    [Senate Hearing 112-590, Part 6]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 112-590, Pt. 6

    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 6

                                   PERSONNEL

                                   ----------

                       MARCH 28; APRIL 25; JUNE 21, 2012

             Printed for the use of the Committee on Armed Services

                                                      S. Hrg. 112-590 Pt. 6

    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 6

                                   PERSONNEL

                                   __________

                       MARCH 28; APRIL 25; JUNE 21, 2012

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

             Printed for the use of the Committee on Armed Services

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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 Personnel

                          JIM WEBB, Virginia, Chairman

    JOSEPH I. LIEBERMAN, Connecticut     LINDSEY GRAHAM, South Carolina
    DANIEL K. AKAKA, Hawaii              SAXBY CHAMBLISS, Georgia
    CLAIRE McCASKILL, Missouri           SCOTT P. BROWN, Massachusetts
    KAY R. HAGAN, North Carolina         KELLY AYOTTE, New Hampshire
    MARK BEGICH, Alaska                  SUSAN M. COLLINS, Maine
    RICHARD BLUMENTHAL, Connecticut      DAVID VITTER, Louisiana

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
            Active, Guard, Reserve, and Civilian Personnel Programs
                                 march 28, 2012

                                                                       Page

    Rooney, Hon. Jo Ann, Acting Under Secretary of Defense for
      Personnel and Readiness........................................     4
    Hale, Hon. Robert F., Under Secretary of Defense, Comptroller,
      and Chief Financial Officer....................................    34
    Woodson, Hon. Jonathan, Assistant Secretary of Defense for Health
      Affairs and Director of TRICARE Management Activity............    39
    McGinnis, David L., Acting Assistant Secretary of Defense for
      Reserve Affairs................................................    50
    Appendix A.......................................................   113
    Appendix B.......................................................   141
    Appendix C.......................................................   166
    Appendix D.......................................................   200
    Appendix E.......................................................   206
    Appendix F.......................................................   214

     Continuation of Testimony on the Active, Guard, Reserve, and Civilian
                               Personnel Programs
                                 april 25, 2012

    Lamont, Hon. Thomas R., Assistant Secretary of the Army for
      Manpower and Reserve Affairs; Accompanied by LTG Thomas P.
      Bostick, USA, Deputy Chief of Staff G-1, U.S. Army.............   229
    Garcia, Hon. Juan M., III, Assistant Secretary of the Navy for
      Manpower and Reserve Affairs; Accompanied by VADM Scott R. Van
      Buskirk, USN, Chief of Naval Personnel, U.S. Navy; and Lt.Gen.
      Robert E. Milstead, Jr., USMC, Assistant Commandant for
      Manpower and Reserve Affairs, U.S. Marine Corps................   242
    Ginsberg, Hon. Daniel B., Assistant Secretary of the Air Force
      for Manpower and Reserve Affairs; Accompanied by Lt. Gen.
      Darrell D. Jones, USAF, Deputy Chief of Staff for Manpower,
      Personnel and Services, U.S. Air Force.........................   270
    Appendix A.......................................................   305

        Department of Defense Programs and Policies to Support Military
                          Families with Special Needs
                                 june 21, 2012

    Guice, Dr. Karen S., Principal Deputy Assistant Secretary of
      Defense for Health Affairs and Principal Deputy Director,
      TRICARE Management Activity....................................   320

                                     (iii)

    Posante, Dr. Rebecca L., Deputy Director, Office of Community
      Support for Military Families with Special Needs, Department of
      Defense........................................................   328
    Tait, Dr. Vera F., Associate Executive Director, Department of
      Community and Specialty Pediatrics, American Academy of
      Pediatrics.....................................................   329
    Hilton, Jeremy L., Military Spouse, Veteran, and Family Advocate.   333
      Attachments A through I........................................   341
    Dawson, Dr. Geraldine, Chief Science Officer, Autism Speaks, and
      Professor of Psychiatry, University of North Carolina at Chapel
      Hill...........................................................   471
    O'Brien, John, Director of Healthcare and Insurance, U.S. Office
      of Personnel Management........................................   475
    Appendix A.......................................................   492
    Appendix B.......................................................   500

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

                                  ----------

                           WEDNESDAY, MARCH 28, 2012

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

            ACTIVE, GUARD, RESERVE, AND CIVILIAN PERSONNEL PROGRAMS

        The subcommittee met, pursuant to notice, at 2:03 p.m. in
    room SR-232A, Russell Senate Office Building, Senator Jim Webb
    (chairman of the subcommittee) presiding.
        Committee members present: Senators Webb, Begich,
    Blumenthal, Brown, Ayotte, and Graham.
        Majority staff members present: Jonathan D. Clark, counsel;
    Gabriella E. Fahrer, counsel; and Gerald J. Leeling, counsel.
        Minority staff members present: Diana G. Tabler,
    professional staff member; and Richard F. Walsh, minority
    counsel.
        Staff assistant present: Jennifer R. Knowles.
        Committee members' assistants present: Gordon Peterson,
    assistant to Senator Webb; Lindsay Kavanaugh, assistant to
    Senator Begich; Ethan Saxon, assistant to Senator Blumenthal;
    Charles Prosch, assistant to Senator Brown; Brad Bowman,
    assistant to Senator Ayotte; and Sergio Sarkany, assistant to
    Senator Graham.

            OPENING STATEMENT OF SENATOR JIM WEBB, CHAIRMAN

        Senator Webb. Good afternoon.
        The subcommittee meets today to receive testimony from the
    Department of Defense (DOD) on military and civilian personnel
    programs contained in the administration's Defense
    Authorization Request for Fiscal Year 2013 and the Future Years
    Defense Program (FYDP).
        I am pleased to have Senator Graham by my side again this
    year as the subcommittee's ranking member.
        With us today are senior DOD leaders with whom we will
    discuss not only DOD personnel policy issues but specific
    budget items in furtherance of our subcommittee's oversight
    responsibilities, which I take very seriously. Our witnesses
    are: the Honorable Jo Ann Rooney, Acting Under Secretary of
    Defense for Personnel and Readiness; the Honorable Robert F.
    Hale, Under Secretary of Defense, Comptroller, and Chief
    Financial Officer (CFO) for DOD; Mr. David L. McGinnis, Acting
    Assistant Secretary of Defense for Reserve Affairs; and the
    Honorable Jonathan Woodson, Assistant Secretary of Defense for
    Health Affairs and Director of TRICARE Management Activity.
        Virtually every leader in DOD who testifies before the
    Senate Armed Services Committee addresses the importance of
    their personnel. In just the past few weeks, for example, we
    heard: ``as we move forward, the Department is committed to our
    most important asset, our sailors, marines, civilians, and
    their families.'' ``The individual marine is our greatest
    asset.'' ``The hallmark of our success as an Air Force has
    always been and will always be our people.'' ``The strength of
    our Army is our soldiers.''
        We agree. Taking care of our military and civilian
    personnel and their families is the priority for this
    subcommittee. There are a number of military and civilian
    personnel policy issues on our radar this year. They include
    the administration's proposal to reduce military end strength
    by more than 120,000 personnel by the end of fiscal year 2017.
    Past experience tells us this cannot be accomplished through
    attrition alone. Many servicemembers who have served multiple
    combat tours will be asked to leave the military even though
    they want to remain in the ranks. This subcommittee will seek
    to provide the Services with the force management tools
    necessary to reduce end strength in a responsible manner while
    keeping faith with those who have sacrificed so much. We also
    want to ensure that the Services have robust transition
    programs to assist servicemembers and their families as they
    leave the Active Duty military.
        DOD has just released a proposed policy change that will
    open more than 14,000 positions to women at the conclusion of
    the congressionally required notification period in a few
    months. We are encouraged that the Services are continuing to
    explore the possibility of opening additional specialties and
    positions to women.
        This subcommittee will continue to monitor the
    implementation of the Secretary of Defense's decision to
    eliminate, reduce, or reallocate 140 general and flag officer
    positions and 150 Senior Executive Service positions.
        The subcommittee remains concerned about the number of
    servicemember suicides and will continue to monitor Service
    suicide prevention policies and programs.
        Sexual assault prevention and response remains a priority
    for this subcommittee. Last year we enacted a number of
    legislative provisions to assist victims of sexual assault.
    Secretary Panetta has announced that he will have additional
    proposals this year, some of which will require legislation. We
    stand ready to work with him on this important issue.
        Our National Guard and Reserves are an integral part of the
    military forces. As an operational reserve, the Reserve
    component is an economical force multiplier, providing
    flexibility and access to valuable capabilities resident in the
    National Guard and Reserves. This subcommittee will continue
    its effort to ensure that there is adequate legislative
    authority for optimal use of the operational reserve.
        The total force includes military personnel, DOD civilian
    employees, and contractor personnel. This subcommittee will
    continue to press the Services to include civilians and
    contract personnel when addressing total force requirements.
        The subcommittee remains committed to the care and
    treatment of our wounded warriors and their families. We
    believe that the Integrated Disability Evaluation System is an
    improvement over the legacy disability evaluation system, but
    it is still too bureaucratic and timeconsuming.
        The subcommittee faces a very clear challenge this year as
    we address the need to control the increasing costs of
    personnel programs. As the Chief of Staff of the Air Force
    stated during a recent hearing, ``among all the other
    challenges facing us, the reality of fewer members of the Armed
    Forces costing increasingly more to recruit, train, and retain
    for promising careers is, `in his view,' the monumental defense
    issue of our time.''
        The total personnel-related base budget in DOD's fiscal
    year 2013 request, including the costs of providing health care
    to servicemembers, their families, and retirees, amounts to
    $168 billion, or about 32 percent of the overall DOD base
    budget. However, while we must achieve savings in our defense
    programs, we must do this in a way that does not unfairly
    impact military benefits for a force that is serving and has
    served so well during more than 10 years of combat operations.
        Our task is even more difficult this year because of the
    funding limitations imposed by the Budget Control Act (BCA)
    passed by Congress last year. To comply with this act, the
    administration has proposed several major actions to reduce
    military personnel costs, including end strength reductions of
    more than 120,000 military personnel, limiting pay raises
    beginning 2015, establishing a base realignment and closure
    (BRAC)-like commission to conduct a comprehensive review of
    military retirement, and increasing health care fees for
    military retirees. Each of these proposals warrants careful
    consideration.
        There is no greater responsibility for Congress and
    military leaders than to care and provide for our
    servicemembers and their families. Our military--Active, Guard,
    and Reserve--is still engaged in the longest sustained period
    of major conflict in our Nation's history. We look forward to
    learning more about the programs and priorities DOD has
    emphasized to make certain that despite today's fiscal
    challenges, our servicemembers, civilian personnel, retirees,
    and their families will continue to receive the support and
    benefits they have earned commensurate with their service.
        I look forward to all of your testimony today on all of
    these issues, and as always, I encourage you to express your
    views candidly and to tell us what, in your view, is working
    and to raise any concerns and issues you may want to bring to
    the subcommittee's attention. Please let us know how we can
    best assist our servicemembers and their families to ensure
    that our military remains steadfast and strong.
        Senator Graham.

                  STATEMENT OF SENATOR LINDSEY GRAHAM

        Senator Graham. Thank you, Mr. Chairman. It has been a
    pleasure working with you.
        We have our work cut out for us. The BCA is going to
    require some $400-plus billion in defense spending reductions
    over the next decade. Sequestration--I hope in a bipartisan
    fashion--we can stop that. That would be devastating according
    to Secretary Panetta to do $600 billion on top of the $400-plus
    billion. To get there, you are going to have to put everything
    on the table like reducing the numbers of people we have in the
    military, looking at benefits anew. But as the chairman just
    mentioned, the number one priority of the Federal Government
    from my point of view is to defend the Nation, and you can only
    do that with people who are willing to serve, and taking care
    of those who have served is the best way to recruit people in
    the future.
        The chairman has a unique background in terms of his
    experience in the government and being a marine. So as we try
    to find out solutions to hard problems, we will work together
    the best we can. I look forward to hearing from each of you.
        Senator Webb. Thank you, Senator Graham. As always, it has
    been a pleasure working with you on this subcommittee and on
    other issues as well.
        We have received statements for the record from a number of
    different military and veterans organizations. Rather than list
    them all--I may be missing some here--all of those that will
    have been submitted by close of business today will be included
    at the end of this record, if there is no objection from anyone
    on this subcommittee.
        Senator Webb. We will now hear opening statements from our
    witnesses. Their complete prepared statements will be included
    in the record. I am going to make a point here because I really
    got into trouble on a recent hearing--we are going to have 7-
    minute rounds for questions from the subcommittee once the
    testimony is over. Those of you here will recall that when we
    had a panel full of lawyers and a subcommittee full of lawyers,
    the conversations went on for about 2 hours. So we will do it 7
    minutes at a turn here. I think everybody on this end of the
    table is an attorney.
        Welcome, Dr. Rooney, why do you not begin?

      STATEMENT OF HON. JO ANN ROONEY, ACTING UNDER SECRETARY OF
                  DEFENSE FOR PERSONNEL AND READINESS

        Dr. Rooney. Thank you. Chairman Webb, Senator Graham, and
    distinguished members of the subcommittee, I appreciate the
    opportunity to appear before you to discuss the personnel and
    readiness programs in support of the President's budget request
    for fiscal year 2013.
        Thank you for your support of our Active and Reserve
    military members, their families, and our government civilians
    who have done everything we ask of them and more.
        As you have heard from Secretary Panetta, the fiscal year
    2013 budget request was the product of an intensive review of
    our defense strategy necessitated by the critical turning point
    of our country after a decade of war and substantial growth in
    our budgets.
        Today, I will describe how we can sustain the All-Volunteer
    Force for generations to come, a force that has a proven record
    of unprecedented success in operations around the world.
    Accomplishing this will require DOD to make hard choices
    regarding competing priorities for limited funding. This budget
    plan is predicated on the assumption that the Services are
    appropriately trained, resourced, and flexible enough to
    rapidly adapt to emerging threats. Resourcing the reset of the
    force while maintaining readiness will undoubtedly be one of
    the most challenging issues of our time.
        As the Acting Under Secretary of Defense for Personnel and
    Readiness, my priorities focus on total force readiness,
    improving the military health system, and total force support.
        After 10 years of intensive operations, our forces are
    among the most capable in our Nation's history. Our Active and
    Reserve servicemembers and defense civilians are well-prepared
    to execute current operations and respond to emergent needs.
    They are experienced and proficient in a wide range of real-
    world operations, including those that were not traditionally
    within DOD's scope of responsibility. As we end today's wars
    and adjust to new and changing missions, we find ourselves
    naturally transitioning back toward a broader range of security
    missions.
        Although this transition is occurring in the midst of
    unavoidable fiscal pressure, we have committed to maintaining a
    ready, capable All-Volunteer Force.
        The performance of our military medical system at a time of
    war continues to set new standards. DOD strives to provide the
    best health care in the world to our servicemembers, but the
    current cost growth of the military health system is
    unsustainable. DOD is pursuing a balanced, four-pronged
    approach for improving the health of our population and the
    fiscal stability of the health care system to ensure we can
    continue to provide this benefit in the future. Our four
    approaches include: moving from a system of health care to one
    of health; continuing to improve our internal efficiencies;
    implementing provider payment reform; and rebalancing cost
    sharing.
        Another key component of overall health and readiness of
    the force is support to the families of our servicemembers. One
    of the four overarching principles of the defense strategy
    guidance is to preserve the quality of the All-Volunteer Force
    and not break faith with our men and women in uniform or their
    families. Despite difficult economic circumstances requiring
    budget reductions across all levels of the Federal Government,
    DOD remains committed to providing servicemembers and military
    families with support programs and resources, empowering them
    to address the unique challenges of military life.
        Ensuring the needs of military families and servicemembers
    are met contributes to the overall well-being of the total
    force. This includes access to mental health care, providing
    for the educational needs of servicemembers' children, support
    of morale, welfare, and recreation programs, and maintaining
    benefits at defense commissaries.
        Secretary Panetta has directed that family programs
    continue to be a priority for DOD and it remains my priority as
    well.
        Putting together this year's budget request in a balanced
    package was a difficult undertaking and took the combined
    effort of our senior military and civilian leadership.
    Throughout that process, I believe we have developed the right
    mix of programs and policies in place to shape the force we
    need. Yes, we will reduce the rate of growth of manpower costs,
    including reductions in the growth of compensation and health
    care costs. But as we take these steps, we will do so in a way
    that we continue to keep faith with those who serve.
        During the past decade, the men and women who comprise the
    All-Volunteer Force have demonstrated versatility,
    adaptability, and commitment, enduring constant stress and
    strain of fighting two overlapping conflicts. They have also
    endured prolonged and repeated deployments. 47,775 have been
    wounded, and 6,376 members of our Armed Forces have lost their
    lives. As DOD reduces the size of the force, we will do so in a
    way that respects and honors these sacrifices.
        I look forward to continuing to work with you, Chairman
    Webb, Senator Graham, and distinguished members of the
    subcommittee, to support the men and women in our Nation's
    Armed Forces.
        Accompanying me today is the Under Secretary of Defense
    Comptroller, Mr. Robert F. Hale, and two senior members of my
    staff, Dr. Jonathan Woodson, Assistant Secretary of Defense for
    Health Affairs and Director of TRICARE Management Activity, and
    Mr. David L. McGinnis, Acting Assistant Secretary of Defense
    for Reserve Affairs. All of us before you today look forward to
    your questions.
        [The prepared statement of Dr. Rooney follows:]
                    Prepared Statement by Hon. Jo Ann Rooney
                                  introduction
        Chairman Webb, Senator Graham, and distinguished members of the
    subcommittee, I appreciate the opportunity to appear before you to
    discuss Personnel and Readiness programs in support of the President's
    budget request for fiscal year 2013. Thank you for your support of our
    Active, Reserve component military members, their families, and our
    government civilians who have done everything we have asked of them and
    more.
        As you have heard from Secretary Panetta, the fiscal year 2013
    budget request was the product of an intensive review of our defense
    strategy necessitated by the fact that our country is at a critical
    turning point after a decade of war and substantial growth in our
    budgets. Today, I will describe how we can sustain the All-Volunteer
    Force for generations to come--a force that has a proven record of
    unprecedented success in operations around the world. Accomplishing
    this will require the Department to make hard choices regarding
    competing priorities for limited funding. This plan is predicated on
    the assumption that the Military Services are appropriately resourced,
    experienced, and flexible enough to rapidly adapt to emerging threats.
    Resourcing the reset of the force, while maintaining force readiness,
    will undoubtedly be one of the most challenging issues of our time.
        As the acting Under Secretary of Defense for Personnel and
    Readiness my priorities focus on: Total Force Readiness, Improving the
    Military Health System, and Total Force Support.
                                   readiness
        After 10 years of intensive operations our forces are among the
    most capable in our Nation's history. Our Active and Reserve component
    members and defense civilians are well prepared to execute current
    operations and respond to emergent needs, and are experienced and
    proficient in a wide range of real world operations. We have, by
    necessity, mastered a host of specialized capabilities that depend
    heavily on language and culture, governance, rule of law, development,
    and other specialized skills; not all of which are within the
    Department's traditional scope of responsibility. However, fully
    preparing for these missions means that there have been fewer
    capabilities available for large-scale, major combat operations. As we
    end today's wars and adjust to new strategic guidance, we find
    ourselves naturally transitioning back toward a broader range of
    security missions.
        The first sign of this transition is the return of full-spectrum
    exercises that we have seen over the last year. Specifically, the
    Marine Corps exercised its first large-scale amphibious assault in 10
    years just a few weeks ago. Similarly, the Army is shifting to decisive
    action training exercises at the Combat Training Centers. We will see
    more of these exercises as forces return and reset from current
    operations. In addition, the Army has begun to regionally align
    maneuver and enabler forces to some combatant commands to conduct
    security cooperation and security force assistance activities. These
    forces will have appropriate language, culture, advisor training and
    skills to enable expanded engagement with critical partners in the
    region.
        Although this transition is occurring in the midst of unavoidable
    fiscal pressure, we have committed to maintaining a ready, capable All-
    Volunteer Force. Program reductions were deliberately managed to
    preserve operational flexibility and to keep faith with servicemembers
    and their families who have made significant sacrifices. We realize
    that sometimes, either due to unforeseen circumstances or a changing
    world, even the most well-conceived plans must be revised. For this
    reason, my office is maintaining its role of closely monitoring the
    readiness of our forces for the dual purposes of identifying and
    remediating critical deficiencies or unmet requirements.
    End Strength
        We know that multiple deployments to Iraq and Afghanistan, with
    limited time at home for recovery, have stressed our military members
    and their families. With the draw down in Iraq and Afghanistan, this
    stress is fundamentally reduced. We have withdrawn 50,000 troops from
    Iraq since 2010, and will have reduced Afghanistan troop levels by
    30,000 at the end of this year. Barring unforeseen events, the
    Secretary's goal of 2 or more years at home for every year deployed
    will likely be met this coming year. The All-Volunteer Active and
    Reserve Force is healthy, and our Services are achieving or exceeding
    their recruiting and retention goals.
        Today, our overall military end strength, which includes the base
    force and overseas contingency operations, is at 2,269,700 in fiscal
    year 2012. While the initial changes to force size are muted, a 1.4
    percent reduction equating to a 31,300 person reduction in fiscal year
    2012, ultimately the Department will be at 2,145,800 by fiscal year
    2017. This 5.5 percent reduction equates to 123,900 fewer troops and
    will be spread throughout the components of the force.

             Army Active, Reserve, and Army National Guard (NG) end
            strength in fiscal year 2013 is projected to be 1,115,300--0.9
            percent less than fiscal year 2012. In fiscal year 2017 the end
            strength will be 1,048,200, a 6.8 percent reduction from fiscal
            year 2012.
             Navy Active and Reserve end strength in fiscal year
            2013 is projected to be 385,200--1.7 percent less than fiscal
            year 2012. In fiscal year 2017, the end strength will be
            376,600, a 3.9 percent reduction from fiscal year 2012.
             Marine Corps Active and Reserve end strength in fiscal
            year 2013 is projected to be 236,900-2.0 percent less than
            fiscal year 2012. In fiscal year 2017 the end strength will be
            221,700, an 8.3 percent reduction from fiscal year 2012.
             Air Force Active, Reserve, and Air NG end strength in
            fiscal year 2013 is projected to be 501,000--1.9 percent less
            than fiscal year 2012. In fiscal year 2017, the end strength
            will be 499,300, a 2.3 percent reduction from fiscal year 2012.

        A force drawdown of this size has not been experienced since well
    before September 11.
    Total Force Management and Planning
        The Department relies on a Total Force of Active and Reserve
    military, government civilians, and contracted support to provide for
    the Nation's defense and execute its core missions. We will face force
    management challenges over the next several years which are far greater
    than those we have experienced since September 11, 2001 and, therefore,
    must balance the competing requirements for equipment reset,
    modernization and support for our servicemembers and their families in
    a climate of reduced budgets. Responsibly managing the required force
    reduction, while ensuring we keep faith with those who have sacrificed
    so much to secure our Nation's interests, and properly caring for our
    military families as many servicemembers transition to veteran status
    is a responsibility taken very seriously and one which my organization
    is helping to facilitate. Congress aided this effort immeasurably by
    recently enacting legislation that expanded voluntary separation
    programs which provide appropriate recognition for significant military
    service, such as the temporary early retirement authority (TERA) which
    gives the military departments the flexibility to offer retirement to
    servicemembers with more than 15 but less than 20 years of service. We
    will continue to work with Congress to reinstate additional expired
    authorities from previous drawdowns that would offer the Department the
    ability to focus separations and avoid the loss of critical expertise.
        The Department's Total Force of Active and Reserve military,
    government civilians and contracted services represents a carefully
    coordinated approach that balances operational needs, satisfies mission
    requirements, and recognizes fiscal constraints. Our future plans will
    seek to balance the capabilities and cost of all elements of the Total
    Force. They cannot be managed in isolation if we are to avoid a hollow
    force and unnecessary expense. Our plans recognize:

             Decreased operational commitments and revised overseas
            posture;
             A Reserve Force that is an operational asset;
             A highly skilled civilian workforce capable of
            performing mission essential and inherently governmental tasks;
             Contracted support that is cost effective and designed
            to provide appropriate and complimentary support to our
            operational needs;
             Civilian decreases that have been carefully targeted
            to deliver efficiencies initiated by Secretary Gates; and
             Efficient management of our contracted support as part
            of our Total Force mix and not as just an acquisition
            management action.
        Active Duty Recruiting
        Recruiting for the All-Volunteer Force continues at unprecedented
    levels. The Department closed out fiscal year 2011 with all active
    Services meeting or exceeding recruiting objectives, both numerically
    and by recruit quality. As shown in Table 1, we continue that record
    pace into fiscal year 2012, with 44,414 new recruits against an
    objective of 44,323 through January of this year. Recruit quality
    remains considerably above Department benchmarks (or standards), with
    98 percent of new recruits having a high school diploma (90 percent
    benchmark) and 80 percent scoring above average in aptitude (60 percent
    benchmark) on the Armed Forces Qualification Test (AFQT). Of particular
    note is the fact that very few recruits accessed at or below the 30th
    percentile on the AFQT through January of this year.

                                          Table 1--Recruit Quality (Fiscal Year 2012 Through January) Active Components
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Quantity                                                     Quality
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Percent Scoring at/ Percent Scoring at/
                                                                                                     Percent High         above 50th          above 30th
      AC Enlisted Recruiting Fiscal       Accessions             Goal           Percent of Goal    School Graduate:      Percentile on       Percentile on
       Year 2012  (End of January)                                                                   Benchmark=90     AFQT; Benchmark=60   AFQT; Benchmark=4
                                                                                                        percent             percent             percent
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Army                              17,123              17,050              100  G                    95  G              64  G               <1  G
    Navy                               9,289               9,289              100  G                    99  G              93  G                0  G
    Marine Corps                       7,795               7,777              100  G                   100  G              76  G                0  G
    Air Force                         10,207              10,207              100  G                   100  G              99  G                0  G
                                     -----------------------------------------------------------------------------------------------------------------------
      DOD Total                       44,414              44,323              100                       98                 80                  <1
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Quantity Key: 100 percent or above goal; 90-99 percent of goal; below 90 percent of goal.
    Quality Key: 100 percent or above benchmark; 90-99 percent of benchmark; below 90 percent of benchmark.

        Generally, a slow economy makes recruiting less challenging, and
    operates to the advantage of those who are hiring, including the U.S.
    military; clearly, the current state of our economy has been one of the
    drivers of this recruiting success. As we see signs of economic
    improvement, we will remain vigilant and continue to monitor the impact
    of that improvement on our recruiting efforts. Despite the positive
    effect of the economy on recruiting, there remain other factors
    counterbalancing our ability to attract bright, young Americans into
    the Armed Forces--the lower likelihood of influencers of youth (e.g.,
    parents and teachers) to recommend service, a large and growing
    proportion of youth who are ineligible to serve in the military, higher
    numbers of youth going to college directly from high school, and
    continuing concerns about the prolonged worldwide, irregular campaign
    with its concomitant high operations tempo. Therefore, we are in
    uncharted waters with significant factors directly affecting military
    recruiting in both positive and negative ways.
        Due to these direct effects on recruiting, and as the Nation faces
    a demographic shift, it is important that the Department align its
    recruiting assets to tap emerging markets. Leveraging the diverse
    perspectives, and cultural, language and regional competencies present
    in our force ensures we encourage innovation and optimize mission
    success with respect to evolving challenges we will face well into the
    21st century. We are carefully reviewing recruiting programs to align
    funding and policies with current realities as we recognize the
    necessity of current and future budget constraints. We will strive to
    ensure the resources dedicated to recruiting are reasonable and remain
    at levels that will not compromise success. The Services will decide
    where best to take those cuts and any realignments undertaken will be
    done carefully and their effects closely monitored.
        Recruit Quality: The Department generally reports recruit quality
    along two dimensions--aptitude and education. Both are important, but
    for different reasons.
        Aptitude is an indicator of trainability and job performance. All
    recruits take an enlistment test called the Armed Services Vocational
    Aptitude Battery (ASVAB). One component of the ASVAB, the Armed Forces
    Qualification Test (AFQT), measures math and verbal skills. Those who
    score at or above average on the AFQT are in Categories I-IIIA, while
    those who score between the 10th and 49th percentile are placed in
    Categories IIIB and IV. Applicants scoring below the 10th percentile
    are ineligible to enlist. We value higher-aptitude recruits because
    their training and job performance are superior to those who score in
    the lower categories.
        The Department's educational enlistment policy groups education
    credentials into three tiers--Tier 1, consists primarily of traditional
    high school diploma graduates; Tier 2 consists of alternate credential
    holders, to include home-school and virtual/correspondence schools; and
    Tier 3 is nongraduates. Education credential is used not to measure the
    quality of education or the intelligence of the applicant, but rather
    the applicant's likelihood of completing his or her enlistment term.
    Years of research and experience indicate about three-quarters of
    recruits with a high school diploma complete their first 3 years of
    service, whereas only about half of those without a high school
    credential will complete 3 years. The attrition rates of those holding
    an alternative credential (e.g., GED) fall between these extremes. The
    Department's benchmark is that 90 percent of new recruits are high
    school diploma graduates.
        As a result of the evolving methods of education delivery across
    the Nation, the National Defense Authorization Act (NDAA) for Fiscal
    Year 2012 required restructuring of the education credential tiers we
    use to determine enlistment priority. Specifically, the act expanded
    Tier 1, ``High School Diploma Graduate,'' to include graduates of
    alternative educational delivery methods. From past experience, we find
    these individuals, on average, have significantly higher attrition
    rates--the current first-term attrition rate for high school diploma
    holders is 28 percent; alternate credential holders average a 38
    percent rate. We remain concerned about the long-term impacts of this
    policy change as it costs the Services approximately $55,000 to replace
    (recruit, train, equip, pay) each individual who fails to complete his
    or her initial term of service. Nevertheless, the new policy will be in
    place by July of this year as directed, and we will monitor the
    attrition behavior of these recruits. Additionally, as encouraged in
    the legislation, we will continue to develop new methods of identifying
    those who are qualified for recruitment and enlistment. These methods
    may include use of a non-cognitive test, adaptive personality
    assessment, or other operational attrition screening tools to predict
    performance, behaviors, and attitudes of potential recruits which
    influence attrition and ability to adaptively perform the required
    missions.
        Active Component Retention:
        Similar to our recruitment numbers, the Army, Air Force, Navy, and
    Marine Corps all exhibit strong retention numbers for the first 4
    months of fiscal year 2012 continuing a trend from the previous year
    (Table 2). The resilience of the All-Volunteer Force through two wars
    continues to prove the tremendous dedication and patriotism of the men
    and women serving our great Nation. I am humbled by their willingness
    to place themselves in harm's way and do their Nation's bidding.
        That said, I also recognize we will face new challenges as the
    economy improves, conflicts subside, and uncertainty rises over the
    drawdown of the force. The Department must ensure meaningful missions,
    support for our military families, and complete transparency regarding
    our reduction efforts. Despite budget pressures we are committed to
    careful and deliberate reviews of servicemember and family programs
    with an eye on retention. We can ill afford to arrive at the end of the
    drawdown with a force that does not match the capabilities the Nation
    requires and without the resources necessary to make adjustments.
    Towards this end, I am encouraged by the plans offered by the Services
    as they make difficult force reduction decisions. For example, the
    Services are limiting reductions in accessions to ensure we meet future
    requirements, and they are offering voluntary separation programs to
    servicemembers prior to taking involuntary separation actions whenever
    possible. We also intend to extend to Congress our commitment of
    transparency in these efforts. Together I am convinced we can create an
    environment that avoids the pitfalls experienced throughout history by
    most post-conflict militaries. While this will undoubtedly prove
    extraordinarily challenging, I believe you will agree we owe it to our
    Nation and to the soldiers, sailors, airmen, and marines who will
    continue to stand watch for the generations to come.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Women in the Service
        The Department has recently completed a review of how we assign
    women in the Service. As requested by Congress, the Department, in
    coordination with the military departments, reviewed laws, policies,
    and regulations, including our co-location policy, to determine if any
    changes were needed to ensure female members have an equitable
    opportunity to compete and excel in the Armed Forces. We took a hard
    look at the current restrictions on women, and recommend changes within
    the report to Congress (available to the public online http://
    www.defense.gov/news/WISR--Report--to--Congress.pdf). Pending
    expiration of the congressionally-required notification period, the
    Department will implement a change to policy that eliminates gender-
    based assignment restrictions to units and positions that are
    doctrinally required to physically co-locate and remain with direct
    ground combat units that are closed to women. These recommendations
    will open over 14,000 positions to women, including 6 Army occupational
    specialties. The Department is not stopping with the policy changes set
    forth in the report. The Services will continue to evaluate these
    recommendations to inform future policy revisions in addition to
    developing gender-neutral standards for physically demanding
    occupations. Secretary Panetta directed the Secretaries of the Military
    Departments and Chiefs of Military Services to report their progress on
    the development of gender-neutral standards, assessment of newly opened
    positions and recommendations for any further positions that can be
    opened, 6 months after implementing these changes. We continue to
    reiterate our commitment to removing all barriers that would prevent
    servicemembers from rising to the highest level of responsibility that
    their talents and capabilities warrant.
        Implementation of the Repeal of ``Don't Ask, Don't Tell''
        Since September 20, 2011, the effective date of repeal, the
    Services report there have been no significant issues related to the
    implementation of the repeal of ``Don't Ask, Don't Tell.'' By all
    accounts, implementation is going smoothly across the force. We
    attribute this success to our comprehensive pre-repeal training
    programs, combined with the discipline of our servicemembers and
    continued close monitoring and enforcement of standards by our military
    leaders at all levels. Prior to repeal, the Department saw a
    preponderance of the force, 2.25 million servicemembers, trained
    regarding the necessary policy and regulation changes that went into
    effect on ``Repeal Day.''
        The Department and the Services remain engaged in ongoing
    implementation efforts. A formal monitoring process ensures continual
    assessment and reporting to the Secretary of Defense. Elements of this
    monitoring process include regular Service assessment reports and
    periodic surveys of servicemembers. Through this feedback mechanism,
    the most common question we hear from the field is about benefits--
    specifically, whether or not benefits will be extended to same-sex
    partners. The Department is engaged in a comprehensive review of the
    possibility of extending eligibility for additional benefits, when
    legally permitted, to same-sex partners, and our goal is to complete
    this review by the end of the fiscal year. With leadership,
    professionalism, discipline, and respect, the Department and our
    servicemembers remain fully committed to the implementation effort,
    consistent with our standards of military readiness, effectiveness,
    unit cohesion, and recruiting and retention for the Armed Forces.
        General, Flag Officer, and Civilian Senior Executive/Equivalent
            Efficiencies
        In 2011, the Secretary of Defense made the decision to eliminate,
    reduce, or reallocate 140 general or flag officer (GFO) positions and a
    minimum of 150 Civilian Senior Executive/Equivalent (CSE) positions.
    The Department designated 102 GFO positions for elimination (complete
    removal from structure or downgrade of a position to a grade of O-6 or
    below) and 211 CSE positions for elimination. By the end of the year,
    we had eliminated 29 GFO positions and reduced 20 positions to a lower
    grade of GFO. We are moving forward to implement the remaining
    efficiencies gradually over the next several years as conditions allow,
    not adversely affecting missions or forcing readiness. Three years ago,
    Congress' authorization of the Joint Pool created the foundation for
    increased flexibility for the Department in the management of
    positions. This latest efficiency effort will take those policies to
    the next level and will create flexibility for each of the Military
    Departments to ensure their readiness to respond to any emerging
    threat. CSE reductions are being implemented based on a 2-year
    strategy. To date, 93 Senior Executive Service, Senior Level or Senior
    Technical (SES/SL/ST) positions, and 57 Defense Intelligence Senior
    Executive and Defense Intelligence Senior Level (DISES/DISL) positions
    have been reduced. The remaining CSE efficiencies will be completed by
    March 2013.
        Growing Language and Culture Capabilities
        The President directed the Department to sustain U.S. global
    leadership as we transition from a long-term engagement in two wars
    toward a more global presence focused on the Asia-Pacific and the
    Middle East. Though Service end strengths will decrease, the demand for
    language skills, regional expertise, and cultural awareness will
    increase, as these capabilities are essential not only to our mission
    readiness but to achieving national security, building partner
    capacity, and strengthening alliances. Currently, 9 percent of military
    personnel have tested or self-professed foreign language skills at any
    level of proficiency and 5 percent have skills that meet the
    Department's need for limited working language proficiency or above.
        Increasing the language capabilities of the Department depends on
    recruiting policies, training, assignment policies, retention, overall
    career management, and the U.S. educational system. We have efforts
    underway to coordinate national and Departmental language capabilities,
    as well as initiatives for long-term sustainment. The goal is to ensure
    a spectrum of programs that include pre-accession, and in-service
    military and civilian training, while establishing new career paths for
    personnel with language and culture skills. These efforts include
    increasing the foreign language skills of the Department's military and
    civilian personnel, as well as outreach to our Nation's schools and
    universities to promote the teaching of critical languages. All these
    efforts are essential to achieving a force, a Nation, and a citizenry
    capable of facing the threats, opportunities, and challenges we will
    confront in the 21st century.
        Drug Demand Reduction
        The abuse of illicit and prescription drugs in the U.S. military
    has substantial implications on force readiness and safety. The goal of
    the Drug Demand Reduction (DDR) Program is to protect readiness and the
    well-being of our civilian and military personnel by detecting and
    deterring drug abuse. Toward that end, the Department and Services have
    recently expanded the existing panel of tested drugs to include
    frequently abused prescription medications, such as Vicodin and Valium.
    The Department's minimum random drug testing goal is 100 percent with a
    positive rate below 2 percent. Overall, drug positive rates for active
    duty military personnel across all Services have continued to decline
    and the current rate of positive specimens is below 1 percent, the
    lowest in the program's history. As with many programs, the DDR Program
    incurred a reduction in budget which will require additional
    efficiencies in collection, outreach, and educational programs. This
    will also require increased targeted random drug testing.
        Suicide Prevention
        Every person within the Department of Defense is a valuable team
    member and each loss to suicide is a preventable tragedy. For this
    reason, we are taking aggressive steps to address suicide by enacting
    policies, providing supportive services and assistance, implementing
    training initiatives and publishing education materials, and conducting
    data surveillance and research to support servicemembers and their
    families. For example, the Department increased behavioral health
    providers from 6,590 to 8,898 total providers, a 35 percent increase
    over the past 3 years, adding mental health providers in primary care
    settings and embedding them with front-line units. We have also
    partnered with the Department of Veterans Affairs (VA) to build a
    continuum of support for transitioning members. This partnership will
    not only provide more service options for our members, it will allow us
    to compile more complete data that could lead to better predictive and
    preventative measures.
        We are building and shaping resiliency and coping skills through
    realistic and interactive training to ensure every servicemember can
    recognize the warning signs of suicide and encompass the skills and
    knowledge necessary to purposely intervene. We are also committed to
    further research on understanding and preventing suicide as with the
    Army Study to Assess Risk and Resilience in servicemembers (ARMY
    STARRS), which is the largest study of mental health risk and
    resilience factors ever conducted among military personnel. Conceived
    by scientists at the National Institute of Health's National Institute
    of Mental Health (NIMH), ARMY STARRS was formalized through a
    memorandum of agreement that authorized NIMH to conduct an extensive
    investigation with Army funding. The ARMY STARRS program is led by an
    interdisciplinary team of Army, Academic, and NIH investigators.
        Though we have been able to arrest the increasing rate of suicides
    over the past 3 years, the Department continues to work hard to reduce
    these tragedies. We have established a Defense Suicide Prevention
    Office to serve as the focal point for developing and overseeing
    suicide prevention policy, training, and programs across the
    Department. This office will also collaborate with Military Departments
    to implement the recommendations of the Department of Defense Task
    Force on the Prevention of Suicide, and serve as our lead with the VA
    and nongovernment organizations to identify and institute a continuum
    of suicide prevention efforts for personnel leaving the Department.
        Sexual Assault Prevention and Response
        As Secretary Panetta has stated, this Department has a zero-
    tolerance policy against sexual assault and this is a leadership issue
    first and foremost. We have received the final numbers from the
    Services and the Department had 3,192 reports of sexual assault in
    fiscal year 2011; because of underreporting, estimates are closer to
    19,000 (per a fiscal year 2010 Defense Manpower Data Center survey).
    This is in stark contrast to the first sample survey in 2006, when the
    estimate was 34,000. Since 2006, more victims are stepping forward to
    report assaults and the percentage of alleged sexual assault offenders
    facing court-martial proceedings has increased.
        In this past year alone, we have made significant strides. We
    recently published a revised Directive expanding our support to assault
    victims to include military spouses and adult military dependents, the
    Department's civilians stationed abroad and the Department's U.S.
    citizen contractors in combat areas. In addition, two new policies
    address expedited transfers and the retention of law enforcement
    records for 50 years. To ensure national standards for victim services,
    we are establishing a sexual assault advocate certification program
    and, we established the DOD Safe Helpline which provides anonymous and
    confidential, 24/7 hotline and texting support to victims anywhere in
    the world. We are collaborating with the VA and Department of Labor
    (DoL) to establish a continuum of care for victims of sexual assault
    transitioning from military to civilian life and will use the DOD Safe
    Helpline as a vehicle to help these transitioning servicemembers.
        To improve the tracking of reports, the Defense Sexual Assault
    Incident Database will be implemented by March 31 and be fully
    operational by August 31st. Because sexual assault cases are some of
    the toughest cases to investigate and to prosecute, the Department has
    committed funding through fiscal year 2017 to provide sexual assault
    specific training for judge advocates and criminal investigators and we
    are assessing the Sexual Assault Prevention and Response training for
    commanding officers and senior enlisted leaders. We will continue to
    hold the perpetrators appropriately accountable and all military
    servicemembers will live up to the high standards set.
        Compensation
        Senior leaders in the Department place a high value on the
    willingness of America's military personnel to serve their country. We
    understand our compensation system must be competitive, recognize the
    demands of military service, and always provide sufficient compensation
    to attract and retain qualified personnel. The 9th Quadrennial Review
    of Military Compensation shows that servicemembers need to be paid
    equal to or better than 70 percent of their civilian counterparts.
        Through the work of Congress, our servicemembers received generous
    military pay raises over the past decade and, as a result, military
    compensation has increased and significantly exceeds that 70th
    percentile. Additionally, over the past decade, the Department and
    Congress addressed a host of challenges ensuring military compensation
    remained competitive, and this has allowed the Department to continue
    to succeed in recruiting and retaining the high-quality, All-Volunteer
    Force required by the Nation, despite nearly a decade at war.
        As we reset following the end to combat operations in Iraq, the
    beginnings of force reductions in Afghanistan, and in light of the
    Nation's economic crisis and our expected manpower reductions, slowing
    the future growth of military compensation will be important. As
    mentioned earlier, we expect challenges in recruiting and retention to
    grow over the next few years as both the economy and labor market
    continue to improve. The current, competitive military compensation
    package makes the Department well suited to respond to those
    challenges, even during this time of war. As a result, we have
    requested full pay raises for fiscal year 2013 and fiscal year 2014,
    and more limited pay raises beginning in fiscal year 2015. For fiscal
    year 2013, this would provide an increase in military basic pay for all
    servicemembers of 1.7 percent, which is in line with earnings increases
    seen in the private sector as measured by the annual change in the
    Employment Cost Index.
        The Department also understands current fiscal pressures demand
    change, and that the costs of military compensation are significant.
    Some cost savings will be achieved through proposing more limited pay
    raises beginning in fiscal year 2015. However, in the continuing search
    for budget cuts and efficiencies, we are evaluating the military
    compensation system, focusing first on military retirement. As I stated
    before the subcommittee in October of last year, we have been
    conducting a vigorous, internal review, and are working diligently to
    identify and evaluate retirement alternatives. In addition to this
    ongoing review, the Department recommends Congress establish an
    independent commission to review military retirement, as requested by
    the administration. We fully support formation of such a commission,
    and if enacted, we will provide significant input. Most importantly,
    our review is performing critical and rigorous modeling and analysis of
    various alternatives. While many in the private sector, and elsewhere,
    have suggested alternatives to the current military retirement system,
    few have undergone rigorous modeling or analysis. We are committed to
    ensure any proposal we develop is sound and does not harm the
    Department's ability to recruit and retain the future force. Secretary
    Panetta has also made clear that current members will be grandfathered;
    for those who serve today, there will be no changes in retirement
    benefits. Following the review of military retirement, we plan to
    continue our comprehensive, broad-based review of military compensation
    in search of additional efficiencies and savings.
    Reserve Component
        The fiscal year 2013 budget supports the increased utilization of
    the Reserve components (RC) as called for in the National Defense
    Strategy and will enable the RCs to continue to fulfill their vital
    national security role. The Department's Ready Reserve totaling about
    1.1 million members contributes 43 percent of total military end
    strength at a cost of 9 percent of the total base budget. The National
    Guard (NG) and Reserve provide trained, ready, and cost-effective
    forces that can be employed on a regular operational basis, while also
    ensuring strategic depth for large-scale contingencies or other
    unanticipated national crises.
        Prior to 2001, the RCs were primarily a strategic reserve with
    occasional operational missions as needed to augment active forces.
    Since 2001, RC units and individuals have been heavily employed across
    the full spectrum of military operations and have demonstrated their
    readiness and criticality. Our current NG and Reserve is, arguably, the
    most combat seasoned reserve force ever, and we plan to capitalize on
    this significant investment to provide needed military capacity during
    current austere economic times.
        The fiscal year 2013 budget anticipates the Department will
    continue to use the Guard and Reserve as a vital part of the
    operational force and--where it makes sense--as a force of first
    choice. Today's Citizen Warriors have made a conscious decision to
    serve, with full knowledge that their decisions mean periodic recalls
    to active duty under arduous and hazardous conditions. In approximate
    numbers, as of December 31, 2011, the Ready Reserve currently consists
    of:

             Selected Reserve: 844,400
             Individual Ready Reserve: 220,000
             Inactive NG: 3,700

        Reserve Component Utilization
        The Reserve component has become an integral part of the Nation's
    military force participating in nearly every mission worldwide for the
    past two decades. As this practice continues, the Department has
    emphasized prudent and judicious management and use of the RC to help
    mitigate stress on the Total Force. Total Reserve component usage in
    support of Contingency Operations since September 11, 2001 is 835,689
    (809,913 Selected Reserve and 25,776 Individual Ready Reserve). Of
    those, 80 percent have deployed in the U.S. Central Command area of
    responsibility. On December 31, 2011, there were 86,213 Reserve
    component members activated in support of Operation Noble Eagle (ONE)
    and Operation Enduring Freedom; of those, 35,361 were deployed in the
    Central Command theater.
        Realigning Capabilities
        The Reserve component is well suited for use as a source of
    strategic depth as well as in a wide variety of operational roles,
    including providing: (1) rotating operational units deployed in
    response to Combatant Commander needs and Service requirements; (2)
    units and teams deployed in support of Theater Security Cooperation and
    Building Partner Capacity activities around the globe; (3) individual
    augmentees who can be deployed in response to Combatant Commander,
    Defense agency, or Service needs; (4) units, teams, and individuals to
    support core Unified Command Plan missions such as Homeland Defense and
    Defense Support of Civil Authorities, as well as to support Governors
    in state security; and (5) units, teams, and individuals assigned to
    support Department or Service institutional needs. Reserve component
    forces are well-suited for missions and tasks in support of Theater
    Security Cooperation and Building Partner Capacity activities and
    specialty missions requiring unique skills, particularly when the RC
    units have an enduring relationship with a supported command.
        Individual and Medical Readiness
        One of the key aspects of maintaining a viable, operational RC is
    to ensure that our military members and our civilian employees maintain
    the highest level of individual readiness. We must focus on maintaining
    the appropriate physical fitness levels for a force that has a higher
    average age than the Active component. Similarly, ensuring that our RC
    members are medically and dentally ready to serve is of the utmost
    importance.
        Employing the RC as operational force requires modifications to
    training schedules and funding requirements. Before we operationalized
    the RC, normal minimum training profiles consisted of training 2 days
    per month plus 14-15 days of active duty for training annually. During
    that training time, RC personnel were required to meet the same
    standards as their Active counterparts. While that training profile
    remains in-place for some types of units, for those with planned
    deployments, training days prior to mobilization increases. This
    training profile, with more training pre-deployment and less post-
    deployment, minimizes mobilized time away from families and civilian
    jobs. Increasing individual readiness by modifying training profiles
    with resources and policies is a major focus area that will allow the
    Guard and Reserve to capitalize on the gains made during the last
    decade and enable sustained use of the RC as an operational force.
        We continue to monitor Individual Medical Readiness of the NG and
    Reserve to ensure availability of ready RC members for deployment, as
    it is a priority for the Department. By the fourth quarter of fiscal
    year 2011, the RC had increased its Fully and Partially Medically Ready
    (FMR/PMR) rate 5 percent over first quarter fiscal year 2011 rates, and
    reduced the Indeterminate population by 6 percent. Most notably, the
    Marine Corps Reserves improved their FMR status by 16 percent and
    reduced the PMR rate by 14 percent--over half of the fiscal year 2011
    first quarter rates. The Coast Guard Reserve also made great
    improvements increasing their FMR rate by 9 percent, and reducing their
    Indeterminate and Not Medically Ready population by 4 and 6 percent
    respectively. While we continue to face challenges with Dental
    Readiness, all Services are over the 75 percent goal except Army
    Reserve and Army NG which are at 71 and 73 percent respectively. We are
    working diligently to improve access to medical and dental services for
    RC members. For example, the Army Reserve now budgets additional
    medical and dental services into their Readiness Accounts for RC
    members if needed.
        Yellow Ribbon Reintegration Program (YRRP)
        The YRRP is a Congressionally-mandated program whereby the Services
    provide RC servicemembers and their families with critical support,
    information, services, and referrals throughout the entire deployment
    cycle focused primarily on local community resources to maximize
    successful servicemember reintegration back into their civilian lives.
    During the past 3 years, the YRRP has evolved into a successful,
    forward-leaning program providing essential readiness and resiliency
    training and resources to over 800,000 servicemembers and designees. In
    fiscal year 2011, Congress appropriated $16 million to the YRRP for
    enhanced outreach and reintegration employment activities which allowed
    the Department to support various State-led initiatives. YRRP's fiscal
    year 2012 funding is entirely dedicated to supporting its legislatively
    mandated core activities. To support the use of the operational reserve
    in the future, we will ensure funding for Service YRRPs is moved to
    their base line budgets.
    Transition to Veterans Affairs
        Today's Veterans face a number of challenges in making the
    transition to civilian life, and among these is embarking on a
    productive post-military career. For every success story of a Veteran
    who has turned skills developed in the military into success in the
    civilian workplace, there are, as President Obama has said, stories of
    Veterans who come home and ``struggle to find a job worthy of their
    experience and worthy of their talent.'' We see these struggles most
    clearly in high unemployment rates for Veterans. Making this situation
    more urgent is that, as we draw down from the wars in Iraq and
    Afghanistan and we make difficult decisions about our future force
    structure in light of the fiscal challenges the Nation faces, the
    number of servicemembers--particularly young servicemembers--departing
    the military over the next several years will increase.
        Making a firm commitment to employ America's Veterans, in August
    2011, the President called for the creation of a Task Force led by the
    DOD and VA with and other agencies including the DoL, Department of
    Education (DoE), Department of Commerce, Small Business Administration,
    and the Office of Personnel Management, to develop proposals to
    maximize the career readiness of all servicemembers. In coordination
    with our VA, DoL, and DoE partners, DOD's role involves implementing
    and sustaining a comprehensive plan to ensure that all transitioning
    servicemembers have the support they need and deserve when they leave
    the military. This includes working with other agencies in developing a
    clear path to civilian employment; admission into and success in an
    academic or technical training program; or successful start-up of an
    independent business entity or nonprofit organization. The effort is
    fully aligned with the VOW to Hire Heroes Act of 2011 and is consistent
    with DOD's commitment for keeping faith with all of our military
    members and their families, providing them a comprehensive set of
    transition tools and support mechanisms as they complete their service
    to our Nation.
    Civilian Personnel
        The Department continues to hold, with limited exceptions, the
    civilian workforce to authorized fiscal year 2010 levels. This
    continues the direction from last year's efficiency initiative and was
    implemented in conjunction with organizational assessments and mission/
    function prioritization. This direction reflects the Department's
    commitment to challenge workload demand; more appropriately size our
    workforce to meet our most pressing and critical priorities; and
    focuses on reducing administrative functions associated with
    headquarters staff while realigning resources to warfighting
    capability, recapitalization, and unit readiness. As Secretary Panetta
    has testified, our spending choices must be based on sound strategy and
    policy. and reductions in the civilian workforce reflect changes in the
    Department's strategy, overseas presence, and force structure.
        Despite the overall decreases to the Department's civilian
    workforce, there have been areas where mission workload, requirements,
    and fiscal considerations warranted growth and exceptions. Growth and
    increases to the civilian workforce have continued in critical areas
    such as acquisition, cyber, and intelligence. Targeted exceptions to
    fiscal year 2010 levels have also been approved for shipyard and
    security guard workforces in the Navy; the test and evaluation
    workforce in the Army and Air Force; joint basing requirements for the
    Navy and Air Force; and in-sourcing of contracted services at some
    combatant commands and defense agencies.
        Reductions in the Department's civilian workforce are being
    executed very deliberately to minimize adverse impacts to our dedicated
    civilian service workforce and to avoid unintended consequences, such
    as:

             ``borrowing'' or ``repurposing'' military personnel
            for non-military tasks, which would risk hollowing the force;
             potentially paying more for contracted services or
            inappropriately realigning work to the private sector; and
             jeopardizing our ability to sustain and develop
            mission critical skills and competencies.

