleet more combat
    capable in this challenging fiscal environment. The majority of funding
    in the Navy's energy program, both operational and facilities, focuses
    on improvements in efficiency to increase our energy security and
    reduce our energy demands--reducing our vulnerabilities, expanding the
    tactical choices for operational commanders, and reducing the lifecycle
    cost of operations. In fiscal year 2012, less than 1 percent of the
    Navy's overall fuel bill will be spent on biofuel to further the Navy's
    ongoing test and certification efforts. This small investment in
    testing and certifying drop-in alternative fuels is designed to achieve
    a less petroleum-dependent future, but the Navy has no plans to
    purchase alternative fuel for operational use until it is cost
    competitive with conventional fossil fuels.
        General Dunford. Yes. The Marine Corps is investing in energy
    efficient and renewable energy capabilities for one purpose: to
    increase combat effectiveness of the force. The Commandant has called
    out expeditionary energy as one of the six pillars of modernization for
    the force-prudent investments we must make to ensure we are prepared
    for future missions. For this reason, we consider energy performance as
    an independent variable in our development of combat capability. It
    must hold its own in the tradeoffs that we make when we design and
    procure our warfighting systems and demonstrate value to the force.
        We measure our return on investment from our operational energy
    investments in terms of increased military effect--forces that go
    farther, stay longer, and operate as less risk. For example, we
    estimate that our President's fiscal year 2013 budget energy investment
    will enable the future MEB to operate 1 day longer than it can today
    over a 15-day assault; for a 365-day mission, the MEB will have 1 more
    month of operations, and a weight reduction of 7 million pounds fuel,
    which translates to approximately 208 fuel trucks off the road.
        General Breedlove. Energy is a necessity for all Air Force missions
    and operations, and the Air Force recognizes energy as an integral part
    of its systems and not simply as a commodity. Every action taken by the
    Air Force to improve its energy security and efficiency is executed in
    support of the Air Force mission. By reducing the Air Force's demand
    for energy and diversifying its potential sources of energy, the Air
    Force is continuing to improve its resiliency to ensure it has the
    ability to recover from energy interruptions and sustain the mission,
    and have energy where and when the Air Force needs it. The Air Force
    has also shown that investments in energy efficiency can result in
    significant cost avoidance. For instance, in fiscal year 2011 the Air
    Force avoided over $257 million in facility energy cost due to previous
    years' investments in efficiency and demand reduction.

        116. Senator Inhofe. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, with the continued decline of the
    defense budget over the past 3 years--forcing cuts to personnel, ships,
    and aircraft--what will be the impact of tripling or quadrupling your
    fuel costs?
        General Austin. This hypothetical situation would have significant
    impacts upon the ability of the Army to train and sustain the current
    force and to ensure that modernization keeps up with emerging threats
    on the battlefield. To provide some context, in 2010 the Army received
    $243 billion in total obligation authority, in the form of base budget
    and OCO funding. The Army spent approximately $2.44 billion in base
    budget and OCO on fuel.
        The Army's 2012 budget for both base and OCO funds is $203 billion,
    with a projected fuel expenditure of nearly $3 billion. In this
    hypothetical scenario where Army fuel requirements increase by $3
    billion to $6 billion, we would be forced to examine current OPTEMPO,
    readiness, and modernization accounts, and curtail, defer, or delay
    lower priority missions, training, maintenance, or modernization
    efforts to pay for the increased fuel costs. Reducing OPTEMPO and
    training would have the added benefit of reducing fuel expenditures;
    nonetheless, such a scenario would have serious impacts on the Army's
    ability to conduct current operations, our immediate readiness, and the
    pace at which we modernize existing capabilities.
        Admiral Ferguson. Any increase in fuel prices during execution year
    must be resolved within the Navy's O&M account. Reconciling this
    deficit comes at a cost to flying hours, steaming hours, sustainment of
    our facilities, and/or our procurement program. As of May 10, 2012,
    increased fuel price volatility of conventional fossil fuels resulted
    in an additional $1 billion bill to the Navy for this year, on top of
    the $4 billion budgeted for liquid fuel. If the Navy were to reconcile
    this bill exclusively by cutting flying hours and steaming hours, it
    would represent a 20 percent decrease in those hours. For fiscal year
    2012, the Navy will likely resolve the deficit by reducing sustainment
    of our facilities, delaying new programs, and cutting flying and
    steaming hours.
        General Dunford. The Marine Corps would be negatively impacted by
    rising fuel cost as a direct correlation exists between increased fuel
    cost and our operational budget. The Marine Corps relies on fuel
    resources to support the training and deployment of our marines, and
    each successive increase in fuel cost requires the Marine Corps to
    adjust our budget estimates and identify offsets from other programs.
    Thus, any significant increase in fuel cost, without a comparable
    increase in our total budget, degrades the Marine Corps' readiness and
    limits our ability to respond to crisis.
        General Breedlove. As one of the largest consumers of fuel in DOD,
    the Air Force is committed to reducing energy consumption in our
    aircraft and facilities through various efficiency initiatives. If fuel
    costs were to drastically increase, the Air Force, along with DOD,
    would need to make tough decisions to properly balance Air Force
    modernization and readiness priorities to fund fuel increases. In order
    to mitigate risk and control costs, the Air Force will continue to
    identify and implement fuel efficiency initiatives to reduce
    consumption in both aircraft and facilities.

