[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


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        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.
      

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

          O&M Navy: Projects would include propeller coatings, in-port 
        ship energy conservation, Advanced Metering Infrastructure, 
        combustion system improvements, Aviation & Maritime training in 
        support of best practices for energy conservation (ENCON) and 
        facility energy audits and facility energy efficiency upgrades.
          O&M Marine Corps: Projects would include completion of energy 
        audits, shelter liners, advanced power systems, renovated HVAC 
        system to increase efficiency, and completed SMART metering 
        projects.
          National Defense Sealift Fund (NDSF)/Other Procurement Navy: 
        Projects would include Shipboard Lighting Upgrades, shore power 
        management/monitoring systems, ship engine automation upgrades.
          Research, Development, Test, and Evaluation: Projects would 
        include undersea power systems, energy storage and power 
        management, the shipboard energy dashboard, water purification 
        technologies, 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.
      

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    We are also aggressively conducting facility energy audits while 
completing installation of ``Smart'' electric metering to implement a 
wide range of facility energy efficiency measures. By the end of this 
year, over 27,000 meters will be installed in our existing facilities 
and provide the means to better measure the amount of energy we are 
consuming. This will allow for our energy managers to provide `real-
time' feedback to our leaders on our installations. At the same time, 
we continue to ensure that new construction is built to LEED Silver 
standards per the 2012 NDAA.
    DON continues to explore how to implement and maintain culture 
change initiatives, beginning with education and training, to ensure 
that energy management is understood by all personnel to be a priority 
in tactical, expeditionary, and shore missions. Energy awareness 
campaigns will be used to encourage personal actions that show 
commitment to energy program goals. The Naval Postgraduate School has 
added an energy program to its curricula and we are partnering with the 
National Defense University to pilot two culture change demonstrations. 
The pilots, at MCB Camp Lejeune and NAVSTA Mayport, will focus on 
raising the energy awareness of civilian and military personnel.
    The Department will continue to cultivate strategic partnerships 
with existing and new organizations to leverage our energy goals. By 
partnering with Federal agencies, such as the Department of Energy, the 
Department of Interior, the Department of Agriculture, and the Small 
Business Administration, we are raising the awareness at all 
governmental levels of the strategic importance of energy within DON. 
In addition, we are working with academic institutions and private 
industry to bring innovative ideas and approaches to the forefront.
    Our budget request asks for continued support of these and similar 
projects in order to enhance our efficiency and maximize our move to 
greater independence and more resilient infrastructure.
                     relocating the marines to guam
    On February 8, 2012, the U.S. Government and Government of Japan 
acknowledged that they were meeting to discuss potential adjustments to 
the 2006 Realignment Roadmap. Both governments remain committed to the 
establishment of an operational Marine Corps presence on Guam. We 
believe that the adjustments to the Guam force laydown that are being 
considered will be responsive to congressional concerns, while also 
maintaining and enhancing peace and security in the Asia-Pacific 
region, one of two regions emphasized in the January 2012 Defense 
Strategic Guidance. Bilateral discussions have only just begun and I 
expect that more information will be available in the next couple of 
months. The Department will keep Congress informed of these discussions 
and, upon a final decision on the Guam laydown, will provide you with 
updates on our planning, programming and execution strategies for 
implementing any adjustments.
    The fiscal year 2013 budget request includes $26 million to 
construct facilities in support of the relocation of marines from 
Okinawa to Guam. The project funds the second increment of a facility 
necessary to support the relocating aviation element and, upon 
completion of both increments, will provide aircraft parking apron, 
taxiways, lighting, wash racks and supporting utilities at Andersen Air 
Force Base. This project supports the relocating aviation element and 
is required regardless of the final force laydown on Guam. In its 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:
      

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         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.]

                                 
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