        To support these goals, I reconstituted the Defense Human Resources
    Board (DHRB) on December 8, 2011. The DHRB is my primary advisory body
    for Total Force management across the Department. Specifically, the
    DHRB serves to promote and facilitate improved Department-wide Total
    Force management, both current and future, through the improved
    alignment of statutes, policy, business practices, information
    technology, and resources.
        It is imperative we improve the management of our Total Force of
    Active and Reserve military, government civilians, and contracted
    services. To do so, leaders and managers throughout the Department must
    be provided the information, tools, and flexibility necessary to make
    sound and well-reasoned decisions. To that end, there are a number of
    specific areas that we have focused attention on.
        In October 2011, the Office of Federal Procurement Policy (OFPP)
    issued its policy letter regarding inherently governmental (IG) and
    other work Reserved for government performance. The Department was an
    active participant in developing that policy letter, and my staff is
    currently working to ensure its implementation and application across
    the Department. The identification of IG functions, work that is
    closely associated with IG, and workload critical to the Department's
    ability to execute its mission are fundamental processes in our Total
    Force management strategy.
        Ensuring the Department's workforce is sufficiently sized and
    comprised of the appropriate mix of personnel is critical to maintain
    readiness and capabilities in our constrained fiscal environment. The
    Department's ``sourcing'' of necessary functions and work between
    military, civilian, and contracted services must be consistent with
    workload requirements, funding availability, readiness and management
    needs, and applicable laws. In particular, workforces must be
    structured to not use military personnel outside of their primary
    specialty to perform functions or tasks that would limit their
    availability to mobilize and perform the operational mission, support
    and maintain necessary states of readiness, or impede their training
    and career progression requirements. As planned military end strength
    reductions happen, the Department will continue to focus on the proper
    mix of personnel.
        Inventory of Contracts for Services (ICS)
        Contracted services remain the largest element of the Total Force.
    The Department remains committed to meeting its statutory obligations
    under title 10 to annually review its contracted services. After 6
    months of working with the more than 40 components that comprise the
    Department, we delivered, on November 22, 2011, a consolidated plan to
    the congressional defense committees that identified both short- and
    long-term actions that will improve the ICS, make it a more reliable
    and complete data set, and improve visibility and accountability in the
    area of contracted services. Consistent with changes to the statute,
    this plan, and subsequent guidance issued on December 29, 2011,
    specifically addresses how the Department will:

             measure contracted support level of effort using
            direct labor hours and associated cost data collected from
            contractors;
             assess the type of work being performed by the private
            sector and for whom based on standardized taxonomies and
            portfolio groups;
             strengthen the relationship between the ICS and annual
            budget justification materials; and
             ensure the ICS supports strategic workforce planning
            and an appropriately balanced, effective, and efficient
            workforce.

        The actions being taken will improve the long-term utility of the
    ICS, beginning with the next submission this summer, and will enable us
    to more accurately and holistically assess contracted workload. Coupled
    with an improved IG&CA Inventory, the ICS will help us achieve the
    right balance in our workforce, aligning inherently governmental
    activities to military and civilian workforces, and commercial
    activities to the most cost effective service provider.
        In-sourcing
        The Department greatly values the support provided by private
    sector firms and recognizes the private sector is a vital source of
    expertise, innovation, and support to the Department's Total Force.
    However, in-sourcing continues to be a necessary workforce shaping tool
    to reduce excessive or inappropriate reliance on contract support;
    appropriately align inherently governmental activities; and protect the
    public's interest while providing the best value for taxpayers.
    Therefore, we are continuing to in-source contracted services that are
    closely associated with inherently governmental work; that provide
    unauthorized personal services; or that may otherwise be exempted from
    private sector performance (to mitigate risk, ensure continuity of
    operations, build internal capability, and to meet and maintain
    readiness requirements). While some contracted services may be
    identified for in-sourcing, some services may no longer be required, or
    be of lower priority, and therefore reduced in scope or eliminated.
    Contracted services that meet the necessary criteria (i.e. consistent
    with statutes, policies, and regulations) will be in-sourced by:

             absorbing work into existing government positions by
            refining duties or requirements;
             establishing new positions to perform contracted
            services by eliminating or shifting equivalent existing
            manpower resources (personnel) from lower priority activities;
            and
             as appropriate or necessary, requesting an exception
            to the civilian levels currently reflected in the budget.

        Our in-sourcing efforts are focused on rebalancing the workforce,
    rebuilding critical internal capabilities (including the acquisition
    workforce), and reducing operational risks.
        OMB Circular A-76
        Consistent with statutory changes that restrict the ``direct''
    conversion of work currently performed (or designated for performance)
    by any number of civilian personnel to private sector (contract)
    performance, I issued guidance to the Department on December 1, 2011.
    In it, I urged vigilance to prevent the inappropriate conversion of
    work to contract performance, as we adapt to declining budgets and
    operating in a constrained fiscal environment. We are also preparing
    guidance that reiterates the current statutory moratoriums on public-
    private competitions.
        As noted earlier, contract support is critical to the Department's
    operations. Last summer, we submitted a report on our public-private
    competition policy and procedures under OMB Circular A-76, making
    recommendations to improve the end-to-end competition process. The
    public-private competition process can be a useful tool for our
    commanders and managers to validate an organization's manpower and
    other requirements; drive a more consistent delivery of mission support
    and services to our servicemembers and families; improve business
    process; and deliver readiness while minimizing fiscal opportunity
    costs to meet the compelling needs of the Department. Congress, in the
    NDAA for Fiscal Year 2012, accepted many of our recommendations and
    made changes to the governing statute for public-private competitions.
    We are committed to making improvements to ensure the process is more
    equitable, less time consuming, and minimizes disruptions to incumbent
    workforces. Together with improvements to the ICS that will enable us
    to more accurately gauge the extent of private sector reliance, we look
    forward to providing an improved A-76 process to our decision makers in
    the future. In summary, we must shape an efficient, effective, and
    viable Total Force aligned to strategy and is supported by robust
    analysis. The fiscal year 2013 budget and our associated plans reflect
    our best judgment today.
        Strategic Human Capital Management and Competency Management
        The Department is making progress toward developing a more
    systematic approach and enterprise tools for strategic human capital
    planning that covers over 750,000 civilian employees in over 600
    occupations. In fiscal year 2012, we developed initiatives to meet
    statutory civilian strategic workforce planning requirements by fiscal
    year 2015. First, the Department expanded its functional community
    construct to cover all major occupations in the civilian workforce.
    Previously, only mission critical occupations, which made up less than
    40 percent of the workforce, were covered in the DOD Strategic
    Workforce Plan. Second, the Department updated criteria for designating
    mission critical occupations following a more structured process
    defined by the Federal-wide Strategic Human Capital Management High
    Risk Initiative. Third, an Enterprise Competency Management Framework
    has been designed that includes phased development of Department-wide
    occupational competency models and deployment of a tool for competency
    assessments. An Army system is now being updated for Department-wide
    use to replace multiple competency tools with a single enterprise
    system. That system, the Defense Competency Assessment Tool is
    scheduled for deployment in fiscal year 2013; and through it, we will
    be able to assess workforce competencies and develop strategies to
    reduce critical skill gaps that may impact mission accomplishment by
    fiscal year 2015.
        The Department continues to focus on life-cycle management of the
    civilian workforce by integrating strategic workforce planning,
    competency management, hiring process improvements, and workforce
    development initiatives to ensure that plans support the recruitment,
    retention, and development of a ready civilian workforce that is
    responsive to swiftly changing mission demands and complex challenges.
    These are multi-year initiatives to improve the Department's ability to
    rapidly grow, contract, and shift the workforce in response to emerging
    mission requirements.
        Hiring Reform
        The Department has made great strides in reforming the hiring
    process by reducing hiring timelines, streamlining the process, and
    focusing on efficient practices. Prior to implementing the May 2010
    Presidential Memorandum for Improving the Federal Recruitment and
    Hiring Process, measurement of all hiring practices was inconsistent
    and lacked input from individual components and servicing agencies. In
    2010, we adopted standard measurement practices that enabled our
    leadership to analyze and measure hiring timelines across multiple
    dimensions, and to drive mission-critical changes.
        In 2011, we continued to make positive and meaningful progress
    toward reforming civilian hiring practices. We reduced the number of
    days it takes to hire an employee by developing a common business
    process, deployed tools to automate key steps in the hiring process,
    and provided manager and human resources specialist training and job
    aids. In addition, our arsenal of hiring-related metrics and
    measurements has grown, thereby enabling transparency and targeted
    improvements to the hiring process. In fiscal year 2011, the Department
    reduced its external hiring timeline by 31 percent, from the fiscal
    year 2010 baseline of 116 days to 91 days. As a result of progress made
    in the early part of fiscal year 2011, the Department's external hiring
    timeline target was adjusted downward to 95 days from the original 101
    day target. Our goal for external hiring in fiscal year 2012 is 80
    days, with quarterly goals established to monitor progress. The overall
    reduction in hiring timeline for external hires contributed to an
    overall time to fill for all hiring actions, both internal and
    external, of 75 days for fiscal year 2011 and 63 days for fiscal year
    2012 year-to-date. Another area of improvement is the automation of our
    hiring process. We procured an automated staffing tool (USA Staffing)
    in fiscal year 2010 and successfully deployed it to over 70 percent of
    the Department in fiscal year 2011, and are aggressively working toward
    completing deployment this year.
        The Department continues to partner with the Office of Personnel
    Management (OPM) on the re-engineering of USAJOBS, the job posting
    portal used by the Federal Government. The USAJOBS 3.0 project is a
    high visibility project and DOD is the largest consumer of USAJOBS'
    services. The deployment of USA Staffing and improvements to USAJOBS
    are critical initiatives; however, without participation and engagement
    from our Hiring Managers and Human Resource (HR) Professionals, the
    benefit of these initiatives cannot be fully realized. As a result, a
    primary objective is to foster and encourage strong partnerships
    between these key stakeholders. To assist, the Hiring Reform Website
    (http://www.cpms.osd.mil/HiringReform/) provides a Hiring Managers
    Toolkit containing 24 guides, and a Webinar series is now available
    that provides content based on the four phases of the hiring process.
        The initiatives outlined represent the Department's continued
    approach to hiring reform implementation, an approach aligned with the
    Department's overall mission, and with its Strategic Workforce Planning
    objectives. A key success criterion is the involvement of senior
    leadership. We continue to solicit and use our cadre of senior leaders
    to guide our efforts, communicate and campaign for process
    improvements, and provide direction throughout each hiring reform
    effort. We will continue to monitor these efforts closely.
        Termination of the National Security Personnel System (NSPS)/New
            DOD-wide Performance Management System, Redesigned Hiring, and
            Workforce Incentives
        The NDAA for Fiscal Year 2010 repealed the statutory authority for
    NSPS, mandating all employees transition from NSPS no not later than
    January 1, 2012. The Department successfully completed the termination
    of NSPS and the transition of all employees and positions from NSPS to
    the appropriate successor statutory pay and personnel system in
    December 2011. No employees or positions remained under NSPS on the
    statutory deadline of January 1, 2012.
        In September 2010, we launched our ``New Beginnings'' effort to
    involve labor representatives in design of a new performance management
    system and hiring processes. New Beginnings was an evolving effort and
    included labor and management planning sessions, conferences, and
    design team working meetings for more than 18 months, which culminated
    in over 100 pre-decisional proposals developed by labor and management
    employees for leadership consideration. The pre-decisional process
    culminated in a comprehensive report from the design teams that
    captures their research, conclusions, and proposals, and Department
    leadership has considered the report's recommendations. We will
    continue to involve employees through their labor representatives as we
    move forward on particular recommendations and decisions about the new
    authorities and practices.
        Civilian Leadership Development
        The Defense Civilian Emerging Leaders Program (DCELP), as
    authorized by the NDAA for Fiscal Year 2010, fills a critical need by
    focusing on a corporate scale on developing civilian leaders at the
    entry and mid-level. We recognize the need for an improved model to
    attract, retain, and develop civilian leaders to support pipeline
    readiness and enhance bench strength. We conducted a gap analysis
    between existing programs and requirements, and designed a framework to
    create a new program to recruit and develop new civilian leaders, using
    proven models such as the Presidential Management Fellows program.
    Recognizing the financial environment and to ensure we have a sound
    programmatic framework, we implemented a DCELP pilot in September 2011
    with 103 participants at the General Schedule (GS) 7 through 11 level
    from the Acquisition, Financial Management, and Human Resources career
    fields. A second cohort, which expands our intake to 180 participants,
    will begin before the end of 2012.
        This new DCELP is additive to the Department's current leadership
    programs, which include the Executive Leadership Development Program
    (ELDP) and the Department of Defense Senior Leader Development Program
    (DSLDP). DSLDP was established in 2008 to meet emergent leadership
    needs and provides a competency-based approach to the deliberate
    development of senior civilian leaders (GS 14 or 15 and equivalent
    grades) with the enterprise-wide perspective needed to lead
    organizations and programs and achieve results in the joint,
    interagency, and multi-national environments. We are pleased to report
    that DSLDP is soon graduating its second cohort and just commenced its
    fourth cohort. DSLDP is a critical feeder pipeline for executive
    talent. Established in 1985, ELDP provides mid-level civilians (GS-12
    through GS-14 and equivalent grades) with an extensive exposure to the
    roles and mission of the Department and our Interagency partners and,
    an increased understanding of, and appreciation for, today's
    warfighters through intensive hands-on field experiences. Both programs
    are aligned with the 21st century competency framework and designed to
    ensure application of critical leader competencies and have garnered
    success for their target senior grade populations. These highly
    competitive Department-wide programs will serve as building blocks for
    the new leader development framework.
        In addition to the programs just mentioned, another critical
    building block in this arena is training managers and supervisors.
    Pursuant to the NDAA for Fiscal Year 2010, the Department has
    established a holistic training curriculum and baseline learning
    objectives for each training topic. We have piloted and launched our
    first course, focusing on new supervisors. Our attention has turned to
    developing the curriculum for refresher training, which the NDAA
    requires occur at least every 3 years. The refresher pilot will take
    place in May 2012. Following that, we will develop and then launch for
    Departmental use training for managers--those who supervise other
    supervisors. All courses will be launched this year. Also, we are
    partnering with OPM and vendors to design assessment and developmental
    tools that will help predict interest and success for aspiring and
    current supervisors. Those assessment tools are planned for use by May
    2012.
        Senior Mentors/Highly Qualified Experts
        In April 2010, in response to media and congressional concern, the
    Secretary issued policy guidance regarding how the Department may
    acquire certain advisory services from retired senior officials--the
    so-called senior mentor (SM) policy. The guidance prohibits contracting
    for mentoring services and directs that senior mentors must be employed
    as Federal officials under the specific Highly qualified Expert (HQE)
    appointing authority, which subjects them to certain Federal ethics
    rules and salary limits. The NDAA for Fiscal Year 2011 formalized the
    requirement that senior mentors be hired as HQEs, and comply with all
    applicable Federal laws and regulations on personnel and ethics
    matters.
        In November 2010, the Deputy Secretary of Defense issued a
    memorandum directing all HQE-SMs position descriptions be revised
    within 30 days, requiring all HQE-SMs complete the public disclosure
    forms. In addition, all HQE-SMs were to submit completed public
    disclosure forms within 30 days of the position description being
    updated, but no later than January 12, 2011. Accordingly, all HQE-SM
    either separated or completed the public financial disclosure form as
    of January 12, 2011. Currently, the Department has 34 HQE-SMs on board,
    and approximately 164 HQEs total while Congress has authorized 2,500,
    and the number of HQEs has declined by 8 percent since December of last
    year. As a result of ongoing efficiency initiatives, the total number
    of HQEs will change as functions are discontinued.
        To further ensure SM services are acquired in strict compliance
    with Department policies, the Defense Federal Acquisition Regulation
    Supplement (DFARS) incorporated the prohibition on contracting for SM
    services in DFARS 237.102-72 issued on November 24, 2010. After a
    Department-wide audit, the Department of Defense's Inspector General
    reported on October 31, 2011, that the Department complied with these
    new policies for hiring senior mentors as HQEs.
        As a result of these changes, the Department has successfully
    balanced the critical need for SM services with the public's need for
    confidence in the integrity of the program. We are committed to
    ensuring consistency and transparency in the use of SM across the
    Department. Further, as we greatly value the contributions of our SM to
    the training and professional development of our current and future
    Joint and Service commanders, we believe this policy provides the
    rigorous oversight required for the proper employment of these experts.
        Civilian Expeditionary Workforce
        The Department is working to better employ the talents of our
    civilian workforce to meet expeditionary mission challenges, including
    those not directly related to war fighting. Global security challenges
    require adequate civilian capacity to conduct complex operations,
    including those missions that require close military-civilian planning
    and cooperation in theater. Since 2001, approximately 50,000 Department
    civilians have been involved in contingency operations around the
    globe. Currently, approximately 4,800 civilian employees are serving in
    the CENTCOM theater.
        The Department institutionalized the Civilian Expeditionary
    Workforce (CEW) to provide deployable civilian experts to support
    military operations, contingencies, emergency operations, humanitarian
    missions, disaster relief, and stabilization and reconstruction
    operations. The CEW is designed to enhance the Department's ability to
    work alongside and help build the capacity of partner defense
    ministries and provide surge support where needed. Since June 2010, CEW
    deployments have increased by 56 percent, from 171 deployed civilians
    to 388 as of the end of February 2012. Civilians deployed under the CEW
    receive general and theatre-specific, urban training, and are eligible
    for the same health care benefits in-theatre as deployed military
    personnel, including medical evacuation and access to hospital
    services.
        With the support of Congress, we have obtained important incentives
    and benefits to help compensate for the inherent risks of deployment.
    The Department continues to identify pertinent issues and propose fully
    integrated solutions to ensure force health protection, surveillance,
    deployment benefits, and medical care for civilians who have been
    injured, wounded, or have contracted diseases while deployed in support
    of contingency operations. We have worked in partnership with OPM, the
    Department of State, and the DoL to ensure all similarly-situated
    Federal civilians receive consistent and equitable benefits
    commensurate with the risks of deployment. In this endeavor, working
    with our partner agencies, we developed proposed legislation to provide
    a standard benefits package for all Federal employees.
        More work is underway to transform the CEW program mission.
    Consistent with the Department's strategic direction, the goal is to
    implement an enduring solution which will enable the CEW to achieve a
    rapid response capability in support of all Combatant Commands. The
    transformation will include consolidation of four key functions across
    the Department, including:

             Policy formulation that enables standard, DOD-level
            instructions for the deployment of civilians that will allow
            sufficient flexibility to meet future demand and ensure
            personnel are identified for potential deployment in any event;
             HR Servicing that provides end-to-end lifecycle
            support, from recruitment to separation;
             Management support for arranging travel; performing
            audience targeted training; conducting final medical screening
            and vaccinations; providing passport services and travel
            voucher training; issuing travel orders, uniforms, and
            equipment; tracking time and attendance during deployment; and
            providing redeployment services; and
             Payroll support allowing for a centralized payroll
            function to ensure standardized policies and administration.

        These efforts will help transform the capability of the CEW to
    efficiently support future contingency staffing needs to unify and
    improve the efficiencies in support of operations.
        Workforce Shaping
        The Department has long experience managing a civilian workforce in
    transition. Beginning with the first installation closures in the mid-
    1960s, our predecessors formulated a strategy for maintaining a
    relatively stable workforce despite the instability that is inherent in
    major downsizing and restructuring. The centerpiece of that strategy
    was, and continues to be, the Priority Placement Program (PPP). Through
    this vital program, we have retained the skills of more than 258,000
    transitioning civilian employees by matching them with Department job
    vacancies. During the last 25 years, which have been largely defined by
    five Base Realignment and Closure rounds and a workforce reduction of
    30 percent \1\, our overall objective has been to reshape the
    Department as efficiently and humanely as possible. By maintaining
    constant focus on this goal, we have been able to develop a broad-based
    career transition assistance program to complement the PPP.
    ---------------------------------------------------------------------------
        \1\ This represents an overall reduction from 1,070,000 in 1987 to
    751,000 in 2012.
    ---------------------------------------------------------------------------
        In view of the efficiency initiatives implemented by former
    Secretary Gates, ongoing efforts by Secretary Panetta to further
    streamline, and the specter of even deeper spending cuts, it is very
    unlikely that involuntary separations can be avoided in fiscal years
    2012 and 2013. Although the scope of involuntary separations is
    uncertain at this time, we will fully exploit all available tools and
    resources to minimize the human impact of force restructuring while
    maintaining mission readiness. Under our current plan, the civilian
    workforce will decrease in size from about 764,300 full-time
    equivalents (FTEs) to 756, 800 in fiscal year 2013. This represents a
    reduction of about 1 percent, and is approximately 2 percent lower than
    our fiscal year 2011 actual execution of 771, 300. Absent additional
    constraints, the workforce will gradually decrease to 738,000 FTEs by
    fiscal year 2017.
        Federal agencies are required to use standard reduction-in-force
    (RIF) procedures when reorganization, lack of work, shortage of funds,
    or insufficient personnel ceilings necessitate separating or demoting
    civilian employees. When RIF becomes necessary, employees compete for
    retention based on several factors established by law and regulation.
    These factors include tenure, veterans' preference, length of service,
    and performance ratings. Together, these factors determine each
    employee's RIF retention standing.
        During periods of force reductions, the Department's policy is to
    use voluntary separation programs to the maximum extent possible prior
    to imposing any involuntary actions. The most familiar and publicized
    of these are Voluntary Separation Incentive Pay (VSIP) and the
    Voluntary Early Retirement Authority (VERA). The Secretary has
    independent authority to allow up to 25,000 VSIP buyouts annually. This
    figure, which does not include incentives paid in conjunction with Base
    Realignment and Closure (BRAC), has thus far been sufficient to meet
    our needs. Although there is no limit on the number of VERAs, the use
    of this authority can be constrained by the VSIP limit, since employees
    who elect VERA frequently also take VSIP.
        The Department also partners with the DoL to provide downsizing and
    restructuring installations outplacement assistance under the Workforce
    Investment System (WIS). The WIS is administered through the various
    State One-Stop Career Centers, and includes assistance such as
    retraining, career counseling, testing, and job placement assistance.
    While working constantly to refine and enhance existing force shaping
    tools, the Department will continue to seek regulatory and legislative
    changes to further assist affected civilian employees in transitioning
    to other positions, careers, or to private life.
                                 health affairs
        The Military Health System provides extraordinary care on the
    battlefield to our servicemembers--both preventing illness and injury
    to those in harm's way, and rapidly treating those who are wounded. The
    performance of our military medical system in a time of war continues
    to set new standards for battlefield survival rates, the reintegration
    of many who are wounded back into their units and for returning those
    who need additional care back to the United States.
        In addition to these successes, the military health system provides
    access to care for over 9.6 million beneficiaries, no matter where they
    live. We provide this access through our direct health care system and
    through our managed care support contracts. This health care benefit is
    justifiably one of the finest in the county and is an appropriate
    benefit for those who serve our county. However, the costs of providing
    this care continue to increase more rapidly than overall inflation. For
    a number of years, and through several administrations, there have been
    continuous, incremental steps taken to reduce the rate of growth in the
    costs of healthcare.
        The Department is pursuing a balanced, four-pronged approach by
    which all stakeholders share responsibility for improving the health of
    our population and the financial stability of the system of care. Our
    four approaches--moving from a system of healthcare to one of health;
    continuing to improve our internal efficiencies; implementing provider
    payment reform; and rebalancing cost-sharing--are further described
    below. In some instances, they reflect efforts already underway, or new
    initiatives that the Department is implementing within existing
    legislative and regulatory authorities.
    Moving from Healthcare to Health
        The Department of Defense's military medical leaders are leading a
    strategic effort to move our system to one that promotes and sustains
    the optimal health of those we serve, while providing world class
    healthcare when and where it is needed. Central to this effort are the
    Department's investments in initiatives that keep our people well; that
    promote healthy lifestyles; and that reduce inappropriate emergency
    room visits and unnecessary hospitalizations.
        Over the last 2 years, the Department introduced the Patient-
    Centered Medical Home and over 2.2 million are currently enrolled. We
    are beginning to see the benefits of this new model of care with
    decreases in emergency room visits; increased compliance with provider
    directions and drug prescriptions; and increased patient satisfaction
    for those enrolled. We've also placed behavioral health staff within
    these medical homes, improving access with reduced stigma, for our
    patients needing the support of mental health providers. A valued
    component of the medical home is the introduction of secure patient-
    provider email communications, allowing our patients to directly
    communicate with their medical providers without the need for a
    physical visit to the clinic. In 2013, we will continue to expand this
    model to all of our primary care clinics in the military health system,
    and increase the tools available to patients to help manage their own
    care.
        Aligned with that initiative is the introduction of a 24/7 nurse
    advice line for all stateside beneficiaries based on our effective use
    of this approach for our military beneficiaries in Europe. This will
    provide beneficiaries with around-the-clock access to toll-free nurse
    advice services. When the caller requires follow-up care, this service
    will provide direct appointing services for beneficiaries enrolled to
    TRICARE Prime in our military treatment facilities. We will implement
    this added service this year.
        In moving from healthcare to health, we have also engaged the
    broader DOD community--line leaders, commissaries, dining facilities,
    schools and child development centers. By changing menus, promoting
    better food choices and healthy lifestyles we will encourage healthy
    lifestyle changes. The First Lady, Michelle Obama, recently visited one
    of our leading installations, Little Rock Air Force Base, to highlight
    the progress we have made.
        Finally, we have taken a number of steps to support preventive
    services. Our TRICARE beneficiaries--whether enrolled to TRICARE Prime
    or in TRICARE Standard--have no copayments for recommended preventive
    services, such as influenza immunizations.
        The ``Healthcare to Health'' element of our strategy will not
    produce immediate cost savings. Nonetheless, based on early results
    from our efforts, as well as experience in the private sector, we are
    confident that these, and other ongoing enhancements to the TRICARE
    program, will produce improvements to health that also ``bend the cost
    curve.'' In the longer term, it is the strategy most likely to produce
    the greatest amount of savings to our system.
    Internal Efficiencies
        Over the last 24 months, we have reduced internal costs by
    decreasing headquarters administrative overhead, reviewing more cost-
    effective governance models, jointly purchasing medical supplies and
    equipment, and directing patients to lower cost venues for medications.
        Last year, the Secretary of Defense directed specific efficiency
    targets across the Department. As a result, over the last 11 months we
    have reduced or eliminated contractor support in the Office of the
    Assistant Secretary of Defense (Health Affairs) and the TRICARE
    Management Activity (TMA). Overall savings from internal efficiencies
    are projected to provide $259 million in savings for fiscal year 2013.
        In June 2011, the Deputy Secretary of Defense established a Task
    Force on Military Health System (MHS) Governance, with the purpose of
    evaluating options for the long-term governance of the MHS as a whole;
    governance in those areas where more than one Service operates medical
    treatment facilities--referred to as multi-Service markets, and
    governance for the National Capital Region (NCR). In late September,
    the Task Force provided their recommendations, after which senior
    Department leaders including Chairman of the Joint Chiefs of Staff
    began review of the Task Force recommendations.
        Implementation of any organizational efficiencies resulting from
    this Task Force has been placed on hold at the direction of Congress,
    subject to a review by the Comptroller General and Congress. We will
    provide congressional committees with the information requested
    regarding the Task Force work, and will develop more detailed cost and
    savings estimates for any eventual governance model. The Deputy
    Secretary of Defense approved and released a ``way ahead,'' on March 2,
    and while we are still awaiting the Government Accountability Office
    (GAO) report, we are prepared to answer any additional questions you
    may have.
        The Department has accelerated tri-service processes to standardize
    and jointly acquire medical supplies and equipment. We project savings
    that grow from $31 million in fiscal year 2012 to more than $69 million
    in fiscal year 2017. We have also engaged with our beneficiaries who
    have chronic medical conditions and high utilization of prescription
    drugs. Through a targeted outreach campaign, we have redirected a
    significant number of our patients from retail network pharmacies (our
    most expensive outlet) to home delivery--an option that is more
    economical for the government and the beneficiary, and has been shown
    to increase drug compliance.
    Provider Payment Reform
        We are committed to identifying greater efficiencies and cost
    savings in all areas of our operations. In addition to internal
    efficiencies we can achieve through reorganization and consolidation,
    we are also seeing significant savings through a number of initiatives
    we have introduced in the last several years. These include the
    implementation of the outpatient prospective payment system; further
    use of Federal ceiling prices for acquisition of pharmaceutical
    products; a redirection of patients to our TRICARE mail order
    pharmacy--where prescription drugs are less expensive to both the
    government and patients, and is shown to increase patient adherence to
    their medication regimen; and the policy changes we made for
    reimbursement to select hospitals and health plans in the TRICARE
    network.
        The Department has undertaken a broad-based, multi-year effort to
    ensure all aspects of our provider payments for care purchased from the
    civilian sector are aligned with best practices in Medicare and in
    private sector health plans. The most notable efforts have included
    implementation of changes to the outpatient prospective payment system
    (OPPS) and reform of payment to Sole Community Hospitals.
        OPPS is modeled after the payment process that Medicare uses for
    similar health care services--setting a fixed fee per procedure,
    inclusive of provider and institutional charges for care. To allow
    medical facilities to transition to this new method of payment, TRICARE
    phased in the reimbursement levels over 4 years, with the full
    implementation of this policy set to occur in 2013. In fiscal year
    2012, we project $840 million in savings, and $5.5 billion over the
    fiscal years 2012-2017.
        Our provider payment reform for Sole Community Hospitals was
    approved by Congress in the NDAA for Fiscal Year 2012. This reform is
    also phased-in over time, producing a projected $31 million in savings
    in fiscal year 2012, but growing to more than $108 million in savings
    by 2017.
        In the area of purchasing prescription drugs, in 2009 we instituted
    a process for obtaining discounts on drugs distributed through retail
    network pharmacies. Known as Federal Ceiling Prices (FCP),
    prescriptions purchased under FCP are at least 24 percent less than
    non-Federal Average Manufacturer prices. In 2012, the FCP program will
    save the Department over $1.6 billion, and will grow to almost $2
    billion in savings by 2017.
    Beneficiary Cost-Shares
        In addition to the focus on internal and external efficiencies, our
    proposed budget introduces changes to the health care out-of-pocket
    costs for our beneficiaries.
        I want to make three critical points related to these proposals.
    First, even accounting for these proposed fee changes, the TRICARE
    benefit will remain one of the finest health benefits available in the
    country, with among the lowest beneficiary out-of-pocket costs
    available to anyone--and certainly lower than costs by other Federal
    Government employees. We believe that is appropriate and properly
    recognizes the special sacrifices of our men and women in uniform, past
    and present.
        Second, these proposals were developed within the Department, and
    represent the input and consensus of our uniformed leadership. They
    have endorsed these proposals, and believe that we have appropriately
    balanced the need for a superb benefit that assists with both
    recruitment and retention of an All-Volunteer Force with our need to
    sustain a cost-effective approach for the long-term.
        Third, we recognize that some beneficiary groups should be
    insulated from increases in out-of-pocket costs. We propose to exempt
    those servicemembers, and their families, who were medically retired
    from military service, as well as the families of servicemembers who
    died on active duty. We also propose to establish cost-sharing tiers,
    with lower increases for retirees based on their retirement rank. More
    junior enlisted retirees, for example, will experience the lowest
    dollar increases in out-of-pocket costs. Finally, we have also avoided
    any changes in cost-sharing for active duty families with the exception
    of prescription drug copayments obtained outside of our medical
    treatment facilities (MTFs). Prescription drugs distributed within MTFs
    will continue to be free of charge for all beneficiaries.
        For over 15 years, patient out-of-pocket costs were either frozen
    or decreased. This was true for all beneficiary categories--active duty
    families; retirees under age 65 and their families; and retirees and
    their families who are Medicare-eligible. Last year, we introduced very
    modest changes in one segment of our population--increasing TRICARE
    Prime enrollment fees for retiree families by $5/month. We further
    recommended that these enrollment fees be indexed so that future
    increases continue to be modest and beneficiaries can plan for them. We
    greatly appreciate Congress' support for these proposals in the fiscal
    year 2012 budget, and have implemented those fee changes in the current
    year.
        For fiscal year 2013, we propose additional changes to fees across
    a broader set of programs. Although last year's changes were a
    necessary step, the Federal budget crisis and the need to balance cost
    reduction efforts throughout the Department necessitate these actions
    begin in 2013, with most changes phased in over time. The following
    sections provide a high-level overview of the proposed changes in
    beneficiary out-of-pocket costs, and Table 3 summarizes the proposed
    phased-in fees through 2017, followed by the estimated indexing of the
    proposed fees through 2022.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Fee increases for TRICARE programs. The following proposed changes
    represent increases from existing patient out-of-pocket costs:

             TRICARE Prime Enrollment Fees. We propose to raise the
            enrollment fees in 2013 for retired servicemembers and their
            families between $80-$300 per year, based on the retirement pay
            of the servicemember, and continue to provide similar increases
            through 2017.
             TRICARE Deductibles. We propose to increase
            deductibles for the TRICARE Standard program for retired
            servicemembers and their families beginning in fiscal year
            2013. TRICARE deductibles have not been changed since before
            the TRICARE program was introduced, having last been adjusted
            over 20 years ago.
             TRICARE Pharmacy Copays. We propose to increase
            pharmacy copayments for generic, brand name, and non-formulary
            prescriptions in both the retail and mail order settings,
            although we will continue to offer significant incentives for
            beneficiaries to elect mail order over retail pharmacy
            networks. This change is proposed for all non-active duty
            beneficiaries, to include active duty family members.
            Prescription drugs obtained in military hospitals and clinics
            will continue to be provided without copay for any
            beneficiaries.

        New fees for TRICARE programs. Our proposed budget also calls for
    the introduction of new fees not previously part of the TRICARE
    program.

             TRICARE Standard/Extra Enrollment Fee. We propose to
            introduce an annual enrollment fee in TRICARE Standard/Extra
            for retired servicemembers and their families. This enrollment
            action will require beneficiaries to elect their preferred
            primary benefit coverage--TRICARE Prime, TRICARE Standard, or
            other health insurance offered through an employer. The
            proposed fee for 2013 will be $40/year for an individual
            retired beneficiary, or $140 per retired family.
             TRICARE For Life (TFL) Enrollment Fee. When TFL was
            introduced in 2002, there was no enrollment fee in the program,
            only a requirement that beneficiaries be enrolled in Medicare
            Part B to enjoy their TFL benefit. Medicare Part B was always a
            step that we recommended our retirees elect, and prior to 2002,
            over 95 percent of eligible military retirees were enrolled in
            Medicare Part B. The TFL benefit has reduced beneficiary out-
            of-pocket costs by thousands of dollars per year in copayments
            or Medicare supplemental health insurance plan payments. The
            proposed TFL enrollment fees, similar to the TRICARE Prime
            enrollment fees, are tiered, based on an individual's
            retirement pay--and range from $35 to $115 per beneficiary per
            year.
             Exclusion of Enrollment Fees from the Catastrophic
            Cap. We propose that enrollment fees, which had previously
            accumulated toward a retiree's catastrophic cap limit, will not
            be counted toward the cap beginning in 2013.
             Indexing all fees beginning in 2014. In addition to
            the indexing of the TRICARE Prime enrollment fee, which is
            already indexed, we propose to index other beneficiary out-of-
            pocket costs identified in this set of proposals, to include
            the TRICARE Standard deductible, TRICARE Standard enrollment
            fee, TFL enrollment fees, pharmacy copayments, and catastrophic
            caps.

        These proposed changes continue to be modest by historic standards
    of cost-sharing in the TRICARE program. In 1994, when TRICARE was
    originally created, a working age retiree's family of three contributed
    approximately 27 percent towards the total cost of their care; today
    that percentage has dropped to 10 percent. Even with these proposed
    changes, the percentage would still remain below the percentage
    originally set by Congress, averaging approximately 14 percent of range
    of overall health care costs in 2017--and stabilizing at that level for
    the out-years.
        These adjustments are an important step to setting the TRICARE
    benefit on a more sustainable path that maintains the quality of the
    medical benefit for future generations. Moreover, the overwhelming
    majority of these adjustments will be phased in over a 4- to 10-year
    period and will be appropriately indexed to ensure future
    sustainability and guarantee transparency. These proposals--one element
    of a four-pronged effort at cost control--will help shift us toward
    more effective and cost-efficient processes that will allow us to
    provide better care while meeting our obligations to help reduce our
    budgets.
    Wounded Warriors
        The 2007 revelations regarding Walter Reed were a stark wakeup call
    for us all. In the nearly 5 years since, the Department has worked in
    tandem with VA to improve policies, procedures, and legislation that
    impacts the care of our wounded warriors. As a result of efforts in
    both Departments and in Congress, we have reached important milestones
    in improving care for our wounded warriors. These milestones include a
    new disability evaluation system and improved case management that are
    the result of a programmatic cohesion with the VA that is better than
    ever before. More so than at any time in our Nation's history,
    separating servicemembers are greeted by more comprehensive mental and
    physical care; by greater opportunity for education, and by a deeper
    societal commitment to ensuring their welfare.
        Disability Evaluation System/Integrated Disability Evaluation
            System
        The genesis of the Disability Evaluation System (DES) was the
    Career Compensation Act of 1949. The DES remained relatively unchanged
    until November of 2007 when, as a result of public concern and
    congressional interest, the joint DOD and VA Senior Oversight Committee
    (SOC) chartered a DES Pilot designed to create a ``servicemember-
    centric'' seamless and transparent DES, administered jointly by the DOD
    and VA.
        The Pilot launched at the three major military treatment facilities
    (Walter Reed, Bethesda, Naval Medical Center, and Malcolm Grow) in the
    NCR on November 21, 2007 and successfully created a seamless process
    that delivers DOD benefits to wounded, ill and injured servicemembers
    and VA benefits to servicemembers as soon as possible following release
    from duty. We found the DES Pilot to be a faster, fairer, more
    efficient system; and, as a result, in July 2010, the SOC co-chairs
    (Deputy Secretary of Defense and Deputy Secretary of Veterans Affairs)
    directed worldwide implementation to start in October 2010 and to
    complete in September 2011. On December 31, 2010, the first Integrated
    Disability Evaluation System (IDES) site became operational, which
    marked the end of the pilot, and the name was formally changed to the
    IDES.
        The IDES, similar to the pilot, streamlines the DES process so that
    the member receives a single set of physical disability examinations
    conducted according to VA examination protocols, proposed disability
    ratings prepared by VA that both DOD and VA can use, and processing by
    both Departments to ensure the earliest possible delivery of disability
    benefits. Both Departments use the VA protocols for disability
    examination and the proposed VA disability rating to make their
    respective determinations. DOD determines fitness for duty and
    compensates for unfitting conditions incurred in the line of duty
    (title 10), while VA compensates for all disabilities incurred or
    aggravated in line of duty during active military, naval, or air
    service for which a disability rating of 10 percent or higher is
    awarded, and also determines eligibility for other VA benefits and
    services (title 38). The IDES permits both Departments to provide
    disability benefits at the earliest point allowed under both titles.
    servicemembers who separate or retire (non-disability) may still apply
    to the VA for service-connected disability compensation.
        In summary, the IDES features a servicemember-centric design, a
    simplified process, more consistent evaluations and compensation, a
    single medical exam and disability rating, seamless transition to
    Veteran status, case management advocacy, and establishment of a
    servicemember relationship with the VA prior to separation. It also
    provides increased transparency through better information flow to
    servicemembers and their families and a reduced gap between separation/
    retirement from Service to receipt of VA benefits. As of January, IDES
    enrollment is 23,602 servicemembers (66 percent Army, 14 percent
    Marines, 10 percent Navy, 10 percent Air Force). Since November 2007,
    cumulative enrollment has been 40,911, with 12,640 completing the queue
    and receiving benefits. Including return to duty cases in the process,
    Active component member IDES completion time averages 380 days as of
    January 2012, RC members average 441 days, and the Guard averages 371
    days. These averages are above our targeted goals but still are
    significantly lower than the 1940-era legacy system it replaced which
    averaged an estimated 540 days by combining DOD and VA systems.
        This past year, the Department partnered closely with the VA to
    implement the IDES at all 139 sites worldwide; however, we recognize
    the need to do better in the areas of timeliness to complete the
    process. This year our focus will be on such timeliness improvements.
    We have made significant policy adjustment to remove efficiency
    impediments, made procedural improvements, enhanced oversight and
    assistance to the Military Departments, and added resources that should
    improve Military Department performance in this area. We will enhance
    our emphasis on leadership, execution, and resourcing the IDES to
    handle increased volume while decreasing the time spent in the process.
        In addition, the Departments are looking closely at the stages of
    the system that are outside of timeliness tolerances and are developing
    other options to bring these stages within goal. We are committed to
    working closely with Congress to explore new initiatives to further
    advance the efficiency and effectiveness of the disability evaluation
    process.
        Recovery Coordination Program
        The Recovery Coordination Program (RCP) was established by the NDAA
    for Fiscal Year 2008 , and was further defined by the Department of
    Defense Instruction (DODI) 1300.24, entitled ``Recovery Coordination
    Program.'' Together these provide a comprehensive policy on the care
    and management of recovering servicemembers, including the assignment
    of a Recovery Care Coordinator (RCC) to help wounded, ill, and injured
    servicemembers and families through the phases of recovery,
    rehabilitation and reintegration. The policy also provides for
    standardized training, and a caseload ratio of not more than 40
    recovering servicemembers per RCC.
        Currently, there are 171 RCCs in 84 locations worldwide, placed
    within the Army, Navy, Marines, Air Force, U.S. Special Operations
    Command, and Army Reserves. More than 3,800 servicemembers and families
    have the assistance of an RCC, whose responsibilities include ensuring
    the servicemember's non-medical needs are met, and assisting in the
    development and implementation of the Comprehensive Recovery Plan
    (CRP). Each RCC receives more than 40 hours of Department-sponsored
    standardized training, including information on roles and
    responsibilities and concepts for developing the CRP. Additionally, we
    are now beginning to train Army ``Advocates'' in order to bring their
    program into compliance with the legislative mandate that every
    recovering servicemember be provided a DOD-trained RCC. RCC training is
    continually enhanced based on feedback from participants. After the
    October 2011 training, 90 percent of students rated the instruction and
    course materials as ``excellent.''
        Over the past 5 years, we have added $26.953 million, resulting in
    increased numbers of RCCs available to provide care coordination to our
    recovering servicemembers. Looking ahead, each Military Service will
    continue to identify and resource their requirements for additional
    RCCs. In addition to standardized training for RCCs, the CRP has
    expanded to include several other portfolios, many of them identified
    as key priorities for the non-medical care management of recovering
    servicemembers during a Wounded Warrior Care Coordination Summit held
    in March 2011.
        The Wounded Warrior Education and Employment Initiative (E2I)
    operates on a regional basis and engages recovering servicemembers
    early in the recovery process to identify skills they have, career
    opportunities that match those skills, and any additional skills they
    might need to be successful. The process is overseen by Regional
    Managers currently located in five regions across the United States.
    The E2I process also relies on collaboration with the VA, which is
    governed by a Memorandum of Understanding to provide VA's vocational
    rehabilitation services earlier in the recovery process than ever
    before.
        The Operation Warfighter program (OWF) also supports this White
    House priority by placing wounded, ill, and injured servicemembers in
    Federal internship opportunities that positively impact their
    rehabilitation and augment career readiness by building resumes,
    exploring employment interests, obtaining formal on-the-job training,
    and gaining valuable Federal Government work experience. There are
    currently more than 500 OWF interns working in approximately 75 Federal
    agencies and subcomponents around the country, with a total of more
    than 2,500 placements in 105 agencies and subcomponents since the
    inception of the program. The program is also supported by five
    Regional Coordinators placed across the country. Going forward, the
    Regional Coordinators will continue to focus on local and regional
    outreach to strengthen relationships with Federal agencies to improve
    and enhance internship and employment opportunities for wounded, ill
    and injured servicemembers.
        The Warrior Athletic Reconditioning Program (WARP) engages wounded,
    ill and injured servicemembers early in individualized physical
    activities outside of traditional therapy settings, inspiring recovery
    and encouraging new opportunities for growth and achievement. This new
    initiative will be implemented throughout the Department. WARP partners
    include the Service chiefs from each branch of the Military, as well as
    the United States Olympic Committee. WARP goals include increasing
    awareness and participation in adaptive sports at the Service-level, as
    well as preparing athletes for participation in competitive events such
    as the Warrior Games.
        These measures when taken together, substantially and materially
    affect the life experience of our men and women in uniform and the
    families who support them. Our work to improve the care of wounded
    warriors, especially as they transition from DOD to VA, is the core of
    our efforts to provide those who have sacrificed so much with the care
    and benefits they deserve. Despite the significant achievements, we
    should not underestimate what remains to be done as we care for a new
    generation of veterans who have served under very difficult
    circumstances for sustained periods. We will continue to work with our
    colleagues at VA and throughout the government to provide our
    servicemembers with the highest quality care and treatment. Taking care
    of our wounded, ill and injured servicemembers is one of the highest
    priorities for the Department, the Service Secretaries, and the Service
    Chiefs.
                              total force support
    Military Family Policy
        One of the four overarching principles of the Defense strategy is
    to preserve the quality of the All-Volunteer Force and not break faith
    with our men and women in uniform or their families. Despite difficult
    economic circumstances necessitating budget reductions across all
    levels of government, the Department remains committed to providing
    military families with support programs and resources that empower them
    to address the unique challenges of military life. To this end, the
    Secretary of Defense has directed that Family Programs and Mental
    Health Care be maintained as a priority for the Department.
        The Department conducted a Front End Assessment of family programs
    and non-medical mental health care. The purpose of the review was to
    ensure that mission critical needs would be met for family programs or
    mental health care during the next 5 years. To ensure efficiency of
    programs, without redundancy, programs were reviewed with the intent of
    identifying, comparing and contrasting methods of program delivery.
        These efficiencies did not cut programs for servicemembers or their
    families but resulted in a more cost-effective approach to program
    delivery. The review identified the following efficiencies.