        117. Senator Inhofe. Admiral Ferguson and General Breedlove, have
    your energy costs increased due to the required and directed use of
    green energy?
        Admiral Ferguson. The Navy's energy costs have not increased due to
    the employment of green energy. Only 0.2 percent ($12 million) of the
    Navy's overall fuel bill will be spent on biofuel in fiscal year 2012
    to further the Navy's ongoing test and certification efforts. In fiscal
    year 2013, over 85 percent of Navy's operational energy program is
    focused on efficiency initiatives while the remaining 15 percent is
    directed to alternative energy development. These investments in
    alternative energy technology are focused on reducing costs over time
    for the fleet. Some initiatives have payback periods as short as 1
    year, while others will take longer but clearly reduce costs over the
    life of the ship. The Navy has no plans to purchase alternative fuel
    for operational use until such alternatives are cost competitive with
    conventional fossil fuels.
        General Breedlove. Air Force energy costs have not increased due to
    the use of renewable or alternative energy sources. Although the DLA is
    responsible for the purchases of fuels for DOD, it is Air Force policy
    that the purchase of energy be cost competitive with traditional
    sources and any energy projects must be supported by a BCA. Energy
    usage on our installations has actually decreased 32 percent since
    2003. The increased cost is purely due to per unit energy price
    increases.

        118. Senator Inhofe. Admiral Ferguson, at what cost to the
    readiness will you continue to advocate for defense funds on green
    energy?
        Admiral Ferguson. The Navy's small investment in testing and
    certifying drop-in alternative fuels has little impact on overall fuel
    costs and no impact on readiness. For fiscal year 2012, only 0.2
    percent of the Navy's overall fuel bill will be spent on biofuel. The
    bigger challenge to the readiness of our naval forces is due to
    increased fuel price volatility of conventional fossil fuels. In fiscal
    year 2012 alone, this volatility resulted in an additional $1 billion
    bill to the Navy. This deficit must be resolved within our O&M account,
    which comes at a cost to flying hours, steaming hours, sustainment of
    our facilities, new programs, and procurements.
        The Navy is pursuing alternative fuels to achieve a less petroleum-
    dependent future, but has no plans to purchase alternative fuel for
    operational use until it is cost competitive with conventional fossil
    fuels. In fiscal year 2013, only 15 percent of the Navy's operational
    energy program is directed to alternative energy development which
    includes not only alternative fuels, but also improved energy storage,
    fuel cells, and portable energy alternatives for expeditionary forces.
    Given the increasingly volatile and challenging market and supply
    constraints associated with conventional fossil fuel-based petroleum, a
    small investment in the alternative fuels market is prudent to increase
    our national energy security and reduce our energy demands. Advanced
    drop-in domestically-produced alternative fuels that use renewable
    feedstocks provide a secure, assured alternative that reduces the risks
    associated with petroleum dependence.

                                      f-35
        119. Senator Inhofe. Admiral Ferguson, General Dunford, and General
    Breedlove, does prolonging production of the F-35 increase overall cost
    of the program?
        Admiral Ferguson. Prolonging production of the F-35 results in an
    increase to the cost of the program due to a longer production run and
    more years of inflation impacting the production program. However, the
    Navy believes this decision provides a balanced approach between
    correcting concurrency issues and incurring a higher unit flyaway cost.
    This approach also allows for allocation of funds to other priorities
    in a resource-constrained fiscal environment.
        General Dunford. Given that the number of JSFs required has
    remained unchanged, prolonging the production of the F-35 by decreasing
    the production rate--and thus extending the reliance on our legacy
    aircraft--does increase the overall cost of the JSF program while
    concurrently precluding the anticipated cost reduction of sustaining
    our legacy aircraft inventory.
        By reducing the JSF procurement rate we do not realize the cost
    efficiencies reaped from procuring increasing quantities and the
    stabilization of our supplier base. In order to meet our operational
    commitments, and because the JSF is not available, we must continue to
    invest in replacing aging and obsolete parts, and reinstitute programs
    to retain combat capability and relevancy in our legacy fleets much
    longer than anticipated.
        General Breedlove. Yes, prolonging production of the F-35 results
    in a small overall increase to the cost of the program due to a longer
    production run and more years of inflation impacting the production
    program. However, over the FYDP, DOD believes this provides a balanced
    approach between concurrency bills and respect for unit recurring
    flyaway costs. In addition, this allows for allocation of scarce money
    to other department priorities in a resource constrained fiscal
    environment.