             Maximized use of military family life consultants
            (MFLC) and Military OneSource counselors;
             Limited number of full-time rotational personal MFLC
            financial counselors due to identified overlaps with Services'
            programs, while allowing the capability for surge support
            through the MFLC program; and,
             Right-sized MyCAA program based on new eligibility
            criteria, which reduced the number of eligible spouses.

        Some key programs and initiatives are:

             Spouse Education and Career Opportunities: The DOD
            Spouse Education and Career Opportunities (SECO) program is a
            holistic, spouse-centric initiative designed to meet the needs
            of all military spouses as they explore portable career
            interests and strive to overcome common barriers to their
            education and career goals. One of the components of SECO is
            the My Career Advancement Account (MyCAA) that provides
            eligible military spouses with tuition assistance as they
            pursue requirements for a portable career. The Department has
            also expanded upon the Army's Spouse Employment Partnership
            program model. A significant number of ``Fortune 500 Plus''
            employers now participate in the Military Spouse Employment
            Partnership (MSEP), with over 150,000 jobs posted on the
            www.MSEPJobs.com web portal and 15,000 spouses hired by MSEP
            employers. We are expanding the portal to include a new
            function which automatically matches posted spouse resumes to
            posted employer job openings. We are also instituting an
            electronic MSEP partner application and streamlining the
            vetting and approval process. These enhancements will allow
            companies to become partner employers more quickly. Webinars
            and online training resources are helping new schools and
            employers to improve their understanding and support for
            military spouse employees who seek employment continuity and
            upward career growth as they relocate to new duty stations.
             Voluntary Education Opportunities: During fiscal year
            2011, our Voluntary Education program helped fund 866,788
            enrollments by over 300,000 servicemembers, which resulted in
            44,692 diplomas and 528 certifications/licensures.
            servicemembers are ``blending'' their course work, taking both
            traditional and online courses, with approximately 73 percent
            of servicemembers taking some courses online. Due to this, we
            now require all post-secondary institutions participating in
            the DOD Tuition Assistance program to follow certain standards
            of conduct; we are tracking compliance and monitoring to ensure
            there is continuous quality improvement.
             Family Readiness Programs: With budget and personnel
            reductions we can expect an increase in stress-related demand
            for support from our military families and we are prepared to
            meet that demand using the wide range of family support
            programs and partnerships. This includes developing virtual
            applications for the delivery of what has traditionally been
            in-person support, and providing surge capability. The
            Department is working closely with the Services to reduce
            redundancy and increase efficiency. For instance, we are in the
            process of developing a new community capacity-building toolkit
            and online professional development modules to streamline the
            training and development of our family support staff, and
            improve capacity. The last Military Family Readiness Council
            meeting was held in December 2011. We are identifying new
            members and working in coordination with the military Services
            to select spouses and/or parents to represent their Services.
            The next MFRC is projected to be during the third quarter of
            fiscal year 2012.
             Non-Medical Counseling: Demand for non-medical
            counseling continues to increase, and access to non-medical
            counseling is a Department focus area. We continue to enhance
            confidential non-medical counseling via two delivery systems,
            the Military Family Life Consultants (MFLC) and the Military
            One Source (MOS) Program. Non-Medical Counseling augments the
            military support programs currently in place, and is designed
            to help servicemembers and families cope with normal reactions
            to the stressful situations created by deployments, family
            separations, war, and reintegration.. MOS non-medical
            counseling is offered by licensed clinicians who have private
            practices in the local community. The MFLC program began as a
            pilot in 2004, and today, more than 1,100 MFLCs provide
            confidential non-medical counseling support on 229
            installations throughout the world. In fiscal year 2011, the
            program provided face-to-face counseling sessions to
            approximately 6.6 million people. At a commander's request,
            additional MFLCs may also be mobilized and deployed to provide
            ``surge'' counseling support. Non-medical counseling is
            provided by licensed clinicians who are deployed to
            installations and are assigned to work at the family centers,
            child development centers, youth centers, schools, and are
            embedded into brigades.
             Military OneSource (MOS): MOS provides call center and
            web-based information, referral, counseling, and educational
            materials. Services are available worldwide, 24 hours a day, at
            no cost to the user. In fiscal year 2011, MOS responded to
            almost a million telephone calls, received 3.6 million online
            visits and assisted servicemembers and families with over
            200,000 Federal and State tax filings. Other MOS services
            include relocation assistance, document translation, child care
            and education resources, special needs consultation, elder care
            consultation, on-line library resources, and health and
            wellness coaching. Accessed via MOS, the Wounded Warrior
            Resource Center (WWRC) provides immediate assistance to
            wounded, ill, and injured servicemembers, their families, and
            caregivers. In 2011, WWRC resolved 3,056 cases for wounded
            warriors, an increase from 2010.
             Family Advocacy Programs (FAP): The FAP addresses
            physical, sexual, and emotional abuse and neglect involving
            Active component military personnel and family members either
            as victims or abusers. We evaluate the effectiveness of FAP
            through rates of child abuse and neglect and spouse/intimate
            partner abuseand outcome measures for prevention and treatment.
            Through 10 years of high stresses on our families due to
            wartime deployments, our rates of such family maltreatment have
            remained relatively stable; however, we continue to monitor
            this carefully. For 2 consecutive years, 85 percent of those
            who participated in our New Parent Support Program for at least
            6 months had no substantiated child abuse or neglect the
            following year, and 90 percent of substantiated spouse abusers
            who completed FAP treatment had no substantiated spouse abuse
            the following year.
             Child Care: The Department continues to expand child
            care capacity that supports RC families while the servicemember
            is deployed, geographically-dispersed active duty military
            families, and servicemembers living in areas in the continental
            United States where on-installation military child care is
            unavailable. Ongoing efforts are focused on ensuring the
            availability of child care options that meet quality standards,
            including health and safety standards and standards for
            developmentally-appropriate practices.
             Youth Programs: Faced with their own unique
            challenges, military youth aged 6-18 can turn to a number of
            quality programs serving more than 600,000 military youth
            around the world designed to prepare young people to meet the
            challenges of military life, adolescence, and adulthood. We
            have developed relationships with other Federal agencies and
            nationally-recognized organizations such as the Boys and Girls
            Clubs of America and the USDA's 4-H Youth Development Program.
            Through these relationships, we offer more than 300 camp
            opportunities each year for military youth, and are a vital
            component of our support to geographically-dispersed youth of
            the NG and RCs.
        Special Needs
        The Department and the Military Services continue to provide
    support to military families with special needs. During the last 2
    years, 120 additional family support personnel have been hired and
    deployed to installations worldwide; we now have a total of over 400
    providers who provide information, referral and education to families
    with special needs. The Exceptional Family Member Program (EFMP) family
    support component also provides non-clinical case management to those
    families who need additional assistance with accessing services on the
    installation and in their local communities. The Office of Community
    Support for Military Families with Special Needs developed a mobile
    website, accessible from smart phones; that website provides military
    families with information on the EFMP and contact information for
    enrollment and family support providers. The mobile website also
    provides podcasts and links to other materials available to military
    families with special needs.
        The Department engages with military families with special needs by
    participating in the Congressional Military Family Caucus sessions and
    reviewing input from families during focus groups and online. We also
    established an EFMP family panel composed of ten families who represent
    all military Services, active duty, and RCs, and ranks. Family members
    with special needs are of all ages (children through adults) and with a
    wide variety of disabilities. Their issues range from access to medical
    care, availability of comparable services in the public schools, and
    lengthy waiting lists for Federal and State programs.
        To address the needs of this population, the Office of Special
    Needs has partnered with the DOD children and youth programs to provide
    training through Kids Included Together on the inclusion of children
    with special needs into children and youth programs. They have also
    partnered with the TRICARE Management Activity to communicate better
    with families about their benefits and accessing care, and to support
    them with portability of care during moves.
        DOD-State Initiatives
        The Department continues to work with State governments to educate
    policymakers on the life-challenges faced by servicemembers and their
    families, and to ensure that State-level policies do not disadvantage
    military families due to their transient life style. States have
    addressed several key quality of life issues, to include the impact of
    frequent school transitions experienced by military children, the loss
    of income by spouses as a result of military moves, and enforcement of
    the Congressionally-mandated DOD predatory lending regulation. The
    State responses have affirmed their commitment to the well-being of the
    Nation's fighting force. For example, 39 States have approved the
    Interstate Compact on Educational Opportunity for Military Children, 39
    States (plus DC) now provide eligibility for unemployment compensation
    to military spouses, and 34 States (plus DC) enforce the DOD predatory
    lending regulation. The Department is continuing this effort in the
    2012 State legislative sessions with strong emphasis on support of
    military families through the issues listed above. We are also
    promoting expedited occupational licensure processes to allow military
    spouses to resume their work faster in a new State, and provisions for
    separating servicemembers to receive credit for their military
    education, training and experience toward a State occupational license
    or an academic degree. The Department is continuing to partner with the
    Uniform Law Commission to inform State legislators of the Uniform
    Military and Overseas Voters Act which simplifies the absentee voting
    process by making it more uniform, convenient and efficient. This year
    we are advocating for States to consider establishing Veterans
    Treatment Courts for servicemembers and Veterans in the criminal
    justice system who are suffering substance abuse and mental health
    issues.
        MWR Support to Troops in Combat:
        Support is critical to allow servicemembers to communicate with
    family and friends, stay physically and mentally fit, and reduce
    stress. The Department now funds over 514 free MWR Internet Cafes in
    Iraq and Afghanistan and 135 portable satellite units (known as
    Cheetahs) to support remote locations. The DOD MWR Online Library
    offers free downloads of audio and e-books, and access to up-to-date
    recreation, education and career transition support databases.
        The ability of injured servicemembers to engage in recreation and
    sports is a very important component of rehabilitation and
    reintegration. Under a contract with Penn State University, MWR
    specialists are trained to work with medical personnel, wounded warrior
    units, and community and non-profit organizations to ensure inclusive
    and adaptive sports and recreation are included in recreation programs.
    The DOD Paralympics Program continues to provide rehabilitation support
    and mentoring to injured servicemembers and veterans who have sustained
    various types of injuries.
        We remain fully committed to supporting the All-Volunteer Force and
    their families, particularly in light of the unprecedented demands that
    have been placed on them in recent years.
        The Department continues to pursue innovations, initiatives, and
    efficiencies that improve the quality of life of its military members
    and their families. With your continued support, our military force
    will remain ready, willing and able to serve this Nation with
    distinction.
    Military Voting
        The Department is well positioned for the 2012 election, building
    on its considerable success in the 2010 election efforts. Through
    direct-to-the-voter outreach programs, easy and quick online voting
    assistance tools, and aggressive communications and marketing programs,
    we experienced a 21 percent increase in military voter participation
    rates between 2006 and 2010. The Department is refining and expanding
    those programs for the 2012 election, as well as providing direct
    support to State and local election jurisdiction which deploy online
    ballot delivery systems, reducing ballot delivery time from 20 to 30
    days to 20 to 30 milliseconds.
    Department of Defense Education Activity
        Ensuring excellence in the education of military children is a top
    priority for Secretary Panetta and the entire Department. A quality
    education is both a stabilizing influence in the lives of our children
    and their families and an overall recruitment, retention and morale
    element in the readiness of our Force. There are 1.2 million school-
    aged children with a parent serving in the military. Nearly 86,000 of
    these children attend one of the schools operated by the Department of
    Defense Education Activity (DODEA). Not unlike other parents, military
    families frequently say that the quality of their children's education
    is one of the most important criteria when selecting a place to live.
    The demands of extended conflict and frequent relocations add to the
    challenges faced by military families. While they are often described
    as a resilient group, the cumulative effects of multiple moves and
    significant parental absences can erode this resilience and, as the
    research suggests, diminish academic performance in school.
        The DODEA schools offer a 21st century, student-centered learning
    environment that is tailored to meet the needs of military families. To
    this end, DODEA is leaning forward and providing military-connected
    children an educational experience that challenges each student to
    maximize his or her potential and prepares them to be successful,
    productive and contributing citizens in today's global economy. DODEA
    also is mobilizing its knowledge, expertise, and resources to support
    military-connected children in the U.S. public schools.
        The Department has made a number of sweeping commitments to
    improving the educational experience for military children. Some of
    these far-reaching commitments are highlighted below:

             DODEA has joined 46 States in the adoption of the
            Common Core State Standards. Today, the differences between
            State educational standards, including variances in graduation
            requirements, can and have negatively impacted achievement for
            military children. The Common Core State Standards will help
            mitigate this academic disruption and provide greater
            continuity in the educational experiences of our highly mobile
            children.
             DODEA has launched a vibrant Virtual Learning program
            which includes the use of tele-presence equipment in
            classrooms, to expand course offerings for students. No longer
            will small enrollments and limited course offerings at one
            DODEA school significantly drive the educational experience of
            students. Student interests and needs now have considerable
            influence. Through virtual learning, students have access to
            courses such as Advanced Placement, foreign language, and STEM-
            related courses that simply would not be possible in some
            locations.
             DODEA is adopting a 21st century teaching and learning
            framework, where technology is leveraged to improve the
            educational experience of children. Ten middle and high schools
            will be using a digital instruction platform on a pilot basis.
            As we leverage technology in our learning environments, we will
            need to make a significant investment in the professional
            development of our teachers and leaders.
             DODEA is modernizing and replacing school facilities
            to ensure that military children have school facilities that
            are safe, secure, in good repair and provide an optimal
            learning environment that supports current and future
            educational requirements. In fiscal year 2013, DODEA requested
            $657 million for 11 school Military Construction projects.
             DODEA has ramped up its outreach to U.S. public
            schools to improve the educational experience for students in
            non-DODEA schools. Since 2008, DODEA has provided 146 grants
            totaling $167 million to school districts, in over 900 schools.
            All grants focus on enhancing student learning opportunities,
            social-emotional support, and educator professional
            development.

        As we move forward with Force structure changes, DODEA will
    continue to work with the Military Services to right-size schools in
    the affected communities, will keep students in the forefront, and will
    stay focused on delivering an excellent education and supporting our
    families. DODEA will ensure a ``warm-hand off'' to the U.S. public
    schools who may be receiving an influx of military-connected students.
    Further, we will leverage our civilian workforce shaping tools to
    provide continuity of employment for all those who wish to continue
    with their Federal careers.
        The Department is charged with the responsibility and privilege of
    educating the children of our Nation's military. We know full-well the
    toll that war, conflict and frequent movements have exacted from our
    servicemembers and their families. The Department is committed to
    ensuring that the education of the children of servicemembers will not
    be among the many sacrifices our families must make to defend our great
    Nation.
    Defense Commissaries
        The commissary continues to be one of the most popular benefits
    with military members and families and is an efficient provider of non-
    pay compensation to our military personnel. Operated by the Defense
    Commissary Agency (DeCA), this integral element of the total
    compensation package significantly contributes to the financial
    readiness of our military families. An average family of four that
    consistently shops at the commissary will save nearly $4,500 per year
    by taking advantage of the 32 percent savings on their overall
    purchases. The commissary further enhances financial readiness as a
    major employer of military spouses and family members. Last fiscal
    year, 39 percent of DeCA employees in the United States were military
    spouses or other family members; and the total rises to 63 percent when
    including military retirees, other veterans, and members of the Guard
    and Reserve. While enhancing military families' quality of life, the
    commissary also provides an excellent return on investment. Last fiscal
    year, the commissary provided direct savings to commissary customers of
    $2.8 billion for a taxpayer cost of $1.4 billion, a 2-for-1 return.
    DeCA implemented efficiency reductions in fiscal year 2012 and there
    are no plans for additional budget reductions at this time.
                                   conclusion
        Putting together this year's budget request in a balanced package
    was a difficult undertaking, but I believe we have the right mix of
    programs and policies in place to shape the force we need in support of
    the strategic guidance. We will reduce the rate of growth of manpower
    costs, to include reductions in the growth of compensation and health
    care costs. But as we take those steps, we will continue to keep faith
    with those who serve.
        During the past decade, the men and women who comprise the All-
    Volunteer Force have shown versatility, adaptability, and commitment,
    enduring the constant stress and strain of fighting two overlapping
    conflicts. They have also endured prolonged and repeated deployments.
    Some--more than 46,000 men and women--have been wounded, and still
    others--more than 6,200 members of the Armed Forces--have lost their
    lives. As the Department reduces the size of the force, we will do so
    in a way that respects and honors these sacrifices.

        Senator Webb. Thank you very much, Dr. Rooney.
        Secretary Hale, welcome.

     STATEMENT OF HON. ROBERT F. HALE, UNDER SECRETARY OF DEFENSE,
                COMPTROLLER, AND CHIEF FINANCIAL OFFICER

        Mr. Hale. Thank you, Mr. Chairman, Senator Graham, members
    of the subcommittee. Let me underscore Dr. Rooney's thanks to
    all of you for the support of our men and women in uniform and
    the civilians who support them.
        I am going to focus on some budget aspects of the personnel
    budget with just a few overall numbers.
        We have asked Congress for $525.4 billion of discretionary
    budget authority in fiscal year 2013. If you adjust that for
    inflation, it is a 2.5 percent real decline, the third
    consecutive year of real decline in the defense budget. As you
    look beyond fiscal year 2013, the budget is basically flat in
    real terms or slightly up.
        To get to this request while also remaining consistent with
    title I, the non-sequestered title of the BCA, we reduced
    overall defense spending by $259 billion in the next 5 years,
    our budget period 2013 to 2017, compared to the last year's
    plan. We took three steps to reduce our plan funding.
        First, more disciplined use of defense dollars by
    eliminating lower priority programs and through efficiencies,
    including some cutbacks in contractor workforce.
        Second, we propose force structure changes to carry out a
    new defense strategy, particularly important to this
    subcommittee. For example, our military will be smaller and
    leaner, especially our ground forces which will no longer be
    sized to carry out large, prolonged operations such as the one
    we undertook in Iraq. On the investment side, we made a number
    of decisions to fund high priority programs, cyber, special
    operations, for example, but also restructured and reduced
    investments for many weapons systems.
        Third, and I know of particular importance to this
    subcommittee, the budget continues to fully support America's
    All-Volunteer Force even in the face of the BCA. We fully
    funded personnel, took a number of steps, funded family support
    programs fully.
        But we also carefully reviewed and slowed the growth in
    military pay and benefits.
        Let me expand on just two aspects of this budget in my oral
    statement.
        The new 5-year budget plan calls for a reduction in end
    strength, Active end strength of about 100,000 and 20,000 in
    the Reserve components, mostly in our ground forces. To achieve
    these substantial end strengths, the Army will eliminate at
    least eight brigade combat teams; the Marine Corps, six
    battalions, four tactical air squadrons. There will be
    significantly smaller cuts in the Navy and the Air Force.
    Altogether these force structure reductions will save us about
    $9 billion in fiscal year 2013 compared to last year's plan,
    $53 billion over the FYDP, so we are about 20 percent with
    those on the way toward being consistent with the BCA.
        We made substantial changes in investment--the cuts in this
    budget were disproportionately on the investment side--and
    pushed for more disciplined use of resources through
    streamlining and efficiencies. But it did not get us to where
    we needed to be.
        In the end--and it was in the end--we made a decision to
    address military pay and benefits issues to avoid what we
    viewed as overly large cuts in force structure and investment.
    Our assessment took note of important trends in military pay
    and benefits. Pay and benefits, defined as military personnel
    and health care and some others, are up over 87 percent since
    2001, 30 percent more than inflation, while the Active Duty end
    strength grew by only 3 percent during that period.
        While we strongly believe that changes are needed in
    military pay and benefits, we also believe they must take into
    account some vital principles. The military compensation system
    has to recognize the unique stress of military life. We cannot
    simply copy the civilian system. It must enable us to recruit
    and retain needed personnel. We judged that it should be
    disproportionately small in terms of the amount of the savings.
    So our total savings were about 10 percent of the target we
    were working toward under the BCA, military pay and benefits
    more than a third of our budget. No one's pay can be cut.
    Growth can be slowed, but no pay cuts, no freezes.
        Now, statements by other witnesses have described the
    proposals to reduce the size of our out-year pay raises,
    increase fees and deductibles for retirees, and raise pharmacy
    copays in ways that increase incentive to buy by mail order and
    to use generic drugs. I am not going to go over those again.
        But I would like to do a couple of things, and I would like
    to correct first a misimpression we created. I am sorry Senator
    Ayotte is not here because I did not do a very good job. I did
    not have a chance really when I testified before the Senate
    Budget Committee, and she asked a question about what we were
    doing for fees of our civilian personnel--health care fees.
        While the President's budget does not propose changes in
    the mechanism for fees charged to Federal civilian employees
    and retirees, those fees are tied to private sector insurance
    costs. Those fees have increased substantially over recent
    years, more than doubling for some large cuts over the last
    decade, and they are almost certain to continue to grow.
    Moreover, even when our proposed increases in military fees are
    fully in place, the military fees will remain substantially
    less than the ones charged to Federal civilian employees and
    retirees. So this budget does require increases for Federal
    civilian personnel and substantial ones.
        Perhaps the most important point regarding our military
    compensation proposals is this, the proposals have the full
    support of our military leaders and that includes all the
    members of the Joint Chiefs, the senior enlisted, and advisors,
    and they have indicated that support in a formal letter sent to
    Congress earlier this year.
        Several of our proposed compensation changes require
    legislative authority. None can be put into effect without your
    support. We fully recognize that. But if that support is not
    forthcoming--and you asked me to be candid, Mr. Chairman, so I
    will be--what keeps the CFO up at night--further cuts in forces
    and investment will be required of us to remain consistent with
    the targets of the BCA. Even if somehow we fit in changes in
    2013, I have to worry about 2014 through 2018, and those cuts
    get bigger in that period.
        If, for example, Congress turned down all of our
    compensation proposals and we offset that hole in our budget
    with additional force cuts, we would have to cut roughly
    another 60,000 troops by 2017. We might look at other ways and
    we probably would. But just to give you an idea of the
    magnitude, these additional cuts would surely jeopardize the
    new defense strategy that we have just recently put in place.
        As this point suggests, our budget is a balanced,
    interconnected whole. I very much ask that you consider it as
    such.
        Mr. Chairman, thank you again for your support of our
    troops and to all the subcommittee members for support of our
    troops and for the opportunity to testify today. When the
    witnesses are done, I welcome your questions.
        [The prepared statement of Dr. Hale follows:]
                   Prepared Statement by Hon. Robert F. Hale
        Mr. Chairman, Senator Graham, members of the subcommittee, thank
    you for the opportunity to join you this afternoon. I will not repeat
    the thorough statements presented by the Department's other witnesses.
    I would like to discuss selected personnel and readiness issues in the
    context of the Department's budget request for fiscal year 2013.
        The fiscal year 2013 budget for the Department of Defense (DOD)
    responds to two broad factors. First, to be consistent with Title I of
    the Budget Control Act of 2011, it reduces defense funding for fiscal
    year 2013 to fiscal year 2017 by $259 billion compared with last year's
    plans. We started by culling $45 billion from our spending plans in
    fiscal year 2013, resulting in a request for $525.4 billion in
    discretionary budget authority. Adjusted for inflation, that is a
    reduction of 2.5 percent compared to the enacted budget for fiscal year
    2012--the third consecutive year of real decline in the Defense budget.
        Second, our proposed budget for fiscal year 2013 reflects the new
    defense strategy that we announced in January. That strategy has been
    documented in a white paper issued in January. The budget implements
    this new strategy in four key ways:

             We seek to make more disciplined use of defense
            dollars. Key changes include streamlining in the Office of the
            Secretary of Defense and defense agencies, rephasing of
            military construction projects in view of force structure
            changes, further IT consolidations, efforts to improve our
            purchasing activities, and continued efforts to improve
            financial management and achieve audit readiness.
             Our budget proposes force structure and investment
            changes that are consistent with the new strategy. Our military
            will be smaller and leaner, but also ready and agile. We
            continue to invest in high priority areas such as Special
            Operations Forces, cyber, and unmanned aerial vehicles.
            However, reflecting strategy and good management along with
            budgetary limits, we propose to restructure and reduce
            investments in programs including the Joint Strike Fighter,
            shipbuilding programs, the Army Ground Combat Vehicle program,
            and the SSBN-X submarine program. We terminate six weapon
            programs in this budget proposal.
             We continue full support for America's All-Volunteer
            Force, which is the very foundation of our military strength.
            But we carefully review and slow the growth in military pay and
            benefits.
             Finally, we provide full support for our warfighters
            in combat through our request for funding for Overseas
            Contingency Operations.

        Our budget proposal for fiscal year 2013 needs to be considered as
    a whole. It proposes changes that are balanced in order to be
    consistent with both our new strategy and good management. We hope that
    Congress will be cautious in making changes lest the revised version
    fail to fully support our new strategy or the current budgetary limits.
        Finally, while this budget is consistent with Title I of the Budget
    Control Act, it does not accommodate the sequestration that could occur
    under Title III of that Act. Sequestration could have devastating
    effects on defense activities. It would force us to revisit our
    strategy and could lead to involuntary separations of personnel,
    reductions in readiness, and the disruption of numerous investment
    programs. We still have time to avert sequestration, and the
    President's fiscal year 2013 budget represents a path to doing so. We
    urge Congress to enact a large, balanced program of deficit reductions
    and then enact legislation to halt the sequestration.
        In addition to this brief overview of our fiscal year 2013 request,
    I want to mention three specific considerations as they relate to
    personnel and readiness.
                  budgetary importance of force structure cuts
        The first of these involves force structure changes. Consistent
    with our strategy and budgetary limits, we assume there will be force
    structure cuts, primarily in ground forces. Our strategy envisions a
    force that is smaller and leaner and that no longer maintains forces
    sized for large, prolonged stability operations.
        Specifically, the new 5-year budget plan calls for an end strength
    reduction of about 72,000 Army soldiers and about 20,000 marines by
    fiscal year 2017. This will result in an Army of 490,000 soldiers and a
    Marine Corps of 182,100 marines. To accommodate these reductions, the
    Army will eliminate a minimum of eight brigade combat teams, and the
    marines will disestablish six battalions and four tactical aircraft
    squadrons.
        There will be smaller cuts in the Navy and Air Force. The Navy will
    be retiring 11 older vessels, and the Air Force will cut 7 TACAIR
    squadrons. By fiscal year 2017, the Navy's Active-Duty end strength
    will be reduced by 6,200 to a force of 319,500 sailors, and the Air
    Force will lose 4,200 airmen, to bring their total to 328,600.
        We will also be reducing end strength in the Reserve components by
    21,500 by fiscal year 2017. This will result in a total Reserve Force
    of 825,600, with Navy Reserve, Air Force National Guard, and Army
    National Guard components experiencing the greatest force reductions.
    There will be no reduction to the Marine Corps Reserve.
        Altogether, compared to last year's plans, force structure
    reductions will save about $53 billion over the FYDP and $9 billion in
    fiscal year 2013 alone. Most of these savings reflect reduced operating
    costs but there are some investments savings as well.
        These force structure changes mean that we need to consolidate our
    infrastructure. The President will ask Congress to authorize the Base
    Realignment and Closure (BRAC) process for 2013 and 2015. We recognize
    the political difficulty associated with the BRAC process, but it is
    the only effective way to achieve needed infrastructure savings.
                budgetary importance of pay and benefit changes
        The second item I want to mention is the budgetary importance of
    pay and benefit changes. Since 2001, the cost of military pay and
    benefits has grown by over 87 percent (30 percent more than inflation),
    while Active Duty end strength has grown by about 3 percent. We felt we
    had to review pay and benefits to avoid overly large reductions in
    forces and investments.
        As my colleagues have noted, the military and civilian leadership
    considered changes in pay and benefits based on several guiding
    principles. To begin with, the military compensation system must take
    into account the unique stress of military life. It should not simply
    be a copy of civilian systems. The system must also enable us to
    recruit and retain needed personnel. We must keep faith with our
    military personnel. That means changes to the system of pay and
    benefits that do not cut anyone's pay. We propose to slow the rate of
    growth, not to institute pay freezes or pay cuts.
        Changes affecting pay and compensation were designed to be
    disproportionately small when compared to the changes in forces and
    investments. While pay and benefits account for about one-third of the
    Defense budget, savings from the initiatives we are proposing will
    amount to about $29 billion over the FYDP, which is slightly more than
    10 percent of our savings target.
        As our acting Under Secretary for Personnel and Readiness
    indicated, we plan military pay raises in fiscal years 2013 and 2014
    consistent with the Employment Cost Index. In later years increases
    will be lower, but by then servicemembers and their families will have
    had time to plan. Over the 5 years of the FYDP, this approach will
    realize total savings of about $16.5 billion.
        We have also proposed changes in the cost-sharing formula for
    health care. This will mostly affect retirees and, especially, retirees
    who are under the age of 65 and are still in their working years. We
    have exempted those who are medically retired and survivors of those
    killed on Active Duty. Our proposed changes save about $12.9 billion
    over the next 5 years. Dr. Rooney's statement expands on these changes,
    and I will not repeat them here.
        However, I do want to emphasize one very important point that Dr.
    Rooney has made. Changes in cost sharing represent only one of the key
    steps that we are taking to improve health care and to hold down cost
    growth. We are also working to improve overall health care--moving from
    health care to health. We are reducing internal costs by cutting
    administrative overhead at headquarters and buying more effectively. We
    have significantly reduced payments to our civilian providers in order
    to slow the growth in health care costs.
        I also want to note that, while our budget does not change the
    formula for enrollment fees for Federal civilian employees or civilian
    retirees, those fees have and are increasing. Fees for civilian
    employees and retirees are tied to private-sector plans and increase
    with increases in health care costs. It is important to note that fees
    paid by civilian employees and retirees will remain substantially
    higher than those paid by military retirees even after all of the
    changes proposed for military retirees have taken effect.
        Our health care proposals, and all of our proposals for military
    compensation, have the full support of our military leaders--including
    both officer and enlisted leaders. These leaders have supported these
    changes in a letter to each of our oversight committees.
        Several of our proposed changes in pay and benefits will require
    legislative authority. For instance, we need authority to exempt
    survivors of members who die while on Active Duty or military
    disability retirees and their families; to establish an annual TRICARE
    Standard enrollment fee for most retirees and their families; and to
    introduce an annual enrollment fee for TRICARE For Life beneficiaries.
    While these particular proposals require legislation, we need your
    support for all of these important changes.
        If Congress does not provide us with needed support, we will face a
    major problem that would jeopardize our defense strategy. Without
    needed authority, we will face further cuts in forces and investment to
    be consistent with the Budget Control Act. Because our budget proposal
    already makes substantial reductions in the investment accounts,
    further cuts might fall mostly on forces. If, for example, Congress did
    not support any of our proposed changes to pay raises and health care,
    and we elected not to make further cuts in investment, we would be
    required to increase the size of our force reductions by roughly half.
    That could mean cutting roughly another 60,000 Active Duty and Reserve
    Forces by fiscal year 2017. Additional force cuts of this magnitude
    would jeopardize our ability to pursue the new defense strategy.
                                   readiness
         The third and final concern that I would raise today is the matter
    of readiness. Our strategy calls for a force that is leaner and
    smaller, but also agile and ready.
        Readiness is a complex topic. There is no single part of the budget
    that we could characterize as the ``readiness'' budget. That said,
    Operation and Maintenance (O&M) is the title most often associated with
    readiness. I would point out that O&M is the only title that would
    increase in the President's budget. Total O&M increases by 6 percent
    between fiscal year 2012 and fiscal year 2013 while the overall budget
    declines by 1 percent. We believe that we have made budgetary decisions
    designed to protect the readiness of our military forces.
        When making our force structure decisions, we also favored the
    forces that are especially agile. Special Ops forces are a case in
    point. These forces, designed to be agile, continue to increase under
    this budget proposal. We also preferentially retained forces that can
    self-deploy. Accordingly, we maintained funding for a fleet with long-
    term level of 11 aircraft carriers and 10 air wings. We also maintained
    funding for the bomber force.
                                   conclusion
        In conclusion, I would emphasize again that our budget is an
    interconnected whole, and we ask that Congress consider it as such.
        Thank you again for the opportunity to testify this afternoon. As
    always, thank you for the support of our men and women in uniform, and
    the civilian employees who support them. I welcome your questions.

        Senator Webb. Thank you very much, Secretary Hale.
        Secretary Woodson, welcome.

      STATEMENT OF HON. JONATHAN WOODSON, ASSISTANT SECRETARY OF
     DEFENSE FOR HEALTH AFFAIRS AND DIRECTOR OF TRICARE MANAGEMENT
                                ACTIVITY

        Dr. Woodson. Thank you, Mr. Chairman, Senator Graham,
    members of the subcommittee. Thank you for the opportunity to
    appear before you today to discuss the future of the military
    health system and in particular, our priorities for this coming
    year.
        Over the last 10 years, the men and women serving in the
    military health system have performed with great skill and
    undeniable courage in combat. Their contributions to advancing
    military and American medicine are immense. The military health
    system's ability to perform this mission and be able to respond
    to humanitarian crises around the world is unique among all
    military or non-military organizations on this globe. I am
    committed to sustaining this indispensable instrument of
    national security.
        One of the most critical elements of our strategy is to
    ensure the medical readiness of the men and women in our Armed
    Forces. We are using every tool at our disposal to assess our
    servicemembers' health--before, during, and following
    deployment to the combat theaters. For those who return with
    injuries and illnesses, we continue to provide comprehensive
    treatment and rehabilitation services supported by medical
    research and development portfolios appropriately focused on
    the visible and invisible wounds of war.
        Concurrent with our mission of maintaining a medically
    ready force, this ready medical force concept has many
    interdependent parts. It requires our entire medical team to be
    well-trained. It requires development of our physicians in
    active, accredited, graduate medical education programs. It
    requires our military hospitals and clinics to be operating at
    near-optimal capacity, and for our beneficiaries, it requires
    an active decision to choose military medicine as their
    preferred source of care.
        To meet these readiness imperatives means we need to
    compete with the rest of American medicine to recruit and
    retain top talent, to provide state-of-the-art medical
    facilities that attract both patients and medical staff, and to
    sustain a high quality system of care.
        The budget we propose provides the resources we need to
    sustain the system. As we maintain our readiness, we also must
    be responsible stewards of the taxpayers' dollars. The 2011 BCA
    required DOD to identify $487 billion in budget reductions over
    the next 10 years. Health care costs could not be exempt from
    this analysis.
        The military health system is undertaking four simultaneous
    actions to reduce costs: one, internal efficiencies to better
    organize our decisionmaking and execution arm; two, a
    continuation of our efforts to appropriately pay private sector
    providers; three, initiatives to promote health, and reduce
    illness, injury, and hospitalization; and four, propose changes
    to beneficiary costsharing under the TRICARE program.
        The military and civilian leaders in DOD developed these
    proposals and have publicly communicated their support for
    these proposals to you in writing and in person.
        I want to identify the core principles to which we adhered
    when developing these proposals. We believe the TRICARE benefit
    has been one of the most comprehensive and generous health
    benefits in this country and our proposals keep it that way. In
    1996, military retirees were responsible for about 27 percent
    of overall TRICARE costs. In 2012, the percentage share of
    costs borne by the beneficiary has dropped to about 10 percent
    of overall costs. If these proposals we have put forward are
    accepted, beneficiary out-of-pocket costs will rise to 14
    percent of costs by 2017. This is about half of what
    beneficiaries paid in 1996.
        Second, we have exempted the most vulnerable populations
    from our costsharing proposals. Medically retired
    servicemembers and families of servicemembers who have died on
    Active Duty are protected under this principle.
        Additionally, we have introduced costsharing tiers based
    upon retirement pay, reducing the increases for those with
    lower retirement pensions. I would mention that that was led by
    the uniformed line leadership.
        Mr. Chairman, we recognize the concerns of the members of
    this subcommittee and the beneficiary organizations have voiced
    regarding these proposals. I want to emphasize that these
    proposals are targeted to mitigate the burden on any one
    particular group of beneficiaries while simultaneously meeting
    our congressionally-mandated costsaving responsibilities under
    the BCA. We have recently submitted to Congress the Secretary's
    recommended path forward for how to organize the military
    health system. We have learned a great deal from our joint
    medical operations over the last 10 years. We recognize that
    there is much opportunity for introducing an even more agile
    headquarters operation that shares common services and
    institutes common clinical and business practices across the
    system of care.
        The budget we have put forward for 2013 is a responsible
    path forward to sustaining the military health system in a
    changing world and recognizes that the fiscal health of the
    country is a vital element in our national security.
        I am proud to be here with you today to represent the men
    and women who comprise the military health system. I look
    forward to your questions.
        [The prepared statement of Dr. Woodson follows:]
                  Prepared Statement by Hon. Jonathan Woodson
        Mr. Chairman and distinguished members of the subcommittee, thank
    you for the opportunity to appear before you today on behalf of the men
    and women who comprise the Military Health System (MHS) and address our
    strategic priorities for the coming year.
        We enter 2012 now having over 10 years of experience in preparing
    for and responding to the consequences of war. We have seen the end of
    one major conflict and the implementation of a concrete timeline for
    the drawdown of the other. Yet, even with these milestones in our
    sights, we have many challenges to address in the coming year, both
    operational and fiscal.
        I am proud of the performance of our military medical personnel on
    the battlefield and here at home. Last year, I provided this committee
    with some of the accomplishments achieved in combat--the lowest levels
    of disease, non battle injury (DNBI) rates in warfare; the highest
    survival from wounds rate; the safety and speed of an aeromedical
    evacuation system that has no peer; and the treatment and
    rehabilitation of wounded warriors that is allowing ever greater
    numbers of our severely wounded to return to their units, or to pursue
    careers in the civilian sector.
        These accomplishments bear repeating. I do this not simply to honor
    the men and women who made them happen, but also to point out that the
    actions and lessons that led to these outcomes are now being replicated
    in trauma centers, surgical suites, and rehabilitation centers around
    the country and around the world. The MHS is transferring our medical
    knowledge gained from battlefield medicine to the rest of society.
        As we share our experiences with our colleagues in American
    medicine, we are also mindful of the need to look internally and assess
    what lessons we have learned--and consider how we should be organized
    to meet our future missions. In June 2011, the Deputy Secretary of
    Defense established an internal task force to study this issue. We have
    now also shared the task force report and the Deputy Secretary's
    planned reorganization with Congress, consistent with Section 716 of
    the National Defense Authorization Act for Fiscal Year 2012. The plan
    we developed increases unity of effort, agility, and the opportunity
    for cost savings both through reduced overhead and, more importantly,
    through the implementation of common clinical and business practices
    across the enterprise. Our ability to implement this model will enhance
    virtually all of the programmatic issues we discuss in the MHS today.
        The Department has proposed a $32.5 billion Defense Health Program
    (DHP) appropriation (Figure 1), reflecting a small increase from the
    fiscal year 2012 enacted budget.

                             Figure 1: Fiscal Year 2013 Defense Health Program (DHP) Summary
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                           Fiscal                           Fiscal                           Fiscal
                                         Year 2011    Price     Program   Year 2012    Price     Program   Year 2013
           Appropriation Summary            \1\       Growth     Growth      \2\       Growth     Growth      \3\
                                           Actual                          Enacted                          Estimate
    ----------------------------------------------------------------------------------------------------------------
    Operation & Maintenance............   29,953.5      721.7      ^89.0   30,586.2      859.6      ^96.6   31,349.3
    RDT&E..............................    1,205.8       22.9       38.1    1,266.8       22.8     ^616.6      673.0
    Procurement........................      546.7       12.4       73.4      632.5       14.2     ^140.2      506.5
                                        ----------------------------------------------------------------------------
      Total, DHP.......................   31,706.0      757.0       22.5   32,485.5      896.4     ^853.4   32,528.7
    ----------------------------------------------------------------------------------------------------------------
    MERHCF Receipts \4\................    8,600.0                          9,470.6                          9,727.1
                                        -----------                      -----------                      ----------
      Total Health Care Costs..........   40,306.0                         41,956.1                        42,255.8
    ----------------------------------------------------------------------------------------------------------------
    Numbers may not add due to rounding
    \1\ Fiscal year 2011 actuals include Operation and Maintenance (O&M) funding of $1,394.0 million and Research
      and Development funding of $24.0 million from the fiscal year 2011 Overseas Contingency Operations (OCO),
      Title IX, Public Law 112-10.
    \2\ Fiscal year 2012 enacted (base), excludes O&M funding of $1,215.3 million of OCO.
    \3\ Fiscal year 2013 estimate excludes O&M funding of $993.9 million for OCO. The Department of Defense projects
      $135.6 million O&M funding should transfer in fiscal year 2012, and $139.2 million in fiscal year 2013 to the
      Joint Department of Defense-Department of Veterans Affairs Medical Facility Demonstration Fund established by
      section 1704 of Public Law 111-84 (National Defense Authorization Act for Fiscal Year 2011).
    \4\ Reflects Departmental DOD Medicare-Eligible Retiree Health Care Fund (MERHCF) for fiscal year 2011, fiscal
      year 2012, and fiscal year 2013 (O&M).