        120. Senator Inhofe. Admiral Ferguson, General Dunford, and General
    Breedlove, have concurrency issues been mitigated by producing only 30
    aircraft per year for 5 years?
        Admiral Ferguson. Yes, quantities of roughly 30 aircraft per year
    in the fiscal year 2013 budget request have reduced the total number of
    aircraft that will require retrofit modifications due to concurrency.
    This reduction in quantity helps mitigate that expected cost. However,
    further reductions in production quantities could drive cost increases
    arising from production assembly and supplier disruptions that would
    offset any benefits associated with lower concurrency costs.
        General Dunford. Concurrency issues are a result of the normal
    discoveries that occur during the development of an aircraft. As
    development progresses and the confirmation and stabilization of the
    design mature, the discoveries will diminish. The decision to reduce to
    30 aircraft per year over the next few years was initiated to reduce
    the number of aircraft requiring modification as a result of the high
    number of discoveries during these past few early years of flight test.
    From here forward we expect the discoveries to decrease, maturity in
    the design to improve, and the confidence to increase procurement
    rates.
        General Breedlove. Yes, the President's budget request for fiscal
    year 2013 quantities of roughly 30 per year have reduced the total
    number of aircraft that will require retrofit modifications due to
    concurrency, and as a result, this reduction has yielded some
    concurrency cost mitigation. However, further reductions in production
    quantities could drive cost increases arising from production assembly
    and supplier disruptions that would offset any benefits associated with
    lower concurrency costs.

        121. Senator Inhofe. Admiral Ferguson, General Dunford, and General
    Breedlove, what does the BCA show when comparing the cost of slowing
    down and delaying production versus accelerating production and
    modifying earlier lots of F-35s?
        Admiral Ferguson. In the FYDP we are satisfied the recommended
    production rate is the best use of DOD's funding. DOD deferred F-35
    aircraft outside the FYDP, in part, to provide a balanced approach
    between concurrency bills and unit recurring flyaway costs. The
    concurrency costs for the low-rate initial production Lot 7 aircraft in
    fiscal year 2013 range from $7 million per aircraft, if only the must-
    fix changes are incorporated, and up to $15 million per aircraft, if
    all changes are incorporated. While the deferment of aircraft did
    result in a unit cost increase of approximately $10 million per
    aircraft in fiscal year 2013, we believe the realignment of the pace of
    production balances the need for a stable industrial base with the
    realities of increasing concurrency modification costs and a resource-
    constrained fiscal environment.
        General Dunford. The Services relied on OSD for Acquisition,
    Technology, and Logisitics (AT&L) to conduct an encompassing BCA that
    addressed all three Services' requirements while incorporating all the
    acquisition and sustainment variables across DOD, delineating the
    optimum balance between production rates and concurrency modifications.
    As such, this question would be better answered by OSD(AT&L).
        General Breedlove. The Air Force has not performed a full BCA
    relating to this specific question. However, DOD held a comprehensive
    program review and developed a balanced approach between decreasing
    modification costs and increasing unit costs associated with decreasing
    production rates. At this time, DOD believes that they have achieved
    the best balance between the need for stabilizing production rates with
    the realities of increasing concurrency modification costs. DOD is
    continuing to monitor the program and will rebalance, as necessary.

        122. Senator Inhofe. Admiral Ferguson, recent delays in the F-35
    program have required the Navy to procure an additional 41 F/A-18E/F
    aircraft and to extend the life of 150 F/A-18A, B, C, and D aircraft
    from 8,000 to 10,000 hours. Will the proposed fiscal year 2013 delay
    force the Navy to institute more service life extensions or procure
    more F/A-18s?
        Admiral Ferguson. The JSF shortfall is predicted to peak at 56
    aircraft in 2025. The Navy will continue to manage the JSF inventory
    through the implementation of management and supply initiatives,
    including the accelerated transition of Legacy Hornet squadrons into
    Super Hornets and the service life extension of 150 Legacy Hornets.
        Change in JSF shortfall projection is mainly attributed to a
    substantial decrease in Hornet 5-year utilization rates and a reduction
    in Marine Corps tactical aircraft force structure to 20 squadrons
    rather than 24 squadrons.
        The Navy does not plan presently to increase the F/A-18E/F program
    of record of 565 aircraft or to conduct service life extension on more
    than 150 aircraft.

                      c-130 avionics modernization program
        123. Senator Inhofe. General Breedlove, an analysis of alternatives
    (AOA) was accomplished and evaluated by the Joint Requirements
    Oversight Council (JROC). Was the cost of the Avionics Modernization
    Program (AMP) considerably less than the three alternatives evaluated
    by the JROC?
        General Breedlove. A formal AOA was not conducted on the C-130 AMP.
    The OSD made an exception for this program since an Institute for
    Defense Analyses (IDA) paper had addressed many of the issues treated
    in such an analysis. In April 2000, the Under Secretary of Defense for
    AT&L directed the Air Force to provide an updated version of that study
    in lieu of a formal AOA report. Subsequently, IDA conducted new
    analyses and updated its evaluation of C-130 life-cycle costs over a
    30-year period, including acquisition, upgrades, and structural
    replacements to extend life, operating costs, and residual value. The
    IDA analyses also discussed C-130 lifetime and mission-capable rates
    and compared the AMP with two alternative program options.
        The three alternatives considered in the IDA study were C-130 AMP,
    procuring additional C 130J aircraft, and a baseline option that
    represented the minimal C-130 support required through 2030. The IDA
    study concluded that the AMP modified aircraft would have lower life-
    cycle costs than the C-130J alternative. Compared to the baseline
    option, AMP had a much higher acquisition cost. However, AMP's lower
    operations and sustainment costs reduced its life-cycle costs compared
    to the baseline option.

        124. Senator Inhofe. General Breedlove, how much will AMP-lite save
    after factoring in termination costs, new contact costs, delays in
    modernization, the requirement to maintain the navigator, and other
    life-cycle costs?
        General Breedlove. Per the fiscal year 2013 President's budget,
    fiscal years 2013 to 2017 investment cost savings from terminating C-
    130 AMP and initiating the Optimize Legacy C-130 Communication,
    Navigation, Surveillance/Air Traffic Management (CNS/ATM) program is
    $2.3 billion.
        The termination liability for C-130 AMP is $5.1 million, and has
    been factored into the cost savings referenced above. Additional
    program termination costs have not yet been determined. The C-130 AMP
    program office will negotiate with Boeing to determine the final C-130
    AMP termination costs.
        The C-130 CNS/ATM program is currently going through the Air Force
    Requirements Oversight Council process. We will adjust the C-130 CNS/
    ATM program cost once final requirements are determined.

        125. Senator Inhofe. General Breedlove, what upgrades previously
    included in the AMP will not be done with AMP-lite?
        General Breedlove. The Air Force plans to modernize the legacy C-
    130H combat delivery fleet in the most economically efficient way
    possible. Therefore, the C-130 CNS/ATM program will include
    approximately 40 percent fewer requirements than the C-130 AMP, such as
    retaining the navigator (which drives less avionics integration).
    Additionally, fleet commonality is no longer a goal and thus
    significantly reduces electrical and wiring modifications.
        The Air Force is continuing to refine the C-130 CNS/ATM program
    requirements through the Air Force Requirements Oversight Council
    process. The goal is for full and open defense industry competition,
    with a C-130 CNS/ATM program contract award in fiscal year 2014.

        126. Senator Inhofe. General Breedlove, what items, such as wiring,
    electrical system, digital avionics cooling, key CNS/ATM components,
    integrated defensive systems, and an integrated airdrop system that
    does not require a navigator, will we have to address at some point in
    the future?
        General Breedlove. Due to fiscal year 2013 budget constraints, the
    Air Force decided to pursue a less robust AMP for the legacy C-130H
    combat delivery fleet by replacing the C-130 AMP with the new Optimize
    Legacy C-130 CNS/ATM program. The C-130 CNS/ATM program addresses
    select aircraft avionics systems' obsolescence. Therefore, as the
    legacy C-130H fleet ages, the Air Force plans to analyze the avionics
    systems' reliability, maintainability, and sustainability issues, and
    to pursue various options to address any shortfalls.

                                missile defense
        127. Senator Inhofe. Admiral Ferguson, what is your current level
    of confidence in being able to deploy the SM-3 2A by 2018 and the SM-3
    IIB by 2020?
        Admiral Ferguson. SM-3 block IIA and SM-3 block IIB are being
    developed by the Missile Defense Agency (MDA). Both programs are
    expected to begin deliveries in 2018 and 2020, respectively. Based on
    MDA's current assessment, we believe they will execute the programs as
    planned.

        128. Senator Inhofe. Admiral Ferguson, do we have enough Aegis
    ships and missiles to meet the wartime requirements of all our
    combatant commanders?
        Admiral Ferguson. Demand for missile defense assets, to include
    multi-mission Aegis ships and missiles, continues to exceed supply
    within each region as stated in the 2010 Ballistic Missile Defense
    Review. While the Navy is filling the most critical combatant commander
    demands for multi-mission Aegis ships, the Navy is not able to meet the
    full demand without exceeding personnel and homeport tempo guidelines
    designed to sustain a capable force over time.
        Combatant commander demands are reviewed periodically and
    adjudicated by the Secretary of Defense through the GFM process to
    ensure the demands are prioritized based on overarching global defense
    priorities and that the Navy's limited BMD capacity is applied to the
    most critical needs.
        The Navy is employing a number of material and non-material
    approaches to mitigate the capacity shortfall by moving forward with
    three coordinated efforts to increase the capability and capacity of
    its BMD-capable combatants. The Navy will also forward deploy four BMD-
    capable destroyers to Rota, Spain, in order to source EUCOM demands
    more efficiently.
        The Navy continues to review force structure as a function of
    demand and fiscal conditions and shares the committee's concerns
    regarding our limited BMD capacity.