        Our proposal includes realistic cost growth for pharmacy, TRICARE
    contracts and other services provided both in our medical treatment
    facilities (MTFs) and care purchased from the private sector; as well
    as sustained investment in medical research and development.
        I will outline the major elements of our strategy for 2013, using
    the Quadruple Aim--the MHS strategic framework--to discuss our
    initiatives. This framework captures the core mission requirements of
    the MHS: Assure Readiness; Improve Population Health; Enhance the
    Patient Experience of Care; and Responsibly Manage the Cost of Care.
                               assuring readiness
        The MHS continues to closely monitor the health and medical
    readiness of the military force. We have consistently witnessed
    improvements in the medical preparedness of our servicemembers, both
    Active and Reserve component.
        We have ensured that our medical forces are also ready through
    sustained investments in our enlisted and officer training programs,
    through our comprehensive Graduate Medical Education (GME) programs
    conducted at a number of our MTF training platforms throughout the MHS
    and with select civilian partners; at the Medical Education and
    Training Center (METC) in San Antonio, TX, in our military medical
    school, the Uniformed Services University of the Health Sciences.
        We also assess the health of the force upon their return from
    deployment. In our continued commitment to ensuring the mental health
    of our servicemembers, the Department has issued policy that
    servicemembers deployed in connection with a contingency operation
    receive a person-to-person, privately-administered mental health
    assessment before deployment, and three times after return from
    deployment. These person-to-person assessments are conducted by
    licensed mental health professionals or by designated individuals
    trained and certified to perform the assessments.
        As part of our monitoring of the medical readiness of the force, we
    also assess our performance in ensuring that those servicemembers who
    are identified as needing behavioral health services receive a referral
    and seek treatment. In this area, we have also witnessed improvement
    each year in both the referral for behavioral health services, and the
    rate at which servicemembers seek ongoing treatment.
        Senior leaders, both officer and enlisted, have led the effort to
    reduce the stigma associated with seeking mental health care. A DOD
    Mental Health Advisory Team (MHAT) survey from February 2011 showed
    that Marines who screened positive for mental health issues, had a
    substantial (and statistically significant) decrease in behavioral
    health stigma levels from 2006. The percent of marines who agreed that
    seeking mental health care would harm their career dropped by more than
    50 percent. Responses by the Marines on whether seeking mental health
    care would cause members of their unit to have less confidence in them,
    cause unit leaders to treat them differently, cause unit leaders to
    blame them for the problem, or cause the Marine to be seen as weak,
    also saw similar statistically significant decreases.
        Together with the Department of Veterans Affairs (VA), we have
    developed an integrated Mental Health Strategy that has 28 discrete
    strategic actions designed to strengthen access to clinical services,
    improve continuity of care across the Departments, streamline the
    adoption and implementation of evidence-based practices and ensure our
    mental health providers are delivering state-of-the-art care.
        We have increased the number of behavioral health care providers
    over the past 3 years and embedded more in frontline units. Along with
    providing care, we have undertaken the largest study of mental health
    risk and resilience ever conducted among military personnel. This study
    will identify risk and protective factors as well as moderators of
    suicide-related behaviors by 2014. The Department continues to improve
    access to behavioral health services through a number of initiatives.
    In fiscal year 2012, we have begun the process of embedding, over a 4-
    year period, over 400 behavioral health providers into our patient-
    centered medical homes. We enhanced confidential, non-medical
    counseling through the Military Family Life Consultants (MFLC) and
    Military OneSource (MOS) programs, to include surge support--for both
    deployment/reintegration points in time, as well as other crises that
    emerge on a short-notice basis, such as the Ft Hood shooting and the
    Japanese earthquake/tsunami/nuclear incident. Recent legislation now
    permits mobile VA Readjustment Counseling Services to provide outreach
    and readjustment counseling to active duty servicemembers.
        We have also made efforts to ensure continuity of behavioral health
    care for members in transition--to a new installation, from active to
    Reserve status, or to the VA. We offer a diverse set of services to
    reach those military members seeking greater support. One notable
    program--``inTransition''--was developed in response to the Mental
    Health Task Force recommendation to ``maintain continuity of care
    across transitions for servicemembers and veterans,'' and offers a
    voluntary telephonic coaching program designed to facilitate a smooth
    transition to a new source of care. Afterdeployment.org is another
    program, serving over 5,000 users monthly, that provides servicemembers
    and their families with behavioral health information in a setting that
    preserves anonymity, and offers tools to help them recognize
    problematic behavioral health issues early and how to address these
    challenges. Recently, the VA has been using the site's interactive
    workshops in their walk-in clinics.
        Just as the Department has established a comprehensive approach to
    its mental health destigmatization efforts, we have employed the same
    model for our suicide prevention programs. The Deputy assistant
    Secretary of Defense for Readiness is standing up the Defense Suicide
    Prevention Office that will be staffed and resourced to develop,
    implement, integrate, and evaluate suicide prevention policies,
    procedures, and surveillance activities across the Department. This
    action specifically addresses a key recommendation contained in the DOD
    Task Force Report on Suicide Prevention and will greatly facilitate the
    timely implementation of additional recommendations contained in the
    report.
        The Department of Defense has made great strides in implementing
    early identification and treatment programs for traumatic brain
    injuries (TBIs). Through the work of the Defense Centers of Excellence
    for Psychological Health and Traumatic Brain Injury (DCoE), the DOD in-
    theater concussion policy has significantly improved the early
    detection of servicemembers with concussion by providing clear and
    specific guidelines for the management of acute concussions. The
    Department's focus on TBI treatment has resulted in the standardization
    of 62 TBI programs at military treatment facilities (MTFs) in the
    nondeployed setting and the cultivation of 11 concussion restoration/
    care centers in the deployed setting. We have also helped update the
    behavioral health curriculum for all medical technicians and corpsmen
    at our Medical Education and Training Center (METC) to ensure our
    knowledge base is advanced throughout the MHS.
        Our fiscal year 2013 program sustains the significant investments
    we have made in all of our medical research and development programs,
    and in particular in the area of TBI and Post-Traumatic Stress (PTS).
    The Center for Neuroscience and Regenerative Medicine (CNRM) is a
    collaborative intramural Federal program that bridges DOD and the
    National Institutes of Health (NIH) in order to catalyze innovative
    approaches to TBI research, and emphasizes research that is relevant to
    military populations. Our other focus areas for the Defense Medical
    Research and Development Program include polytrauma and blast injury;
    operational health and performance; regenerative medicine;
    rehabilitation; psychological health and well-being for military
    personnel and families; and military medical training systems and
    health information technology applications.
        Within the readiness area, the health of our servicemembers is also
    protected through sound occupational health practices. This past fall,
    the Institute of Medicine (IOM) concluded its independent study of the
    long-term health consequences of exposure to burn pits in Iraq and
    Afghanistan. The IOM was unable to identify any long-term health risks
    from these exposures. Nonetheless, DOD and the VA are continuing to
    monitor of the health of deployed servicemembers and veterans and
    provide for a longer period of post-exposure health assessments to
    ensure these initial findings are sustained over time.
        Finally, at the core of our medical readiness posture is our
    people. Our recruitment of medical professionals--physicians, dentists,
    nurses, ancillary professionals and administrators--remains high. With
    the support of Congress, through the use of flexible bonuses and
    special salary rates, we have been able to meet most of our recruiting
    goals. Yet we recognize that competition for medical professionals will
    grow in the coming years, amidst a growing shortage of primary care
    providers and nurses. We will continue to work with Congress on
    potential new flexibilities to ensure we remain competitive in this
    environment.
                          improving population health
        Closely linked with our readiness mission are our efforts to
    improve the health of the entire MHS population. We are going to engage
    in a multi-year effort on two of the greatest contributors to ill
    health--tobacco use and obesity in our population.
        Our servicemembers use tobacco and tobacco products at a much
    higher rate than their peers; we have started to reduce tobacco use,
    but we plan to do more. In addition to the existing suite of smoking
    cessation pharmaceuticals available at MTFs, and counseling services,
    we will soon offer the pharmaceutical benefit through our mail order
    program, and allow for a 24/7 smoking cessation line with counseling
    services over the phone.
        In the area of obesity and overweight persons, in some
    circumstances we reflect what is occurring within the larger society.
    Our active-duty servicemembers--as you would expect--do well in
    maintaining their weight and their fitness, and exceptionally well when
    compared to their peers. However, the influence of nutritional habits
    in the larger society is having effects on the military population and
    particularly on entry-level candidates. When those in uniform leave
    active service, too many reverse the physical fitness habits and
    discipline of military service. There is a financial cost to this; one
    DOD study found that $1.4 billion could be attributed to overweight and
    obesity-related medical problems and services. But, more importantly,
    the quality of life for our overweight and obese beneficiary population
    is often far worse than it should be as many are affected by obesity-
    related disease, such as diabetes and heart disease.
        We have worked across the Services to develop and launch both adult
    and childhood obesity management and prevention guidelines, emphasizing
    the provider's role and positive steps to take in assisting and
    advising patients. We have also implemented a demonstration project to
    determine whether monetary incentives can be used to improve the
    overall health and wellness of the MHS population. We do not yet have
    the results of this demonstration project, but will report interim
    findings to Congress this year. Finally, we have joined with a broader
    set of partners in DOD, that includes bringing together everyone on a
    military installation--commanders, senior enlisted advisors, the
    military family program leaders and medical personnel--in a set of
    initiatives aimed at further improving the fitness of our entire
    community. Our military dining halls, schools and child development
    centers are offering healthier food choices--both here and in
    Afghanistan; our commissaries and exchanges will help identify better
    nutritional choices; and we're redesigning our military communities in
    ways that will increase exercise and fitness.
                    enhancing the patient experience of care
        As the MHS moves into 2012, we will re-evaluate our efforts and
    mission through the lens of enhancing the patient experience of care by
    focusing on maximizing the value we provide to our beneficiaries.
        The MHS is continuing the implementation of the Patient-Centered
    Medical Home (PCMH), a program with the principle focus of developing a
    cohesive relationship between the patient and the provider team. The
    PCMH is a transformative effort within our system, with the potential
    to positively affect all aspects of our strategic focus--readiness,
    population health, patient experience and per member cost. Begun in
    2009 as a strategic initiative, the MHS has formalized through
    directive and accreditation our PCMH program. In 2011, 44 of our
    facilities were formally recognized by the National Committee on
    Quality Assurance (NCQA), with 93 percent recognized as Level 3 PCMHs
    (as compared to a private sector rate of 60 percent with Level 3
    recognition). Our more mature PCMHs--at facilities throughout the Army,
    Navy and Air Force, and representing more than 25 percent of our
    medical homes--are achieving the outcomes we sought: improved access to
    care (increased percentage of the enrolled population getting an acute
    appointment within 24 hours, and a routine appointment in 72 hours);
    improved continuity with the same team of providers (increased
    percentage receiving care from their assigned primary care manager);
    and reduced emergency room utilization. In fiscal year 2012, we will
    further augment our medical homes with a 24/7 nurse advice line to
    offer both enrollees (and all beneficiaries) access to essential health
    information. This nurse advice line will be linked with MTF appointing
    to further improve access to care, and reduce bureaucratic hurdles for
    our patients.
        The Department has long been a national leader in developing and
    deploying a global, electronic health record (EHR). Our first EHR was
    put into the field in the late 1980s. We are now on the cusp of
    developing our third generation EHR--and the first to be co-developed
    with the Department of Veterans Affairs--the integrated Electronic
    Health Record (iEHR). Both DOD and the VA are encouraged by the
    progress that our interagency teams have made in refining or developing
    the IPO charter, and the principles, strategies and architectural
    framework for the iEHR as we embark upon this landmark effort.
        The DOD/VA Interagency Program Office has been rechartered to give
    them more responsibility and authority as the program execution office
    for the iEHR. In addition, the VA has signed an agreement with the
    Defense Information Systems Agency to move the data centers for two of
    VA's regions into DOD data centers. Most recently, this week we
    announced the selection for the Director of the Interagency Program
    Office.
        As we expand the amount of health care information that we collect
    and share, we remain vigilant about the security of this sensitive
    health information. In the last year, a DOD contractor responsible for
    the maintenance of aspects of our electronic health record experienced
    a serious security breach in which 4.9 million medical records were
    potentially compromised. In the wake of that incident, we have
    conducted a critical review of the contractor's performance, as well as
    a review of our existing policies and procedures, and we have
    strengthened our guidance and future contract requirements for a number
    of security and encryption standards.
        Our work with the VA on the iEHR is only one element of a
    comprehensive strategy to further partner with the Department of
    Veterans Affairs. We have successful joint ventures or fully integrated
    operations at ten locations in the United States, and, in addition, we
    are pursuing other opportunities for joint purchasing, shared education
    and training opportunities, and joint construction, where feasible.
        The Military Construction (MILCON) program continues to
    recapitalize our inventory of MTFs. Our current investment program was
    substantially increased 5 years ago and has been essential in
    facilitating the BRAC transition and continued improvement of our MTFs.
    Both the Walter Reed National Military Medical Center in Bethesda, MD,
    and the Fort Belvoir Community Hospital in Fort Belvoir, VA, have
    opened their doors, showcasing the investments made, using evidence-
    based design standards. Construction and renovation of medical
    facilities in San Antonio is also complete. Along with other military
    medical facility projects in the United States over the last 7 years,
    with the support of Congress we have just completed one of the most
    transformative periods in the history of our military medicine
    infrastructure.
        As budgets and force structure are reduced in the Department, we
    recognize that there is a need to reassess the size and scope of major
    construction projects, as we are currently doing with the Landstuhl
    Regional Medical Center in Germany. We will, however, sustain our
    commitment to the operational mission, patient-centered design and
    clinical quality, even if sizing issues are reconsidered. The
    recapitalization of military medical facilities is essential to our
    efforts to recapture health care that has migrated to the civilian
    sector.
                           responsibly managing cost
        We are proud of our achievements in combat and peacetime medicine.
    We offer a superb benefit to our 9.7 million beneficiaries, no matter
    where they live, through our direct health care system and through our
    managed care support contracts. This health care benefit is justifiably
    one of the finest and most generous in the county and is an appropriate
    benefit for those who serve our country. However, the costs of
    providing this care continue to increase more rapidly than overall
    inflation. For a number of years, and through several administrations,
    there have been continuous, incremental steps taken to reduce the rate
    of growth in the costs of healthcare.
        In addition, the requirements of the Budget Control Act of 2011
    compelled the Department to identify $487 billion in budget reductions
    over the next 10 years. The process of identifying these budget cuts
    was developed by the senior civilian, military officer and enlisted
    leadership from throughout the Department. Difficult choices were made.
    Over 90 percent of the cost reductions were external to personnel
    compensation and benefits. Still, health care was not exempt from this
    process. The proposals being put forward in this budget appropriately
    balance the need for a superb benefit that assists with both
    recruitment and retention of an All-Volunteer Force with our need to
    sustain a cost-effective approach for the long-term.
        This administration is pursuing a four-pronged approach by which
    all stakeholders share responsibility for improving the health of our
    population and the financial stability of the system of care.
        Our four approaches--moving from a system of healthcare to one of
    health; continuing to improve our internal efficiencies; implementing
    provider payment reform; and rebalancing cost-sharing--are further
    described below. In some instances, they reflect efforts already
    underway, or new initiatives that the Department is implementing within
    existing legislative and regulatory authorities.
    Moving from Healthcare to Health
        The Department of Defense's military medical leaders are leading a
    strategic effort to move our system to one that promotes and sustains
    the optimal health of those we serve, while providing world-class
    healthcare when and where it is needed.
        Central to this effort are the Department's investments in
    initiatives that keep our people well; that promote healthy lifestyles;
    and that reduce inappropriate emergency room visits and unnecessary
    hospitalizations. These initiatives have been addressed in earlier
    parts of my testimony and include the Patient-Centered Medical Home
    (PCMH) initiative; the embedding of behavioral health staff within
    these medical homes; the introduction of a 24/7 nurse advice line; and
    our many population health initiatives. We have also taken a number of
    steps to support preventive services. Our TRICARE beneficiaries--
    whether enrolled to TRICARE Prime or in TRICARE Standard--have no
    copayments for recommended preventive services, such as influenza
    immunizations.
        The ``Healthcare to Health'' element of our strategy will not
    produce immediate cost savings. Nonetheless, based on knowledge of
    well-constructed wellness programs in the private sector, we are
    confident that these, and other ongoing enhancements to the TRICARE
    program, will produce improvements to health that also ``bend the cost
    curve.'' In the longer term, it is the strategy most likely to produce
    the greatest amount of savings to our system.
    Internal Efficiencies
        The Department has instituted internal cost reduction efforts by
    decreasing headquarters administrative overhead; jointly purchasing
    medical supplies and equipment; and directing patients to lower cost
    venues for medications. The cumulative savings from all of these
    internal efforts for fiscal year 2013 are estimated at $259 million.
        I have also previously noted the proposed reorganization of the
    MHS, following the work of the Task Force on Military Health System
    (MHS) Governance, which evaluated options for the long-term governance
    of the MHS as a whole; governance in those areas where more than one
    Service operates medical treatment facilities--referred to as multi-
    service markets, and governance for the National Capital Region (NCR).
        Implementation of any organizational efficiencies resulting from
    this Task Force has been placed on hold at the direction of Congress,
    subject to a review by Congress and by the Comptroller General. We will
    provide congressional committees with the information requested
    regarding the Task Force work and will develop more detailed cost and
    savings estimates for any eventual governance model. After the Deputy
    Secretary of Defense approves the ``way ahead,'' we will be prepared to
    answer any additional questions that you have. We believe that further
    integration of health services across the Services and with the TMA are
    needed in order to provide a continued high quality of care in an
    environment of diminishing resources while ensuring the preservation of
    the health benefit for future generations.
    Provider Payment Reform
        We are committed to identifying greater efficiencies and cost
    savings in all areas of our operations. In addition to internal
    efficiencies, we are also seeing significant savings through a number
    of provider payment reforms that we have introduced in the last several
    years. These include the implementation of the outpatient prospective
    payment system; the policy changes we made for reimbursement to select
    hospitals and health plans in the TRICARE network; and further use of
    Federal ceiling prices for acquisition of pharmaceuticals.
        The Department has undertaken a broad-based, multi-year effort to
    ensure all aspects of our provider payments for care purchased from the
    civilian sector are aligned with best practices in Medicare and in
    private sector health plans. The most notable efforts have included
    implementation of changes to the outpatient prospective payment system
    (OPPS) and reform of payment to Sole Community Hospitals.
        OPPS is modeled after the payment process that Medicare uses for
    similar health care services--setting a fixed fee per procedure,
    inclusive of provider and institutional charges for care. In order to
    allow medical facilities to transition to this new method of payment,
    TRICARE phased in the reimbursement levels over 4 years, with the full
    implementation of this policy set to occur in 2013. In fiscal year
    2012, we project $840 million in savings, and $5.5 billion over the
    fiscal years 2012-2017.
        Our provider payment reform for Sole Community Hospitals (SCH) was
    also phased-in over time, and will provide a projected $31 million in
    savings in the first year, and will grow to about $100 million in
    savings through 2017.
        In the area of purchasing prescription drugs, in 2009 we instituted
    a process for obtaining discounts on drugs distributed through retail
    network pharmacies, pursuant to authority provided in the 2008 National
    Defense Authorization Act. Known as Federal Ceiling Prices (FCP),
    prescriptions purchased under FCP are at least 24 percent less than
    non-Federal Average Manufacturer prices. In 2012, the FCP program will
    save the Department over $1.6 billion, and will grow to over $2 billion
    in savings by 2017.
    Beneficiary Cost-Shares
        In addition to the focus on internal and external efficiencies, our
    proposed budget introduces changes to the health care out-of-pocket
    costs for our beneficiaries.
        I want to make three critical points related to these proposals.
    First, even accounting for these proposed fee changes, the TRICARE
    benefit will remain one of the finest and most generous health benefits
    available in the country, with among the lowest beneficiary out-of-
    pocket costs available to anyone--and certainly lower than costs by
    other Federal Government employees. We believe that is appropriate and
    properly recognizes the special sacrifices of our men and women in
    uniform, past and present.
        Second, as mentioned earlier in my testimony, these proposals were
    developed within the Department, and represent the input and consensus
    of our uniformed leadership, both officer and enlisted.
        Third, we recognize that some beneficiary groups should be
    insulated from increases in out-of-pocket costs. We propose to exempt
    those servicemembers, and their families, who were medically retired
    from military service, as well as the families of servicemembers who
    died on active duty. We also propose to establish cost-sharing tiers,
    with lower increases for retirees based on their military retirement
    pay. More junior enlisted retirees, for example, will experience the
    lowest dollar increases in out-of-pocket costs. Finally, we have also
    avoided any changes in cost-sharing for active duty families with the
    exception of prescription drug copayments obtained outside of our MTFs.
    Prescription drugs distributed within MTFs will continue to be free of
    charge for all beneficiaries.
        For over 15 years, the Department had not increased patient out-of-
    pocket costs for any beneficiary. In fact, the TRICARE benefit was
    enhanced in many ways, and a number of out-of-pocket costs were
    decreased. A few of these enhancements include: active duty family
    members enrolled in TRICARE Prime had their copays eliminated; retirees
    and their families using TRICARE Prime had their catastrophic cap
    reduced from $7,500 to $3,000 per year; Medicare-eligible retirees and
    their families received TRICARE For Life coverage, and a TRICARE
    pharmacy benefit. Last year, we introduced very modest changes in one
    segment of our population--increasing TRICARE Prime enrollment fees for
    retiree families by $5/month, and indexed these fees so that future
    increases continue to be modest and beneficiaries can plan for them. We
    greatly appreciate Congress' support for these proposals in the fiscal
    year 2012 budget, and have implemented those fee changes in the current
    year.
        Although last year's changes were a necessary step, the Department
    has proposed further cost reduction efforts in 2013 as an element of
    our strategy to meet the requirements of the 2011 Budget Control Act.
    All of these changes are phased in over time. For select fees the
    Department has proposed ``tiers'' of copays based on the retirement pay
    of the beneficiary. Fee changes are distributed across the various
    TRICARE programs, so that no one beneficiary group bears the entire
    burden for these changes in cost-sharing. Retirees in TRICARE Prime,
    TRICARE Standard and TRICARE For Life each have a share of the
    increases; all beneficiaries (except uniformed personnel) have
    additional costs for prescription drugs outside of MTFs. The following
    sections provide a high-level overview of the proposed changes in
    beneficiary out-of-pocket costs. Figure 2 summarizes the proposed fees:

             Fee increases for TRICARE programs. The following
            proposed changes represent increases from existing patient out-
            of-pocket costs.

                     TRICARE Prime Enrollment Fees. We propose to
                    raise the enrollment fees in 2013 for retired
                    servicemembers and their families from between $80-$300
                    per year, based on the retirement pay of the
                    servicemember, and continue to provide similar
                    increases through 2016.
                     TRICARE Deductibles. We propose to increase
                    deductibles for the TRICARE Standard program for
                    retired servicemembers and their families beginning in
                    fiscal year 2013. TRICARE deductibles have not been
                    changed since before the TRICARE program was
                    introduced, having last been adjusted over 20 years
                    ago.
                     TRICARE Pharmacy Copays. We propose to
                    increase pharmacy copayments for generic, brand name
                    and non-formulary prescriptions in both the retail and
                    mail order settings, although we will continue to offer
                    significant incentives for beneficiaries to elect mail
                    order over retail pharmacy networks. Additionally, non-
                    formulary prescription drugs will no longer be
                    available in the retail network. These changes are
                    proposed for all non-active duty beneficiaries, to
                    include active duty family members. Prescription drugs
                    obtained in military hospitals and clinics will
                    continue to be provided without copay for any
                    beneficiaries.

             New fees for TRICARE programs. Our proposed budget
            also calls for the introduction of new fees not previously part
            of the TRICARE program.

                     TRICARE Standard/Extra Enrollment Fee. We
                    propose to introduce an annual enrollment fee in
                    TRICARE Standard for retired servicemembers and their
                    families. The proposed fee for 2013 will be $70/year
                    for an individual retired beneficiary, or $140 per
                    retired family.
                     TRICARE For Life (TFL) Enrollment Fee. When
                    TFL was introduced in 2002, there was no enrollment fee
                    in the program, only a requirement that beneficiaries
                    be enrolled in Medicare Part B to enjoy their TFL
                    benefit. Medicare Part B was always a step that we
                    recommended our retirees elect, and prior to 2002, over
                    95 percent of eligible military retirees were enrolled
                    in Medicare Part B. The TFL benefit has reduced
                    beneficiary out-of-pocket costs by thousands of dollars
                    per year in copayments or Medicare supplemental health
                    insurance plan payments. The proposed TFL enrollment
                    fees, similar to the TRICARE Prime enrollment fees, are
                    tiered, based on an individual's retirement pay--and
                    range from $35 to $115 per beneficiary per year in
                    fiscal year 2013.
                     Exclusion of Enrollment Fees from the
                    Catastrophic Cap. We propose that enrollment fees,
                    which had previously accumulated toward a retiree's
                    catastrophic cap limit, will not be counted toward the
                    cap beginning in 2013.
                     In addition to the indexing of the TRICARE
                    Prime enrollment fee, which is already indexed, we
                    propose to index other beneficiary out-of-pocket costs
                    identified in this set of proposals, to include the
                    TRICARE Standard deductible, TRICARE Standard
                    enrollment fee, TRICARE For Life enrollment fees,
                    pharmacy copayments, and catastrophic caps.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        These proposed changes continue to be modest by historic standards
    of cost-sharing in the TRICARE program. In 1996, when TRICARE was
    implemented, a working age retiree's family of three contributed
    approximately 27 percent towards the total cost of their care; today
    that percentage has dropped to just over 10 percent. Even with these
    proposed changes, the percentage would still remain below the
    percentage originally set by Congress, averaging approximately 14
    percent of range of overall health care costs in 2017--and stabilizing
    at that level for the out-years.
        These adjustments are an important step to setting the TRICARE
    benefit on a more sustainable path that maintains the quality of the
    medical benefit for future generations. Moreover, the overwhelming
    majority of these adjustments will be phased in over a 4- to 10-year
    period and will be appropriately indexed to ensure future
    sustainability and guarantee transparency. These proposals--one element
    of a four-pronged effort at cost control--will help shift us toward
    more effective and cost-efficient processes that will allow us to
    provide better care while meeting our obligations to help reduce our
    budgets.
        We are cognizant of the strains placed on our economy and the
    government by Federal budget deficits and long-term debt. We recognize
    that the Department of Defense must shoulder its share of
    responsibility and that we must tighten our belts just as so many
    Americans have been forced to do in recent years. We have not taken any
    proposed change lightly. The health benefit exemplifies the
    Department's gratitude to veterans for their service and acts as an
    integral part of recruiting, retaining, and maintaining a healthy
    force. We worked to ensure that cost changes would be minimized and
    that any reforms would not degrade the quality of the benefit. We are
    confident that this is the case.
        I am honored to represent the men and women of the Military Health
    System before you today, and I look forward to answering any questions
    you may have.

        Senator Webb. Thank you very much, Secretary Woodson.
        Secretary McGinnis, welcome.

     STATEMENT OF DAVID L. McGINNIS, ACTING ASSISTANT SECRETARY OF
                      DEFENSE FOR RESERVE AFFAIRS

        Mr. McGinnis. Chairman Webb, Senator Graham, distinguished
    members of the subcommittee, thank you for the opportunity to
    appear before you today and discuss the Reserve and our
    National Guard.
        Today, I can report to you that we have over 72,000 members
    of the Guard and Reserve on involuntary orders for mobilization
    supporting operations in U.S. Central Command (CENTCOM). In
    addition, we have another 86,000 on a snapshot. At the end of
    the month, we provided to the Secretary, 86,000 guardsmen and
    reservists deployed on 6 continents supporting our regional
    commanders in various duty statuses from annual training to
    mobilization. This is reflective of the emerging new role of
    our Reserve components described by many as the operational
    reserve.
        The President's fiscal year 2013 budget supports this
    operational reserve providing funding and programmatic support
    to three key readiness imperatives: training, equipping, and
    recruiting and retention.
        Training is focused on, first of all, maintaining
    capability and capacity identified within DOD for the
    particular organizations and leveraging available training
    technologies so we can make the maximum use of available time
    of our guardsmen and reservists when they are in training. We
    are focused on developing a common readiness standard across
    the components of each Service so we have standardized
    expectations on what we are looking for the Guard and Reserve
    to do.
        Equipping within my office first focuses on transparency.
    That is a bumper sticker for assuring that the equipment that
    you authorize for the Reserve components gets to those Reserve
    components you expected in a timely manner. We have also
    expanded this program to now develop a life cycle view of that
    equipment and track it throughout the system.
        We are also working very hard to ensure that the Guard and
    Reserve organizations have the right equipment to train with,
    including command and control and communications equipment, so
    they can integrate within the Total Force.
        Recruiting and retention are obviously an essential element
    of a ready force, and our recruit quality remains high. We
    expect some shifts in that as we move forward with individuals
    leaving the Active component, as we mentioned earlier, and we
    are working very strongly to come up with ways to integrate
    them into the Reserve components as they leave Active service.
        Retention currently is very solid, and we know that while
    we recruit the servicemember, we must maintain the family and
    retain the family. The Yellow Ribbon Reintegration Program
    (YRRP) is a wonderful tool that you provided us, that helps us
    do that. The use of the Reserve components in an operational
    role is necessitating that we begin to move the YRRP, or at
    least portions of it, into the base budget. With Secretary
    Hale's help and the help of others, we have started to do that
    in 2013, and we are working on doing that as we develop the
    future defense program.
        Continuing evolving requirements now also include
    employment programs, employment assistance, and training. We
    are working very hard at that. I will talk about that in a
    minute.
        As we learned from our members and their families on
    multiple deployments, we are finding that the tension to pre-
    enduring deployment activities within the YRRP really enhances
    the post-deployment period. We are putting a lot of emphasis on
    that.
        Hero2Hired (H2H) is a joint initiative between the YRRP and
    the National Committee on Employer Support to the Guard and
    Reserve which is focused on unemployment and under-employment
    of this distinct category of servicemembers within the Reserve
    components.
        Second, this focuses on the reality that is really,
    unemployment of our guardsmen and reservists is a key element
    of individual military readiness. Successful guardsmen and
    reservists are established in the community and have good jobs.
    We know that.
        Finally, sir, I could not appear before you without
    highlighting the 20-year history of the building of enduring
    international partnerships with the National Guard State
    Partnership Program. We currently have a total of 63
    partnerships, but I would like to focus on the 22 in Eastern
    Europe and the 5 in CENTCOM. The 22 in Eastern Europe have
    helped us build the North Atlantic Treaty Organization (NATO)
    and expand NATO and also account today, as we speak, for about
    9,500 Eastern European military members as part of the
    International Security Assistance Force (ISAF); and the 5
    CENTCOM programs give us expanded access and understanding of
    the CENTCOM theater.
        I thank you very much again. I look forward to your
    questions.
        [The prepared statement of Mr. McGinnis follows:]
                    Prepared Statement by David L. McGinnis
                                  introduction
        Chairman Webb, Ranking Member Graham, and members of the
    subcommittee; I thank you for your invitation to participate in this
    hearing. I welcome the opportunity to give you an overview of the
    issues we are addressing in the Reserve components.
        The fiscal year 2013 budget supports the National Defense Strategy
    and will enable our Reserve components to continue to fulfill their
    vital national security role. The budget provides funding and
    programmatic support for the training, equipping, recruiting and
    retaining of the Guard and Reserve.
        The Department's Ready Reserve totaling about 1.1 million members
    contributes 43 percent of total military end strength at a cost of 9
    percent of the total base budget. The National Guard and Reserve
    provide trained, ready and cost-effective forces that can be employed
    on a regular operational basis, while also ensuring strategic depth for
    large-scale contingencies or other unanticipated national crises.
    Reserve component forces can:

             Provide critical capabilities for meeting national
            defense objectives
             Enable mitigation of strategic risk at lower cost than
            a large standing full-time force
             Provide cost effective returns on significant
            Department of Defense (DOD) investment
             Reduce stress on the Total Force
             Provide the capability to rapidly ``reverse'' given a
            change in our national strategic objectives

        Prior to 2001, the Reserve components were primarily a strategic
    reserve with occasional operational missions as needed to augment
    Active Forces. Since 2001, Reserve component units and individuals have
    been heavily employed across the full spectrum of military operations
    ranging from combat missions overseas, to homeland emergencies, to
    National Special Security Events and have demonstrated their readiness
    and utility. The current National Guard and Reserve is, arguably, the
    most combat seasoned Reserve Force ever, and the Department seeks to
    capitalize on this significant investment to provide needed military
    capacity during current austere economic times.
        To ensure the Reserve component can continue to provide both
    operational and strategic forces, the Department included funding and
    programs in its fiscal year 2013 budget request for their training,
    equipping, recruiting and retention.
      training and utilization opportunities for the military departments
        After a decade of sustained engagement in combat operations, the
    Reserve components of our Armed Forces continue to transform into a
    dependable operational force that provides full-spectrum capability to
    the Nation. As of 31 December 2011, 835,689 Reserve component members
    (809,913 Selected Reserve and 25,776 Individual Ready Reserve) have
    served in support of contingency operations since September 11, 2001
    and 80 percent of those service men and women have deployed in the U.S.
    Central Command area of responsibility. Today there are over 85,000
    National Guard and Reserve men and women on active duty around the
    world and at home, serving in missions ranging from combat in
    Afghanistan to defending the air space here in Washington and our
    borders in the southwest.
    RC Utilization
        The contribution of the Reserve components has increased
    dramatically in the last two decades, and during that time the Reserve
    component has become an integral part of the Nation's military force
    participating in nearly every mission worldwide. The increased
    utilization of the Reserve components supports the recent Strategic
    Guidance, and the Department has managed the use of the Reserve
    component to help mitigate the stress on the Total Force.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Today's Reserve component is a force multiplier which provides
    access and flexibility at an incredible value allowing the Services to
    utilize full capabilities in an operational capacity while retaining
    strategic depth. An optimal Active component/Reserve component force
    mix will allow the department to not only preserve previous investments
    in readiness, capability, and capacity, but also protect the
    operational expertise of the force for future use while ensuring a
    rapidly expandable, trained, and ready military.
    Innovative Readiness Training
        The Innovative Readiness Training (IRT) Program is an outstanding
    volunteer training opportunity for our National Guard and Reserve.
    IRT's focus is to provide a varied and challenging menu of training
    opportunities that exercise the Mission Essential Task List (METL)
    requirements of combat support and combat service support units and
    individuals. Each year, new training opportunities are presented by
    Federal, State, or local government agencies or nonprofit organizations
    to the Services for their selection. Military units are provided METL
    training in a realistic, hands-on setting while providing quality
    services to communities throughout the United States and U.S.
    territories.
        Examples of IRT activities include infrastructure development,
    constructing rural roads and runways, small building and warehouse
    construction and providing medical and dental care to medically
    underserved communities. These opportunities result in interoperability
    and readiness training ensuring our Nation always has a fully capable
    National Guard and Reserve. Historically, this office's IRT program
    budgets for, and executes a $20 million fiscal year training program.
    Cyber Workforce
        Operating effectively in Cyberspace is vital to DOD and the Nation.
    ``Cyber'' as a Warfare Domain is newly organized and rapidly expanding.
    The need for personnel with cyber skills, the limited number of workers
    with those skills, and increasing competition within U.S. Government
    and the private sector for the same set of skills require a long-term
    and robust cyber workforce strategy. The Secretary of Defense has
    stressed the need for a flexible approach to attract, develop, and
    retain Cyber, and specifically Cybersecurity, professionals along with
    endorsing innovative use of the Reserve component for cyber missions.
        Innovative use of the Reserve component as proposed by the
    Secretary is well underway, with forces assigned to the National
    Security Agency, U.S. Cyber Command (CYBERCOM), the Defense Information
    Systems Agency and to each of the four Service component commands
    supporting CYBERCOM. There are multiple Air and Army Guard units
    engaged in the cyberspace mission and Computer Network Defense teams
    are authorized in all 54 States and territories. The Reserve component
    offers very highly qualified individuals from the private sectors whose
    civilian skills may be maximized when supporting DOD.
    State Partnership Program
        The National Guard State Partnership Program (SPP) mission is to
    establish and sustain enduring relationships with partner nations of
    strategic value in conjunction with the National Security Strategy,
    National Military Strategy, Department of State and Combatant Command
    Theater Security Cooperation guidance to promote national objectives,
    stability, partner capacity, better understanding and trust.
        Program partners engage in security cooperation activities to
    include homeland defense and security, disaster response/mitigation,
    consequence/crisis management, interagency cooperation, border/port/
    aviation security, combat medical, fellowship-style internships, and
    bilateral familiarization events that create training and exercise
    opportunities. SPP provides the ability to focus a part of DOD, a
    State's National Guard, with a single country or region in support of
    U.S. and partner country objectives. Currently, 48 States, 2
    territories, and the District of Columbia are partnered with 63
    countries around the world.
        This program directly supports the Secretary's strategic goal of
    building innovative partnerships. The program has been funded at $13.36
    million for fiscal year 2012 and the President's fiscal year 2013
    budget includes a request for $16.5 million. Many of these partnerships
    have resulted in collaborative working relationships through police and
    military operational mentoring and liaison teams with our new NATO
    partners who are part of the effort in Afghanistan.
                        equipping the reserve components
    Equipment Procurement
        There currently is no specific appropriation that provides
    equipment directly to the Reserve components. The Reserve component
    relies on the active procurement account to meet equipment requirements
    and provide adequate capabilities. Congress has been generous in
    providing additional support through the National Guard and Reserve
    Equipment Appropriation ($1 billion for fiscal year 2012), which
    provides funding for Reserve component equipment modernization and
    critical dual-use equipment.
    P-1R
        We thank Congress for their continued generous support of the Guard
    and Reserve equipping (P1R fiscal year 2012 - $4.6 billion/fiscal year
    2013 - $3 billion). The current challenge is that the P-1R has
    historically been treated as a non-binding projected subset of the
    Procurement Programs (P-1). In my view it is time to make the National
    Guard and Reserve equipment a sub-line within the P-1 and eliminate the
    P-1R. This will better ensure that Guard and Reserve component
    equipment is part of the Service plans throughout the entire
    procurement process.
    Resetting
        Currently, funding for reset of equipment returning from theatre
    for the Guard and Reserve comes from overseas contingency operations
    appropriations. As we prepare to move away from reliance on these
    supplemental funds, it is important to have a continued source of
    funding built into the base budget for Reserve component equipment
    reset. It is critical that the Guard and Reserves are able to continue
    to train on high quality equipment for which funds have already been
    allocated.
    RC Equipment Transparency
        Full transparency and accountability can only be achieved through a
    full life cycle, enterprise approach to reserve equipping. The life
    cycle includes requirements determination, budget requests,
    appropriation, purchase, and delivery of hundreds of thousands of
    pieces of equipment. The importance of transparency doesn't stop when
    an item is delivered to a Reserve component unit; the value of
    transparency in the life cycle approach to equipping continues beyond
    delivery. Plans to return borrowed Reserve component equipment are
    included as key deliverables in this process.
    Military Construction
        The fiscal year 2013 Reserve component budget includes $1.02
    billion, $21 million less than fiscal year 2012, for military
    construction which will meet both current and new mission requirements
    for Reserve component operations, readiness, and training facilities.
    The budget also funds sustainment, which is essential to maintaining
    facilities at a level that supports readiness and preserves the
    substantial investment the country has made in infrastructure. However,
    with urgent Reserve component facilities deficiencies and funding
    constraints, we must work to exploit opportunities to utilize existing
    DOD facilities and continue to pursue the efficiencies of joint use
    construction opportunities. The benefits of doing this go far beyond
    cost savings by promoting cooperation, building trust, and providing
    opportunities for joint training.
    Regional Integrated Training Environment
        The Regional Integrated Training Environment (RITE) concept is a
    joint effort that identifies and matches Services' training
    requirements to a vast network of local training facilities and
    resources. The purpose of the RITE initiative is to help sustain the
    total force readiness posture and surge capability as determined by
    service rotational readiness models while reducing overhead training
    costs through innovative management of facilities, training assets,
    advance simulators and Joint Live Virtual and Constructive capability,
    pooled, shared equipment, and coordinated through a web-based
    scheduling/visibility program. As the concept matures, collaboration
    will expand with key internal and external DOD stakeholders.
              recruiting and retaining the reserve component force
        In approximate numbers, as of December 31, 2011, the Ready Reserve
    currently consists of the following end-strengths:

             Selected Reserve: 844,400
             Individual Ready Reserve: 220,000
             Inactive National Guard: 3,700

    Continuum of Service, End Strength and Readiness Management
        Meeting Reserve component end strength objectives is a priority of
    the Department. The following table depicts the current prescribed and
    actual end strengths for the Reserve components as of December 2011.
    The Department's Continuum of Service efforts have contributed to all
    six DOD Reserve components remaining within the variance allowed for
    their congressionally-mandated end strength objective. The Services
    have implemented recruiting, retention, and force shaping policies and
    programs to achieve end strengths for fiscal year 2012. We appreciate
    the congressional support of the fiscal year 2012 end strength levels
    and the legislative initiatives that assist in recruiting and retaining
    Reserve component servicemembers. Fiscal year 2013 end strength levels
    will provide the Reserve components with the forces necessary to meet
    strategic and operational demands while maintaining a dwell consistent
    with Departmental policy.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Recruit Operational Ready Reserve Strength
        Thus far, for 2012, Reserve recruiting efforts show continued
    success. Through January, five of the six Reserve Services are within
    tolerance for recruit quantity objectives. Also, all Reserve components
    have met recruit quality objectives. The Reserve components continue to
    exceed the DOD Benchmark of 90 percent of new recruits being High
    School Diploma Graduates, with 97 percent of Reserve component recruits
    holding that credential.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        It is important that we have a military that reflects the society
    it defends, both in the enlisted ranks and our commissioned officers.
    This is particularly important as less than 1 percent of the American
    public serves in uniform.
        We continually review our recruiting programs to align funding and
    policies with current realities. Each of the Services has made
    significant adjustments to recruiting programs in light of our austere
    fiscal environment and draw-downs, and continues to look for additional
    cost savings but we must be cautious and resist the temptation to cut
    too deeply and too fast. Stable adequate investments in recruiting
    resources are necessary to maintain long-term success. Although
    enlistment incentives can be adjusted quickly to meet market
    fluctuations and force management needs, history has shown that the
    time required to redeploy advertising/marketing campaigns and/or
    qualified recruiters is significant.
        Acknowledging and understanding these factors and the need to
    expand our recruiting areas for the Reserve components, we continue to
    enhance DOD influence in underserved communities by working with local
    school administrators, specifically from Title I school districts, and
    implementing programs like the DOD STARBASE Program that have potential
    long-term impacts on students' on-time high school graduation; college
    enrollment; and interest in learning science, technology, engineering
    and mathematics. DOD STARBASE is an outreach and educational program
    that focuses on science, technology, engineering, and mathematics
    (STEM). STARBASE provides students underrepresented in the STEM areas
    of study and careers with 25 hours of instruction through an inquiry-
    based curriculum with ``hands-on, minds-on'' experiential activities
    and exposing them to military's technological environment to solidify
    their attachment to and engagement with learning. The program's
    influence has resulted in former DOD STARBASE students being invited to
    attend and participate in the White House Science Fairs for the last 2
    years.
        My staff and I have been working with the Office of Management and
    Budget to challenge States, industries, and nonprofits to invest in
    intervention programs like the National Guard Youth Challenge Program.
    I am also working with General McKinley, Chief of the National Guard
    Bureau, to provide oversight and management of the Program by
    collaborating with Governors to eliminate State resident issues; and to
    ensure every qualified high school dropout has an opportunity to attend
    the program. The Challenge program is currently operating in 27 States
    and Puerto Rico. Its goal is to improve the education, life skills and
    employment potential of America's high school dropouts. We provide
    quasi-military based training, supervised work experience to advance
    the program's core components. The core components include obtaining a
    high school diploma or equivalent, developing leadership, citizenship,
    life coping and job skills and improving physical fitness, health and
    hygiene. Since the program's inception over 100,000 students have
    successfully graduated from the program. The average cost per Challenge
    student is approximately $16,000. The fiscal year 2013 budget will
    support increasing annual enrollment and/or start up new programs in
    States that have the fiscal resources to match the cost-share funding
    requirements and to sustain the program's viability in States that have
    budget limitations.
        These two successful DOD youth outreach programs provide the
    Department a unique connection to the American public and working with
    our most valued resource--our young people.
        The Montgomery GI Bill-Selected Reserve (MGIB-SR) has been a
    cornerstone of our military recruiting efforts since 1985, and a major
    contributor to the success of the All-Volunteer Force. The new Post-9/
    11 GI Bill appears to enhance our recruiting efforts even more
    especially after signing the Post-9/11 Veterans Educational Assistance
    Improvements Act of 2010--providing additional benefit options that
    include the eligibility of National Guard and Reserve members who were
    inadvertently omitted from the original Bill, vocational and other non-
    college degree training, and living stipends for those enrolled in
    distance learning programs.
    Individual Readiness
        We understand that maintaining the highest level of individual
    readiness for our military manpower and civilian employees is a
    requirement for continuing to be utilized as a viable part of the
    operational force. Employing the Reserve components as operational
    forces requires modifications to training schedules and funding
    requirements. Ancillary training must be properly managed and
    prioritized in order to allow our members to focus on training for the
    skills that will be required of them when deployed or activated. Before
    DOD operationalized the Reserve component, the normal minimum training
    profiles consisted of training 2 days per month plus 14-15 days of
    active duty for training annually. While that training profile remains
    in-place for some types of units, current Department policy states that
    for those with planned deployments, training days prior to mobilization
    increases. This training profile, with more training pre-deployment and
    less post-deployment, minimizes mobilized time away from families and
    civilian. Increasing individual readiness by modifying training
    profiles with resources and policies is a major focus area that will
    allow the Guard and Reserve to capitalize on the gains made during the
    last decade and enable the continued use of the Reserve component as an
    operational force.
    Individual Medical Readiness
        The Individual Medical Readiness of the National Guard and Reserve
    continues to be a priority for the Department to ensure availability of
    Ready Reserve component members for deployment. As of the fourth
    quarter of fiscal year 2011, the Reserve component has increased its
    Fully and Partially Medically Ready rate 5 percent over first quarter
    fiscal year 2011 rates, and reduced the Indeterminate population by 6
    percent. Most notably, the Marine Corps Reserves improved their Fully
    Medically Ready status by 16 percent and reduced the Partially Medical
    Ready rate by 14 percent, over half of the fiscal year 2011 first
    quarter rates. The U.S. Coast Guard Reserve also made great
    improvements increasing their Fully Medically Ready rate by 9 percent,
    and reducing their Indeterminate and Not Medically Ready population by
    4 percent and 6 percent respectively. While we continue to face
    challenges with Dental Readiness, all Services are over the 75 percent
    goal except Army Reserve and Army National Guard which are at 71
    percent and 73 percent respectively. My office is working within P&R
    and across the Services to improve access to medical and dental
    services for Reserve component members. For example, the Army Reserve
    now budgets additional medical and dental services into their readiness
    accounts for Reserve component members.
    TRICARE for the Reserve Components
        The Department offers various health and dental coverage options to
    eligible members of the Reserve components and their families. Members
    of the Selected Reserve (SELRES) who actively participate in the
    Reserve component may purchase individual or family TRICARE Standard/
    Extra coverage under TRICARE Reserve Select (TRS). Members pay premiums
    that reflect 28 percent of the total cost of the coverage and incur
    cost shares after meeting an annual deductible (a government subsidy
    covers 72 percent of premium cost).
        For Reserve component members who have been activated in support of
    a contingency operation, premium-free TRICARE coverage may begin up to
    180 days before the member is activated (Early Identification) and
    continues for 180 days after the member is deactivated (Transitional
    Assistance Management Program (TAMP)) for the member and his/her
    family. After this period, qualified SELRES members may re-enroll and
    purchase TRS coverage again if desired. As of December 2011, there were
    a total of 81,465 TRS plans in effect: 29,204 TRS member-only plans and
    52,261 TRS member and family plans with a total of 215,545
    beneficiaries covered by TRS. Additionally, the Continued Health Care
    Benefit Program (CHCBP) is a premium-based health care program that
    offers temporary transitional health coverage for 18-36 months after
    TRICARE eligibility ends. CHCBP acts as a bridge between military
    health benefits and civilian health plans. Qualified members may
    purchase CHCBP within 60 days of loss of eligibility for either regular
    TRICARE or TAMP coverage.
        TRICARE Retired Reserve (TRR) is a full cost (no government
    subsidy) premium-based, worldwide health plan that qualified retired
    Reserve members and survivors may purchase. TRR offers comprehensive
    health coverage from any TRICARE-authorized network or non-network
    provider. TRR members may receive care in military treatment facilities
    on a space-available basis. TRICARE Young Adult is a premium-based
    health care plan that qualified dependents may purchase. TRICARE Young
    Adult provides medical and pharmacy benefits, but dental coverage is
    excluded. TRICARE Young Adult allows dependent adult children to
    purchase TRICARE coverage after eligibility for ``regular'' TRICARE
    coverage ends at age 21 (or 23 if enrolled in a full course of study at
    an approved institution of higher learning) and are not yet age 26.
        Collectively, these options for health care coverage provide a
    comprehensive and affordable health care plan for Reserve component
    servicemembers and their families. TRICARE insurance has provided
    servicemembers the opportunity to maintain their individual medical
    readiness requirements, increasing the overall readiness of our Reserve
    component units.
    Yellow Ribbon Reintegration Program
        The Yellow Ribbon Reintegration Program (YRRP) is a statutorily
    created, joint effort to support the Services in providing National
    Guard and Reserve servicemembers and their families with critical
    support, information, services, and referrals throughout the entire
    deployment cycle (pre, during, and post) to maximize successful
    transitions as servicemembers move between their military and civilian
    roles and to create strong, resilient military families. The YRRP is
    also responsible for providing Reserve component members and those who
    support them with training in suicide prevention and community healing.
    In fiscal year 2013, the YRRP will continue collaborating with suicide
    prevention experts to develop a strategic approach in identifying
    promising practices, strengths, challenges and gaps. We in Reserve
    Affairs continue to work with the Services as well as the newly created
    Defense Suicide Protection Office within the Office of the Under
    Secretary of Defense for Personnel and Readiness to address this
    important issue. The Services, along with Reserve Affairs, have taken
    current suicide rates very seriously and have committed resources to
    significantly reduce this trend.
        Guard and Reserve, Federal and State employees, volunteers and
    nonprofit organizations have worked tirelessly to ensure our
    servicemembers and those who support them have access to resources as
    they transition back into their communities. During the past 3 years,
    the YRRP has evolved into a successful, forward-leaning program
    providing essential readiness and resiliency training and resources to
    over 800,000 servicemembers and designees through direct-contact YRRP
    events. In fiscal year 2011, the Services conducted a total of 2,151
    YRRP events across the country, providing vital information and
    resources to 309,753 servicemembers, their families and/or designated
    representatives. To support the use of the operational reserve in the
    future, we need to work towards YRRP funding in the base budgets to
    ensure continuation of these important programs.
        In fiscal year 2011, Congress appropriated an additional $16
    million to the YRRP for enhanced outreach and reintegration activities
    which allowed the department to provide one-time support to various
    State led initiatives. Our Center of Excellence is working to collect
    data and metrics from these various programs to ensure we are funding
    the most effective outreach.
    Employer Support of the Guard and Reserve (ESGR)
        Employer Support of the Guard and Reserve engagement has grown
    significantly in recent years. The vision is ``to develop and promote a
    culture in which all American employers support and value the military
    service of their employees with ESGR as the principal advocate within
    DOD.'' ESGR has a footprint in all 50 States, U.S. Territories, and DC
    with over 4,800 volunteers assisting employers and servicemembers on a
    daily basis. The support of employers and families has never been more
    critical to our national defense. Through its network ESGR accomplished
    the following during the past year:

             Through Employer Outreach, ESGR volunteers briefed
            153,062 employers regarding their rights and responsibilities
            in accordance with Uniformed Services Employment and
            Reemployment Rights Act (USERRA). Also, ESGR attained 45,140
            Statements of Support. Employers signing a Statement of Support
            pledged support for their employees serving in the Guard and
            Reserve, while also focusing on opportunities to hire
            guardsmen, reservists, and veterans.
             Through Military Outreach efforts, ESGR volunteers
            briefed 473,891 servicemembers regarding their rights and
            responsibilities under USERRA. In turn, servicemembers
            recognized supportive employers with 4,049 nominations for the
            2011 Secretary of Defense Employer Support Freedom Award and
            acknowledged 16,559 supervisors with ESGR's Patriot Award.
             ESGR's Ombudsman services are supported by over 600
            trained USERRA experts spread across the country and by a
            National Customer Service Center. Together, the Ombudsmen
            fielded 29,727 USERRA inquiries and handled 2,884 cases. ESGR
            Ombudsmen provided free, neutral mediation to resolve nearly 80
            percent of all cases, in less than 9 calendar days. For cases
            that cannot be resolved by the Ombudsman, servicemembers are
            informed of their option to file a complaint with the
            Department of Labor, where a formal investigation will be
            conducted as to the merits of the complaint.
    Reserve Component Unemployment and Underemployment
        The Department knows that civilian employment is an important piece
    of a Reserve component servicemember's readiness, and the current high
    unemployment rate is a clear threat to the readiness of our force. The
    Bureau of Labor Statistics January 2012 report showed that the
    unemployment rate for all Veterans (including Guardsmen and reservists
    who previously served on active duty) was 7.5 percent nationwide. The
    unemployment rate among Gulf War era II veterans (those serving since
    September 11) was 9.1 percent. For reservists and guardsmen, the
    January 2011 Status of Forces Survey of Reserve Component Members shows
    a self-reported 23 percent unemployment rate among junior enlisted
    members in the grades of E-1 to E-4.
        As a result of these unemployment rates, ESGR and YRRP launched an
    Employment Initiatives Program (EIP) in January 2011. Under the Office
    of the Assistant Secretary of Defense for Reserve Affairs (OASD (RA))
    our ESGR volunteers increased their focused activities to address the
    unique unemployment needs of Reserve component servicemembers. Our ESGR
    Committees, representing the 54 States, Territories. and District,
    began focused efforts such as employment assistance workshops, job
    fairs, employment summits, and many other local community programs.
    ESGR conducted numerous workshops whereby servicemembers were trained
    on how to create civilian resumes, undergo mock interviews, dress for
    success, and received career counseling.
        Beginning in March 2011, ESGR volunteers assisted the U.S. Chamber
    of Commerce in the launch of their mega-hiring fairs around the
    country. As of the latest Chamber report, there have been 88 events,
    connecting more than 84,000 Veterans, Reserve component members and
    military spouses, to over 4,300 different employers. As a result of the
    combined effort, the National Chamber reports that more than 7,300
    veterans, servicemembers, military spouses, and 50 wounded warriors
    have gained employment.
        This past December 2011, our office launched a comprehensive,
    multi-faceted program called ``Hero2Hired'', better known as H2H, using
    lessons learned from our own efforts this past year and from the U.S.
    Army Reserve Employer Partnership of the Armed Forces program, H2H was
    developed to address the gap in employment assistance services and
    support for Reserve component servicemembers who are not considered
    veterans in law and so are ineligible for VA employment programs. H2H
    focuses on helping Reserve component servicemembers connect to and find
    jobs with military-friendly companies that seek employees with specific
    training and skills. H2H is a powerful, comprehensive employment
    program with a powerful job search site (www.H2H.jobs) and online
    community that is made available at no cost to servicemembers and
    employers. It contains all the tools a job seeker needs to find a job:
    job listings, career exploration tools, education and training
    resources, advice and tips, hiring events, virtual career fairs, mobile
    phone app, and networking opportunities. In 2012, H2H is sponsoring and
    participating with the U.S. Chamber of Commerce in 40 job fairs in high
    Reserve component unemployment areas. H2H booths will be available and
    staffed by H2H, YRRP, and ESGR State Committee volunteers.
        Together, YRRP and ESGR are delivering meaningful services to
    assist Reserve component servicemembers to transition and reintegrate
    into their civilian community through full spectrum assistance with
    employment and by promoting positive employer relations through USERRA
    education.
        Individual and Family Support Policy (IFSP) is participating in DOD
    studies on Child Care Subsidy, Military Family Life Consultants,
    Effectiveness Tracking, Resilience Programs, Websites and Help-lines,
    State Liaisons, and Communication with Families. OSD Reserve Affairs
    will continue to be an active partner in the DOD process to ensure that
    as family support resources are realigned, the 1.1 million National
    Guard and Reserve members and their families are considered in the
    decisionmaking process and that family support functions at a level
    that sustains full mission readiness.
                                   conclusion
        Secretary Panetta has recently testified on the need to maintain
    the tremendous expertise that has been developed in the Reserve
    components during the last decade of sustained engagement. The
    Department's recently released strategic guidance highlights the need
    for our National Guard and Reserves' continued capabilities and
    contributions as an agile, flexible and ready force in our national
    security. It is wise to build on the success and capitalize on these
    investments as we continue to develop the Reserve components to provide
    full-spectrum capability to the Nation. The Quadrennial Defense Review
    directed Comprehensive Review of the Future Role of the Reserve
    Component, released last year, provides a foundation upon which to
    build a cohesive execution strategy that preserves current Total Force
    competencies, efficiently integrates multiple capabilities, and
    leverages Reserve component value.
        Additionally, the 2012 National Defense Authorization Act requires
    an assessment of Reserve component force structure and end strengths in
    total force structure, and we are working within the Department to
    complete this requirement. These analyses and others that are ongoing
    will support the Department's strategic guidance to examine the mix of
    Active component and Reserve component elements best suited to support
    the strategy while maintaining a balance between the available
    resources and our security needs for the next decade.
        The fiscal year 2013 budget anticipates the Department will
    continue to use the Guard and Reserve as a vital part of the
    operational force, and where it makes sense, as a force of first
    choice. Today's Citizen Warriors have made a conscious decision to
    serve since September 11, with full knowledge that their decisions mean
    periodic recalls to active duty under arduous and hazardous conditions.
    To keep faith with their commitment, we will need your continued
    support of the funding requested for their training, equipping,
    recruiting, and retention. Thank you again for allowing me an
    opportunity to give you an overview of the issues we are addressing in
    the Reserve components.