        129. Senator Inhofe. Admiral Ferguson, is the demand for Aegis
    ships now and in the future outstripping supply?
        Admiral Ferguson. The Navy currently has sufficient surface
    combatants to meet the most critical demands for multi-mission Aegis
    warships; however, the Navy is not able to meet the full demand without
    exceeding personnel and homeport tempo guidelines designed to sustain a
    capable force over time. The Navy continues to review force structure
    as a function of demand and fiscal conditions and is currently
    conducting a force structure assessment in support of revised strategic
    guidance.

        130. Senator Inhofe. Admiral Ferguson and General Breedlove, as
    North Korea, Iran, and other states develop their missile technology,
    we cannot sit idly by without improving our own systems. How should we
    adjust our national security policy to ensure that our missile defense
    can meet all future threats?
        Admiral Ferguson. The Navy is cooperating closely with the MDA in
    developing a series of spiral improvements to our BMD combat systems in
    Aegis ships and the Standard Missile variants. An example of this
    cooperative venture is Aegis Baseline 9C to be installed later this
    year aboard USS John Paul Jones (DDG 53). This open architecture, IAMD
    combat system will employ the latest instantiation of MDA-developed
    software and hardware to ensure that our Aegis destroyers have both the
    capability to defeat current threats and the ability to be upgraded for
    new threats. This combat system will eventually be installed in our
    most advanced BMD surface combatants.
        General Breedlove. In accordance with presidential direction, we
    continue to improve our BMDs in a phased and fiscally sustainable
    manner. The Air Force plays a leading role in both global surveillance
    and command and control of BMD operations. We continue to work with the
    MDA to maintain and enhance ballistic missile surveillance and tracking
    capabilities, and the integration of BMDs. We also continue to work
    with allies and partners to strengthen cooperation, enhance
    interoperability, and improve data-sharing, to strengthen regional
    deterrence architectures and establish a foundation for cooperative
    relationships and appropriate burdensharing. The Air Force and the MDA
    are investigating options to take advantage of the inherent speed and
    flexibility of air and space power to address identified capability
    shortfalls and to ensure we remain capable of defeating the growing
    ballistic missile threat. In addition, the Air Force continues to
    enhance global ISR and global strike capabilities to hold adversary
    ballistic missile capabilities at risk, where necessary.

        131. Senator Inhofe. Admiral Ferguson and General Breedlove, what
    is our hedge strategy in the event North Korea or Iran is able to
    develop their ICBM capabilities more rapidly than current U.S.
    intelligence estimates?
        Admiral Ferguson. The MDA, at the request of the Missile Defense
    Executive Board, recently developed a series of options to improve our
    Homeland defense capability for such a contingency. From a Navy
    perspective, we are cooperating closely with MDA to ensure BMD
    capabilities are compatible with Navy surface combatants. A current
    example is the competitive development of the SM-3 Block IIB missile
    with limited ICBM capability. MDA and the Navy are working hand-in-hand
    to ensure this missile is developed quickly and economically and are
    investigating the safe use and utility of employment of this missile
    from Aegis ships.
        General Breedlove. The Air Force is working closely with our joint
    and international partners to comply with the President's guidance and
    implement a European Phased Adaptive Approach to the defense of Europe.
    NATO recently declared an initial capability and we are quickly
    evolving that capability. I believe we are effectively pacing the
    threat.
        In the Pacific region, the BMD system is mature and growing more
    robust. Again, I believe we are appropriately pacing the threat.
        The Air Force is cooperating with the MDA and the entire DOD to
    address the potential that the ballistic missile threat to the U.S.
    Homeland will evolve more quickly than we expect and to recommend
    options to address that potential.

                               army end strength
        132. Senator Inhofe. General Austin, how do you plan on growing the
    Special Operations Forces (SOF) within the Army?
        General Austin. Army SOF are programmed to grow 3,677 military
    manpower authorizations from 31,811 to 35,448 between fiscal year 2013
    and fiscal year 2017. Capability requirements are SOCOM-validated and
    OSD-directed to address QDR identified capability shortfalls, adjust
    for SOF maneuver force growth, and apply Army initiatives. The Army has
    already made capability reductions in the force to support programmed
    SOF growth. Any additional SOF growth will require further cuts in
    existing Army force structure.
        Growth of Army SOF from fiscal year 2013 to fiscal year 2017
    consists of the following:

             SOF Aviation will:

                     Increase crew ratios by adding 88 crew members
                    (fiscal year 2013)
                     Add one MH-47G helicopter company (176 spaces
                    in fiscal year 2014)
                     Add two extended range/multi-purpose unmanned
                    aerial system companies (330 spaces in fiscal year 2014
                    and fiscal year 2015)
                     Establish the U.S. Army Special Operations
                    Aviation Command (96 spaces in fiscal year 2013)

             Special Forces will:

                     Increase combat support and combat service
                    support to adequately support recently activated 4th
                    Battalion in each Special Forces Group (1,445 spaces in
                    fiscal years 2013/2014)
                     Increase Military Intelligence capability of
                    the Active Special Forces Groups (245 spaces in fiscal
                    year 2014)

             The 75th Ranger Regiment will:

                     Add personnel to support a return to nine-man
                    squads; add a military working dog team; add a Shadow
                    unmanned aerial system platoon; and add three Stryker
                    platoons (639 spaces in fiscal year 2013)
                     Increase Military Intelligence capability in
                    the Ranger Regiment (89 spaces in fiscal year 2014)

             Civil Affairs will increase capacity of the SOF Civil
            Affairs Brigade at company, battalion, and brigade level (530
            in fiscal years 2013 to 2015)
             U.S. Army Special Operations Command (USASOC) will add
            Behavioral Health Team positions throughout its operational
            units (39 spaces beginning in fiscal year 2014)

        133. Senator Inhofe. General Austin, with an anticipated increase
    in special operations numbers and capabilities, what is the
    corresponding increase in the budget that is required?
        General Austin. As a result of the 2006 and 2010 QDRs, the Army SOF
    strength will grow from 32,000 personnel to 35,000 by fiscal year 2015.
        This will complete the growth of Army SOF from 26,000 in 2009.
    While the majority of the growth is within the five Active component
    Special Forces Groups, all of the USASOC operational formations either
    have received or are receiving additional growth in both operational
    and organic sustainment capabilities.
        USASOC's fiscal year 2011 budget increased from $8.6 billion in POM
    8-13 to $9.3 billion for POM 10-15, however, there has been no P2
    increase for ARSOF.
        In addition to the Army's investment in Army specific special
    operations formations, the Army is also resourcing personnel across the
    same period into essential joint SOCOM and control structures such as
    theater SOCOMs. The recent re-emphasis on the role of SOF within the
    recently published DSG reconfirms the need for this investment.

        134. Senator Inhofe. General Austin, has the overall worldwide
    threat to the national security interests of the United States
    decreased over the past year?
        General Austin. The overall worldwide threat to national security
    interests of the United States has remained roughly the same over the
    past year--due mainly to counterterrorism successes being partially
    offset by spreading instability resulting from the Arab Spring. Many
    threats remain unchanged while some, such as in cyberspace, are
    building.
        The Army agrees with the Director of National Intelligence James
    Clapper's assessment that the al Qaeda-led global jihadist movement is
    in a slow but steady decline. The 2011 withdrawal from Iraq has
    substantially reduced the opportunity for attacks against U.S.
    personnel and soldiers in Iraq. The al Qaeda core in the Afghanistan/
    Pakistan theater is in a crisis that it may not survive due to
    continuing leadership losses to U.S. drone strikes. Further, the
    overall movement itself is in transition to more reliance on regional
    groups in Africa and the Middle East who, while they most often pursue
    local military and political goals, have frequently expressed their
    intention to attack U.S. interests worldwide. For the foreseeable
    future, the jihadist movement will remain a serious threat and the Army
    believes that any decrease of the pressure on al Qaeda and its
    affiliated organization would allow them the breathing room to renew
    their attacks on the United States and its interests.
        Arab countries are undergoing a variety of contested transitions
    that affect U.S. national security interests. The countries most
    affected by the Arab Spring--Egypt, Libya, Syria, Tunisia, and Yemen--
    suffered setbacks to development, with economic activity stalling or
    declining which could lead to additional internal instability.
    Terrorist groups such as al Qaeda and its affiliates are attempting to
    establish cells and fund newly formed groups in these countries, and
    considering the significantly weakened state of counterterrorism
    capabilities in these countries, this could present significant
    challenges to the U.S. security in the near-term.
        The fragile nature of Afghanistan's development, as well as chronic
    instability in Pakistan, make the area still ideal for the basing of
    transnational terror groups. Those groups still pose a potential threat
    to the United States. Other sources of continuing conflict include
    ethno-religious strife, political rivalries, economic disintegration,
    and reaction to the continuing U.S. presence in the area. While
    continuing safe haven for transnational terror networks in region pose
    a potential threat to the United States, the remaining sources of
    conflict do not.
        Iran continues to pursue its twin goals of asserting regional
    hegemony and preserving the Islamic regime. Despite its frequent anti-
    western statements--mostly directed at the United States and Israel;
    Iran's decisionmaking is guided by a cost-benefit approach that offers
    the international community influence opportunities. However, Tehran
    will continue to pursue its regional ambitions by supporting proxies
    and surrogates, many of whom are violent/extremist actors in their own
    right.
        North Korea remains just as dangerous under the new leadership of
    Kim Jong Un as it was under the leadership of his father. Despite
    conventional force degradation, North Korea maintains niche
    capabilities in such areas as ballistic missiles, nuclear weapons, and
    SOF. Pyongyang remains committed to its provocation strategy to include
    missile tests, potential nuclear tests, and rhetoric threatening more
    violent attacks on South Korea.
        Proliferation of WMD capabilities remains largely unchanged in the
    last year. We do not know if Iran will eventually decide to build
    nuclear weapons, but it nevertheless is expanding its uranium
    enrichment capabilities, which can be used for either civil or weapons
    purposes. The Intelligence Community assesses Pyongyang views its
    nuclear capabilities as intended mainly for deterrence, international
    prestige, and coercive diplomacy, but could be used if Pyongyang fears
    loss of control of its national territory to an external threat.
        Threats to cyberspace are the one area where threats to the United
    States and indeed to the international cyberspace commons are rising.
    Countries such as Russia and China are the primary concerns with regard
    to protection of U.S. interests in this domain, but capabilities of
    many other countries as well as non-state actors are rising. The United
    States has so far managed to keep up with such threats, but
    developments in cyberspace are so rapid and dispersed that the
    possibility of surprise remains possible.
        China's intent to threaten U.S. interests has neither increased nor
    decreased over the past year. In the diplomatic sphere, Beijing has
    moderated some of the assertiveness it showed in 2010, in particular in
    the South China Sea. The potential for conflict with Taiwan continued
    to decrease with the reelection of President Ma Ying-jeou who holds a
    relatively favorable attitude toward Beijing. It has also shown some
    flexibility in allowing its currency to appreciate. Nevertheless,
    China's modernization and expansion of its A2/AD capabilities continues
    at a rapid pace and there remains a mutual lack of trust: the United
    States desires greater transparency from China as it increases its
    military capabilities while China believes the United States seeks to
    contain its rise.
        In summary, successes against terrorist groups have increased U.S.
    security in the past year to some extent, but other developments and
    conditions around the world remain much the same, and new risks
    resulting from developments related to the Arab Spring and cyber
    warfare have created new future challenges.