        Senator Webb. Thank you, Secretary McGinnis.
        I will start and I will also adhere to the 7-minute rule
    that I asked everyone else to adhere to at the beginning of my
    statement.
        Actually, Secretary McGinnis, I would like to start with
    just where you ended up because when we look at the
    unemployment figures for those who served, we essentially, in
    my view, have three different groupings of people who have
    served. We have the one-term or non-career enlistees, which I
    think a lot of people up here misunderstand in terms of the
    size of that group. We tend to think if you have an all-
    volunteer system, you have an all-career system, and in truth
    and particularly in the Marine Corps and the Army, the majority
    of people leave before they enter their first enlistment. That
    group has one set of challenges in order to reassimilate into
    the civilian society.
        Then we have the Guard and Reserve as a particularly
    difficult problem right now, and I want to get back to it.
        Then third, we have the retirees who have another different
    set of circumstances when they leave.
        But with respect to the Guard and Reserve, I had the
    position that you are acting in right now for 3 years and
    responsibility for the oversight of these programs. We never
    could have comprehended the rate that they are being called to
    Active Duty and the percentage of their professional career
    that they are actually spending in uniform. We are seeing some
    really disturbing data in terms of the unemployment rates. I
    understand there are a lot of complexities that go into the
    fact that the employment numbers are down, but could you give
    us a better description of what the challenges are?
        Mr. McGinnis. Yes, sir. The first challenge is the group
    that has the biggest unemployment, going as high as 24 to 26
    percent, depending on when you measured it, and that is junior
    enlisted personnel. We have increased the number of non-prior
    service enlistments over the last decade in the Guard and
    Reserves, especially Army components, and of course the Marine
    Corps has always had a high percentage. But in the Guard and
    Reserve, particularly in the Army Guard and Army Reserve, the
    numbers are now up to about 55 percent or more. They used to be
    lower than that by about 10 or 15 percent. We used to rely a
    lot more on prior service before stop-loss.
        A lot of those individuals enlisted directly out of high
    school, came into the Guard, and went through their initial
    entry training and then deployed. Now they are coming back, and
    they have never been in the workforce before. So that is one
    unique group we are focusing on. That is why I mentioned in my
    opening statement that this is a unique group that we have to
    segment, as you explained, because then we have the individuals
    coming back who, because of the economy and other reasons, may
    have lost their jobs for reasons that their employer could not
    help and that number is running about 12 percent.
        So we are working with the Employer Support Committee in
    each State and their 4,800 volunteers with the Chamber and
    their effort and with H2H, which we have joined with the Army
    and the Army Reserve to focus on both of these groups in
    different ways. So we are getting a lot of momentum, and we
    have been working on it for about 18 months.
        The initial problem we looked at was under-employment. We
    had some momentum working on under-employment for people coming
    back who were looking for better jobs based on their experience
    in theater. We did have some momentum.
        But those are the two areas that we are focused on and they
    are two distinct areas.
        Senator Webb. Do you see any indication of a resistance in
    the employer community because of the deployment cycles?
        Mr. McGinnis. No, sir. We have just completed a survey
    which is now being assessed of employers. The Employers Support
    Committee did that, and when it is available, we will make it
    available to you. But initial indications are while if you look
    at the groups who have to support us, the individual
    themselves, the families, the employers, the employers have the
    lowest level of support, but it is not below 50 percent. The
    employers on par have been very patriotic and very supportive
    of the efforts. We do not see a reluctance to hire. In fact, we
    see people who are coming to us who want to hire. The biggest
    issue we have--and it has been the issue since the program
    started--is the small employer and in some cases the medium
    employer. We need to continue to work with them. Hopefully from
    the survey we will figure out some ways that we can bring to
    you on how we can help them. But that is a large group of
    employers.
        Senator Webb. Secretary Hale, you mentioned the cross
    section of the Total Force when it comes to the reductions that
    we are looking at. Could you give us a comparative examination
    or a statement on the civilian employees and contractor
    employment?
        Mr. Hale. The civilians are down slightly, roughly similar
    to the military from 2012 to 2013, down about 2 percent. In the
    out-years, our civilian employment drops not very much, just a
    couple more percent. In fact, we are looking at that now. I
    believe what happened is we were pretty busy in the last
    program budget review, and, I think, we did not have a chance
    to look at support personnel as much as we could or should
    beyond 2013. So I know it will be an issue as we look at the
    2014 to 2018 program.
        Regarding contractors, we struggle with good information.
    They are down in dollar terms from 2012 to 2013. Frankly, in
    the out-years, we do not have reliable data on contractors
    because we just do not formulate it in the same way. We are
    working to do that and I hope we will have better information,
    but they are down slightly from 2012 to 2013.
        Does that answer your question?
        Senator Webb. Roughly, what would the percentages look like
    compared to the Active Force?
        Mr. Hale. Similar. From 2012 to 2013, down 1 to 2 percent
    for both Active and civilians. Let me correct the details for
    the record. Similar for contractors in dollar terms, which is
    the best data I have.
        Senator Webb. Are the out-years the same?
        Mr. Hale. Well, no. For Active Duty personnel, including
    Guard and Reserve together, about 5 percent over the FYDP
    period. More like 2 for civilians. As I said, I think we need
    to relook at that issue. I do not have contractor data beyond
    2013. We keep track of how much we are going to spend in
    operation and maintenance buckets. We do not in the
    contractors, and we are trying to do a better job, but we are
    not there.
        Senator Webb. We may ask you a follow-on question on that.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        Just to pick up with where the chairman left off, I think
    it is very important before we make a decision how to get to
    $87 billion, that the civilian workforce, if it is going to be
    reduced just a fraction of the Active-Duty Forces and Reserve
    folks who wear the uniform, I would like to know more about how
    we could maybe shift some of this reduction, look at the
    civilian side a little bit harder, and make sure that we get to
    $87 billion with as many people that are available to go to war
    if we have to have a war. So I just want to echo what the
    chairman said there.
        Dr. Woodson, in 1996, I think you said the amount of money
    collected from people on the program through premiums for
    TRICARE was about 26 percent?
        Dr. Woodson. Sir, the cost share was about 27 percent.
        Senator Graham. 27 percent. So 27 cents of every dollar of
    cost came from the people on the program, right?
        Dr. Woodson. Correct.
        Senator Graham. It is down to 10 now. Is that right?
        Dr. Woodson. Correct.
        Senator Graham. Is that just because we have never adjusted
    the premiums and the costs have gone up?
        Dr. Woodson. Correct, and also remember we have added
    substantial benefits to the program over the last decade.
        Senator Graham. So what you are proposing is to try to get
    the premium cost share up to 14 percent?
        Dr. Woodson. Correct, on average.
        Senator Graham. Based on retirement benefits reschedules,
    based on how much money you make in retirement?
        Dr. Woodson. Correct.
        Senator Graham. In terms of overall budget, if it continues
    on the course that it is now, what percentage of DOD's budget
    would be consumed by health care?
        Dr. Woodson. Sir, that is a great question, Senator. If you
    look at the numbers right now and you look at a base budget of
    $525 billion, our unified medical plan this year was $53
    billion. So we are at 10 percent now. If you look at the issue
    of a modest 5.3 percent growth in health care--and you can do
    the calculations--particularly the top line of DOD comes down.
    The implications of this, of course, are that health care will
    consume a greater percentage of the DOD budget, but it also
    produces a palpable tension, if you will, between providing
    health care and training, manning, and equipping the force. I
    think that is what Secretary Hale was alluding to before.
        Senator Graham. I would just like to be on the record
    saying I would like to work with the administration to find
    some way to change this dynamic because the BCA requires $87
    billion. I do not know if that is set in stone. If we can
    change that number, I would be willing to. But we have to
    balance the budget. We are $15 trillion in debt. Everything has
    to be on the table.
        When it comes to the Guard and Reserve, Mr. McGinnis, the
    Air Guard seems to get hit pretty hard here. Are you familiar
    with the proposed cuts in the Air Guard?
        Mr. McGinnis. Yes, sir. The Secretary of the Air Force is
    in the process of reorganizing his force and has presented this
    to DOD. I have made my recommendations to the Secretary, and
    the Secretary is in the process of reviewing that now.
        Senator Graham. I appreciate it.
        Mr. McGinnis. Secretary Hale is very much a part of that,
    and hopefully in the near future, we will have a decision.
        Senator Graham. Secretary Rooney, if you allowed people who
    were 50 percent disabled to access commissaries and exchanges,
    could you get back to us later on and see what impact that
    would have? Because I think the rule is now that only 100
    percent disabled people have commissary and exchange
    privileges. Is that correct?
        Dr. Rooney. I believe you are correct, sir.
        Senator Graham. Okay, if you could look at that. What I am
    getting at is our commissaries and exchanges are good deals for
    the members and their families, and we want to make it
    sustainable. If we are going to draw down the force, then you
    lose customers, and this might be one way of getting a larger
    customer base and reward people who have sacrificed for the
    country. I just want you to look at that and I will talk with
    Senator Webb about it.
        Thank you all for your service, and we will see what we can
    do to work through this.
        Mr. Hale. Senator Graham, could I add briefly to your
    opening, underscoring the chairman's point on civilian
    personnel? I agree we need to look at them. We need to look at
    contractors as well. But we need to remember that civilians run
    our acquisition, they run logistics, they run finance, they fix
    our ships and planes. We cannot fight effectively without them.
    So we need to be a little careful, in my view, about damning
    our civilian workforce which we sometimes, I think, lean toward
    doing. We just cannot work without them.
        Senator Graham. They are a very valuable part of the team,
    cannot do the job without them. But again, we are going to have
    to set our priorities in this country and figure out where we
    go.
        Mr. Hale. We need to be careful.
        Senator Webb. Before I call on Senator Blumenthal, just let
    me first of all say I am looking for data here when it comes to
    civilian numbers and Active numbers. There is a reality that I
    think we all acknowledge that when you end a long period of
    sustained ground combat, you reduce your ground forces. So, it
    is not necessarily an apples-to-apples comparison when you look
    at the civilian side. But my question really was to get the
    numbers.
        Another thing, just from my own experience, Senator Graham,
    I was talking to staff on your question as to the percentage
    disability being able to use commissary and exchanges.
        Senator Graham. Am I wrong?
        Senator Webb. If you are medically retired from the
    military, it is 30 percent or above where you can use
    commissary and exchange. There is a different system if you go
    to the VA for a percentage. But I wanted to clarify that if you
    are retired, which is 30 percent or higher, then you are able
    to use those benefits.
        Dr. Rooney. Correct.
        Senator Webb. Senator Blumenthal?
        Senator Blumenthal. Thank you, Mr. Chairman, and thank you
    for your leadership and Senator Graham's on this subcommittee.
    Thank you to the witnesses for the excellent work that you are
    doing in a very difficult time, perhaps more difficult than any
    within recent memory.
        Many of the issues that have been raised both by my
    colleagues and by you in your testimony are of very great
    interest to me. I want to focus on one, though, that may not be
    directly related to the budget. I know the budget consumes a
    lot of time. You have discussed in your testimony, Secretary
    Rooney, the issue of sexual assault, which I know troubles you
    and the Secretary greatly, a great concern to you, and there is
    a zero tolerance policy. It is a leadership issue.
        You say in your testimony that the estimates now are about
    19,000 sexual assaults a year, which is down from the estimate
    of 34,000 in 2006. Are you suggesting that the rates or numbers
    of sexual assaults have been reduced over the last 6 years?
        Dr. Rooney. Sir, the way we get to that number is we look
    at the number of reported sexual assaults as a percentage of
    the overall force and then actually multiply it. The number
    appears to come down, but quite frankly, as you indicated, our
    concern is that there are any at all. 19,000 are 19,000 too
    many, or whatever the exact number is, because again, that was
    extrapolated from actual reported numbers. So while we believe
    that the attention being focused, the programs being put in
    place, and frankly the leadership taking this on as such a
    critical area to be able to address because it goes right to
    the heart of what our military believes in terms of their work
    and their respect for each other, that that number will come
    down. But we realize we have a great deal of work to do, sir.
        Senator Blumenthal. But it may not have come down in the
    last 6 years. Obviously, your objective is to make it come
    down. But I am just asking whether you have confidence in that
    number because, quite honestly, I am not sure that I do.
        Dr. Rooney. I believe that number indicates that we have a
    substantial problem. But again, it is not a specific number. It
    is extrapolated from those reports we have.
        Senator Blumenthal. Of the defendants who are reported--and
    in those incidents, 3,192 in fiscal year 2011--what percentage
    faced court martial?
        Dr. Rooney. Sir, I will take that question for the record
    and get back to you on the specifics.
        Senator Blumenthal. The information I have is fewer than 21
    percent.
        Dr. Rooney. That percentage is correct.
        Senator Blumenthal. What is the reason that they are not
    brought to court martial?
        Dr. Rooney. Often, sir, it is many of the same challenges
    that we see on the civilian side, which is in order to go
    through the court martial, obviously, we need to be able to get
    the evidence and make sure that our folks are trained to be
    able to take and prosecute those particular cases. Those are
    specific areas we are working on now to make sure people are
    trained in the specific areas of how to be able to not only get
    the evidence, but to present that forward. That is often the
    roadblock.
        Senator Blumenthal. So you are upgrading the procedures for
    collection of evidence, and what about retention of evidence?
        Dr. Rooney. Yes, sir. We actually are retaining the
    evidence at this point, if it is an unrestricted report, for 50
    years.
        Senator Blumenthal. Are you making efforts to speed up the
    process? In one instance that has been reported to me--and I
    can get you the name and perhaps you can get me more details--
    there was a 3-year gap. By the way, I am very familiar with the
    defects in the civilian area since I was involved in it.
        Dr. Rooney. I know you are, sir.
        Senator Blumenthal. So this is by no means to say that you
    should use it as a model necessarily, but I know the military
    sets its own standards for what excellence is and you have your
    own goals.
        But that 3-year gap makes evidence, even if it is
    collected--that is, the eyewitness testimony that may be
    provided--more difficult to get. I just wonder what steps are
    being taken to make sure that these cases are brought to court
    martial and brought, in effect, to trial more quickly.
        Dr. Rooney. Actually, we are working directly with the
    Services on this, and the Joint Chiefs have been actively
    involved in looking at how do we not only streamline the actual
    court process, but also streamline from the point of reporting,
    we have such things in place as expedited transfers. So all
    through the process, making sure that we are able to still
    protect due process, if you will, for the accused, but move
    that through the system from the first report through. So that
    is something we are actually engaged, right now, with the
    Services to do.
        Senator Blumenthal. Do you have numbers as to the median or
    average length of time it has taken and what percentage involve
    eventual findings of guilt, culpability, and also what the
    eventual penalties are in those cases?
        Dr. Rooney. Sir, we do have those numbers, but if I could
    take that for the record and give them to you as opposed to
    trying to get them from memory, we do have them. I have seen
    them, sir.
        Senator Blumenthal. I would appreciate that.
        Dr. Rooney. We will.
        [The information referred to follows:]

        The length of time for the investigation and adjudication of sexual
    assault reports varies greatly with the facts of each case. Of the
    2,439 Unrestricted Reports opened and investigated in fiscal year 2011,
    66 percent (1,612) of investigations were completed by the end of the
    fiscal year. Based on past case flow, we would expect that the
    investigations and subject dispositions for over 90 percent of the
    remaining 827 Unrestricted Reports received in fiscal year 2011 should
    be completed in time for reporting in the fiscal year 2012 Annual
    Report on Sexual Assault in the Military.
        In fiscal year 2011, 1,518 subjects investigated for sexual assault
    were military servicemembers. However, legal factors sometimes prevent
    disciplinary action from being taken against some subjects. For
    example, commanders were precluded from taking disciplinary action
    against 482 of these military subjects because there was insufficient
    evidence of an offense to prosecute, the victim declined to participate
    in the military justice process, or the statute of limitations had
    expired. These factors do not fall under the discretion of a military
    commander to remedy and precluded these military subjects from
    receiving disciplinary action. Commanders declined taking action
    against 47 military subjects because they determined the sexual assault
    allegations against those subjects were unfounded.
        Of the 1,518 subjects investigated, commanders had sufficient
    evidence and the legal authority to support some form of disciplinary
    action against 989 subjects. Of the 989 subjects, 791 subjects had
    command actions taken against them for sexual assault: 62 percent (489
    subjects) had courts-martial charges preferred (initiated) against
    them, 24 percent (187 subjects) received nonjudicial punishment under
    Article 15 of the UCMJ, and 14 percent (115 subjects) received a
    discharge or another adverse administrative action. For 198 subjects,
    evidence supported command action for other misconduct that came to
    light during the sexual assault investigation (such as making a false
    official statement, adultery, and other crimes under the UCMJ) but not
    a sexual assault offense. Of these, another 198 military: 9 percent (17
    subjects) had court-martial charges preferred against them; 46 percent
    (92 subjects) received nonjudicial punishment; and 43 percent (85
    subjects) received some form of adverse administrative action or
    discharge (no data was available for the remaining 2 percent of
    subjects).
        As noted previously, of the 791 military subjects who had
    disciplinary action initiated on a sexual assault offense, 489 had
    court-martial charges preferred against them. The dispositions and the
    sentences imposed by courts-martial are for those subjects with at
    least one sexual assault charge adjudicated in fiscal year 2011. Of the
    489 subjects who had courts-martial charges preferred against them in
    fiscal year 2011, 370 subjects' court-martial outcomes were completed
    by the end of the fiscal year. Of the 240 subjects whose cases
    proceeded to trial, 80 percent were convicted, and most convicted
    servicemembers received at least four kinds of punishment: confinement,
    reduction in rank, fines or forfeitures, and discharge (enlisted) or
    dismissal (officers) from service. Thirty-nine subjects were allowed to
    resign or were discharged instead of court-martial. Court-martial
    charges were dismissed against 91 subjects. However, commanders used
    evidence gathered during the sexual assault investigation to take
    nonjudicial punishment against 25 of the 91 subjects. Most of the 25
    subjects who received nonjudicial punishment received three kinds of
    punishment: reductions in rank, fines or forfeitures, and restrictions
    on liberty.
        Of the 791 military subjects who received disciplinary action on a
    sexual assault offense, 187 received nonjudicial punishment. Of the 168
    subjects whose nonjudicial punishments were completed in fiscal year
    2011, 93 percent of subjects were found guilty by the commander. Most
    subjects who received nonjudicial punishment received at least three
    kinds of punishment: reduction in grade, a fine or forfeiture of pay,
    and restriction of their liberty for a period of time. In addition,
    almost half of these subjects received extra duty or hard labor as part
    of their punishment. For 6 percent of subjects, the nonjudicial
    punishment served as ground for a subsequent administrative discharge.
        Commanders administratively discharged 48 subjects investigated for
    a sexual assault offense. There are three types of administrative
    discharges: Honorable, General, and Under Other Than Honorable
    Conditions (UOTHC). Most of these 48 subjects received either a General
    or a UOTHC discharge.
        In fiscal year 2011, commanders took adverse administrative actions
    against 67 subjects investigated for a sexual assault offense. These
    actions may consist of Letters of Reprimand, Letters of Admonishment,
    and Letters of Counseling. These actions may also include but are not
    limited to denial of reenlistment, the cancellation of a promotion, and
    the cancellation of new assignment orders. Adverse administrative
    actions are typically used when the misconduct alleged is of a lesser
    degree or when available evidence does not support more serious
    disciplinary action.
        The sexual assault investigations conducted by the Military
    Criminal Investigative Organizations sometimes do not find sufficient
    evidence to support disciplinary action against the subject on a sexual
    assault charge. However, the investigations sometimes uncover other
    forms of chargeable misconduct. When this occurs, DOD holds those
    servicemembers who have committed other misconduct appropriately
    accountable based on the available evidence.
        DOD released the fiscal year 2011 Annual Report on Sexual Assault
    in the Military on April 13, 2012. The preceding information and
    supplementary charts and graphs detailing the subject case dispositions
    and punishments imposed are available on pages 42 through 49. The
    report is available at: http://www.sapr.mil.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Blumenthal. Can you also provide percentages as to
    what numbers or in what rate you give defendants the option of
    a discharge or a resignation in lieu of court martial?
        Dr. Rooney. I will get the information as to what the
    eventual resolution was as to whether that was a negotiated
    plea or something in that regard. That will be a little harder,
    but I can certainly tell you article 15 and various steps of
    penalties.
        [The information referred to follows:]

        Of the 370 military subjects whose courts-martial action was
    completed in fiscal year 2011, 39 subjects (or 10.5 percent) were
    discharged (enlisted) or allowed to resign (officer) in lieu of court-
    martial. In cases in which a resignation or discharge in lieu of court-
    martial is requested and approved, the characterization of the
    discharge is usually Under Other Than Honorable Conditions, unless a
    higher characterization is justified.

        Senator Blumenthal. Finally on this subject, can you tell
    me when Secretary Panetta is going to be releasing the
    recommendations he is going to be having both administrative
    and legislative? Do you know?
        Dr. Rooney. Actually, we have been working on the possible
    legislative proposals as recently as today. So I am expecting
    those to be coming up soon, and within the next 3 to 6 months,
    we will also have some additional ways forward on specific
    recommendations coming out from the Services, as well as
    follow-up on the ones we mentioned with the expedited transfer
    and the document retention.
        Senator Blumenthal. Thank you.
        On the issue--and you raise it in your testimony--
    concerning suicides, can you talk a little bit about what steps
    are being taken to address this issue more effectively?
        Dr. Rooney. Absolutely, and you are right that the numbers
    right now, despite many of our efforts, have not shown a
    significant decrease. But what we have done, in fact, is taken
    the task force that had their report forward. One of the
    recommendations was to create a specific suicide prevention
    office, which we have done in the last few months. The purpose
    of that office is not to create yet another layer, but it is to
    look across all of the Services and actually be the conduit for
    what are best practices, where are we missing some potential
    opportunities, getting rid of the redundancies. That has at
    this point a temporary staff, but in the fiscal year 2013
    budget, we have the full appropriations we are requesting on
    that to have that staff stand up.
        In addition to that, we are working directly with the
    Services in each of their component areas to see what practices
    they have in place.
        The next thing--and I think you have seen it also from the
    medical side--is we are embedding behavioral health not only
    within the units but also making it available to the families
    through a number of our family programs. Again, we are
    continuing to monitor what has been the outreach and where have
    we seen some successes or not as it were.
        Those are the steps at this point with many more coming
    forward.
        Also, collecting data has been a big challenge that we have
    had, contemporaneous data. So we are working closely with the
    Department of Veterans Affairs (VA) in particular at this point
    to share information not only from the DOD side but also what
    the VA is getting. We are doing a lot of joint work with them.
    So we are getting data that is within 30 to 60 days old as
    opposed to a year or 2, which is what we had been getting, as
    the way the States are gathering it, and sharing that
    information and trying to trend directly with the VA.
        Senator Blumenthal. Thank you, thank you very much. My time
    has expired.
        Thank you, Mr. Chairman.
        We hear a lot and I profoundly agree with the statement
    that we have heard again and again that our most important
    asset is our people, and you are the folks who are dealing with
    that asset. So I want to thank you for your great work. Thank
    you for being here.
        Thank you.
        Senator Webb. Thank you, Senator Blumenthal.
        Senator Begich.
        Senator Begich. Thank you very much, Mr. Chairman.
        Thank you all for being here. I appreciate it.
        Let me start with a couple of questions, but first, Mr.
    McGinnis, there is a piece of legislation that Senator Graham
    and I have sponsored on space availability for widows of combat
    veterans, as well as Guard and Reserves. To be very frank with
    you, we are not changing any of the prioritization. We are just
    making sure if there is a seat open and all the prioritization
    has occurred, then there is opportunity. The response we got
    informally was not very thoughtful in my view. I will not
    belabor it here, but I would like you, if you could, to take a
    look at that legislation and give your thoughts on it.
        We have a lot of bipartisan support. As a matter of fact, a
    lot of people on this committee have sponsored it. We think it
    is a fair way to approach. It is like an airline industry. When
    there is a seat empty, there is no value to it, and if there is
    an opportunity, we should explore that. I think what we have
    tried to do is recognize the rules and regulations of
    prioritization of utilization of space available and
    recognizing that, but not overtaking that and leaving a lot of
    authority to DOD.
        So if you could take a look at that bill, that would be
    great.
        Mr. McGinnis. I will, sir.
        Senator Begich. My staff will be happy to talk with your
    staff about that.
        I will not belabor it more than that, to say the response
    was not as thoughtful as I thought it would be. I will leave it
    at that.
        Mr. McGinnis. I will look at it.
        Senator Begich. Thank you very much.
        Secretary Hale, this might be to you and to Secretary
    Rooney also. I want to understand the process. You have to
    understand where I come from. I come from being a former mayor
    where if I have a CFO, they know all, and at the end of the
    day, they have to sign off on money things. No department can
    go do their own stuff, and even when personnel has stuff,
    someone has to sign off their savings or costs. So I do not
    necessarily say that is the way it all works in the military. I
    am not suggesting that.
        But let me walk through an example and help me understand
    how you would be engaged in this or in your case, Secretary
    Rooney.
        I am dealing with, and a lot of folks are dealing with,
    this around the country with bases that are being reviewed for
    potential reductions or reductions of services or personnel,
    may they be military and/or civilian. We are dealing with this
    at Eielson Air Force Base right now. Here is the scenario. The
    proposal was laid out. It will save X amount of dollars. We
    then, of course, questioned this. Now they are sending a team
    up to analyze what the savings will be, which seems odd that
    you would propose a savings and then analyze it later, but I
    will leave that for a second.
        First of all, I will start with you, Secretary Hale. When
    the Secretary of the Air Force--I am using them as an example,
    I do not mean to pick on them, but they are the ones we are
    dealing with with Eielson. They propose these savings that
    recognize a certain amount of money that will be saved. What is
    your interaction with those activities? Do you accept those
    based on that information? Then holding that thought, the
    question I would have for you, Secretary Rooney, is when they
    propose this--and it is basically a bulk of personnel savings--
    how are you engaged in that, in analyzing that number, may they
    be civilian and/or personnel or military active personnel?
    Secretary Hale, to the first question. What is that engagement?
        Mr. Hale. We are dealing with one of the world's largest
    organizations, Senator Begich, and many of these proposals do
    work up through our Military Services and departments which
    have cost analysts and staff similar. They are not formally
    CFOs, but they have assistant secretaries for financial
    management and comptroller. My staff tends to review the ones
    that are in contention or perhaps cut across all the Services.
        I do not know for sure on the Eielson one, but my guess is
    it was an Air Force estimate and reviewed by them.
        Senator Begich. So you accept because they go through this
    kind of chain, to a certain extent, I am not saying all the
    time.
        Mr. Hale. If we have reason to question it, no, but we do
    not review every single proposal that comes forward. I do not
    know on the particular one you are referring whether we did. I
    would need to find out.
        Senator Begich. Let me ask then on the personnel. So when
    they recommend or suggest that it will save this amount of
    military personnel and X amount of civilian personnel, again
    recognizing they go through this chain, what happens at your
    level, if anything? I do not know.
        Dr. Rooney. Actually, it would. Two of the areas within
    personnel and readiness deal with military personnel policy and
    civilian personnel policy, but embedded in that is this idea of
    Total Force. Our role typically at that point is working with
    the Services to ask them what, in fact, are they going to use
    as tools, specific drawdown tools available potentially for the
    military, if they are seeing that the reduction would come from
    the personnel side, and walk through with them from a policy
    standpoint what exact shaping tools are they using and making
    sure they are understanding the costs or the implication of
    those.
        The same with the civilian side. We have set processes and
    procedures to, hopefully, reintegrate the civilians within the
    workforce, and walk through whether, in fact, they are
    following those procedures and have considered that in cost
    estimates.
        Senator Begich. I appreciate that answer. But I would have
    expected that from our personnel department in the city would
    have done that. The departments do their thing and then the
    personnel walks through it because sometimes departments will
    over-estimate for the benefit of getting past the Office of
    Management and Budget (OMB). Getting past OMB, life is better.
    But in the mayor's office we always had to say, well, are these
    real, what does it mean?
        In this situation, I am assuming they then submit to you
    something that says here is what we guess, here is how much
    civilian, here is how much Active, and then you walk through
    this process. Sometimes it is easy because it is clear, but
    sometimes more complicated. Is that a fair statement? Depending
    on what it is, is that fair?
        Dr. Rooney. A fair statement.
        Senator Begich. Can I ask for the record--and again, I do
    not expect you to have it off the top of your head here--what
    role, maybe limited or extensive, that you might have had in
    this review within your area with regard to this redirection?
    It is a lot of people. Actually, they do not know how many.
    That is the challenge, to be very frank with you. They have
    estimated Active military, but they cannot give us an answer to
    this day on civilian. We have asked them four times. I know
    there is a document that exists that says here is what we
    anticipate because someone had to review it to say here is what
    it will save. I have not seen it. We have asked for it over and
    over and over again.
        So is that something you could look at and respond? If your
    answer is, well, we did not get anything, okay. Or we did, and
    we cannot give it to you yet, okay. Or, yes, we have it, here
    it is. I would prefer the latter, to be very frank with you. I
    am hoping it is the latter.
        Dr. Rooney. What we will do is look at it. Based on what
    you are indicating, it is very possible it has not reached the
    level yet where we would see it fleshed out to the point to be
    able to give some feedback. But what I will do is check with
    our team, if they have been involved to this point, and if not,
    be able to check and see what work has been done, and then we
    can give you a better idea when it would, in fact, come to us
    for a review. But it usually has a little more detail than what
    you described before we would actually see it to be able to
    give some reaction.
        [The information referred to follows:]

        The fiscal year 2013 budget reflects a balanced workforce that
    decreases spending on military personnel, civilian full-time
    equivalents, and contracted services. It reflects our best judgment
    today, representing a carefully coordinated approach based on our
    strategy and policy, balancing operational needs and fiscal reality.
    Furthermore, we must budget for a future where we face a decreasing top
    line, and in order to help components do so, the Department of Defense
    (DOD) established civilian manpower targets at fiscal year 2010 levels,
    with certain exemptions and exceptions in critical growth areas.
    Individual components develop their workforces to meet their missions,
    tasks, and functions based on their operational requirements, workload
    needs, and available funding. At the departmental level, we do not
    prioritize the components' missions for them or tell them how to size
    their workforces. As such, we do not require the components to submit a
    report estimating civilian drawdown.
        However, we are committed to ensuring the components have a
    balanced, flexible, responsive workforce that is the appropriate mix of
    military, civilian, and contracted support; efficiently mitigates
    risks, ensures continuity of operations, and promotes an organic
    knowledge base; and ensures mission requirements are met most cost
    effectively and efficiently.
        In developing budget requests and making manpower determinations,
    Personnel and Readiness works together with other elements of the
    Secretary's and DOD's leadership team to ensure that risk mitigation,
    continuity of operations, and mission attainment shall take precedence
    over cost of performance.

        Senator Begich. My time is up.
        I would have anticipated even the kind of detail you are
    talking about that you would expect I would expect when they
    make a reduction to a military base to shift 600-plus people
    plus more civilians, which we do not know of, that you would
    have more information to make those judgments because we have
    to make the decision that, okay, this is an okay budget and we
    have to check off. But if we do not understand how they got
    there, we cannot make a rational decision. So that is why I am
    in this quandary.
        I will tell you there has been a lot of this--pointing--and
    I know the way it works, especially within the military. There
    are more forms about forms to have more forms. So somewhere in
    this mix someone wrote down in 2013 and 2014 and 2015 we
    anticipate this civilian reduction, this military reduction for
    the savings of X so that we can then get past OMB and the CFO.
    Someone did it somewhere. If they did not, then to be very
    frank with you, that is incompetency. But somewhere it is done.
    I just know it. That is how DOD works here, more reams of paper
    than paper can be produced every day, is my view. So that is
    just a thought there.
        I have some other questions which I will submit for the
    record for generally all of you. They are broader in the sense
    of some policy issues, and I will submit those.
        I thank you for you letting me have my rant. Thank you, Mr.
    Chairman, for letting me rant.
        Senator Webb. Thank you, Senator Begich. Actually, we will
    have another round if you want to come back and ask more
    questions.
        Senator Begich. I will submit them.
        Senator Webb. Having spent 5 years in the Pentagon, I can
    say a lot of the reams of paper that grow around the Pentagon
    have been produced at the behest of the Senate and the House of
    Representatives. [Laughter.]
        Senator Begich. The good news is I am not asking for more
    paper. I am just looking for a piece of paper that they
    produced.
        Senator Webb. Senator Ayotte?
        Senator Ayotte. Thank you, Mr. Chairman.
        Speaking of paper, I wanted to ask Secretary Hale about
    where we are on audit because I was able to ask the Chief of
    the Air Force. I know that the Air Force may have the most
    difficulty in meeting Secretary Panetta's goal of a 2014
    statement of budgetary resources. This is something I have been
    very interested in. In fact, I introduced an amendment to the
    National Defense Authorization Act (NDAA) in this past go-
    around wanting to codify that you meet the audit requirements.
        Just wondering where we are. Are we going to meet the 2014
    deadline for a statement of budgetary resources in each of our
    Services and within the overall DOD?
        Mr. Hale. I am reasonably confident. This is a tough
    problem, tougher frankly than I anticipated. But we have
    several things going for us.
        The first is the strong endorsement by Secretary Panetta
    which has opened doors wider than I expected, and we are doing
    everything we can to leverage it. In particular, I think what
    we are doing that we have not been able to do in the past is
    get this out of being a comptroller issue and into being a
    commander issue. We absolutely have to do that because we have
    to change business processes, and only the commander can do
    that. We have the money. We have the governance process. We
    have interim goals which are critical. You probably heard me
    say before no one wakes up thinking, I really got to work hard
    today for a 2014, let alone a 2017, goal. So we have interim
    dates.
        The Secretary convened a meeting of all the Service
    Secretaries and Service Chiefs. We had everyone there. Amazing
    to me. They get it that it is important now.
        Senator Ayotte. It is important. This is not just any
    paperwork.
        Mr. Hale. So I am going to stop with reasonably confident.
        Senator Ayotte. Okay. I appreciate that.
        We did talk about a lot of paperwork, but this is really
    important particularly when we are asked to make some very
    difficult decisions about DOD in terms of it being a management
    tool as well as an information tool for Congress. Would you
    agree with me on that?
        Mr. Hale. I would. We have over-promised and under-
    delivered for a long time. So that is why the best you get is
    reasonably confident, Senator.
        Senator Ayotte. Reasonably confident. I will take it. How
    is that?
        I wanted to ask Secretary Rooney, yesterday you and I had a
    chance to meet and talk about New Hampshire's deployment cycle
    support program within our Guard. It is one of the challenges
    that we have had that our guardsmen and women and our
    Reserves--we have really used them in these conflicts in Iraq
    and Afghanistan. They have been part of our Total Force. We
    would not be able to have fought in Iraq and Afghanistan
    without our Guard or Reserve. Yet, often the whole deployment
    cycle support is not there for them.
        So, New Hampshire came up with a very strong public/private
    partnership. We partnered Federal Government resources with
    State government, as well as private organizations like Easter
    Seals. We have been keeping metrics on it so that we can
    measure the results, and, in fact, the results have been
    getting our veterans to work, reintegrated into work. We have
    actually saved someone's life in a suicide, which we are very
    proud of, and really serving our families.
        So, I wondered Secretary Rooney, if you have had a chance
    to look at that after we talked yesterday, what are your
    impressions of it. I would also ask Mr. McGinnis as well, and
    then I would also love to invite both of you to New Hampshire
    to see firsthand how this program works.
        Dr. Rooney. Thank you, Senator. Starting with your last
    point, as I indicated to you yesterday, I would welcome the
    opportunity, particularly if I am back home in New England on
    the weekend, to join you and actually see the program.
        I appreciate the additional information you did send over.
        You hit upon a key aspect. When we talk about the
    challenges that we have in managing to leverage resources and
    be efficient, it is how do we not only extend what we are doing
    in DOD, but reach out and form more of these public/private
    partnerships. It is going to be a way that we have to be very
    diligent about looking for those opportunities, finding those
    situations that work the best, and how can we replicate them.
        After I left you, I was meeting with the senior enlisted,
    and we started talking about this, about how do we successful
    transition, and whether it is Guard and Reserve or Active, it
    is just how do we transition our folks from the military and
    reach out. They indicated to me too that they were aware of the
    New Hampshire program and also possibly another one in Oregon
    and maybe another State.
        I think what all of us need the responsibility for doing,
    myself and Mr. McGinnis, is to look for those opportunities,
    learn more about how they work, and see if we can duplicate
    them so that we are addressing the issues, as we heard of,
    suicide and unemployment and transition. Our job can be to more
    tightly align with how do we translate military skills into
    skills that the civilian workforce can use. We can do a good
    job about that, but then really rely on those public/private
    partnerships. We are seeing in several cases that they work.
        Senator Ayotte. I think one of the reasons it works in New
    Hampshire is because we know there are limited resources, but
    we are leveraging those with the State and with the nonprofit
    community to take advantage of all the services in a way that
    is very proactive for those that return from overseas or return
    from deployment.
        I do not know if you wanted to add anything, Mr. McGinnis?
        Mr. McGinnis. Yes, ma'am. The funding that has been
    provided for these programs in the past has been congressional
    adds. There has been a number of State programs that have been
    supported. The appropriated dollars both to the Services and to
    DOD--and YRRP is focused on the long list of mandated
    requirements I have to make sure happens within the YRRP. We
    are focused on that.
        However, our YRRP Center for Excellence (CFE) is putting
    together a process to be able to evaluate all these programs,
    as Dr. Rooney mentioned. We share a very similar problem with
    my colleague in military communities and families, Secretary
    Gordon, and we are working with him to put together a process
    where we can evaluate these programs. But like Secretary
    Rooney, I would very much want to come up and see your program.
        Senator Ayotte. We would love it. Come in the fall. It is
    gorgeous. We will have you sooner too.
        Mr. McGinnis. Thank you.
        Senator Ayotte. I wanted to ask Dr. Rooney, certainly
    Secretary Woodson, where we are. Our All-Volunteer Force--I
    think you would all agree that our troops have done everything
    we have asked of them and more.
        So last year, did we not increase TRICARE enrollment fees?
        Dr. Rooney. Modestly we did, yes.
        Senator Ayotte. But we did.
        We tied it to cost-of-living adjustments, correct? Now you
    are back before us--I know, Secretary Hale, you certainly have
    an opinion on this--to ask for additional TRICARE increases.
    These increases are very significant.
        I know my time is up here, but I think this is a really
    important issue. So I will wait for another round.
        But for some individuals, these are not trivial. For
    example, a retiree receiving between $22,000 and $45,000 a
    year--their annual fees will go from $500 to $1,500 a year,
    threefold in only about 4 years. So this is a pretty
    significant issue.
        I think we have a duty, given what our servicemen and women
    have done, to really have a very hard discussion about this. I
    am really concerned about it.
        I know my time is up. I will stick around to ask more
    questions and turn it back to the chairman.
        Senator Webb. Thank you, Senator Ayotte.
        Actually, I am going to get into that. So I welcome your
    participating when I do.
        I have one other little item that I would like to raise
    now, and there may be other questions that I or other members
    will submit for the record. They will have until close of
    business tomorrow in order to do so.
        I want to follow on what Senator Ayotte just said.
        Before I do that, Dr. Rooney, last year Secretary of
    Defense Gates made a decision to eliminate, reduce, or
    reallocate 140 general and flag officer positions. We held a
    hearing on that issue, as you may recall. Can you give us an
    update on the status of that?
        Dr. Rooney. Yes, sir. As of now, we have eliminated 49 of
    the positions. As you are aware, this is a process that we
    expect between now and 2016 to reach the number that you
    indicated. But right now we are at 49. We are expecting, as we
    continue the drawdown in our overseas operations, that we will
    continue to actually increase that number of those that have
    been eliminated or reduced.
        Senator Webb. So you are continuing the process that was
    begun when Secretary Gates initiated it?
        Dr. Rooney. Yes. In fact, Secretary Panetta was affirmative
    in his support for continuing that process.
        Senator Webb. All right.
        Now, I would like to follow on to what Senator Ayotte said
    and add some of my own concerns here, as I did in the full
    committee hearing about a week ago.
        First, I have said many times--I think all of you know that
    I believe whether there is a specific contractual obligation or
    not, when someone has served a full career, we have a moral
    obligation to provide them with lifetime medical care. Would
    you agree or disagree?
        Dr. Rooney. Sir, I believe we have to offer the best
    medical care possible in respect of their service, yes.
        Senator Webb. Secretary Woodson?
        Dr. Woodson. Yes, I do believe we have a responsibility,
    particularly for the wounded, ill, and injured, to provide
    long-term lifetime medical care.
        Senator Webb. What about for those who serve a career?
        Dr. Woodson. I think we have an obligation to provide them
    with a benefit package that is very generous and reflects their
    sacrifice and service.
        Senator Webb. Thank you. That defines the struggle that we
    all have here. I know how difficult it has been to put together
    these numbers.
        Secretary Woodson, I want to go back and examine the
    percentage that you raise with respect to 1996 versus today. I
    want to just have my staff take a look at that and get back to
    you. I may have some further questions about how that number
    was arrived at.
        I would like to put up a chart that you had in your written
    testimony over here because this is another piece of the
    reality, and that is that if you look at cost per enrollee in
    the system, that cost has grown at pretty much the same pace as
    civilian health care. As I have said many times, our health
    care difficulties, as we have seen from the last 3 days in the
    Supreme Court, is a national problem. It is not a DOD problem.
    It is a challenge for all of us. But we are pretty much seeing
    the same percentage increase if you use 2005 as a baseline as
    we have seen nationally. Is that a correct statement?
        Dr. Woodson. That is correct. Thank you for putting up that
    chart because I have the very same chart.
        [The chart referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Webb. I think it is a great starting point for this
    discussion.
        Another clarification is, as far as I know, when we
    summarize the costs even for TRICARE For Life, we do not take
    the costs of Medicare Part B and apply it when you are looking
    at the health care costs inside DOD. Right?
        Dr. Woodson. Let me make sure I understand your question.
        Senator Webb. Let me be clearer. When a retired
    servicemember reaches the age of 65, they are required to sign
    up for Medicare Part B before they can get TRICARE For Life.
        Dr. Woodson. That is correct.
        Senator Webb. The cost of Medicare Part B--just to
    summarize, when you reach the age of 65, you are automatically
    entitled to Medicare Part A. But you have to elect to get
    Medicare Part B. It is wider coverage. But for a retired
    servicemember who wants TRICARE For Life, the DOD benefit, they
    are required to sign up for Medicare Part B.
        Dr. Woodson. That is correct.
        Senator Webb. When we look at the increase in the costs or
    the percentage increase in the costs inside DOD, we do not
    factor in Medicare Part B. That is a total separate account.
    Correct?
        Dr. Woodson. That is correct, but remember 90 percent of
    folks will and have taken Part B. TRICARE For Life represents
    that wraparound insurance for that other 20 percent, which
    includes a Part D, which is a pharmacy benefit. Remember prior
    to 2001 when TRICARE For Life came on board, many folks were
    paying independently for that wraparound insurance. So you are
    correct in your statement about Part B, but most folks will be
    paying Part B anyway.
        Senator Webb. Medicare Part B is a very expensive program,
    and we do not count that when we look at the cost of TRICARE in
    terms of DOD funding. Correct?
        Dr. Woodson. That is correct.
        Senator Webb. Can you put up this other chart?
        [The chart referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Webb. If you are looking at this from the
    perspective of a retired servicemember--I spoke to this in a
    full committee hearing. But when you are on Active Duty,
    obviously all your medical care is provided for. When you
    retire before the age of 65, presently you are at where the red
    marks are on this line. You hit 65. You are where that far
    right bar is in terms of how much you are required to pay in.
    The blue represents the proposal from DOD for the increases in
    TRICARE fees.
        So if you are somebody out there, having retired, looking
    at what it is going to cost you for health care, you are
    seeing, first of all, as Senator Ayotte pointed out, a
    significant jump with the proposals from DOD, but if you are
    over here past 65, you are seeing just a really large, sudden
    expenditure.
        Dr. Woodson. Yes. Thanks for bringing this up because this
    is an interesting chart. First of all, it does not include the
    average out-of-pocket costs. The figures you have given there,
    where you are looking at a premium of $7,000 or a cost $7,672,
    represents the upper tier of folks who pay Part B. They would
    have to be making $428,000 a year in order to pay that premium.
        Senator Webb. The couple, not the individual. Actually, if
    you will see the first line there, that is the lowest tier.
    Also, let us remember if somebody is on that upper tier, they
    are also paying Medicare again for the money that they are
    making. They are paying three times. They are paying Medicare
    Part B. They are going to be paying TRICARE, and they are going
    to be paying for Medicare on the income that they are making.
        Dr. Woodson. Yes, but the important issue, in terms of the
    optics relative proportion, is that Medicare Part B--they do
    not start tiering until about $170,000 a year. So you are
    really talking about an upper echelon.
        The other thing about the chart is, again, you are not
    talking about total out-of-pocket costs. That is why the
    differential looks so wide there. If you looked at the other
    out-of-pocket costs, you would see that it would not be as----
        Senator Webb. Actually, that goes to another point, and
    then I am going to let Senator Ayotte follow on here, and that
    is that people who think that the TRICARE fee by itself is all
    that somebody is paying is not correct. For instance, if you
    are talking about TRICARE standard, you pay a 25 percent cost
    share after you pay your fee. So when people are talking about
    the notion that the amount that our retirees are paying for
    health care is very small, I agree with you that is not
    reflective of the amount that they are paying.
        Dr. Woodson. That is exactly why we talk about cost share
    because that takes into account the relative out-of-pocket
    costs, and so the statistics I gave you before were correct,
    that in 1996 the relative contribution cost share was 27
    percent. It has dropped to about 10 percent, even less if you
    look at prime. What we are talking about is a rebalancing so
    that even in 2017 and beyond, the relative cost share is only
    going to be about 14 percent, which is about half of what it
    was originally. So you have to talk about out-of-pocket costs.
        Senator Webb. Right. We will look at your figures.
        Dr. Woodson. Oh, absolutely. We can provide you details on
    that.
        Mr. Hale. Could I just add one more point that I think is
    important to this comparison? Although we should not copy the
    civilian system, we need to keep it in mind. Good Medigap
    coverage for a couple is probably $4,000 a year. We are talking
    TRICARE For Life at the highest tier of $900, at the lowest
    tier for $22,000 and less, more junior retirees, $300. It is
    meant to be generous. I think that is right. But I think we
    have to keep this in mind. This is a dynamic health care
    system, and we have to make some of those or----
        Senator Webb. Look, that is in addition and in addition
    to----
        Mr. Hale. Yes, but it would be in addition for the
    civilians as well. They would be paying that $2,000----
        Senator Webb. What we are talking about is an obligation to
    provide them medical care for the rest of their life based on a
    compensation package that begins the day that they enlist and
    is amortized over the rest of their life. It is not a direct
    comparison, in my view.
        Now, we are going to continue this probably for the next 4
    or 5 months. But I appreciate your views and you have heard
    mine.
        Mr. Hale. Okay. I understand. May I add one more thought?
    That is, you keep this in the context that we owe them not only
    good medical care, we have to provide training and equipment
    for them, as you know a lot better than I do given your
    military service. We have to have a balanced package as we
    respond to the----
        Senator Webb. I totally agree with that, but what I am
    saying to you is you cannot renegotiate the front end once the
    back end is done. This is an obligation that has been made to
    people whose military careers are now done. If you want to
    reexamine the whole compensation package, that is something
    that actually is on the table.
        Senator Ayotte.
        Senator Ayotte. I would agree very much with the chairman
    on this. Just in terms of what we are talking about, as far as
    a comparison, there is a reason that in President Lincoln's
    second inaugural address he said that we have a duty. Really,
    we have to ``bind up our Nation's wounds to care for him who
    shall have borne the battle and for his widow and his orphan.''
    This is different than the rest of the population in terms of
    what they have sacrificed and what they have put on the line
    for us and what they were promised. What is it that they
    expected in all this? So I think that that is what we are
    talking about here.
        What bothers me about this is that the reason that you are
    here in this position is that--let's face it. Something like
    the BCA--you came with us last year to ask for TRICARE
    increases, and that was not easy, was it, Secretary Hale? That
    was a difficult question. I know you did not get everything you
    wanted.
        Mr. Hale. We appreciate your support.
        Senator Ayotte. No, exactly. We supported you on that, and
    you are back before us this year.
        In the context of what we are looking at with something
    like the BCA, you have been handed a number. You are under
    additional budgetary pressures. Health care costs are rising in
    every sector. But we have not, as a Congress, dealt with the 60
    percent of the spending that is going up in Federal spending
    that includes Medicare, that includes Medicaid, that includes
    the mandatory programs. I understand why you are here before
    us.
        I do not think, though, that we should put that, if we do
    not show the courage to deal with the entire budget--to really
    put a significant increase and burden after we just did an
    increase last year on this group of individuals who have served
    our Nation, given what they had as anticipation when they came
    into Service, as Senator Webb has said, and where we are making
    these changes. So that is one of the overall concerns I have
    about this.
        I understand that you were handed a number in the BCA.
    Would you be here asking for these increases immediately after
    you got some last year but for the BCA?
        Mr. Hale. I suspect the answer to that is no, but the BCA
    is a law that you passed and we do need to be consistent with
    it. My worry is that if we choose not to make these decisions,
    we will have to take it out of force structure and investment,
    and I believe that we have already, consistent with the
    strategy, done what we should there. It is actually quite
    disproportionate toward the investment side and very
    disproportionate on the low side for personnel. So if you do
    not support this, I am not sure where we go.
        Senator Ayotte. But my point in the bigger picture in all
    this, which is really not your fault that you are put in this
    position--is that because in Congress we are not looking at the
    whole picture, that you are in a position where you are handed
    the BCA, you are coming before us, you are going to ask for
    these health care increases after just having increased TRICARE
    last year. I think that we also on our end, to put this a
    little bit on us, that we have to take on the big picture here
    or we are going to be in a place like sequestration. We are
    going to be in a place where there is no question, reductions
    are going to happen to our military with withdrawal from Iraq
    and drawdown in Afghanistan. But you are here. It is troubling
    to me that we are going to take it out of that group first
    instead of dealing with the big picture of our budget problem.
        Mr. Hale. I would love a grand budget deal.
        Dr. Woodson. But the truth of the matter is we are not
    taking it out of that group first. As Secretary Hale said in
    his opening statement, while personnel costs at 30 percent--
    when the Secretary laid out the policies and procedures for
    looking at the budget, 90 percent came from troops, weapons
    programs, ships, planes. 10 percent came from personnel costs,
    and the truth of the matter is these TRICARE fee adjustments
    represent only slightly less than 5 percent.
        Senator Ayotte. I do have one substantive question. You
    received the Government Accountability Office (GAO) report
    which recommended a consolidation among the Services of health
    care as a way of a significant cost saving measure. I do not
    see that in all of this. I do not see a significant move in
    terms of changing and consolidation in trying to look at other
    ways where we could save money in health care. In fact, GAO
    recommended that you could achieve between $281 million and
    $460 million in annual savings from that. Have we gone down
    that road at all?
        Dr. Woodson. Yes. So you may be aware that we delivered to
    Congress the required report to Congress in the NDAA looking at
    the restructuring of the military health system. We were ready
    to move out on that last fall when at the 11th hour, we got a
    prohibition in the NDAA saying that we could not make any
    changes in the military health system. So we have gone down
    that path in terms of analyzing what we need to get the
    greatest amount of efficiencies by looking at common business
    practices and common service orientation.
        I would suggest to you again that as much as we are
    bringing focus and energy to reorganizing the structure of the
    military health system--can we put up chart 1 please?
        [The chart referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Dr. Woodson. You need to understand that headquarters
    functions actually represent only about 2 percent of budget,
    and we affectionately call this slide ``the planet slide''
    because it shows the relative amounts of money in the budget.
    If you look to the far right, that really represents
    headquarters function, and where we spend the bulk of the money
    is actually in delivery of care and private sector care and
    maintenance----
        Senator Ayotte. I apologize. I will grab that report and
    look at it right away. So is this something you would still
    want to do?
        Dr. Woodson. Absolutely.
        Senator Ayotte. If you did it, could you also not have to
    ask for the increases that you are asking for?
        Dr. Woodson. The answer is no because if you look at that
    slide, again headquarters function, while we want to squeeze
    that lemon very hard, only represents about 2 percent of really
    our costs. So the headquarters function is not going to get us
    to where we need to go.
        The other thing that you have to remember is that it is
    about putting the program on a sustainable course so that it
    will be there for future generations and men and women who
    stand up and raise their right hand and say I will protect and
    defend, that a benefit will be there, a generous benefit will
    be there, to take care of their lifelong needs and medical
    care. The issue is that because we have had prohibitions for 16
    years, we actually are far behind the curve and not on a
    sustainable course.
        Put up number 4 there, please.
        [The chart referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Dr. Woodson. I want to show to you how dramatic this is. If
    you look at particularly the private sector--and I know we do
    not want to talk about comparisons--over the course of the last
    decade or so, contributions to premium costs in health care
    have gone up 168 percent. Premium costs have gone up 160
    percent. If you look at the blue line at the bottom, you can
    see that there has been no increase until last year when we had
    these very modest increases of $2.50 per month for singles and
    $5 a month for families.
        The issue is that we have not been on a sustainable course,
    and we need to certainly slightly rebalance it. With all of the
    proposals, we will not go back to what was the original agreed
    upon cost share. We will only be at half of that, but we will
    be on a more sustainable course. This is about a national
    security issue that goes on for decades.
        Senator Ayotte. This in my view--with all respect to the
    private sector, they do not endure what our soldiers do in
    battle----
        Dr. Woodson. I understand.
        Senator Ayotte.--or shot at--the things that they have to
    experience. So I do not find the comparison good.
        I think that if we as Congress would actually say that this
    is a commitment we want to follow through on, that we could
    find a way to do it if we are willing to take on entitlements,
    if we are willing to take on the rest of the budget rather than
    you all trying to find a way to pass this on to our veterans in
    the first instance. That is my big-picture concern here.
        But I understand that health care is going up everywhere,
    but I do not find the comparison the same.
        Senator Webb. Let me just have the final word here, seeing
    as I have the gavel. [Laughter.]
        Just a couple of things. This is almost going the way that
    the lawyer hearing went when we had all the Judge Advocates
    General up here. It is going for another half hour.
        We will have further discussion about this and we will
    actually want to come back to you again, Secretary Woodson.
    There are some data that I may want.
        But let me just make three final points here in terms of
    where our concerns are.
        First, I understand the hand that you are dealt. I spent 5
    years in the building. I was on the Defense Resources Board for
    4 years. I understand the hand you are dealt.
        Second, I understand the notion of getting a sustainable
    course. The difficulty here is if you are going to look at the
    back end after someone has completed their career, that is a
    different situation than analyzing the whole context of the
    moral contract that goes into service. That is a concern.
        Then third, the reason I put that chart up there with
    Medicare Part B is I do not think there are very many members
    up here who understand that a military retiree has to buy into
    Medicare Part B before they get TRICARE For Life. They do not
    understand that. They see the little bar at the very top, the
    red part of the bar. They do not understand the blue part. I
    think I got that right. So it is an important part of the
    decision process up here when people look at that because it
    does not show up in the DOD budget, but it does show up in
    somebody's bank account.
        So we will continue this discussion. Again, I very much
    appreciate your all coming to testify today.
        This hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Mark Begich
                                  tricare west
        1. Senator Begich. Dr. Woodson, I understand you made a decision
    recently on the TRICARE contract in the West Region, which serves my
    home State of Alaska. As you know, Alaska is just beginning to move
    towards delivering military care in a somewhat similar manner as is
    done in the lower 48 States. It's been a long and challenging process.
    So, the decision on the contract award will have a substantial impact
    on my constituents. I understand this award went to the higher price
    bidder. The contract award process is more detailed than simply price,
    but price is pretty important these days. Is it accurate that the
    contract was awarded to a higher bidder?
        Dr. Woodson. Yes, the contract was awarded to the higher priced
    offeror. The source selection factors for this solicitation gave
    greater weight to technical and performance-related factors than to
    cost and price-related factors. The Source Selection Authority compared
    offers and, within the parameters of this authority, determined that
    the higher price was more than offset by the added value offered.