        135. Senator Inhofe. General Austin, have any worldwide long-term
    combatant command operational planning requirements changed?
        General Austin. Based on the changing strategic environment, our
    ability to execute operations globally, and emerging threats, long-term
    operational planning requirements will continue to evolve. As our
    strategy shifts and resources decline, DOD will continue to evaluate
    operational planning requirements to ensure that they are realistic and
    our combatant commanders have the capabilities to meet them. Most
    recently, the Army has worked with the other Services and all the
    combatant commands through the CJCS Strategic Seminar Series to
    identify capability gaps and assess our ability to meet requirements to
    execute top priority plans.

        136. Senator Inhofe. General Austin, how would you quantify the
    increased risk to our Army and our Nation caused by the shrinking of
    land power in regards to Army end strength?
        General Austin. There is a risk in our ability to respond to
    multiple contingencies within compressed timelines. We've been
    participating in the CJCS's Seminar Series to assist in identifying
    what we can do to mitigate any risk associated with change to our
    strategic guidance. In addition to the mitigation measures I've already
    discussed such as investment, regional alignment, and interoperability
    with our sister Services, access to the Reserve component remains
    essential for our capacity to respond quickly to crises. Retaining
    adequate funding for training and equipping all of our units for a full
    range of capabilities is our requirement for controlling risk resulting
    from a smaller force.

             joint requirements oversight council responsibilities
        137. Senator Inhofe. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, is the JROC solely responsible for
    approving the joint military requirements of both existing and future
    weapons programs?
        General Austin. No, the JROC is not solely responsible for
    approving all military requirements. The CJCS Instruction 5123.01F,
    dated January 10, 2012, states that the JROC is the final validation
    authority for capability requirements unless otherwise delegated to a
    subordinate board or to a designated validation authority in a Service,
    combatant command, or other DOD component. The JROC retains initial
    approval authority for Major Defense Acquisition Programs and programs
    identified as special interest by combatant commanders, DOD leadership,
    or Congress. Requirements validation authority for smaller programs is
    typically delegated to the sponsoring component. The Army Chief of
    Staff's validation authority is exercised through the Army Requirements
    Oversight Council.
        Admiral Ferguson and General Dunford. Yes. The JROC assists the
    CJCS and Secretary of Defense in identifying and managing Joint
    requirements. The Joint Capabilities Integration and Development System
    (JCIDS) is the primary process used by the JROC and its subordinate
    boards to fulfill advisory responsibilities to the CJCS in identifying,
    assessing, validating, and prioritizing joint military capability
    requirements.
        General Breedlove. The JROC is not solely responsible for approving
    Joint military requirements. JCIDS documents are assigned by the Joint
    Staff gatekeeper to one of five Joint Staffing Designators (JSD). The
    JSD is assigned based on actual/potential acquisition category and
    Joint Staff equities. The five JSDs include: JROC Interest, Joint
    Capabilities Board (JCB) Interest, Joint Integration, Joint
    Information, and Independent. The JROC is the approval authority for
    all JROC Interest programs. The JROC delegates approval authority for
    other JSD programs. The JCB is the approval authority for all JCB
    Interest programs. The Sponsor (usually the Service) is the approval
    authority for Joint Integration, Joint Information, and Independent
    programs (JCIDS Manual, Enclosure C, pp. C-3 to C-4).