        2. Senator Begich. Dr. Woodson, will you provide me with a full
    briefing on the decision from the Department of Defense (DOD) so I may
    better understand it, as it will have a tremendous impact on all men
    and women in uniform, but especially on constituents in Alaska, as we
    don't want to go backwards with progress that has been made in the
    State.
        Dr. Woodson. I would be happy to arrange for a briefing once this
    protest is settled. The decision in the West is under protest and a
    briefing prior to the outcome of that proceeding would be guide
    limited.

                               tricare increases
        3. Senator Begich. Secretary Hale and Dr. Woodson, in years past,
    DOD has proposed to increase TRICARE fees, and thereby achieve savings,
    that were based in part on the principle that beneficiaries would
    either opt out of TRICARE completely, or decrease the amount of health
    care they used. This year DOD's proposal for TRICARE Prime enrollment
    fees is for a first-year increase of 30 percent to 78 percent. That,
    plus other increases in health care costs to retirees, will result in
    $12 billion in savings to DOD over 5 years. How much revenue does DOD
    expect to generate from the proposed fee increases?
        Mr. Hale and Dr. Woodson. The fiscal year 2013 health reform
    proposals are expected to save DOD a total of $12.9 billion through
    fiscal year 2017. These savings are derived from four effects:

             First, we project some savings from stopping and
            reversing the increase in the number of retirees who use
            TRICARE as their primary health insurance vice using their
            employer-sponsored insurance. In fiscal year 2000,
            approximately 60 percent of retirees relied on TRICARE. Today,
            it is roughly 84 percent with projections that it will reach 90
            percent by fiscal year 2017. Our estimate is that these
            proposals will reduce this reliance to 79 percent, roughly what
            it was in fiscal year 2008. For fiscal year 2013, these savings
            amount to $201 million.
             Second, we project a minor decrease in health care
            utilization due to the higher fees.
             Third, we project that beneficiaries will use health
            care options that are less costly for DOD. We project more
            beneficiaries will use TRICARE Standard vice Prime, that they
            will use more generic prescriptions vice brand, and that they
            will use military treatment facility (MTF) and mail order vice
            retail pharmacies.
             Finally, there is the direct savings from increased
            fees that will offset DOD's cost of health care.

        For fiscal year 2013-fiscal year 2021, we project that 25 percent
    of the savings will come from the increased reliance on employer-
    sponsored health care, 7 percent of the savings will come from the
    decrease in utilization, 28 percent will come from the use of less
    costly options, and that 40 percent will come directly from the
    increased fees.

        4. Senator Begich. Secretary Hale and Dr. Woodson, how much does
    DOD expect to save from beneficiaries changing their behavior with
    regard to health care use?
        Mr. Hale and Dr. Woodson. The fiscal year 2013 health reform
    proposals are expected to save DOD a total of $12.9 billion through
    fiscal year 2017. These savings are derived from four effects:

             First, we project some savings from stopping and
            reversing the increase in the number of retirees who use
            TRICARE as their primary health insurance vice using their
            employer-sponsored insurance. In fiscal year 2000,
            approximately 60 percent of retirees relied on TRICARE. Today,
            it is roughly 84 percent with projections that it will reach 90
            percent by fiscal year 2017. Our estimate is that these
            proposals will reduce this reliance to 79 percent, roughly what
            it was in fiscal year 2008. For fiscal year 2013, these savings
            amount to $201 million.
             Second, we project a minor decrease in health care
            utilization due to the higher fees.
             Third, we project that beneficiaries will use health
            care options that are less costly for DOD. We project more
            beneficiaries will use TRICARE Standard vice Prime, that they
            will use more generic prescriptions vice brand, and that they
            will use MTF and mail order vice retail pharmacies.
             Finally, there is the direct savings from increased
            fees that will offset DOD's cost of health care.

        For fiscal year 2013-fiscal year 2021, we project that 25 percent
    of the savings will come from the increased reliance on employer
    sponsored health care, 7 percent of the savings will come from the
    decrease in utilization, 28 percent will come from the use of less
    costly options, and that 40 percent will come directly from the
    increased fees.

                              personnel decreases
        5. Senator Begich. Secretary Rooney, DOD is proposing a decrease of
    8,000 personnel in fiscal year 2013. How did DOD determine 8,000
    personnel decreases were feasible and will not undermine the workforce?
        Dr. Rooney. DOD's fiscal year 2013 budget request, including the
    proposed reduction in personnel, reflects a balanced workforce that
    decreases overall spending on military end strength and DOD's Federal
    civilian workforce, as well as on contract services. It reflects our
    best judgment today and represents a carefully coordinated approach
    based on DOD's strategy and policy that balances operational needs and
    fiscal reality without placing national security and our overall
    defense posture at risk. Proposed reductions in the military personnel
    levels reflect declines in our current overseas commitments; revised
    strategy, posture, and operational planning; and changes to our force
    structure. Reductions in civilian personnel are predominantly
    associated with ongoing organizational assessments and mission/function
    prioritization in an effort to reduce administrative workload. These
    reductions preserve DOD's civilian workforce's capability to perform
    key enabling functions for the operating forces, such as critical
    training and preparation to ensure readiness, equipment modernization
    and reset, medical care, family support, and base operating and
    infrastructure services--all vital services that support our men and
    women in uniform and help meet the Nation's security needs.

        6. Senator Begich. Secretary Rooney, what assessment was conducted?
        Dr. Rooney. The reductions in the workforce reflect, in part, a
    continuation of DOD's efficiency initiative, directed by Secretary
    Gates and first included in the fiscal year 2012 budget. Specifically,
    they reflect the direction given to complete organizational assessments
    and mission/function prioritization, reflecting DOD's commitment to
    challenge workload requirements and more appropriately size the
    workforce to meet the most pressing and critical priorities with a
    focus on reducing administrative functions associated with headquarters
    staffs. Additional reductions planned and reflected in the fiscal year
    2013 budget correlate to changes in DOD's force structure, strategy,
    posture, and operational tempo.

        7. Senator Begich. Secretary Rooney, of the 8,000 civilian
    personnel reduction, please provide how many each Service will have to
    decrease by and in what areas--base support, et cetera.
        Dr. Rooney. Total U.S. Direct Hire (USDH) full-time equivalents
    (FTE) decreased by 7,367 from the fiscal year 2012 level of 751,172 to
    the fiscal year 2013 level of 743,805. There was a net decrease of USDH
    (reimbursable) FTEs of 12,194 (see charts by Service component and
    appropriation below), which were offset by a net growth of 4,827 USDH
    (direct) FTEs, resulting in the overall decrease of 7,367.

             The decrease in USDH reimbursable FTEs is primarily in
            the Military Departments' Operation and Maintenance and
            Revolving Funds accounts, as shown in the chart attached.
            Reimbursable functions include logistical support functions
            such as depot-level equipment/aircraft repair and maintenance
            and ship maintenance and operations.
             Of the Defense-wide reductions, 306 USDH reimbursable
            FTEs were converted to USDH direct FTEs. The remaining Defense-
            wide reductions were in the drug demand reduction and
            intelligence programs.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  joint basing
        8. Senator Begich. Secretary Rooney, you mention in your written
    testimony submitted for the record that there have been some exceptions
    for growth and increases to the civilian workforce--to include joint
    basing requirements for the Navy and Air Force. Why have these
    exemptions not also been extended to Air Force and Army joint bases--
    such as Joint Base Elmendorf-Richardson (JBER)?
        Dr. Rooney. When DOD directed its components to hold civilian
    funding to fiscal year 2010 levels, we recognized that some allowances
    had to be made for new missions or legislative requirements. One such
    allowance, as needed, was for implementing certain Base Realignment and
    Closure (BRAC) 2005 directed initiatives associated with selected joint
    basing agreements.
        Joint basing generated civilian workforce transfers between the
    Services. As a result, both the Air Force and Navy increased, while the
    Army saw its civilian workforce decrease as joint basing was
    implemented. Therefore, the Army did not require a growth exception for
    joint basing. Based on workforce shifts of installation support
    realignments, the Navy and Air Force requested exceptions to their
    overall civilian workforce levels. Based on overall joint basing
    requirements, the Army did not request an exception.

        9. Senator Begich. Secretary Rooney, I am concerned the Air Force,
    as the installation's executive agent, is not meeting joint basing
    requirements at JBER. JBER lost more than 220 civilian personnel
    billets previously identified as necessary to accommodate joint basing
    and the increase in Army end strength at the installation. Has the Air
    Force sought exceptions for joint bases where they are the lead or just
    the tenant? Why or why not?
        Dr. Rooney. The Air Force actively sought exceptions to protect
    civilian growth associated with joint basing, acquisition excellence,
    plus operations and maintenance in-sourcing. While some exceptions were
    granted, DOD had to also respond to the Budget Control Act (BCA) of
    2011. As such, the Air Force focused on reductions in overhead and
    support areas while minimizing the impact to functions tied to joint
    basing, acquisition excellence, the nuclear enterprise, and its flying
    missions.
        BRAC 2005 created joint basing as a means to identify, capture, and
    continue significant savings through consolidation thus freeing
    resources for other priorities. The joint bases for which the Air Force
    is the last Service are now in the process of reducing some of its
    previously planned growth by consolidating and centralizing many base
    support functions; examples include the ``Tailoring Installation
    Support'' and ``Civil Engineer Transformation'' initiatives. Their
    joint base commanders have the authority to, and will, reallocate
    manpower and dollars across their functions to maximize capabilities
    while mitigating impact to the services they provide. In spite of these
    fiscal challenges, Air Force remains committed to joint basing while
    meeting or exceeding the needs of our mission customers.

                                 base services
        10. Senator Begich. Secretary Rooney, as you know, to meet the
    fiscal year 2010 cap, the Services decreased civilian personnel
    primarily in base support services. Do you have any concerns the
    Services will take the additional reductions in base support services
    and thereby compromise quality of life and installation support?
        Dr. Rooney. No, I am not concerned that quality of life and
    installation support will suffer. The reductions in DOD's civilian
    workforce, including those in base support services, are correlated to
    workload and based on mission/function prioritization, reflecting the
    changes in DOD's strategy and force structure. DOD has established an
    internal, multi-level governance process for monitoring implementation
    of all efficiencies and associated budget reductions. Through such
    governance processes, the Service and Department's leadership ensures
    that base operating and infrastructure services, critical training to
    ensure readiness, equipment modernization and reset, medical care, and
    family support are delivered in a manner and with sufficient personnel
    to maintain quality of life and warfighting capabilities.

                                   separation
        11. Senator Begich. Secretary Rooney, I understand it is DOD's
    intent to utilize voluntary separation measures when implementing
    civilian personnel reductions. Yet, most applicants are being turned
    down when they apply for voluntary separation or retirement. In these
    economic times, a lay-off is unacceptable. Does DOD have the
    flexibility it needs to utilize voluntary incentives to the fullest?
        Dr. Rooney. Yes, these incentives have served DOD well in avoiding
    involuntary separations. In accordance with the governing statute,
    Voluntary Separation Incentive Pay (VSIP) and/or Voluntary Early
    Retirement Authority (VERA) can only be granted when a voluntary
    separation would avert an involuntary separation, or when the vacated
    position can be restructured to meet organizational needs. It is
    management's responsibility to determine when it is necessary to use
    these authorities and to determine who is in the eligible population.
    As a result, employees who do not work in areas targeted for VSIP/VERA
    are not eligible and they generally represent the group of applicants
    who claim they are being turned down.
        To minimize involuntary separations, DOD has a statutory limit of
    25,000 VSIP payments annually. We do not anticipate exceeding the
    statutory limit in the current environment. There is no ceiling on
    VERA, but the number may be limited by the 25,000 VSIP limit because
    most employees who apply for VERA also apply for VSIP. In fiscal year
    2011, DOD approved 3,854 VSIPs and 712 VERAs (649 with VSIP). As of
    March 31, 2012, DOD has approved approximately the same number of VSIPs
    and VERAs as it did in fiscal year 2011.
        If the use of voluntary separation incentives does not avoid the
    need for involuntary separations, DOD relies on the DOD Priority
    Placement Program (PPP), DOD's civilian career transition assistance
    program. When employees are scheduled for displacement due to
    downsizing or organizational restructuring, they receive hiring
    preference for DOD job vacancies through the PPP. Almost 260,000
    civilians have been successfully placed through this program, and it
    remains the centerpiece of DOD's overall efforts to maintain a stable
    workforce.

                                       Voluntary Separation Incentive Pay Approved
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal Year
                                     -------------------------------------------------------------------------------
                                                                                                  2012  (1st and 2nd
                                             2009                2010                2011                qtr)
    ----------------------------------------------------------------------------------------------------------------
    Army............................                820                 790               2,143               1,679
    Navy............................                364                 540                 812                 265
    Air Force.......................                496                 236                 247               1,107
    Other DOD.......................                313                 463                 652                 427
                                     -------------------------------------------------------------------------------
      Total.........................              1,993               2,029               3,854               3,496
    ----------------------------------------------------------------------------------------------------------------

                                     Voluntary Early Retirement Authorities Approved
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal Year
                                     -------------------------------------------------------------------------------
                                                                                                  2012  (1st and 2nd
                                             2009                2010                2011                qtr)
    ----------------------------------------------------------------------------------------------------------------
    Army............................                280                 250                 250                 399
                                        (241 with VSIP)     (197 with VSIP)     (234 with VSIP)     (381 with VSIP)
    Navy............................                149                 150                 186                  71
                                        (102 with VSIP)     (125 with VSIP)     (175 with VSIP)      (60 with VSIP)
    Air Force.......................                157                 107                 142                 247
                                        (151 with VSIP)      (99 with VSIP)     (136 with VSIP)     (241 with VSIP)
    Other DOD.......................                173                 293                 134                  77
                                        (108 with VSIP)     (157 with VSIP)      114 with VSIP)      (74 with VSIP)
                                     -------------------------------------------------------------------------------
      Total.........................                759                 800                 712                 794
                                        (602 with VSIP)     (578 with VSIP)     (659 with VSIP)     (794 with VSIP)
    ----------------------------------------------------------------------------------------------------------------

        12. Senator Begich. Secretary Rooney, are there legal restrictions
    or barriers to more lenient use to avoid a reduction in force?
        Dr. Rooney. Yes. As explained in my previous response, VSIP and the
    VERA are governed by law. Section 9902 of Title 5 of the U.S. Code,
    imposes limits on the Secretary's independent authority to use these
    separation incentives. These tools may only be used for two purposes:

        1.  To reduce involuntary separations that would otherwise occur.
        2.  To restructure the workforce to meet mission objectives without
    reducing the overall number of personnel. We cannot approve VSIP or
    VERA requests unless the voluntary separations would achieve one of the
    two specified purposes.

                                 family support
        13. Senator Begich. Secretary Rooney, family support programs are
    protected in the budget but indications are they will not see any
    growth in budget in the out-years. How does DOD intend to ensure
    funding of family support programs keeps pace with inflation?
        Dr. Rooney. To ensure that funding of family support programs keeps
    pace with inflation and family programs are not reduced, I emphasized
    the need for Services to safeguard and sustain funding levels for their
    family programs. This resulted in implementation of a Comptroller-
    mandated, in-depth, mid-year review of the Services' budgets. The
    Services are in the process of scrutinizing their budgets, tracking
    program funding, and disclosing discrepancies that could indicate
    diversion of funds from programs for which the funds were originally
    intended. Ongoing tracking of budgets and reporting on status of
    budgets supports the Secretary's position of ``keeping faith'' with
    servicemembers and their families to protect family assistance
    programs. Additionally, resourcing plans must maximize leveraging
    community-based organizations that offer legitimate resources to
    support and empower our military families. DOD's ability to adapt
    programs and establish partnerships that more effectively and
    efficiently meet the needs of our military families are key to DOD's
    continued success in an ever more fiscally-constrained environment.

                             assignments for women
        14. Senator Begich. Secretary Rooney, I've long been an advocate
    for eliminating assignment restrictions for women in the military.
    Please describe the recent DOD changes with respect to women serving in
    the military.
        Dr. Rooney. On February 9, the Secretary of Defense notified
    Congress of his intention to remove the co-location restriction and
    permit an exception to policy that allows women to be assigned to the
    battalion-level of specific direct ground combat units. Co-located
    positions are not part of ground combat units, but by virtue of the
    duties or missions involved, must be co-located with the ground combat
    units. In addition, positions opened under an exception to the existing
    DOD policy permit assignment of women to specific direct ground combat
    battalions in select occupations open to women. The experience gained
    by assigning women to these select positions will help assess the
    suitability and contemporary relevance of the direct ground combat unit
    assignment prohibition and inform future policy decisions. In total,
    14,325 positions are opening as a result of these changes. The Services
    will begin implementing these changes effective May 14, 2012.

        15. Senator Begich. Secretary Rooney, what more is DOD doing to
    give women a larger role in the Services?
        Dr. Rooney. See response to question #14.

                               reserve component
        16. Senator Begich. Mr. McGinnis, I was pleased in your opening
    statement that you mention the Innovative Readiness Training (IRT)
    program. I am pleased to see this program's funding remained stable in
    the budget request at $20 million. Please elaborate on the benefits of
    the program to our Reserve component and civilian and military
    partnerships.
        Mr. McGinnis. The IRT program provides real world training
    opportunities for DOD servicemembers, which prepares them for wartime
    missions while supporting the needs of America's underserved
    communities, many in rural areas. Through this program, the National
    Guard and Reserve and various Active component military units refine
    their planning, logistical, engineering, health care, driving, and
    transportation skills by performing services and developing projects in
    and for communities that otherwise would not have the resources to
    conduct them on their own. In many cases, the community provides the
    materials and the military provides the manpower, equipment, and
    training to sustain the improvements.
        This year, along with significant training in logistics, joint
    operational planning, coordination, and communication, Navy Seabees,
    Marine Combat Engineers, Army Reserve, and Air Force Red Horse teams
    will gain vertical and horizontal engineering experience. In West
    Virginia, over 1,300 Reserve component engineers and support personnel
    will build roads and helipads. In New Mexico, houses for homeless
    Navajos will be constructed, and in Arizona, a school for exceptional
    children will expand.
        In Arkansas last year, 5 communities were provided much needed
    medical, dental, optometry, and veterinary care; over 6,000 residents
    received direct medical care. Just last month, over 10,000 residents of
    Kauai, HI received similar medical services and 3,500 pairs of glasses
    were fabricated. Currently, the Arctic Care mission is underway in 16
    villages in partnership with the Norton Sound Health Corporation in
    Nome, AK. Next month, three rural communities in Alabama will provide
    the back drop for medical training and many residents will receive much
    needed health care. Over 300 military medical personnel train at each
    of these health care missions.
        As overseas military operations wind down in the coming years, it
    is imperative to have sustainment training opportunities available to
    the Guard and Reserve. This program provides that unique niche of high-
    value mission essential training in support of the Nation's underserved
    and remote communities.

        17. Senator Begich. Mr. McGinnis, you highlight the alarming
    Reserve component unemployment rate in your testimony. I understand the
    Army Reserves has a program called the Employer Partnership of the
    Armed Forces (EPAF). This program is having tremendous success ensuring
    members are trained and receive credentials for civilian work while
    staying qualified for their military work. The Army Reserves is working
    hand-in-hand with employers to understand what credentials and skill
    sets are required for employment, training the force, and then placing
    members into jobs. Are you familiar with this program?
        Mr. McGinnis. Yes, my office is very familiar with this program.
    The EPAF was developed by the Office of the Chief, Army Reserve to work
    with employers to facilitate employment opportunities for Army
    reservists. After careful review of the success of EPAF, and with the
    concurrence of the Chief, Army Reserve, EPAF has transitioned to a
    multi-Service program known as ``Hero2Hired (H2H)'', which is
    administered by my office, and is available for use by servicemembers
    in all seven Reserve components. H2H, with a web site H2H.jobs, retains
    many of the great features and lessons learned in EPAF and has expanded
    tools designed to provide outreach, support, and mentorship to the
    unique Reserve component population. The tools help all unemployed and
    under-employed Reserve component servicemembers and spouses with
    employment assistance.

        18. Senator Begich. Mr. McGinnis, how is DOD leveraging the lessons
    learned from successful initiatives such as this one?
        Mr. McGinnis. The Yellow Ribbon Reintegration Program (YRRP)
    applies lessons learned to its operations on a continuous basis,
    constantly improving the quality of curriculum, materials, and
    resources provided to the Service components. H2H is a program provided
    by YRRP to address the needs of unemployed and under-employed Reserve
    component servicemembers. YRRP also made significant enhancements to
    the DOD YRRP Center for Excellence whose primary mission is to gather
    lessons learned, conduct analysis, and propagate the end results
    throughout the Services for their use.

        19. Senator Begich. Mr. McGinnis, the 168th Air National Guard Wing
    at Eielson Air Force Base has a critical need for a communications
    facility. Unfortunately, funding for this facility has not been
    provided and funding for it continues to slip into the future years.
    Without construction and modifications to the existing facility,
    communications will fail for this wing. Would you please look into this
    issue and provide an update?
        Mr. McGinnis. While my office provides policy oversight of the
    Reserve components, any final decisions on construction and funding for
    National Guard facilities falls within the purview of the Services. As
    such, my office did not play a direct role in any ultimate decisions
    related to the 168th. However, upon reviewing the matter, I was
    informed of the following information:
        The communications facility is scheduled for design and subsequent
    construction in fiscal years 2012 and 2013. This facility requirement
    was reviewed and found to be better suited for accomplishment using a
    combination of minor construction and sustainment, restoration, and
    modernization (SRM) funds instead of military construction (MILCON)
    funds.
        The project calls for a repair of the existing roof, construction
    of an addition, and renovation of the existing space. The roof was
    repaired in 2011. Construction of a 3,650-square-foot addition for $2
    million is under design for the fiscal year 2012 program and will be
    executed using minor construction funding. A companion project
    renovating 5,504 square feet for $1.85 million is under design for the
    fiscal year 2013 program.

        20. Senator Begich. Mr. McGinnis, I am especially concerned with
    the decreases proposed by the Air Force in Air Guard equipment and
    manning. What role did you play in the deliberations this year and what
    role did the States play?
        Mr. McGinnis. The Assistant Secretary of Defense for Reserve
    Affairs serves as an advisor to the Secretary of Defense through the
    Under Secretary of Defense for Personnel and Readiness on all matters
    pertaining to the planning, programming, budgeting, and execution
    system for the Reserve components within DOD.
        The budgets are developed by the Secretaries of the Services based
    on their views of the future of their Services. The role of Reserve
    Affairs is to advise the Secretary of Defense, but we do not play a
    direct role in development of these budgets. However, we did
    participate in the Office of the Secretary of Defense review of the
    Services' budget submissions.
        I am not aware of whether the States Adjutants General were
    involved in the development of this budget. It is the responsibility of
    the Service Secretaries to communicate, through the National Guard
    Bureau, with the State Governors and representatives, and I fully
    support that interaction and communication. If that was done this year,
    my office would not necessarily have played a role.
                                     ______

                 Questions Submitted by Senator Lindsey Graham
                                 sequestration
        21. Senator Graham. Secretary Hale, the BCA requires DOD to reduce
    all major accounts by a total of $492 billion over 10 years. Secretary
    of Defense Panetta has said that this would have a catastrophic impact
    on our military and its ability to protect this country. What is the
    impact on military readiness, equipment, and training?
        Mr. Hale. The initial impact of these reductions would come from a
    potential sequestration in January 2013. DOD is concerned that the
    sequestration process would have significant consequences due to the
    uncertainty surrounding the process and the rigid formula which
    Congress has prescribed for its application. Assuming the Fiscal Year
    2013 Defense Appropriations Act Conference Report contains language
    similar to the Joint Explanatory Statement of the Committee of
    Conference accompanying Division A--Department of Defense
    Appropriations Act, 2012, DOD would be forced to reduce each line item
    within each procurement appropriation by the same percentage and each
    program element within each research and development appropriation by
    the same percentage. This percentage would be calculated based on the
    budgetary resources, primarily the enacted fiscal year 2013
    appropriation and any unobligated balances carried forward at the end
    of fiscal year 2012. Some examples of the problems this method would
    cause are found in line items such as those for a ship, where it is not
    feasible to buy a fraction of a ship, or in a line item funding a
    multiyear contract where a fraction of the funding would not be
    sufficient to pay the negotiated cost of the multiyear contract. With
    over 1,500 individual line items in these accounts, DOD could not fix
    all of these issues with the transfer authority that Congress typically
    provides; this would leave broken programs across all of these accounts
    within DOD. Finally, sequestration would force an immediate percentage
    reduction in our operation and maintenance accounts which would impact
    readiness. Funding provided for overseas contingency operations is not
    excluded from sequestration.
        The fiscal year 2014 and subsequent budgets will be developed using
    DOD's planning, programming, budgeting, and execution process. Changes
    to our budget required by revised caps on the defense budget will be
    managed through this process to best allocate potential reductions to
    the currently planned funding to protect our highest priorities. As
    changes of this magnitude will impact all aspects of DOD's budget, the
    process will be implemented in coordination with the White House and
    the Office of Management and Budget (OMB).

        22. Senator Graham. Secretary Rooney, if sequestration is allowed
    to go forward, are we creating a hollow force and diminished support
    for military families and schools?
        Dr. Rooney. I share your concerns about the devastating impact of
    further automatic cuts should Congress fail to enact additional deficit
    reduction measures.
        As the Secretary testified on February 29 to the House Budget
    Committee, sequester would subject DOD to another roughly $500 billion
    in additional cuts over the next 9 years. In fiscal year 2013, these
    cuts would have to be implemented with limited flexibility. These
    changes could hollow out the force and inflict severe damage to our
    national defense and programs that are vital to our quality of life.

        23. Senator Graham. Mr. McGinnis, I am concerned about the current
    cuts in the Reserve and National Guard. What greater catastrophe looms
    in the event of sequestration for the Reserve component?
        Mr. McGinnis. The fiscal year 2013 budget submission supports the
    National Defense Strategy and will enable our Reserve components to
    continue to fulfill their vital national security role. The current
    budget provides funding and programmatic support for the training,
    equipping, recruiting, and retaining of the Guard and Reserve.
    Sequestration will have a direct impact on the operations, maintenance,
    and training of our Reserve components and can run the risk of
    preventing the ability of the National Guard and Reserve to provide
    trained, ready, and cost-effective forces that can be employed not only
    for unanticipated national crises, but also on a regular operational
    basis, providing strategic depth for large-scale contingencies. The
    extent of the impacts of sequestration will depend on congressional
    action or inaction, OMB guidance, and the measures each Service employs
    to implement those measures.

        24. Senator Graham. Dr. Woodson, will access and quality of medical
    care decline in the event of sequestration?
        Dr. Woodson. See response to question #22.

        25. Senator Graham. Secretary Rooney, Secretary Hale, Mr. McGinnis,
    and Dr. Woodson, are you currently conducting any planning in your
    areas of responsibility (AOR) for the impact of sequestration, and if
    so, how are you assessing and mitigating the risk of the potential cuts
    beginning in January 2013?
        Dr. Rooney, Mr. McGinnis, and Dr. Woodson. The President's budget
    makes the necessary budget adjustments to avoid devastating DOD through
    sequestration. If sequestration becomes an inevitability, DOD will
    evaluate all options available to comply with the law.
        Mr. Hale. Consistent with direction from OMB, DOD did not reflect
    the effects of the sequestration in its fiscal year 2013 budget
    submission. The President's budget proposes over $4 trillion in
    balanced deficit reduction, which Congress could enact and avoid
    sequestration. DOD is not currently planning for sequestration. OMB has
    not directed agencies, including DOD, to initiate any plans for
    sequestration.

                     reductions in active duty end strength
        26. Senator Graham. Secretary Rooney, despite ongoing combat
    operations, it seems clear that budgetary pressures are going to force
    reductions in the number of Active Duty military personnel: Army down
    49,000; Navy down 9,000; and Marine Corps down 16,000. The Air Force
    will downsize to prevent exceeding its end strength limit, due to high
    retention. I am concerned about the need for advance planning to
    implement cuts like these, and particularly with respect to the ground
    forces, the effect this may have on morale and readiness in the
    present. How will cuts in the Army and Marine Corps affect dwell time,
    assuming we are still deploying units to Afghanistan?
        Dr. Rooney. In the near-term, 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.
        In the long-term, these reductions are consistent with our plan to
    transition to the new strategic guidance--to build a force that is
    smaller, more agile, and able to adapt to an uncertain future security
    environment.
        The Services are shaping their future force structure in ways that
    protect their ability to maintain and regenerate capabilities needed to
    meet future, unforeseen demands, maintaining intellectual capital and
    rank structure that could be called upon to expand key elements of the
    force. For those critical skill sets, there will be a need to keep on
    hand some of the specialized infrastructure (people, facilities,
    training curricula), or seed corn, that will enable a new capability to
    be developed in a timely manner. Keeping experienced mid-grade officers
    and noncommissioned officers will also be key. The seed corn and the
    experience will need to be properly balanced between the Active and the
    Reserve components.

        27. Senator Graham. Secretary Rooney, if we are unable to find the
    mandatory spending authority for the force shaping legislation you
    would like to have (such as early retirement authority and more
    Selective Early Retirement authority), what measures would you have to
    use to achieve these reductions?
        Dr. Rooney. We currently have a limited number of force management
    tools we can use to achieve these reductions. They include, but are not
    limited to: Selective Early Retirement Board (SERB), Temporary Early
    Retirement Authority (TERA), Voluntary Retirement Incentive (VRI), and
    Voluntary Separation Pay (VSP).
        The reinstatement of Enhanced SERB authority, the extension of
    Early Discharge or Reduction in Force (RIF) authority, and expanded
    Time-in-Grade waiver authority, combined with the use of the current
    authorities, will allow the Services to execute a very balanced
    drawdown. These additional authorities allow us to shape the force with
    greater flexibility and fidelity.

                          army and air national guard
        28. Senator Graham. Mr. McGinnis, I'm interested in your views on
    the role of the Army and Air National Guard. There is no question that
    Guardsmen have been essential contributors in Iraq and Afghanistan. In
    the future, in an era of tight budgets, we need to have a clear
    understanding from the Army and Air Force about how the National Guard
    will and should best be employed. What is your view of the appropriate
    role of the National Guard? Stated differently, what does the term
    ``operational reserve'' look like for the National Guard as it's
    implemented over the Future Year Defense Program (FYDP)?
        Mr. McGinnis. Missions that are predictable and long-lasting are
    particularly well suited to the Guard and Reserve. This was clearly
    established in the Comprehensive Review of the Future Roles of the
    Reserve Component approved by Secretary Gates on April 27, 2011. The
    legislation expanding authority in title 10, section 12304, that was
    passed last year, facilitates this type of utilization. The Guard and
    Reserve have proven themselves over the last 10 years. From a cost and
    readiness point of view, their continued use makes good sense. Placing
    Reserve component units and individuals in service force generation
    models with appropriate levels of resourcing makes full use of the
    Total Force. It also relieves stress on the Active Force, permits the
    Active Force to train for full spectrum operations, and maintains the
    readiness levels of the Reserve component.

        29. Senator Graham. Mr. McGinnis, data from the Air National Guard
    suggests that operating under today's deployment constraints, the Air
    Guard costs only 53 percent of an equivalent Active Duty Air Force
    Major Command. In light of the cost effectiveness of the Guard and
    Reserve, why do you support cutting the Reserve capability in the Navy
    and the Air Force?
        Mr. McGinnis. The current National Guard and Reserve is, arguably,
    the most combat seasoned Reserve Force ever, and DOD seeks to
    capitalize on this significant investment to provide needed military
    capacity during current austere economic times. Since 2001, Reserve
    component units and individuals have been heavily employed across the
    full spectrum of military operations ranging from combat missions
    overseas to Homeland emergencies and national special security events.
    They have consistently demonstrated their readiness and enduring value.
        To ensure the Reserve component can continue to provide operational
    reserve and strategic capabilities, DOD included funding and programs
    in its fiscal year 2013 budget request for their training, equipping,
    recruiting, and retention. I believe the service force generation
    models provide the best mechanism to maintain a ready Reserve component
    force that can routinely contribute to the operational force. As
    discussed in the recently released Comprehensive Review of the Future
    Role of the Reserve Component, I continue to strongly advocate for the
    value that the Guard and Reserve can bring to the force mix equation;
    value that leverage cost differentials, attainable readiness, and
    inherent strategic depth. I intend to continue to work closely with the
    Services and Joint Staff to ensure a ready Reserve component that
    contributes to the most efficient delivery of required capabilities of
    the Total Force.

        30. Senator Graham. Mr. McGinnis, why is this the correct strategy,
    either from a fiscal or readiness point of view?
        Mr. McGinnis. Even as the pace of operations declines, placing the
    Reserve components in the Service rotational models expands readiness,
    permits the Active Force to reset and train, and provides an efficient
    use of the Total Force. There are currently ongoing studies that will
    provide further guidance on the appropriate force mix to achieve the
    right balance of Active and Reserve components to provide the necessary
    capabilities across the spectrum of operations to effectively support
    the national defense strategy.

                                 cybersecurity
        31. Senator Graham. Secretary Rooney, defense against cyberattacks
    is on every American's mind and DOD obviously has a big role to play
    and much at stake in this threat. What policies are being implemented
    to increase the skills and numbers of civilian and military personnel
    with cybersecurity skills?
        Dr. Rooney. To increase the cybersecurity skills of civilian and
    military personnel, DOD is updating its current information technology
    (IT) and information assurance workforce management guidance and
    enhancing training and education offerings. DOD is in the process of
    establishing policy and procedural requirements for the cyberspace
    workforce, leveraging the basic concepts of previous issuances, DOD
    Directive 8570.01, ``Information Assurance Training, Certification and
    Workforce Management,'' and DOD 8570.01-M, ``Information Assurance
    Workforce Improvement Program.'' In addition, under oversight of the
    DOD CIO, the Information Resources Management College (iCollege) of the
    National Defense University has restructured its cybersecurity
    certificate program and recently introduced a cyber leadership program.
        DOD continues to explore optimal tools for recruitment and
    retention. Efforts include establishing a 2-year pilot program to use
    the DOD Information Assurance Scholarship Program to develop IT
    acquisition personnel with cybersecurity skill sets; working with the
    Office of Personnel Management to extend and enhance the Cybersecurity
    Schedule A Hiring Authority (currently due to expire in December 2012);
    and developing a new cyberaptitude test to support military recruiting
    efforts.

        32. Senator Graham. Secretary Rooney, how are you avoiding
    duplication of efforts to train and recruit these specialists across
    the Federal Government as cited by the Government Accountability Office
    (GAO)?
        Dr. Rooney. In light of emerging cyberthreats, cyberworkforce
    roles, responsibilities, and skill requirements continue to evolve, not
    only in DOD, but across the Federal Government. DOD is working on
    Federal-wide efforts through the National Initiative for Cybersecurity
    Education (NICE) and Federal CIO Council to establish a common lexicon
    across government and the private sector; identify current and emerging
    cyberskill requirements; and develop relevant education, training, and
    recruitment strategies. Also, DOD is developing a directive to
    establish policy and guidance for the management of the workforce in
    the cyberspace domain which will include an American National Standards
    Institute (ANSI) accredited, commercial certification requirement, as
    appropriate. Collaborations with other Federal Government entities and
    the use of commercial certification providers reduce duplication by
    establishing a baseline that can be applied across the Government,
    while still allowing DOD, or component-specific training based on
    relevant threat or mission profiles.

        33. Senator Graham. Mr. McGinnis, how can the Reserve components be
    used creatively to enhance DOD's strength in this important area?
        Mr. McGinnis. Many cybersecurity personnel in the Reserves are at
    the forefront of that industry in their employment as civilians. Within
    this evolving domain, Reserve components offer DOD the wide range of
    opportunity, flexibility, and depth of expertise that is difficult to
    capture within Active Forces. The Active component cyberworkforce and
    Active Duty missions are focused and scoped to meet the day-to-day
    Service-specific needs, limiting the ability to maneuver or plus-up in
    a crisis or a shift in threat.
        This originates from the depth and currency of expertise that
    individual reservists bring from their civilian positions that is not
    now captured in the training and development of the Active component
    cyberforces. Changes in the cyberindustry are rapid and the capacity
    for those changes to be reflected in Service cyberschools is slower
    than it is in industry. Reservists bring to the fight depth and up-to-
    date information which is then rapidly shared and infused into the
    Active component mission.

                          disability evaluation system
        34. Senator Graham. Secretary Rooney, do you agree that we have a
    large and growing problem for wounded and ill servicemembers who are in
    need of disability evaluation?
        Dr. Rooney. More than a decade of war has increased DOD's
    disability caseload but we are committed to ensuring that the
    evaluation and compensation of our wounded and ill servicemembers is
    fair, correct, and thorough. Many of these wounded and ill
    servicemembers suffer from highly complex injuries that take time to
    manifest, properly diagnose, and evaluate. DOD evaluated 18,393
    servicemembers for disability during 2011, about the same number as in
    2010 and about 22 percent more than in 2001. More than 50 percent of
    those DOD evaluated in 2011 went through the legacy process. Since
    November 2007, 49,478 servicemembers have entered and 19,518 have
    completed the Integrated Disability Evaluation System (IDES). Today,
    fewer than 2,000 servicemembers remain in the legacy process. At the
    same time, the inventory of servicemembers in the IDES has grown
    rapidly as installations complete their older, legacy cases and enter
    new cases in IDES. As of early May 2012, 27,371 servicemembers were in
    the IDES process (68 percent Army, 12 percent Marine Corps, 9 percent
    Navy, and 12 percent Air Force). DOD's number of servicemembers
    undergoing disability evaluation has grown since the beginning of the
    conflicts in Iraq and Afghanistan, and we project that it will continue
    to grow as servicemembers redeploy from Afghanistan and the Military
    Services reduce their end strength. Unfortunately, predicting the exact
    number of referrals into the IDES is complicated because many injuries
    and illnesses may take weeks, months, and years to manifest to the
    point where they prevent a servicemember from performing their duties.
    Nevertheless, we are committed to providing the necessary resources to
    accelerate IDES timeliness and improving all aspects of the Disability
    Evaluation System (DES) for our wounded and ill servicemembers who are
    in need of disability evaluation. We are confident that we have the
    right measures in place to adequately staff and accelerate the IDES so
    it remains manageable for recovering servicemembers and the Military
    Services as they draw down and refit their forces.

        35. Senator Graham. Secretary Rooney, what is the solution to this
    problem?
        Dr. Rooney. DOD leadership is focused on improving the integrated
    disability evaluation process. DOD and the Department of Veterans
    Affairs (VA) leaders meet regularly to review progress toward that end.
    The Secretaries of DOD and VA have met to review progress multiple
    times in the last year and will receive monthly updates on progress
    toward this priority goal. Within DOD, the Military Services'
    disability agencies and medical and personnel communities are expected
    to execute the DOD portion of IDES in 175 days and do so in accordance
    with their 10 U.S.C. Chapter 61 responsibilities and authorities.
        Under the IDES in March 2012, servicemembers averaged 395 days to
    complete both DOD and VA systems, significantly less than in the
    previous legacy system, but still short of our goal to have 60 percent
    of servicemembers complete the IDES in 295 days by the end of 2012. DOD
    is concentrating on accelerating the IDES to meet that goal and will
    not rest until all referred servicemembers experience the most
    efficient IDES possible, even in times of increased caseloads. DOD
    plans to accelerate the IDES by emphasizing the following themes.
    Proper Staffing
        The Services have planned their budgets to ensure proper staffing
    of the IDES. Their efforts are underway with the Army completing 1,218
    of 1,400 (87 percent) hiring actions for additional IDES staff. The
    Navy has increased its Informal Physical Evaluation Board staffing by
    47 percent and has reduced processing time from 50 days in January to
    11 days in March 2012, well within the goal of 15 days. It is
    noteworthy that there has been growth in the number of soldiers in the
    IDES. Although the number of servicemembers in the IDES has grown since
    2007, that growth is mainly a result of the transition between the
    prior legacy processes and the IDES. Although DOD expects some increase
    in the number of servicemembers requiring disability evaluation as
    servicemembers redeploy from Afghanistan and the Services reduce end
    strength, DOD believes the right measures are in place to staff and
    accelerate the IDES so the situation remains manageable.
    Improving System Execution
        DOD and the Services are focused on fine-tuning the IDES by
    identifying and implementing best practices in training and execution.
    For example, the Navy has made significant gains in accelerating their
    medical evaluation boards (MEB) at Camp Lejeune by using existing
    technology in DOD's Armed Forces Health Longitudinal Technology
    Application (AHLTA) to streamline the medical summaries. The Navy is
    now preparing to implement this improvement at all locations. The Air
    Force has improved their initial IDES referral screening process to
    prevent unnecessary referrals and added workload. The Army recently
    completed a review of its IDES process and is implementing an Execution
    Order (EXORD) to streamline and standardize their IDES operations. Each
    of the Services is taking positive steps to improve execution.
    Senior Leadership Involvement
        DOD and VA leaders meet regularly to ensure they oversee and drive
    progress within their commands. The Secretaries of DOD and VA meet
    quarterly to discuss IDES progress. The Vice Chief of Staff of the Army
    and the Navy's Bureau of Medicine leadership both meet monthly with VA
    senior staff to review IDES processes and direct attention to areas
    needing improvement. Recently, these top leaders convened joint VA and
    DOD teams to examine existing capabilities and implement by this summer
    an electronic, paperless, searchable IDES case file transfer system.
    This work is on track and will significantly reduce workload,
    accelerate the process by about 20 days, and save about $600,000 in
    annual mailing costs.
        DOD's goal is to continue to improve the IDES so that
    servicemembers will benefit from a process that is faster, fairer, and
    reduces the benefits gap. While this is appropriate, lasting
    improvement in disability evaluation requires a national dialogue and
    significant legislative work. DOD is in the beginning stages of
    exploring this strategic reform and envisions this to be a long-term
    project that will span several legislative and budgeting cycles. Any
    large-scale effort to revolutionize the DES would eventually require
    your leadership and we look forward to working with you when and if we
    reach that point. Because soldiers comprise approximately 67 percent of
    the current IDES caseload, the Army bears most of that operational
    burden. To accelerate disability processing, the Army issued execution
    and operation orders in the first half of fiscal year 2012. The orders
    direct staffing, standardization, and execution improvements. We are
    confident this effort will produce results for the Army and the DOD as
    a whole.
        On the joint technology front, VA plans to release an improved
    version of the software DOD and VA use for disability evaluation in the
    third quarter of fiscal year 2012. These improvements will enhance case
    management capability and add electronic interfaces that will reduce
    labor-intensive data-entry requirements and free staff to focus on one
    core VA IT system. In the fourth quarter of fiscal year 2012, VA plans
    to implement an electronic case file transfer capability or paperless
    claim file to the available IDES IT support tools. VA, in partnership
    with DOD, is planning future veterans tracking application
    improvements, including synchronization of disability IT improvements
    with efforts to develop an integrated electronic health record and the
    planned virtual lifetime electronic health care record.
        My Wounded Warrior Care and Transition Policy staff is also
    preparing updated IDES program guidance that will streamline and
    consolidate policy. DOD anticipates that this publication will ease
    execution of the IDES policy and procedural guidance and accelerate
    disability evaluation.

        36. Senator Graham. Secretary Rooney, what will this situation look
    like in a year or 2 if we don't come up with a solution?
        Dr. Rooney. Predicting the exact number of referrals into the IDES
    is complicated because many injuries and illnesses may take weeks,
    months, and years to manifest to the point where a member's fitness for
    duty maybe called into question. We project that DOD's number of
    servicemembers undergoing disability evaluation will grow as
    servicemembers redeploy from Afghanistan and the Services reduce their
    end strength. But, we are also confident we have the right measures in
    place to adequately staff and improve the process so the situation
    remains manageable for servicemembers as they recover from their wounds
    and prepare to transition back to their communities and the Services as
    they drawdown and refit their forces.

                                tricare reforms
        37. Senator Graham. Secretary Hale and Dr. Woodson, I've said that
    I support health care reform in DOD. Do you agree with me that if we
    don't control the growth in health care costs, we will pay for it
    through decreased personnel and readiness?
        Mr. Hale and Dr. Woodson. Absolutely. We project that the total
    medical care budget will grow to 10.7 percent of the DOD topline by
    fiscal year 2017 if we do not take additional measures to slow the
    growth in health care costs.
        If Congress does not provide us with needed support for the health
    reform proposals included in the fiscal year 2013 budget, DOD will have
    to find about $12.9 billion from other defense programs to meet its
    health care obligations. Such action would place the new defense
    strategy at risk. Without needed authority, DOD will face further cuts
    in forces and investment to be consistent with the BCA. DOD's budget
    proposal already makes substantial reductions in the investment
    accounts so further cuts might fall mostly on forces. This could mean
    cutting additional Active Duty and Reserve Forces by fiscal year 2017
    at a magnitude that could jeopardize DOD's ability to pursue the new
    defense strategy.

        38. Senator Graham. Secretary Hale and Dr. Woodson, we received a
    32-star letter embracing these proposals, so among the senior military
    leaders, there is no dissent, is that correct?
        Mr. Hale and Dr. Woodson. That is correct; these proposals have the
    full support of DOD's senior military leaders.

        39. Senator Graham. Secretary Hale and Dr. Woodson, how does this
    administration's proposal for fee increases compare with the proposal
    put forward in 2006, which we all felt was too much, too fast?
        Mr. Hale and Dr. Woodson. While there are some similarities between
    the 2006 and 2013 proposals, there are also significant differences.
    The 2006 proposal for Prime enrollment fees also involved three tiers
    and the enrollment fees for 2017 for each of the tiers are roughly the
    same as the 2006 proposals. However, the 2006 proposal was based on
    retired rank vice retired pay. In 2006, the tiers were split by junior
    enlisted (E-6 and below), senior enlisted (E-7 and above), and
    officers. Based on current data, roughly 24 percent of retired
    beneficiaries under the age of 65 would fall into the lowest category
    and 28 percent would fall into the highest category. With the 2013
    proposal, 48 percent will fall into the lowest category and only 12
    percent will fall into the highest category. The 2006 proposals for
    Standard also involved implementing an enrollment fee and raising the
    deductible. The 2006 proposals had tiers with the lowest tier having a
    2017 enrollment fee of $410 and the highest tier, $820. The 2013
    proposal has no tiers for Standard and the proposed 2017 enrollment fee
    is $250. The deductibles proposed in 2006 were also tiered with the
    lowest tier having a $542 deductible in fiscal year 2007 and the
    highest tier having an $820 deductible. The 2013 proposal, with no
    tiers, is for a 2017 deductible of $580. There was no TRICARE For Life
    enrollment fee proposed in 2006. Finally, the 2006 pharmacy proposed
    copays were similar to the copays implemented in fiscal year 2012.

        40. Senator Graham. Secretary Hale and Dr. Woodson, from what I
    have heard, one of the most controversial elements of the reforms that
    you are seeking in health care is a three-tiered system that links the
    amount of the fee a retiree pays to his or her military retired pay.
    What is DOD's rationale in moving to means testing for military retiree
    health care benefits and why is it the right approach?
        Mr. Hale and Dr. Woodson. Where feasible, the proposed fee
    increases were tiered by military retirement pay, based on the
    principles of the December 2007 Task Force on the Future of Military
    Health Care. In its deliberations, the Task Force recognized that
    military retirement is not like most civilian retirement systems and
    that the entire military compensation system differs from the typical
    civilian salary system because much of the compensation is in-kind or
    deferred. Thus, changes in the health care benefit were examined in the
    context of this unique system and its compensation laws, policies, and
    programs. The Task Force believed that, for equity reasons, military
    retirees who earn more military retired pay should pay a higher
    enrollment fee than those who earn less. While this tiering approach is
    not commonly used in the private sector for enrollment fees, the Task
    Force believed that it made sense in a military environment.

        41. Senator Graham. Dr. Woodson, under current law, the TRICARE
    Prime benefit is supposed to be cost neutral--that is, the government
    costs for Prime should not exceed the government costs for Standard.
    Does the cost of TRICARE Prime today comply with this requirement? If
    not, what is the difference in government costs between TRICARE Prime
    and TRICARE Standard for retirees?
        Dr. Woodson. The Prime benefit is no longer cost neutral compared
    to Standard/Extra plans.
        Section 731(c) of the National Defense Authorization Act (NDAA) for
    Fiscal Year 1994 required that the benefit that became known as TRICARE
    Prime ``shall be administered so that the costs incurred by the
    Secretary under the TRICARE program are no greater than the costs that
    would otherwise be incurred to provide health care to the members of
    the uniformed services and covered beneficiaries who participate in the
    TRICARE program.'' When TRICARE was implemented in 1996, the Prime
    enrollment fee was set to: (1) offset the substantially reduced out-of-
    pocket costs, including the elimination of the Standard deductible, the
    near-total elimination of the 25 percent Standard inpatient copay, and
    the substantial reduction of outpatient copays; and (2) make Prime cost
    neutral to the government. Subsequent enactments regarding TRICARE for
    Active Duty family members have superseded the NDAA for Fiscal Year
    1994 requirement for Active Duty family members, but not for Prime-
    eligible retirees.
        For a working retiree family of three, the cost to DOD of providing
    health care in fiscal year 2011: Prime--$13,442; Standard--$11,267. The
    disparity between Prime and Standard/Extra was recognized in 2005 and
    resulted in proposals to adjust cost shares to both Prime and Standard/
    Extra. DOD was largely prohibited from changing fees and copays until
    fiscal year 2012. The net result is that Prime is not cost neutral to
    the Standard/Extra plans.

        42. Senator Graham. Dr. Woodson, is cost neutrality of a managed
    care option like Prime compared to fee for service still desirable,
    still achievable?
        Dr. Woodson. Cost neutrality is a laudable goal and our efforts
    should try to move in that direction. However, we cannot get to
    complete cost neutrality without significantly increasing the cost
    shares under Prime above the levels proposed in the President's budget.
    The proposed increases in the Prime enrollment fee are one part. We
    also believe that increases in utilization management envisioned under
    the Patient Centered Medical Home concept that we are implementing will
    bring the cost of Prime closer to Standard/Extra.

        43. Senator Graham. Dr. Woodson, if you want to encourage more
    people to move from Prime to Standard, why make Standard more
    expensive?
        Dr. Woodson. DOD took a balanced approach to benefit reform with
    increases in cost shares for Prime, Standard, and to TRICARE For Life.
    Each program has not kept pace with the cost of medical care and thus
    DOD has been faced with funding a larger share of the total health care
    expenses. While Prime, with the fixed enrollment fee and relatively
    modest outpatient visit copay, saw the more significant change in the
    beneficiary share of the cost, Standard/Extra with no enrollment fee,
    fixed deductible, and especially the relatively low catastrophic cap
    also saw significant change. Both had to be adjusted and indexed so
    that the relationship between what DOD pays and what the beneficiary
    pays moves closer to what was originally intended and remains there.

        44. Senator Graham. Dr. Woodson, your reform proposals to TRICARE
    pharmacy will likely cause people to use mail order pharmacy instead of
    their local pharmacy, is that correct?
        Dr. Woodson. The copay changes included in the President's fiscal
    year 2013 budget proposal are intended to encourage beneficiaries to
    use the most cost-effective venue. Costs to both the government and to
    beneficiaries are lower in the military treatment facilities and the
    mail order pharmacy program than in the retail network pharmacy
    program. For example, review of recent DOD pharmacy data (fourth
    quarter of fiscal year 2011) show that moving 1 percent of the retail
    market of maintenance medication over to mail order would save
    approximately $1 million in fourth quarter of fiscal year 2011 or $4
    million per year. It is worth noting that this 1 percent decrease in
    the retail market would have been a 1.8 percent increase in use at mail
    order pharmacies during the fourth quarter of fiscal year 2011 (because
    the retail market was larger than mail order). Also, these savings
    estimates assume the 1 percent moving over from retail to mail exactly
    matches the mix of maintenance medications that make up the retail
    market basket used in the study.

        45. Senator Graham. Dr. Woodson, can you explain the cost
    difference for DOD for prescriptions obtained at a local pharmacy
    versus those that come from mail order?
        Dr. Woodson. Based on DOD analysis of maintenance medications,
    which was comprised of 19.9 million prescriptions filled during the
    fourth quarter of fiscal year 2011 at all three points of service
    (military treatment facilities, retail, and mail order), the data show
    that the mail order and military treatment facility venues to be more
    cost-effective points of service. The results showed the mean cost per
    90-day supply of a market basket of maintenance medications was 19
    percent lower through either the mail order program or military
    pharmacies, compared to the retail pharmacy network.

        46. Senator Graham. Dr. Woodson, how much does DOD spend in
    pharmacy costs every year and where do you see that cost going in the
    future?
        Dr. Woodson. The table below highlights actual pharmacy costs for
    fiscal years 2009 through 2011. The table shows current projected costs
    for fiscal years 2012 and 2013. We have assumed slower growth in the
    future due to proposed copay changes and project that pharmacy expenses
    will increase at roughly the Consumer Price Index, Medical (3 to 5
    percent per year). Failure to increase pharmacy copayments may result
    in higher actual expense.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                  Fiscal Year
                                                         -----------------------------------------------------------
                                                             2009        2010        2011        2012        2013
    ----------------------------------------------------------------------------------------------------------------
    Under 65 Pharmacy Expense...........................       $3.42       $3.82       $4.32       $3.95       $3.76
    Medicare Eligible Pharmacy Expense..................        4.19        4.06        3.71        4.32        4.72
                                                         -----------------------------------------------------------
      Total Pharmaceutical Expense......................        7.61        7.88        8.03        8.27        8.48
    ----------------------------------------------------------------------------------------------------------------

        47. Senator Graham. Dr. Woodson, what initiatives are underway,
    other than adjustments to cost sharing, to reduce the costs of the
    TRICARE pharmacy program?
        Dr. Woodson. Over the last several years, DOD has made significant
    efforts to control rising pharmacy benefit costs. The strategies and
    efforts pursued have been drawn from private sector best business
    practices, national trends, congressional mandates, professional
    consultants, and independent studies. Each effort has had an effect in
    controlling the rise in pharmacy costs. Many programs and policies
    surrounding formulary management within TRICARE closely mirror what
    commercial plans do to manage drug benefits.
        Implementation of section 703 of the NDAA for Fiscal Year 2008
    granting DOD authority to obtain Federal discounts in the retail
    pharmacy venue has collected over $3.5 billion in refunds as of March
    30, 2012.
        Publication of an Interim Final Rule in December 2009 covering
    seasonal flu, H1N1 flu, and pneumococcal vaccines followed by a final
    rule in August 2011 provided the authority for the TRICARE pharmacy
    benefit to cover all TRICARE-allowed vaccines within the retail
    pharmacy setting, significantly increasing accessibility of vaccines
    for the prevention of diseases. Over 700,000 vaccines have been
    administered through 45,000 retail pharmacies under this program since
    December 2009 at no copay for beneficiaries. In addition to the
    increased accessibility of vaccines for beneficiaries, the discounted
    price to the government was a factor in the decision for this effort.
        The TRICARE Management Activity Beneficiary Education and Support
    Division in conjunction with the Pharmaceutical Operations Directorate
    implemented a comprehensive home delivery (mail order) marketing
    program in 2010. Over the course of 2 years this initiative has
    contributed to an overall increase of 23 percent in home delivery. In
    2011, home delivery prescriptions totaled over 12 million. At the same
    time that the home delivery use increased, the growth in the more
    expensive retail use has slowed, declining for the first time in 2011.
    In the first quarter of fiscal year 2012 the government cost savings
    associated with this enhanced communication effort totaled $17.2
    million.
        Substantial additional cost avoidance (over and above the standard
    retail rebate) is realized as a result of the ongoing clinical and cost
    effectiveness evaluations of drugs and drug classes for the TRICARE
    Uniform Formulary (first implemented mid-2005), which allowed for
    tiered formulary copays and the ability to negotiate with manufacturers
    for better pricing based on formulary status. As an example, the
    additional first-year cost avoidance for drug classes reviewed in
    fiscal year 2010 was estimated to be $131 million. In fiscal year 2011,
    approximately $161 million in cost avoidance was obtained over and
    above the mandatory retail refund. The recent copay changes have also
    added to our negotiation leverage with the pharmaceutical
    manufacturers.
        Step therapy, requiring a trial of a preferred agent prior to
    covering a non-preferred agent--is among the formulary tools used to
    promote evidence-based and cost-effective drug therapy and to negotiate
    better pricing with manufacturers. We estimate that over 4 years
    (August 2007-June 2011), formulary decisions in four major drug classes
    with step therapy programs resulted in at least $786 million in
    voluntary rebates over and above the mandatory retail rebate.
        The NDAA for Fiscal Year 2007 directed implementation of an over-
    the-counter (OTC) demonstration project to allow selected OTC drugs to
    be included on the DOD Uniform Formulary thereby allowing access to
    less costly medications in place of the more expensive prescription
    products. The success of the program from both the beneficiary and
    government perspective has resulted in preparation of a legislative
    proposal requesting permanent authority for this program. Through
    November 30, 2011 the program has saved DOD $48.5 million.

        48. Senator Graham. Dr. Woodson, TRICARE is a complex program that
    includes many benefit options. The administration's proposals will add
    to its complexity by creating a three-tiered copayment structure based
    on retired income. Did you take into consideration the increasing
    complexity of administering TRICARE in the development of your reform
    proposals?
        Dr. Woodson. Yes, we did consider the complexity in administering a
    pharmaceutical copayment structure based on retired income. For that
    reason, DOD's pharmacy copayment increase proposal is not linked to
    retirement pay. The proposed fees will be tiered, as they are today,
    based on the drug class status (i.e. generic, brand, or non-formulary).
    For Prime and TRICARE For Life enrollment fees, DOD's decision was to
    tier the premiums. This will add some complexity, which was taken into
    consideration, but it was determined to be achievable and worth the
    effort.

        49. Senator Graham. Dr. Woodson, what are the costs associated with
    the administration of the new benefit structure in fiscal year 2013
    through fiscal year 2017?
        Dr. Woodson. The fiscal year 2013 fee proposals included an
    implementation cost of $33 million in fiscal year 2012. The model
    assumed these costs in fiscal year 2012 on the assumption that contract
    modifications would need to be issued in fiscal year 2012 in order for
    the benefit changes to go into effect for fiscal year 2013. For
    subsequent years, starting fiscal year 2013, the budget also included
    annual administrative costs of $16 million for ongoing administration
    of the enrollment fee process in TRICARE Standard. All of these amounts
    should be viewed as rough order-of-magnitude placeholders, pending
    development and analysis of actual implementation details, timelines,
    et cetera.

        50. Senator Graham. Secretary Hale and Dr. Woodson, you and the
    military leadership have described the fiscal year 2013 budget request
    as an interconnected whole. What is the budgetary and programmatic
    impact on that whole if Congress fails to enact the reforms you have
    requested?
        Mr. Hale. The reforms we requested are an essential element in
    meeting the fiscal controls mandated by the BCA of 2011. Therefore, any
    reduced savings from failure to implement DOD's TRICARE reform
    proposals will have to be replaced with commensurate reductions in
    other DOD accounts. This will undermine DOD's attempt to execute the
    new strategy as stated and raises the risk that readiness will suffer.
        Dr. Woodson. If Congress fails to enact the proposed health care
    reforms, DOD will be forced to shoulder the increasing cost of military
    health care, likely at the expense of force structure and in
    modernization. DOD's budget proposal already makes substantial
    reductions in the investment accounts, so further cuts could mean
    cutting additional Active Duty and Reserve Forces, which would impact
    DOD's ability to pursue the new defense strategy.

        51. Senator Graham. Secretary Hale and Dr. Woodson, how realistic
    are your health care savings targets for fiscal year 2013 in light of
    the timetable for completion of legislation for fiscal year 2013?
        Mr. Hale and Dr. Woodson. DOD will continue dialogue with Congress
    to identify options to achieve savings in fiscal year 2013. Our budget
    estimates are predicated on fee changes going into effect on October 1,
    2012. DOD requires several months of lead time to make the appropriate
    contract and system changes to meet this timeline. Delays in the
    timetable for the completion of legislation will result in reduced
    savings in fiscal year 2013.

        52. Senator Graham. Secretary Hale and Dr. Woodson, what options
    does DOD have to achieve savings in fiscal year 2013 if the NDAA
    becomes law late in fiscal year 2012?
        Mr. Hale. The fiscal year 2013 budget request assumes
    implementation of the TRICARE reform proposals on or about October 1,
    2012. The projected fiscal year 2013 TRICARE savings are $0.7 billion.
    Should the NDAA for Fiscal Year 2013 preclude the TRICARE reform
    proposals, DOD will most likely have to find commensurate savings in
    operational accounts with potential negative impact on readiness.
        Dr. Woodson. Our budget estimates are predicated on fee changes
    going into effect on October 1, 2012. DOD requires several months of
    lead time to make the appropriate contract and system changes to meet
    this timeline. Delays in the timetable for the completion of
    legislation will result in reduced savings in fiscal year 2013. DOD
    will continue dialogue with Congress to determine the appropriate
    course of action and implementation timelines.

                      internal efficiencies in health care
        53. Senator Graham. Dr. Woodson, military family and veterans
    groups have urged that you exhaust internal efficiencies in health care
    before increasing fees. What progress are you making in internal
    reforms and how much money have they saved prior to going ahead with
    this year's proposal?
        Dr. Woodson. We completely agree. We have been working aggressively
    to reduce the administrative overhead of the military health system by
    reducing reliance on contract support; reducing the number of
    government staff; reducing the number of boards and studies conducted;
    implementing leading purchasing practices for buying the best medical
    products at the lowest cost; and simply doing more with less.
        Health care savings initiatives--other than beneficiary cost
    sharing proposals--continue to be proposed and implemented, resulting
    in real cost savings. However, it is important to note that because the
    vast majority of the health care budget is spent on providing direct
    patient care, there is a limit on the amount of savings that can be
    achieved through internal efficiencies alone. As a result, changes in
    beneficiary cost sharing represent only one of the key steps that we
    are taking to improve health care and reduce the rate of growth in
    health care costs. We are also employing other approaches, including:
    (1) Moving from Healthcare to Health; investing in initiatives that
    keep our people well while promoting healthy lifestyle; (2) Maximizing
    Internal Efficiencies; that reduce the administrative overhead of our
    military health system; and (3) Reforming Provider Payments; by
    responsibly paying private care providers and aligning with Medicare
    reimbursement levels, as required by law.
        Over the past several years, we have made great progress in
    implementing changes that have resulted in real cost savings. Below is
    a summary of these efforts:

             Federal Ceiling Price: In 2008, with the support of
            Congress, DOD championed changes in law (known as Federal
            Ceiling Price) that require pharmaceutical manufacturers to
            provide DOD about $800 million annually in discounts for drugs
            provided to TRICARE beneficiaries through retail network
            pharmacies. This authority will provide DOD over $4 billion in
            collections over the next 5 years, representing substantial
            savings.\1\
    ---------------------------------------------------------------------------
        \1\ $1.5 billion in collections since 2009, based on data ending 31
    January 2012; discretionary savings (DHP) and the reductions in outlays
    from the Medicare-Eligible Retiree Health Care Fund (MERHCF) since 2009
    were approximately $3.5 billion.
    ---------------------------------------------------------------------------
             Outpatient Prospective Payment System: In 2009, by
            aligning its payments with Medicare rates (known as the
            Outpatient Prospective Payment System), DOD instituted changes
            in the way it reimburses private hospitals for outpatient
            services provided to TRICARE beneficiaries. When fully
            implemented, these changes will save DOD over $900 million
            annually. This new system will result in over $4.6 billion in
            savings over the next 5 years.
             Sole Community Hospital: DOD is in the process of
            revising its payment rules to reimburse inpatient care claims
            at sole community hospitals by using Medicare rates; when fully
            implemented, this action will result in savings of about $100
            million annually.
             Medical Supply Chain Optimization and Standardization:
            To further reduce costs, DOD is changing the way it buys
            medical products, by leveraging the bulk buying power of the
            military health system. A series of strategic price reduction
            initiatives are being implemented, saving DOD on average $60
            million annually.
             Reducing Administrative Overhead: DOD is reducing
            administrative overhead in the military health system by
            streamlining its processes; reducing the number of unnecessary
            reports, studies, and commissions; and initiating other actions
            which will result in over $200 million in reduced personnel and
            contract costs annually.
             Reducing Fraud, Waste, and Abuse: DOD is stepping up
            its efforts to detect fraud, waste, and abuse from fraudulent
            providers and institutions, and to recover overpayments. We
            expect these efforts will save DOD on average $35 million
            annually over the next 5 years.
             Investing in Health: Finally, in effort to control
            long-term costs, DOD is pursuing a multifaceted strategy to
            invest in initiatives that keep beneficiaries well, promote
            healthy lifestyles, and reduce inappropriate emergency room
            visits and unnecessary hospitalizations while improving patient
            satisfaction. In the short term, we expect savings on average
            of over $25 million over the next 5 years.

        54. Senator Graham. Dr. Woodson, how can Congress help you achieve
    them?
        Dr. Woodson. We appreciate Congress' support for past efficiency
    efforts. DOD continues to reduce the administrative overhead of its
    military health system by reducing reliance on contract support;
    reducing the number of government staff; reducing the number of boards
    and studies being conducted; implementing leading purchasing practices
    for buying the best medical products at the lowest cost; and simply
    doing more with less.
        More is achievable with changes in the organizational structure of
    military medicine (report submitted to congressional committees). We
    look forward to Congress' support for these proposed changes.

                          transitional health benefits
        55. Senator Graham. Dr. Woodson and Mr. McGinnis, if the
    administration's plan to reduce military personnel goes forward, some
    who have served may be involuntarily separated. What health benefits
    will those involuntarily separated from Active Duty receive?
        Dr. Woodson and Mr. McGinnis. Active Duty servicemembers who are
    involuntarily separated from the Active component may \2\ qualify for
    180 days of premium free TRICARE coverage under the Transition
    Assistance Management Program (TAMP); (10 U.S.C. 1145(a)(2)(A)). TAMP
    offers comprehensive, premium-free TRICARE coverage to both the sponsor
    and eligible family members on the same basis as an Active Duty family
    member. At the conclusion of this transition period the individual and
    or his family is also eligible to purchase the Continued Health Care
    Benefit Program (CHCBP) plan, which is a premium based, temporary
    health care coverage program (18 months of eligibility) similar to
    better known COBRA program. It provides the Basic program benefits
    generally offered under the TRICARE Standard program. The premium rates
    are based on the Federal Employees Health Benefits program employee and
    agency contributions for a plan with similar benefits.
    ---------------------------------------------------------------------------
        \2\ Eligibility for the TAMP for sponsors and family members is
    determined by the sponsor's Service branch and information in the
    Defense Enrollment Eligibility Reporting System. TAMP categories are:
    members involuntarily separated from Active Duty and their eligible
    family members; National Guard and Reserve members, collectively known
    as the Reserve component, separated from Active Duty after being called
    up or ordered in support of a contingency operation for an Active Duty
    period of more than 30 days and their family members; members separated
    from Active Duty after being involuntarily retained in support of a
    contingency operation and their family members; and members separated
    from Active Duty following a voluntary agreement to stay on Active Duty
    for less than 1 year in support of a contingency mission and their
    family members.

        56. Senator Graham. Dr. Woodson and Mr. McGinnis, what about for
    those involuntarily separated from the Reserve components?
        Dr. Woodson and Mr. McGinnis. ``A member of a Reserve component who
    is separated from Active Duty to which called or ordered in support of
    a contingency operation if the Active Duty is Active Duty for a period
    of more than 30 days'' may \3\ qualify for 180 days of premium free
    TRICARE coverage under the TAMP (10 U.S.C. 1145(a)(2)(B)). TAMP offers
    comprehensive, TRICARE coverage to both the sponsor and eligible family
    members on the same basis as an Active Duty family member.
    ---------------------------------------------------------------------------
        \3\ Ibid.
    ---------------------------------------------------------------------------
        If the Reserve component member is involuntarily disaffiliated from
    the Armed Forces altogether and the member had TAMP, TRICARE Reserve
    Select, or TRICARE Retired Reserve coverage at the time, the member and
    eligible family members may purchase premium-based coverage under the
    CHCBP.

        57. Senator Graham. Dr. Woodson and Mr. McGinnis, are these
    benefits fair and reasonable or should Congress consider some
    enhancement, particularly for the Reserve and Guard?
        Dr. Woodson and Mr. McGinnis. Congress recently enhanced the
    transitional health benefits for Reserve component members. Section 703
    of the NDAA for Fiscal Year 2010 (P.L. 111-84) amended law and offered
    Active Duty dental coverage to the Reserve component sponsor (and
    sponsor only) in TAMP. This provision was implemented by the Final Rule
    published in the Federal Register December 28, 2011 (76 FR 81366-81368)
    and is fully operational as reported in the TRICARE news release http:/
    /www.tricare.mil/mediacenter/news.aspx?fid=742.
        Comprehensive coverage under the CHCBP is now available for
    purchase by all individuals who lose coverage under TAMP or any TRICARE
    program under Chapter 55 of Title 10, U.S. Code.
        This is further bolstered by the enhanced health care benefits
    eligibility from the VA enjoyed by combat veterans. This enrollment
    period was extended from 2 years to 5 years by section 1707 of the NDAA
    for Fiscal Year 2008 (P.L. 110-181, January 28, 2008), which amended 38
    U.S.C. 1710(e)(3).
        DOD has proposed a legislative change to extend eligibility for
    TRICARE Reserve Select and TRICARE dental coverage for a period of 180
    days for members of the Selected Reserve who are involuntarily
    separated.

                            family support programs
        58. Senator Graham. Secretary Rooney, Secretary of Defense Panetta
    has assured Congress that support for family support programs is
    protected throughout DOD even in this austere budget. Yet, testimony
    provided by the National Military Family Association argues that
    ``family programs are being short-changed,'' by reductions in child
    care and family support.
        Our expectation is that the Secretary's pledge will be fulfilled.
    What are you doing in your oversight capacity to ensure that family
    programs are not reduced during this time of war?
        Dr. Rooney. To ensure that family programs are not reduced during
    this time of war, I emphasized the need for the Services to safeguard
    and sustain current funding levels for their family programs. This
    resulted in implementation of a comptroller-mandated, in-depth, mid-
    year review of the Services' budgets. The Services are in the process
    of scrutinizing their budgets, tracking program funding, and disclosing
    discrepancies that could indicate diversion of funds from programs for
    which the funds were originally intended. Ongoing tracking of budgets
    and reporting on status of budgets supports the Secretary's position of
    keeping faith with servicemembers and their families to protect family
    assistance programs.
                                     ______

                 Question Submitted by Senator Saxby Chambliss
           uniformed services employment and reemployment rights act
        59. Senator Chambliss. Secretary Rooney and Mr. McGinnis, the
    Uniformed Services Employment and Reemployment Rights Act (USERRA)
    protects millions of people, largely National Guard and Reserve
    members, as they transition between their Federal duties and civilian
    employment. USERRA is intended to eliminate or minimize civilian
    employment disadvantages resulting from service in the Reserve
    components and protect the rights of those members when they deploy.
    Since September 11, 2001, over 835,000 citizen soldiers have mobilized
    to fight the war on terrorism. Many American soldiers have served more
    than one tour of duty and may be required to serve more. As we downsize
    the Active Force and operationalize the Reserve Force, it is likely
    that Reserve soldiers will continue to mobilize to fill the gaps of the
    smaller Active Force. In light of this stress on the Reserve
    components, do you see the need for any changes to USERRA to provide
    additional protection to our Guard and Reserve members?
        Dr. Rooney and Mr. McGinnis. No changes to USERRA are required at
    this time. On balance, our Nation's employers have proven to be full
    partners in the 21st century Total Force. Moving forward, as we believe
    civilian employment is a key part of individual readiness, we are
    committed to ensuring strong protections for Reserve component
    servicemembers. As such, we will continue to review existing laws to
    ensure that they are keeping up with the needs of the servicemembers.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                              medicare and tricare
        60. Senator Ayotte. Dr. Woodson, the Centers for Medicare and
    Medicaid Services (CMS) are engaged with a number of States in seeking
    ways to enhance care and reduce costs for Medicare/Medicaid dual-
    eligible beneficiaries. The nearly 2 million TRICARE For Life
    beneficiaries are another large population that is dually entitled--to
    Medicare and TRICARE in this case. Have you explored with Medicare
    leadership the possibilities for interagency cooperation to evaluate
    potential approaches to coordinating benefits and enhancing care for
    TRICARE For Life beneficiaries?
        Dr. Woodson. TRICARE For Life provides Medicare wraparound coverage
    when health care is a benefit under both programs, as long as the
    beneficiary is enrolled in Medicare Part B. Medicare pays 80 percent of
    their allowed amount, and claims automatically cross over to TRICARE
    where TRICARE processes the remainder for payment.
        Recently, TRICARE Management Activity staff met with
    representatives from the CMS' Innovation Center to discuss the
    Comprehensive Primary Care Initiative that CMS is developing. This
    initiative will use a managed care approach to providing preventive
    care and disease management for Medicare and other patients. It will
    reward providers when costs are reduced as participants in the
    initiative achieve desired health outcomes. Many TRICARE For Life
    beneficiaries are likely participants in the initiative, and TRICARE
    intends to monitor progress and results of the initiative to assess how
    and whether to apply the care approach to a broader segment of our
    TRICARE For Life population.
        We have also instituted new management controls that are applicable
    when TRICARE becomes primary payer for a TRICARE For Life beneficiary's
    stay in a skilled nursing facility (SNF). This occurs after exhaustion
    of the 100-day SNF care coverage provided by Medicare. We have found
    that bills for SNF care are among the largest of any that TRICARE For
    Life must cover. Now we require that SNF care beyond 100 days be
    preauthorized and base the decision upon review of medical records to
    ensure: (a) that skilled care truly is required; and (b) if skilled
    care is required, that it is of such intensity that it cannot be safely
    provided at a lower, less expensive, level than in a SNF.

        61. Senator Ayotte. Dr. Woodson, would this be a way to provide
    better care at a lower cost to the taxpayers for TRICARE For Life
    beneficiaries?
        Dr. Woodson. There is potential that Medicare's Comprehensive
    Primary Care Initiative will demonstrate an improvement in outcomes and
    will lower cost. That is why we are supportive of the initiative and
    intend to monitor its progress and results closely to determine if the
    approach is one that would have application to a broader set of our
    TRICARE For Life beneficiaries.

                             defense health program
        62. Senator Ayotte. Secretary Hale, I understand that in their 2007
    report, the Task Force on the Future of Military Health Care called on
    DOD to conduct an audit of financial controls on the DHP, to include
    establishment of a common cost accounting system. Did you serve on this
    task force?
        Mr. Hale. Yes, I did serve on the Task Force on the Future of
    Military Health Care before assuming my current position. As noted
    above, the Task Force recommended: (1) the conduct of an external audit
    to ensure the proper financial controls with respect to health care
    eligibility and coverage, and (2) the establishment of a common cost
    accounting system to provide a more accurate level of accounting for
    costs across the Military Health System (MHS).
        The Defense Manpower Data Center (DMDC), a component of the Defense
    Human Resources Activity (DHRA), provides the beneficiary data upon
    which eligibility for health care benefits is determined. The data is
    maintained in the Defense Enrollment and Eligibility Reporting System
    (DEERS) database. Both DMDC and DHRA understand and support the value
    of an independent, external audit of financial controls on the DHP.
        DMDC is audited twice yearly by auditors external to the DHRA and
    the DHP. In that regard, the DOD Inspector General conducted an Audit
    of Beneficiary Data in the DEERS database (Project No. D2010-D000FR-
    0149.000) ``to assess the completeness and accuracy of beneficiary data
    contained in DEERS used to estimate health care liabilities on DOD
    financial statements,'' and actions are underway to address the
    findings of the audit.
        With respect to the establishment of a common cost accounting
    system, DOD is in the process of developing a statement of work to seek
    expert assistance in evaluating a set of alternatives for creating a
    common cost accounting structure and universal application across MHS.
    More specifically, DOD will evaluate the feasibility of overlaying a
    common cost accounting structure across the various disparate financial
    systems of the Service Medical Departments and the TRICARE Management
    Activity. In addition, DOD will evaluate the option of adopting a
    single financial system across the MHS, with special consideration to
    Service or Department systems further along in their development. We
    strongly believe that having a common cost accounting structure is a
    key component for improving financial transparency across the MHS and
    we are working on an aggressive schedule to accomplish this critical
    evaluation.

        63. Senator Ayotte. Secretary Hale, is that recommendation still
    valid today?
        Mr. Hale. Yes, the recommendation is still valid today. As
    mentioned previously, both the DMDC and the DHRA understand and support
    the value of an independent, external audit of financial controls on
    the DHP, to include the establishment of a common cost accounting
    system. In addition, DOD is working aggressively to evaluate options
    for improving financial transparency across the MHS.

        64. Senator Ayotte. Secretary Hale, what actions are underway to
    achieve greater accountability and additional savings for the DHP, to
    include protection against fraud and recovery of payments from other
    health insurance?
        Mr. Hale. DOD is employing a multi-prong approach for achieving
    greater accountability and additional savings for the DHP, to include:
    (1) Moving from Healthcare to Health; investing in initiatives that
    keep our people well while promoting healthy lifestyle; (2) Maximizing
    Internal Efficiencies; that reduce the administrative overhead of our
    MHS; and (3) Reforming Provider Payments; by responsibly paying private
    care providers. We are also stepping up our efforts to reduce fraud,
    waste and abuse and increase our recovery of payments from other health
    insurance. Specific strategies include utilizing third party entities
    to detect other health insurance coverage and prepare these cases for
    recovery; educating beneficiaries about legal requirements to disclose
    other health insurance coverage; and training MTF staff in proper
    patient intake procedures and tools available to increase recovery of
    payments.

        [Appendices A through F follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        [Whereupon, at 3:39 p.m., the subcommittee adjourned.]

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

                                  ----------

                           WEDNESDAY, APRIL 25, 2012

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

     CONTINUATION OF TESTIMONY ON THE ACTIVE, GUARD, RESERVE, AND CIVILIAN
                               PERSONNEL PROGRAMS

        The subcommittee met, pursuant to notice, at 1:07 p.m. in
    room SR-232A, Russell Senate Office Building, Senator Jim Webb
    (chairman of the subcommittee) presiding.
        Committee members present: Senators Webb, Blumenthal,
    Graham, Brown, Ayotte, and Vitter.
        Committee staff member present: Leah C. Brewer, nominations
    and hearings clerk.
        Majority staff members present: Jonathan D. Clark, counsel;
    Gabriella E. Fahrer, counsel; and Gerald J. Leeling, counsel.
        Minority staff member present: Richard F. Walsh, minority
    counsel.
        Staff assistant present: Jennifer R. Knowles.
        Committee members' assistants present: Gordon Peterson,
    assistant to Senator Webb; Ethan Saxon, assistant to Senator
    Blumenthal; Brad Bowman, assistant to Senator Ayotte; Sergio
    Sarkany, assistant to Senator Graham; and Joshua Hodges,
    assistant to Senator Vitter.

            OPENING STATEMENT OF SENATOR JIM WEBB, CHAIRMAN

        Senator Webb. The hearing will come to order.
        The subcommittee meets today to continue to receive
    testimony from the military Services on military and civilian
    personnel programs contained in the administration's Defense
    Authorization Request for Fiscal Year 2013 and the Future Years
    Defense Program (FYDP).
        I would like to begin this hearing by thanking everybody
    for adjusting their schedules. As you have been informed, we
    have a series of votes that will begin in approximately 1 hour.
    So I am going to summarize my statement, at the end of which I
    will have my full statement entered into the record. Then I
    think we previously asked that the civilian assistant
    secretaries give a brief overview of theirs. All of the written
    statements will be entered into the record, and hopefully we
    can allow enough time for members who wish to ask questions to
    use this next hour in a fruitful manner.
        As always, the hearing record will be open until close of
    business tomorrow if there are written questions for the record
    for any of those of you who are here today.
        We have today the senior leaders responsible for military
    and civilian personnel matters within the Services. We will
    discuss, as always, the plans and programs for fiscal year 2013
    and also specific budget items in furtherance of this
    subcommittee's oversight responsibilities.
        We have Hon. Thomas R. Lamont, Assistant Secretary of the
    Army for Manpower and Reserve Affairs; Hon. Juan M. Garcia III,
    Assistant Secretary of the Navy for Manpower and Reserve
    Affairs; Hon. Daniel B. Ginsburg, Assistant Secretary of the
    Air Force for Manpower and Reserve Affairs; Lieutenant General
    Thomas P. Bostick, USA, Deputy Chief of Staff G-1, U.S. Army;
    Vice Admiral Scott R. Van Buskirk, USN, Chief of Naval
    Personnel, U.S. Navy; Lieutenant General Robert E. Milstead,
    Jr., USMC, Assistant Commandant for Manpower and Reserve
    Affairs, U.S. Marine Corps; and Lieutenant General Darrell D.
    Jones, USAF, Deputy Chief of Staff for Manpower, Personnel and
    Services, U.S. Air Force.
        We had originally scheduled this hearing for a few weeks
    ago. At that time, General Milstead was recovering from some
    very serious surgery. We are pleased that you have successfully
    recuperated, although you might have been better off being able
    to avoid this hearing a couple of weeks ago. But we are very
    happy to have you with us today, General.
        As I stated at our oversight hearing with the Office of the
    Secretary of Defense (OSD) witnesses in March, we have some
    very serious challenges here. General Schwartz, Air Force Chief
    of Staff, called these challenges with personnel programs ``the
    monumental defense issue of our time.'' These challenges, as
    everyone knows, have been made more difficult by the Budget
    Control Act (BCA).
        Much of the subcommittee hearing last month was devoted to
    the TRICARE fee issue. I am not going to go into that in any
    detail today. Just suffice it to say that it is an issue of
    great concern to me and some other members on this
    subcommittee.
        We are concerned about the planned reduction of large
    numbers of military personnel, more than 120,000 across Service
    components. I have been able to have personal discussions with
    a number of you about that issue. It may come up again today.
        The Integrated Disability Evaluation System does not seem
    to be working. I have been able to have discussions again out
    of this hearing room with people about that. It is being
    implemented worldwide. There are some 23,000 servicemembers in
    the system, that at least by our count, are still awaiting some
    sort of resolution.
        We are interested in examining the roles and opportunities
    for service by women. The Marine Corps, particularly, has had
    an interesting week in that regard. We will have a discussion
    about that.
        Sexual assault prevention and response remain a priority,
    as always, for our subcommittee.
        Another priority is the many discussions we have had
    regarding total force mix of military personnel, Department of
    Defense (DOD) civilian personnel, and contractors. This has
    come up a number of different times. It was a major part of our
    hearing last year. It will come up again today.
        Lastly, we continue to be interested in the DOD's and the
    Services' efforts to eliminate, reduce, and reallocate 140
    general flag officer positions and 150 Senior Executive Service
    positions.
        At the outset of the hearing, I think it is important for
    those of us who are on this end of the table to express our
    great appreciation to all of you for what you and the people
    who serve alongside you do every day to make our country more
    secure and also to make DOD a better functioning place.
        At this time, I will enter my full statement for the
    record.
        [The prepared statement of Senator Webb follows:]
                     Prepared Statement by Senator Jim Webb
        The subcommittee meets today to receive testimony from the Military
    Services on military and civilian personnel programs contained in the
    administration's Defense Authorization Request for Fiscal Year 2013 and
    the Future Years Defense Program.
        With us today are the senior leaders responsible for military and
    civilian personnel matters within the Services. We will discuss not
    only their plans and programs for fiscal year 2013, but also specific
    budget items in furtherance of this subcommittee's oversight
    responsibilities. We will begin marking up the 2013 defense bill in the
    next few weeks. Your statements and testimony today are extremely
    important as we prepare for that important activity.
        Our witnesses today are:

             The Honorable Thomas R. Lamont, Assistant Secretary of
            the Army for Manpower and Reserve Affairs;
             The Honorable Juan M. Garcia III, Assistant Secretary
            of the Navy for Manpower and Reserve Affairs;
             The Honorable Daniel B. Ginsberg, Assistant Secretary
            of the Air Force for Manpower and Reserve Affairs;
             Lieutenant General Thomas P. Bostick, USA, Deputy
            Chief of Staff G-1, U.S. Army;
             Vice Admiral Scott R. Van Buskirk, USN, Chief of Naval
            Personnel, U.S. Navy;
             Lieutenant General Robert E. Milstead, Jr., USMC,
            Assistant Commandant for Manpower and Reserve Affairs, U.S.
            Marine Corps; and
             Lieutenant General Darrell D. Jones, USAF, Deputy
            Chief of Staff for Manpower, Personnel and Services, U.S. Air
            Force.