        138. Senator Inhofe. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, who has the authority to make changes
    to those requirements?
        General Austin. We are actively examining ways to increase our
    capabilities in a variety of areas. Though we may reduce our capacity
    in some areas, such as major combat operations, we are maintaining our
    resolve to rapidly deploy and deter threats by reinvigorating our rapid
    deployment ability in response to global crises and investing resources
    in air and BMD. This is based in part on our assessment of the likely
    scenarios the Army would have to support in the event of a contingency.
    We are currently retaining sufficient force for any one major combat
    operation according to our scenarios, while we are mitigating the risk
    resulting from multiple contingencies through retaining the ability to
    expand our end strength, when necessary.
        Admiral Ferguson and General Dunford. The JROC is the final
    authority for validation of and changes to requirements. However, in
    addition to the JROC, Services, combatant commands, and other DOD
    components with delegated validation authority may validate Service-,
    combatant command-, or component-specific capability requirements using
    variations of the JCIDS process.
        General Breedlove. The authority to make changes to validated
    requirements is generally determined by the Joint Staffing Designator.
    Only the JROC can authorize changing requirements for JROC Interest
    programs. Only the JCB can authorize changing requirements for JCB
    Interest programs. The Sponsor (usually the Service) can authorize
    changing requirements for Joint Information, Joint Integration, and
    Independent programs. In addition, requirements are further defined by
    KPPs and KSAs. The authority to change KPPs, the critical performance
    attributes, cannot be delegated to a lower level of authority. However,
    the authority to change KSAs, the non-critical attributes, is often
    delegated to the Sponsor (usually the Service) by the JROC or the JCB
    (JCIDS Manual, Enclosure C, pp. C-3-C-4).

        139. Senator Inhofe. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, once the JROC established the
    requirements, are those requirements used to establish development and
    testing criteria?
        General Austin. Yes, the approved operational requirements serve as
    the common baseline for system development and testing criteria.
        Admiral Ferguson and General Dunford. Yes. Requirements documents,
    known as the Capability Development Document (CDD) and Capability
    Production Document (CPD), are approved by the JROC or a Board with
    delegated authority. These documents provide authoritative, testable
    capability requirements, in terms of KPPs, KSAs, Concept of Operations,
    and additional performance attributes for the Production and Deployment
    (P&D) phase of an acquisition program.
        General Breedlove. Yes. The Integrated Defense Acquisition,
    Technology, and Logistics Life Cycle Management System has an event-
    driven defense acquisition system that addresses systems engineering,
    test and evaluation, and supportability. The systems engineering
    portion, as described in the Defense Acquisition Guidebook (chapter 4),
    takes the requirements, ascertains any derived requirements, works the
    design, and uses test to verify/validate as the design matures. The
    system engineering is embodied in the system engineering plan, but also
    relies upon the acquisition strategy and concept of operations to shape
    the requirements and inform developers and testers. JROC approval of
    the requirements is just the first step, but it is a vital step.

        140. Senator Inhofe. General Austin, Admiral Ferguson, General
    Dunford, and General Breedlove, does DOD test community have authority
    to test to a different standard, higher or lower, than the established
    JROC requirement without the JROC changing the requirements document?
        General Austin. The test community does not have the authority to
    modify the system requirements to be tested. The entire requirements
    community, to include testers and system developers, ensures that the
    requirements presented for approval are developed in sufficient detail
    to support the identification of testable performance standards. Once
    the data is collected, the test community determines to what degree the
    system met the test requirements. They also evaluate whether
    performance to the approved standards will result in an operationally-
    effective capability.
        Admiral Ferguson and General Dunford. No. Testing against new or
    evolved threats typically does not require changing the JROC-approved
    KPPs and KSAs, but may involve different employment of JROC KPPs as a
    result of system CONOPs and critical operational issues as described in
    the Test and Evaluation Master Plan. If the new or improved threat
    requires KPP modification or establishment, a change to the CDD is
    staffed to the JROC for approval.
        General Breedlove. No. The DOD test community performs rigorous
    testing to determine system performance and then evaluates systems
    against established requirements. Testing provides a continuous stream
    of data and information about whether or not the requirements are
    realistic, and whether the system is likely to meet the user's needs.
    The feedback from tests and evaluations may influence the user
    community and program offices to coordinate requirements changes via
    the formal JCIDS process. Testers do not test to different standards
    nor do they evaluate KPPs against values without JROC changing the
    requirements document.

        [Whereupon, at 11:45 a.m., the subcommittee adjourned.]