        Lieutenant General Milstead, I understand you tried to avoid this
    hearing the first time by scheduling surgery. I am pleased that your
    plan failed, and we are happy to see you back in good health.
        As I stated at our oversight hearing with the Office of the
    Secretary of Defense witnesses in March, this subcommittee faces a very
    clear challenge this year as we address the need to control the
    increasing costs of personnel programs. General Schwartz, the Air Force
    Chief of Staff, called this challenge ``the monumental defense issue of
    our time.''
        This challenge is made more difficult by the funding limitations
    imposed by the Budget Control Act. To comply with the discretionary
    funding caps, the administration has made several proposals to reduce
    military personnel costs, including end strength reductions of more
    than 120,000 military personnel, limiting pay raises beginning in 2015,
    establishing a BRAC-like commission to conduct a comprehensive review
    of military retirement, and increasing TRICARE fees for military
    retirees and their families.
        Much of this subcommittee's hearing last month was devoted to the
    TRICARE fee issue, and I won't rehash that here. Suffice to say, I
    believe we have made a moral contract with servicemembers past and
    present to provide them a lifetime of medical care in exchange for a
    career of military service. The Department's proposal to institute fees
    for TRICARE for Life, in my view, does not fully take into account
    other fee requirements that already are in place.
        We are also very concerned about the planned reduction of large
    numbers of military personnel--more than 120,000--across all Service
    components. I want to hear from the personnel chiefs in particular
    about their plans to reduce the size of their forces, how they will
    ensure adequate dwell time, and how they will avoid the need to
    involuntarily separate soldiers, sailors, airmen, and marines. Our
    witnesses today are well aware that our men and women in uniform have
    sacrificed much on behalf of our Nation during the past decade. I
    specifically would like to know what force-shaping tools the Services
    must have in place to achieve force reductions in a compassionate and
    sustainable manner.
        In a related issue, the Integrated Disability Evaluation System
    (IDES) does not seem to be working as initially planned. It is
    bureaucratic and timeconsuming. It has been fully implemented worldwide
    for some 15 months, and yet there are more than 23,000 servicemembers
    in the system according to the latest data provided to the committee.
    For the Army alone, its IDES population would equal six brigade combat
    teams. I would like to hear from the personnel chiefs their view of how
    this new evaluation system is progressing and what we can do to make it
    more efficient and fair.
        Many of us on the committee continue to be interested in examining
    the roles and opportunities for service by women. The Department
    recently proposed to Congress policy changes that would open more than
    14,000 positions to women. Additionally, last week the Marine Corps
    announced opening a limited number of training slots in combat
    specialties to women, a significant departure from current
    restrictions. As our witnesses know better than anyone, for a variety
    of reasons, more than 75 percent of the Nation's youth do not qualify
    for enlistment in the military. Maintaining unnecessary barriers to
    service of those who are qualified and motivated to serve magnifies the
    challenge in recruiting the most qualified individuals for service in
    the All-Volunteer Force. At the same time, this subcommittee has an
    obligation to ensure policy changes continue to move us in the right
    direction. I look forward to learning more from our witness today.
        Sexual assault prevention and response remain a priority for this
    subcommittee. Last year, we enacted a number of legislative provisions
    to assist victims of sexual assault. Additionally, Secretary Panetta
    recently announced several initiatives in this area, some of which may
    require legislation. I would like to hear what the Services are doing
    to reduce incidents of sexual assault in the military, prosecute
    offenders, and provide greater assistance to victims of such crimes.
        Another continuing priority is accounting for the total force mix
    of military personnel, DOD civilian personnel, and contractors. At last
    year's hearing, with all the same witnesses except for Admiral Van
    Buskirk, I asked how you account for civilian contractors when you
    build your manpower models. There was a good deal of difficulty in
    pinning down actual numbers. I would like to know how we have
    progressed on addressing this issue since last year.
        Lastly, this subcommittee continues to be interested in the
    Department of Defense and the Services' efforts to eliminate, reduce,
    and reallocate 140 general and flag officer positions and 150 Senior
    Executive Service positions. I would like to know what progress has
    been made in executing these reductions.
        I'm sure that we all agree that there is no greater responsibility
    for Congress and our military leaders than to care and provide for our
    servicemembers and their families. That includes making careful,
    deliberate, and sometimes painful budget choices necessary to protect
    the viability of the All-Volunteer Force and to ensure our military
    remains the finest in the world. Tradeoffs must be made between what is
    nice to have and what we must have--not just in terms of weapons,
    planes, and ships, but most importantly in terms of our people. We must
    have the right number with the right qualifications and skills.
        I look forward to hearing your testimony about the health of your
    Services, military personnel and their families, and your assessment
    and counsel concerning the difficult choices ahead. As always, I
    encourage you to express your views candidly. Let us know how we can
    best assist our servicemembers and their families to ensure that our
    military remains steadfast and strong.
        We will now hear opening statements from our witnesses. Given the
    number of witnesses, I ask that the witnesses keep their oral
    statements to 3 to 5 minutes. Their complete prepared statements will
    be included in the record. Following the opening statements, we will
    limit our questions to 7 minutes per round. I am going to call witness
    by Service, starting with the Army.
        Finally, I would like to note that this will be the last
    subcommittee hearing for Dick Walsh, minority counsel to the committee.
    Dick has been with the committee for over 10 years and has made
    innumerable contributions always in a bipartisan fashion. We will miss
    him, and we wish him luck.
        We have received a statement from the Reserve Officers Association.
    If there is no objection, it will be entered into the record.

        Senator Webb. With that, Senator Graham, welcome.
        Senator Graham. Thank you, Mr. Chairman. I will just forgo
    an opening statement and look forward to receiving the
    testimony.
        Senator Webb. Thank you.
        We have received a statement from the Reserve Officers
    Association, and if there is no objection, that will be entered
    into the record.
        [The information referred to can be found at Appendix A:]
        Senator Webb. With that, we will start with Secretary
    Lamont. Hopefully, you can summarize your statement in about 3
    minutes or so.

    STATEMENT OF HON. THOMAS R. LAMONT, ASSISTANT SECRETARY OF THE
       ARMY FOR MANPOWER AND RESERVE AFFAIRS; ACCOMPANIED BY LTG
      THOMAS P. BOSTICK, USA, DEPUTY CHIEF OF STAFF G-1, U.S. ARMY

        Mr. Lamont. I will try to do it in half of that, if you do
    not mind. I have truncated my lofty words and will rely upon
    our written statement.
        Senator Webb. Your written statement in full will be
    entered into the record.
        Mr. Lamont. Thank you.
        Chairman Webb, Senator Graham, and members of this
    subcommittee, thank you for taking the time to explore the
    issues that are so critical to the men and women in our All-
    Volunteer Army and to our national defense both today and in
    the future.
        It is an honor to serve as the Army's Assistant Secretary
    for Manpower and Reserve Affairs.
        After a decade of war, the Army is poised to draw down both
    our military and civilian forces. We must do this smartly and
    compassionately. Thousands of individuals will transition out
    of military and civil service after serving faithfully and
    honorably. They will need the support of the Nation and deserve
    quality transition assistance.
        Wartime experiences over the past decade have taught us
    that we must have a total Army. The Army National Guard and
    Army Reserve provide 51 percent of the Army's military end
    strength for around 16 percent of the base budget. We look
    forward to working with you to transform the Army National
    Guard and Army Reserve into an operational force that provides
    not only ready access to 1 million trained soldiers but also an
    historic opportunity for our Nation to achieve the most cost-
    effective use of its Army.
        We are increasingly aware of the physical and emotional
    toll a decade of war has taken on our force, and we are
    committed to providing quality assistance to soldiers and
    family members who are struggling with issues such as substance
    abuse, depression, post-traumatic stress disorder (PTSD), and
    sexual harassment and abuse. These issues affect readiness and
    weaken our force. The Army continues to take aggressive action
    to promote health, identify and reduce risky behaviors, and
    prevent suicides. Further, at all levels of the Army, we are
    reinforcing the Army value of respect in order to establish a
    climate where sexual harassment, sexual assault, and hazing
    will not be tolerated.
        While we transform to a smaller Army, we remain dedicated
    to improving readiness and building resilience in our soldiers,
    civilians, and families. The Army must not and will not
    sacrifice readiness as it draws down. We will emerge from the
    forthcoming budget reductions a leaner force but one still
    capable of and committed to meeting our obligations to the
    Nation, the American people, and the dedicated men and women
    who serve. Although our Army will become smaller in the coming
    months and years, we will preserve the quality of our All-
    Volunteer Force. This fighting force will retain the confidence
    and pride of the American people as it has for more than 236
    years.
        I appreciate the support of the committee and your
    commitment to taking care of our soldiers, civilians, and
    families. The well-being of our force, regardless of its size,
    is absolutely dependent upon your tremendous support.
        Thank you very much. I look forward to your questions.
        Senator Webb. Thank you, Secretary Lamont. General Bostick,
    your written statement will be entered into the record as well.
    I know you will be receiving some questions during the question
    period.
        [The joint prepared statement of Mr. Lamont and General
    Bostick follows:]
      Joint Prepared Statement by Hon. Thomas R. Lamont and LTG Thomas P.
                                  Bostick, USA
                                  introduction
        Chairman Webb, Senator Graham, distinguished members of this
    committee, thank you for the opportunity to appear before you on behalf
    of America's Army. The U.S. Army is a values-based organization that
    exists to serve the American people, to defend the Nation, to protect
    vital national interests, and to fulfill national military
    responsibilities. We are now poised to execute an historic drawdown of
    both our military and civilian personnel, and we are proposing to do it
    in a deliberate and careful manner. Thousands of individuals will
    transition out of military and civil service and deserve quality
    transition assistance.
        While the future Army will be smaller, the Army is implementing a
    number of improvements in force structure and other capabilities to
    ensure it remains the best led, best-trained, and best-equipped land
    force in the world today and in the future. Our soldiers have performed
    superbly over the last 10 years of war, displaying the values,
    character and competence that make our Army second to none. We must not
    waver on our commitment to support all those who have served with
    courage, pride, and honor.
        Thank you for your steadfast commitment to ensuring that the needs
    of our soldiers, their families, and our civilian workforce are met by
    supporting our personnel initiatives to ensure growth, sustainment and
    well being of our All-Volunteer Force.
                               strategic overview
        America's Army, our soldiers, families, and civilians are strained
    by nearly a decade of persistent conflict. More than 1.1 million
    soldiers have deployed to combat, impacting not only the soldiers, but
    their families as well. Additionally, Army civilians shoulder a
    majority of the Generating Force mission, and 30,000 civilians have
    deployed into harm's way. Now we will transition to a smaller force,
    while continuing to remain vigilant of new threats and prepare for new
    capabilities and requirements.
        To maintain an All-Volunteer Force of the highest quality soldiers
    and achieve our end-strength goal, the Army must responsibly balance
    force shaping across accessions, retention, promotions, voluntary and
    involuntary separations, and natural losses. We should assist our
    soldiers and civilians who will transition from their military and
    civil service careers to employment in the private sector.
        One of the challenges we face is the nondeployable population. The
    disability system is not effective and we must continue to work on an
    efficient solution between the Services, DOD, and the Veterans
    Administration to streamline the disability system and improve
    coordination for health care, compensation, and benefits. The Army also
    continues to focus on assisting our soldiers and family members
    struggling with depression, substance abuse, and other Health of the
    Force issues.
        With the continued support of the American people and Congress, we
    remain committed to the readiness, health and well being of our
    soldiers, civilians, and family members. As part of this effort the
    Army is also focused on wisely managing our resources in the health
    care arena. The Department of Defense (DOD) has also put forward a set
    of proposals to further reduce the rate of growth in health care
    costs--proposals that are aligned with our priorities. TRICARE is a
    superb health benefit--one of the best in the country--and
    appropriately so. Just as in all areas of the defense budget, we need
    to make decisions that preserve a strong benefit yet reflect the fiscal
    realities of the times. The proposals take care to exempt populations
    who have made the greatest sacrifices--those who are medically retired,
    and those families who have lost their loved one while serving on
    active duty. The changes proposed are also adjusted to reflect lower
    adjustments for those retirees with lower retirement pay. Most
    importantly, DOD continues to provide resources that improve the
    overall health system for our soldiers and their families.
        The American soldier is the centerpiece of everything we do in the
    Army. Our efforts must remain focused on the preservation of our most
    precious resource, our people.
                             drawdown/end strength
        In keeping with the National Defense Strategy, the Army is building
    our future force to meet the Nation's requirements. The Army is
    reducing its Active component end strength to 490,000 soldiers by
    fiscal year 2017. Based on Total Army Analysis of future requirements,
    the force structure effective in fiscal year 2017 requires an
    additional decrease of 24,000 enlisted soldiers and 5,000 officers
    beyond our current rate of attrition over this same period. The Army
    continues to reduce the additional temporary end strength increase
    (TESI) of 22,000 soldiers, approved in 2009 by the Secretary of
    Defense, and is on target to be at an Active component end strength of
    552,100 by the end of fiscal year 2013. In fiscal year 2014, the Army
    will begin to take further steps to significantly shape the force
    toward the 490,000 fiscal year 2017 goal.
        Our projected drawdown ramp allows for funding 490,000 of end
    strength in the base budget starting in fiscal year 2014 and beyond,
    with all other end strength supported by Overseas Contingency
    Operations (OCO) funding. This ramp allows for a steady enlisted
    accession mission of 57,000 and an Active Competitive Category officer
    mission of 4,300. Our strength projections incorporate additional
    soldier inventory, Temporary Endstrength Army Medical (TEAM), to
    mitigate impact of the Disability Evaluation System (DES) nondeployable
    soldiers. This TEAM end strength is assumed in fiscal year 2013 and
    fiscal year 2014 and fully eliminated by end of fiscal year 2015.
        In order to achieve expected end strength reductions, the Army
    expects to use various types of separation authorities across all
    elements of the force (officer, enlisted, and civilian). In order to
    maintain America's Army as an All-Volunteer Force of the highest
    quality, we are planning to execute the upcoming force reductions in a
    responsible and targeted fashion while maintaining a ready force. Our
    soldiers have performed superbly over the last 10 years of war and have
    displayed the values, character and competence that made us successful.
    We value their service and sacrifices, and will use precision, care,
    and compassion in achieving the end strength goal without jeopardizing
    combat operations. Under current loss rates, the Army will not be able
    to reach its end strength goal over the fiscal year 2013-2017 period.
    We are making use of reduced accession levels, promotion selectivity
    and tightened retention standards to help shape our force naturally.
    Through these processes, we expect to lose combat seasoned soldiers and
    leaders, but our focus will be on retaining the best individuals in the
    right grades and skills.
        The National Defense Authorization Act (NDAA) for Fiscal Year 2012
    provides several incentive authorities that will help the Army
    encourage soldiers to separate over the drawdown period, along with the
    flexibility to apply them to meet specific grade and skill needs. We
    are developing cost data for potential use of Voluntary Separation Pay
    (VSP), Temporary Early Retirement Authority (TERA), and Voluntary
    Retirment Incentive (VRI) pay, but will need to realign or request
    reprogramming of funds to support execution of these now existing
    authorities. Unfortunately, there is no single force shaping method
    among the choices of accessions, retention and separations, that will
    achieve the Army's end strength goals, and there will be good soldiers
    who we will not be able to retain. As soldiers depart our active duty
    formations, the Army is committed to assisting them and their families
    as they transition to the Army Reserve, National Guard, or civilian
    life.
        To maintain an All-Volunteer Force of the highest quality soldiers
    and achieve our end strength, the Army must responsibly balance force
    shaping across accessions, retention, promotions, voluntary
    separations, involuntary separations, and natural losses.

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                         transition assistance strategy
        Our Nation entrusts its best and brightest to the Army to support
    the All-Volunteer force. Therefore, the Army has a responsibility to
    help our transitioning personnel prepare for post-Army life by
    providing the training and tools to enable their success. We must help
    them use their Army training, education and experience to successfully
    return to civilian life and to become gainfully employed. Support
    through this transition process demonstrates the Army's commitment to
    its soldiers and their families beyond their years of service.
        Some of the more than 130,000 soldiers who transition from the Army
    annually have difficulty finding employment. As of January 2012, 21
    percent of our Gulf War II Veterans between the ages of 20 and 24 are
    unemployed while the national unemployment average for the same age
    group is 14 percent. Since 2001, the Army's annual unemployment
    compensation costs have increased from $90 million to $574.5 million in
    fiscal year 2011. As the Army executes force shaping in the 2014-2017
    timeframe, the number of personnel requiring transition training and
    counseling is expected to increase.
        Consequently, the Army is transforming the way we transition
    soldiers in order to give them the greatest opportunity for success
    after their military service. On August 29, 2011, the Army published a
    new Transition Policy, which encompasses transitions throughout the
    entire lifecycle of Service (e.g. permanent change of station,
    component change, promotion, schooling, deployment, demobilization and
    separation/retirement). In particular, this policy establishes
    Transition as a commander's program; ensures every soldier begins
    mandatory transition counseling and planning no later than 12 months
    before separating or demobilizing; mandates building a tailored plan
    for an individual's needs which will have measurable outcomes; and
    expands virtual services for career and education counseling before,
    during, and after deployment. On December 29, 2011, the Army published
    an Execution Order focused on transition policy actions which will have
    an immediate and positive impact on soldiers preparing to separate from
    Active Duty, demobilizing Reserve component soldiers, and their
    families.
        The Army supports the White House Employment Initiative and the
    DOD/Department of Veterans Affairs (VA) Veterans Employment Initiative
    Task Force to develop reforms to ensure all transitioning
    servicemembers maximize their career readiness prior to separation in
    line with the newly enacted Veterans Opportunity to Work to Hire Heroes
    Act of 2011. With the Army's new proactive approach to transition, we
    are connecting soldiers and veterans with career private industry
    employment opportunities. The Army is working with the DOD/VA Task
    Force to help identify the best information technology application and
    functional capability to support this employment initiative.
                civilian reductions and human capital management
        The Army is reducing civilian on-board strength, where necessary
    and appropriate, in order to meet funded targets. This reduction will
    draw down civilian on-board strength in order to hold to fiscal year
    2010 civilian funding levels. Headquarters, Department of the Army
    Staff and all Army commands and agencies have conducted exhaustive
    reviews of programs and functions in order to identify specific
    functions, activities, and workload for elimination and/or reduction.
        On February 2, 2011, the Department of the Army suspended civilian
    employment offers for Operation and Maintenance, Army (OMA)-funded
    positions, with exceptions for positions related to medical, law
    enforcement, safety, health, welfare, and contingency operations. Other
    exceptions to fill vacancies were approved at the Department of the
    Army headquarters level. The suspension was lifted on April 29, 2011,
    and commands and agencies were directed to manage civilian and
    contracted workload within their targeted fiscal constraints.
        The Secretary of the Army issued implementation guidance to Army
    commands on July 11, 2011, informing them of their funded civilian
    authorization levels and an implementation order was issued on August
    3, 2011. The $834 million reduction in OMA funding is associated with
    8,741 reductions in direct hire civilian authorizations. Commands and
    agencies will take immediate action to reduce civilian on-board
    strength as rapidly as possible, but no later than the end of fiscal
    year 2012. Our reshaping efforts are already assisting commanders and
    directors with reshaping efforts.
        The Assistant Secretary of the Army (Manpower and Reserve Affairs)
    and the Assistant Secretary of the Army (Financial Management and
    Comptroller) have established business processes and reporting
    mechanisms to effectively align requirements, authorizations, on-board
    strength and associated funding execution for the civilian workforce.
    Commands and agencies report monthly on the status of their civilian
    workforce reduction plans, the number of civilian reductions effected
    each month, the total number of reductions to date and the amount of
    OMA funding expended on civilian payroll. In accordance with statutory
    restrictions and the Secretary of the Army's instructions, service
    contracts will not be initiated in lieu of reduced civilian manpower,
    nor will existing contracts be modified to accommodate work formerly
    performed by civilian employees.
        To the maximum extent possible, the Army is relying on voluntary
    departures and attrition to achieve the personnel reductions. Reshaping
    tools to effect voluntary departures include Voluntary Early Retirement
    Authority (VERA) and Voluntary Separation Incentive Pay (VSIP). Other
    non-voluntary reshaping tools short of Reduction In Force (RIF) may
    include release of temporary employees, separation of Highly Qualified
    Experts (HQE), separation of re-employed annuitants, management-
    directed reassignments and furloughs. If these measures do not achieve
    the required civilian personnel levels, then a RIF may be considered.
        Several commands are releasing temporary employees, re-employed
    annuitants and HQEs. Many have also instituted internal hiring freezes,
    with recruitment outside of the command requiring higher headquarters
    approval. Commands have offered VERA to employees willing to retire
    and/or VSIP to those willing to separate from the Federal Government.
    If further reductions are necessary, a RIF will be the last resort. As
    conditions change with regard to the size of the workforce, marginal
    adjustments will be made to these planned reductions at installations
    where such adjustments are warranted.

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                recruiting and retention (officer and enlisted)
        Our soldiers are the Army's most important resource, and our
    ability to meet the challenges of the current and future operational
    environment depends on our ability to sustain the All-Volunteer Force.
    Even as we drawdown the Army, we must continue to bring high quality
    men and women into the force to grow our future leaders. We must also
    ensure that the Army retains the most talented soldiers with the skills
    necessary to meet our future needs.
        Despite the challenges of an ongoing conflict, the active Army and
    the Army Reserve once again exceeded their enlisted recruiting and
    retention missions in fiscal year 2011. The Army National Guard
    intentionally under accessed in fiscal year 2011 to avoid exceeding
    their congressionally mandated end strength limits. The active Army
    accessed the highest percentage of high school diploma graduates since
    fiscal year 1992--increasing from 94.7 percent in fiscal year 2009 to
    98.7 percent in fiscal year 2011. The Army met its skill-set needs,
    achieving over 99 percent Military Occupational Specialty (MOS)
    precision. The Army's percentage of new enlisted soldiers with a high
    school diploma was well above historic rates for all three components.
    In addition, recruits scoring (50-99 percent) exceeded the DOD standard
    of 60 percent, while recruits who scored in the lower range (30 and
    below) on the Armed Forces Qualification Test decreased by 30 percent
    (from 281 to 199). Ineligibility waivers granted for enlistment and
    appointments declined by 4.45 percent from fiscal year 2010 to fiscal
    year 2011 as a result of being more selective and the improved
    recruiting environment. We are currently on track to achieve our fiscal
    year 2012 mission and expect to recruit half of the fiscal year 2013
    annual mission into the entry pool by the end of fiscal year 2012.
        In fiscal year 2011, Combined Active Army (AC) and Army Reserve
    Component (RC) enlistment and reenlistment incentives (bonuses and
    education), totaled slightly over $1.39 billion. Entering fiscal year
    2012, the combined Active and Reserve components will spend slightly
    over $1.19 billion (AC recruiting; $406 million), AC retention ($231
    million), Army National Guard recruiting and retention ($455 million),
    USAR recruiting and retention ($274 million). A large part of the
    fiscal year 2012 incentives budget is a result of obligations for
    enlistment bonuses occurring from fiscal years 2007-2010. As a result
    of lower recruiting missions and the favorable recruiting environment,
    average Regular Army recruiting bonuses dropped from over $13,000 in
    fiscal year 2009 to $2,500 in fiscal year 2012. Enlistment and
    reenlistment bonuses are only used to incentivize longer-term
    enlistments in a small percentage of critical skills. These incentives
    ensure the success of the total Army recruiting and retention missions
    and shape the force to meet specific grade and skill requirements. The
    amount budgeted for contractual payments is anticipated to decrease
    until at least fiscal year 2015.

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        Over the years through research, the Army has improved personnel
    assessment measures to more fully assess an individual's potential to
    serve and predict a soldier's success in job performance, attitudes,
    and career intentions. One valuable measure is the Tailored Adaptive
    Personality Assessment System (TAPAS). TAPAS was developed to enhance
    the selection of soldiers with Tier 1 credentials by screening out low
    motivated, high attrition risk applicants. To date, more than 320,000
    Army and 96,000 Air Force applicants have tested on TAPAS. The Navy
    also started testing their applicants in late fiscal year 2011.
    Preliminary results in operational testing indicate that soldiers who
    pass the TAPAS screen have better retention and training outcomes than
    soldiers in the same Test Score Category who fail the TAPAS screen.
        Recruiting success is expected to continue in fiscal year 2012;
    however, the Army and the Nation still face challenges such as rising
    obesity rates and decreasing high school graduation rates as we recruit
    the All-Volunteer Force. As the pool of qualified 17-24 year old
    Americans continues to decline due to growing rates of obesity and
    decreasing rates of high school graduation, it will become more
    important for parents, teachers and business leaders to support a
    youth's decision to join the Army. In today's environment fewer than
    one in four 17-24 year-olds are eligible to serve in the Army. More
    than 20 percent of high school students fail to graduate and 1 in 5
    youths, 12-19 years old, are currently overweight, compared to 1 in 20
    in the 1960s. This trend is projected to grow to 1 in 4 by 2015.
        The Army must retain the flexibility to offer incentives to attract
    and retain talent. The continued funding of these programs by Congress
    is absolutely critical to the Army. These incentives assist in shaping
    the force for both quality and specific talent required.
        The Army continues to retain soldiers at unprecedented levels,
    while engaged in the longest period of conflict for our All-Volunteer
    Force. The Army has surpassed its retention goal, every year since
    2002. Soldiers reenlist for three top reasons: current command climate,
    job satisfaction, and the quality of life in the Service. Additionally,
    retention rates within the last 24 months have been slightly higher
    than anticipated.
        In fiscal year 2011, the Active Army reenlisted 43,626 soldiers
    towards an annual mission of no less than 40,000 and no more than
    45,000. Soldiers extending to complete deployments with their units
    represented an additional 7,346 extended contracts. The Army Reserve
    reenlisted 12,934 soldiers, exceeding their annual goals by 11 percent.
    The Army National Guard accomplished their mission as well by achieving
    116 percent of their assigned mission, reenlisting 39,750 soldiers.
        During fiscal year 2011 and into fiscal year 2012, retention
    bonuses were carefully monitored and adjusted to ensure that the Army
    met its retention goals while remaining fiscally responsible. As we
    posture for future reductions in the size of our force, the Army is
    using lessons learned from past reductions to ensure that today's
    decisions maintain the viability of tomorrow's All-Volunteer Force.
    Retention policies will emphasize retention of soldiers with high
    potential coupled with appropriate force alignment and structure.
        The Army's programs to recruit and retain both officers and
    enlisted soldiers with critical skills have been effective. For
    enlisted soldiers, the Enlistment Bonus, the Selective Reenlistment
    Bonus, Critical Skills Retention Bonus, and the Student Loan Repayment
    Program are proven tools that remain effective for filling critical
    skills.
                                   diversity
        The diversity of our Army is a continuous source of strength as we
    recruit soldiers and Army civilians from an increasingly diverse
    America. We must take full advantage of opportunities to bring new
    ideas and expanded capabilities to the mission by reaching out to
    communities and building relationships that will support the Army's
    human resource requirements. To this end, we have developed and
    implemented our first strategy for conducting outreach activities on an
    Army-wide basis. In this first year of execution, 9 commands are
    responsible for coordinating 25 outreach events for the Total Army. The
    Army staff will coordinate an additional 10 events for a total of 35
    during 2012. Additional organizations and events will be added to the
    strategy in the future.
        Our ability to be inclusive of the Nation's diverse citizenry while
    sustaining a high performance Army requires the engagement of senior
    leaders and continuous diversity education throughout the Force. The
    Army Diversity Roadmap, published in December 2010, outlines a unique
    approach to an enterprise-wide diversity initiative over the coming
    years and will guide our actions in the areas of leadership, people,
    structure and resources, training and education, and inclusive work
    environments. Within the Roadmap, we are implementing an intra-Army
    council of senior leaders to advise the Secretary and provide a forum
    for collaboration and sharing ideas in connection with implementation
    of the Army Diversity Roadmap and execution of related initiatives. In
    addition, the Council will facilitate delivering the diversity and
    inclusion message throughout the Army.
        Our initial diversity training and education efforts have focused
    on practitioners who support our commanders and other leaders. We have
    completed initial training for 560 Military Equal Opportunity (MEO) and
    Equal Employment Opportunity professionals, and followed up with
    materials to support unit-level instruction. Over the past 2 years, 300
    general officers and civilian senior executives have completed a
    diversity education program. In this program Senior executives are
    presented with Army demographics and participate in experiential
    exercises that facilitate awareness and perspective.
        We will continue to invest in diversity education and inclusive
    leadership by seamlessly integrating the training for senior leaders
    into their initial leader development programs. Ultimately, we will
    also reach every soldier and Army civilian through the Army's
    institutional professional development system.
        We must position the Army to recruit, develop and retain the most
    talented people our Nation has to offer. Critical to our global mission
    is an understanding of the cultures, languages and social norms of the
    people in locations where we deploy as well as in our own ranks. This
    diversity initiative is integral to the Army's long-term vision for
    human capital and our understanding of the human dimension of
    leadership and global engagements.
                         operationalizing the reserves
        The wartime experiences of the past decade validate the need to
    institutionalize the policies, procedures and legal authorities
    conducive to achieving the most efficient utilization of the Total
    Force through maintaining the Army's Reserve components as an
    ``operational force.'' Additionally, recent DOD strategic guidance
    advocates maintaining key capabilities within the Total Force by
    shifting certain capabilities to the Reserve components where they can
    be maintained at a high readiness level at lower overall cost. This
    strategy requires we continue to regularly employ National Guard and
    Reserve Forces in support of our national strategy.
        To support an Operational Reserve, 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. This required investment in
    readiness ultimately allows the Army to manage our Reserve components
    as an operational force.
        Towards that end, the NDAA for Fiscal Year 2012 provided the
    authority for Service Secretaries to place limited numbers of their
    Reserve component units on active duty as an operational force for
    certain preplanned missions in support of the combatant commands where
    the costs associated with such usage are contained in that year's
    Defense budget. Additionally, the Secretary of the Army promulgated the
    Army's Deployment Period Policy which established a common, 9-month
    period of deployment for General Purpose Forces at division-level and
    below. The policy also mandates common processes and procedures for
    validating pre-deployment readiness across the Total Force with a view
    towards integrating Active and Reserve Forces at the tactical level
    consistent with the Secretary of Defense's policies for utilization of
    the Total Force.
        The Army National Guard and Army Reserve provide 51 percent of the
    Army's military end-strength for around 16 percent of the base budget.
    Transforming the Army National Guard and Army Reserve into an
    operational force provides not only ready access to 1 million trained
    soldiers, but also an historic opportunity for our Nation to achieve
    the most cost-effective use of its Army.
                          nondeployable campaign plan
        As a result of more than a decade of war, the Army has experienced
    a dramatic increase in the number of soldiers who are unable to deploy.
    During the 4-year period from 2007 through 2011, the nondeployable rate
    for Brigade Combat Teams (BCTs) increased by nearly 60 percent, from
    10 percent in fiscal year 2007 to greater than 16 percent in fiscal
    year 2011. The corresponding decrease in the overall deployable rate
    has required us to over-man deploying units so that BCTs deploy with
    the required combat strength. This has directly impacted the Army's
    ability to properly man the generating force. As a result, the Army
    developed a comprehensive nondeployable campaign plan to analyze the
    three categories representing the highest percentage of nondeployable
    soldiers: Medical, Separations [Expiration Term of Service/
    retirements], and Legal Processing.
        With the support of this Congress, we made significant strides this
    past year in the administrative categories; driving the overall rate
    down to 14 percent. Legislation passed in 2011 authorizing 365-day
    early separation will enable the Army to increase the readiness of our
    deploying units as we backfill those separating with deployable
    soldiers. Soldiers with medical conditions remain a challenge,
    comprising nearly half of our nondeployable population. This population
    will continue to grow as we draw down, decreasing the overall
    population while retaining these non-deployable soldiers as they
    undergo medical evaluation. Our soldiers continue to be the cornerstone
    of our combat formations and as we draw down the force, we remain
    committed to providing top quality service to our soldiers and their
    families. Therefore, we have focused our efforts to reduce the number
    of medically nondeployable soldiers by creating a Disability Evaluation
    System (DES) Task Force that will represent both medical non-deployable
    and DES initiatives. Through the collaboration of this multi-faceted
    Task Force, we can continue to man an expeditionary Army with soldiers
    who are deployable, while preserving the All-Volunteer Force.
                     the army disability evaluation system
        The DES has made improvement over the last 4 years, as legislative
    changes and the new Army Disability Evaluation System (DES) have made
    the system less adversarial; provided greater consistency between
    Military and VA ratings; and reduced the time it takes to start
    receiving VA benefits after separation. However, we are committed to
    improving the complex process.
        The current process takes almost 400 days to complete. Even if the
    Army were meeting DOD's goal of 295 days, 10 months is simply too long
    for our soldiers and their families to wait while their future hangs in
    the balance. Currently the Army has more than 19,000 soldiers tied up
    in this process of disability adjudication; the equivalent of 5 Brigade
    Combat Teams sitting on the bench, not available or deployable, who
    must be replaced from other elements to meet operational and tactical
    requirements. As a result of the lengthy processing times, the DES
    continues to have a significant impact on Army readiness. More than 95
    percent of these soldiers depart from the Army once through the
    process.
        The Army is committed to doing everything it can to improve the
    current process. Our Senior Leadership meets monthly with our partners
    in the Department of Veterans Affairs to focus on the execution of the
    Army DES down to the installation level, identify performance issues,
    and share best practices in order to streamline the process. More
    recently the Army completed a Senior Leader assessment of the execution
    of the Army DES at installations across the Army. This assessment
    identified specific actions required to enhance and standardize
    performance across the Army. Combined, these actions and standards will
    ensure our soldiers receive the needed support in a timely manner;
    provide the leadership at all levels visibility in order to adjust
    resourcing and assess efficiency; and help us improve Army Readiness by
    moving soldiers through the Army DES more expeditiously.
        We are working with DOD leadership, the other Services, and our
    partners in the Department of Veterans Affairs on improving the system
    and look forward to collaborating with Congress on this issue.
                        quality of life/family programs
        The strength of our Nation is our Army. The strength of our Army is
    our soldiers. The strength of our soldiers is our Families. Because of
    the tremendous sacrifices soldiers and families make every day, the
    Army is resolute in sustaining the important programs that enhance
    their strength, readiness, and resilience.
        The Army Family Covenant institutionalized the Army's commitment to
    provide soldiers and their families with a quality of life commensurate
    with their level of service to the Nation. Army Senior Leadership
    signed the first Family Covenant in October 2007 and reaffirmed its
    tenets in October 2011. The Covenant represents our commitment to
    provide programs and services to soldiers, both single and married, and
    their families, regardless of component or geographic location. The
    Covenant recognizes the strength and commitment of soldiers and their
    families and establishes a lasting partnership with Army families to
    enhance their strength, readiness, and resilience.
        We are committed to improving soldier and family readiness by
    continuing to build resiliency through strengthened soldier and family
    programs that are simple and easier to access; maintaining
    accessibility and quality of health care; sustaining high-quality
    housing for soldiers and families; maintaining excellence in school
    support, youth services, and child care; promoting education and
    employment opportunities for family members; sustaining recreation,
    travel, and quality of life opportunities for single soldiers; and
    joining forces with communities to inspire support for soldiers and
    families.

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                     army military equal opportunity policy
        The Army is the leader in MEO policy and practice. Commanders at
    all levels are responsible for sustaining positive MEO climates within
    their organizations, thus enhancing Army Readiness. To remain relevant
    within the ever-changing environment in which we operate, the Army is
    revising its MEO policy by integrating and institutionalizing equal
    opportunity goals, objectives and training practices. This effort will
    strengthen the foundation of the Army's Human Capital Strategy. Since
    fiscal year 2009, the Army has invested $3.2 million to include $0.8
    million in fiscal year 2011, and expects to invest another $2.1 million
    in fiscal year 2012 for MEO personnel services support, database and
    survey systems, outreach support, and training for implementation.
                               women in the army
        On January 13, 1994, the Secretary of Defense issued the Direct
    Ground Combat Definition and Assignment Rule. The rule remains in
    effect today and prohibits the assignment of women to units below the
    brigade level whose primary mission is to engage in direct combat on
    the ground.
        The Army's current assignment policy (Army Regulation 600-13, 27
    Mar 92) allows women to serve in any officer or enlisted specialty or
    position except in those specialties, positions, or units (battalion
    size or smaller) which are assigned a routine mission to engage in
    direct combat, or which collocate routinely with units assigned a
    direct combat mission.
        On March 2, 2010, in the context of a changing operational
    environment, with emerging requirements and missions, the Army
    initiated a routine cyclic review of its assignment policy for female
    soldiers. The purpose of the review was to assess the current Army
    policy alignment with DOD policy. The Army completed the cyclic review
    in March 2011 and submitted the results and recommendations to Army
    Senior Leadership for decision. Prior to making that decision, the NDAA
    for Fiscal Year 2011, section 535, directed the Secretary of Defense,
    in coordination with the Services, to review laws, policies, and
    regulations that restrict female servicemembers an opportunity to excel
    in the Armed Forces.
        The DOD review was completed in late January 2012 and released
    February 9, 2012. The Army concurred with the other Services in the
    revision of the Direct Ground Combat Assignment Rule that eliminates
    gender-based assignment restrictions to units and positions that are
    required to physically colocate and remain with direct ground combat
    units that are closed to women and to further align Army assignment
    policy with that of DOD. In doing so, the Army opened approximately
    13,139 positions for the assignment of women. Additionally, we opened
    six MOS: three in Field Artillery and the remaining three closed
    specialties in the Logistics career field. We also requested and were
    granted a DOD exception to the Direct Ground Combat Assignment Rule
    that will authorize the Army to assign females to direct ground combat
    units below the brigade level. This limited exception allows assignment
    of female soldiers in select open specialties to serve in the battalion
    headquarters of select direct ground combat units. Each of these
    activities will take effect in late spring 2012.
        Women in the Army have and continue to serve this Nation with honor
    and distinction in the roles, positions, units, and specialties in
    which they are allowed to serve. They have proven their ability to
    serve in expanded roles throughout the Army both on and off the
    battlefield. This review marks the beginning of a careful and
    deliberate effort to apply lessons learned by commanders over more than
    a decade of persistent conflict. The Army will continue to review
    positions and requirements to ensure that all soldiers are provided
    opportunities to reach their full potential and that we accomplish our
    missions with the most capable and qualified soldiers.
       sexual harassment/assault response and prevention program (sharp)
        The Army's goal is to eliminate sexual assault and sexual
    harassment through cultural change, thereby, creating a professional
    climate where every member of the Army family (soldiers, civilians,
    family members, and contractors) trusts their leaders to treat them
    with dignity and respect.
        The Army SHARP Program reinforces the Army's commitment to reducing
    incidents of sexual violence while promoting sensitive care and
    confidential reporting for victims of sexual assault, and
    accountability for those who commit these crimes.
        The Army continues to implement a comprehensive ``I. A.M.
    (Intervene, Act, and Motivate) Strong'' Sexual Harassment/Assault
    Prevention Strategy and Campaign.
        The campaign is based on the same strategic framework and guiding
    principles used to execute a successful military initiative--Prevent,
    Shape and Win. The Army's goal is to ``Prevent'' sexual assault and
    harassment before it occurs; ``Shape'' an Army culture that promotes
    dignity and respect; and ``Win'' an environment that improves
    prevention, investigation, and prosecution while reducing the stigma of
    reporting.
        The program consists of a comprehensive policy that centers on
    awareness and prevention; training and education; victim advocacy; and
    response, reporting, accountability and program assessment.
        The Secretary of the Army and the Chief of Staff of the Army are
    strong advocates for the implementation of the SHARP Program. They
    consider SHARP an integral part of the ``Profession of Arms'' in
    developing individual character and supporting the Warrior Ethos.
        In 2008 the Army launched a comprehensive sexual assault prevention
    strategy, which incorporates the ethical principles of the ``Profession
    of Arms'' and requires leaders to establish a positive command climate
    that clearly communicates sexual assault's negative impact on the force
    and family members. The strategy further encourages soldiers to engage
    in peer-to-peer intervention, and not tolerate behavior that could lead
    to sexual assault.

              This strategy consists of four integrated, cyclical phases
            that are designed to achieve true cultural change as we work to
            be the Nation's leader in sexual harassment and sexual assault
            prevention:
              Phase I (Committed Army Leadership) provides training on best
            practices and allows commands the opportunity to develop
            prevention plans to support the Army strategy.
              Phase II (Army-wide Conviction) includes educating soldiers
            to understand their moral responsibility to intervene and stop
            sexual assault and harassment.
              Phase III, which launched April 2011, is dedicated to
            ``Achieving Cultural Change'' and fosters an environment free
            from sexual harassment and sexual assault
              Phase IV, the final phase is ``Sustainment, Refinement and
            Sharing.'' This phase will be implemented beginning April 2013.
            Here, the prevention program will continue to grow while
            motivating national partners--governmental and nongovernmental
            organizations--to support our efforts in changing generally
            accepted negative social behaviors.

        The goal will be the reduction of sexual assault through primary
    prevention by creating an environment where people are not afraid to
    intervene as soon as conditions exist that could lead to sexual
    misconduct if left unchecked.
        The Army's campaign commitment includes integrating sexual
    harassment and sexual assault prevention efforts; executing the SHARP
    transformation plan; providing policies; training and education support
    to commands; and establishing prevention partnerships.
        The SHARP Program transition is occurring throughout the Army.
    Building on previous training, SHARP Mobile Training Teams (MTTs) have
    trained approximately 7,900 of 17,000 command-selected program
    personnel on a prevention-focused 80-Hour Program Certification Course.
    The course was approved by the National Organization for Victim
    Assistance in December 2011 and credentialed under the National
    Advocacy Credentialing Program.
        The Army applied $40 million from fiscal year 2009-fiscal year 2011
    to increase investigative and prosecutorial capabilities by hiring 12
    highly qualified experts in the field of prosecution and investigations
    and 23 additional special investigators. The Judge Advocate General
    designated 16 special victim prosecutors and 5 Trial Counsel Assistance
    Program attorneys. Additionally, there are plans to add another seven
    Special Victim Prosecutors in fiscal year 2012.
        The U.S. Army Military Police School Special Victims Unit Course,
    Fort Leonard Wood, MO, has been selected as the DOD school house. In
    essence, the Army will serve as the DOD executive agent for sexual
    assault investigator training and the U.S. Army Military Police School
    will serve as the proponent for sexual assault investigations training
    for DOD.
        The Army's school house employs a unique advanced interview
    technique in its Special Victims Unit (SVU) Training Course. This
    technique is called the Forensic Experiential Trauma Interview, or
    FETI, which was developed by the Army SVU lead instructor. This new
    interview technique combines the best of child forensic interview
    techniques along with the principles of critical incident stress
    debriefings and new neurobiology research to obtain not just the who,
    what, why, when, where, and how of the incident, but also the three
    dimensional experiential aspect of the crime. This process solicits and
    documents critical forensic physiological evidence. Based on feedback
    from the field this new technique has already shown to be substantially
    more effective in obtaining information and substantially more
    beneficial evidence which enhances our ability to prosecute sexual
    assault cases. The FETI technique is also being trained by our Army
    trainers to Federal, State, and local civilian agencies and has been
    embraced as a promising best practice.
        The SVU course is not only taught by USAMPS and USACIDC experts,
    but is also augmented by other nationally recognized experts as well as
    legal instructors from the Army Trial Counsel Assistance Program.
    Agents from DOD Inspector General, Naval Criminal Investigative
    Service, and Air Force Office of Special Investigations have already
    begun training at the SVU course. Army prosecutors will also begin
    attending the SVU course in April of this year to foster additional
    synergy and understanding between our CID Special Agents and
    prosecutors. We have developed a plan to include prosecutors from other
    DOD Services beginning in fiscal year 2013.
        Additionally, the Army is continuing in its efforts to ensure
    attorneys in the Judge Advocate community are receiving the most up-to-
    date training so they are properly equipped to investigate/prosecute
    sexual assault cases. Judge Advocates who are selected to serve as
    Special Victims Prosecutors based on their skill and experience in the
    courtroom, are required to attend a 2-week Career Prosecutors Course at
    the National District Attorneys Association in South Carolina; a 1-week
    Essential Strategies for Sexual Assault Prosecutions; and 2-weeks of
    on-the-job-training with a designated civilian district attorney's
    office, special victims in various other locations.
        The Army is currently providing $3.5 million to support Judge
    Advocate prosecution and defense capability improvements, to include
    policy development, case management, training and education. DOD is
    supporting the Army's investigation/prosecution training efforts with
    an additional $1.3 million in funding.
        Based on recent congressional, Office of the Secretary of Defense,
    and Army directives, the Army is revising its policy and program
    requirements to effectively expand the program to additional
    beneficiaries such as family members 18 years of age or older, DOD
    civilians serving overseas and Deployed DOD contractors deployed into
    combat zones, while finalizing a plan to meet the NDAA for Fiscal Year
    2012 requirements. Concurrently, the Army is revising its comprehensive
    training and education program that began in fiscal year 2004 and
    remains flexible to meet new legislative and military direction.
        The Army is working with DOD leadership to ensure the manpower and
    funding required to address the programmatic changes stipulated in the
    NDAA are adequately addressed.

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            health promotion, risk reduction and suicide prevention
        The Army continues to take aggressive actions to promote health,
    identify and reduce risky behaviors, and prevent suicides. Utilizing a
    holistic approach, increased emphasis has been placed on developing and
    implementing targeted training programs as well as funding for support
    programs that impact the entire Army Family.
        The key elements of the Army's approach are: ensuring that all
    soldiers have prompt access to quality behavioral health care;
    increased screening and documentation of mild traumatic brain injuries;
    and improved leader awareness of high-risk behavior. As conclusions are
    derived from ongoing studies, such as the Army Study to Assess Risk and
    Resilience in Servicemembers (Army STARRS), the largest BH
    epidemiological study that the Armed Forces has ever undertaken,
    appropriate leadership decisions will follow to capitalize on the
    outcomes. The Army has increased screening efforts to improve diagnosis
    and treatment for soldiers through the Post-Deployment Health
    Assessments, standardized screening protocols for those exposed to
    concussive events and implemented the ``Pain Management Task Force'' to
    appropriately manage the use of pain medications and adopt best
    practices Army-wide.
        The dramatic increases in suicides experienced from 2006 to 2010
    leveled off in calendar year 2011 and were down slightly from their
    record year in 2010. It is important to note, however, that suicides by
    soldiers on Active Duty increased while those by soldiers not on Active
    Duty decreased. There were 165 suicides by Active-Duty soldiers during
    2011, an increase from 159 suicides in 2010. However, a significant
    decrease was observed for Not-on-Active Duty members of the Army
    Reserve and National Guard, with 115 suicides during 2011 compared to
    146 in 2010. This represents a decrease of 25 suicides over the 2010
    report.
        The Army released the Army 2020 Generating Health and Discipline in
    the Force Ahead of the Strategic Reset Report 2012. Referred to as the
    Army Gold Book, the report is an update to the Army Health Promotion,
    Risk Reduction, Suicide Prevention Report, 2010. It summarizes the
    progress made in enhancing the health, discipline and readiness of the
    Force and it represents the next phase in the Army's ongoing campaign
    to counter the stress associated with more than a decade of war. The
    Gold Book is designed to educate leaders, illuminate critical issues
    that still must be addressed, and provide guidance to those grappling
    with these issues on a day-to-day basis. It candidly addresses the
    challenges that leaders, soldiers and families currently face, while
    providing a thorough assessment of what the Army has learned with
    respect to physical and behavioral health conditions, disciplinary
    problems, and gaps in Army policy and policy implementation. The Army
    is committed to ensuring the entire Army Family has access to the
    training and resources necessary.

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                          army substance abuse program
        More than a decade of war has created symptoms of stress for our
    soldiers, including an increase in alcohol and drug abuse. The Army
    Substance Abuse Program (ASAP) is a commander's program that uses
    prevention, education, deterrence, detection, and rehabilitation, to
    reduce and eliminate alcohol and drug abuse. It is based on the
    expectations of readiness and personal responsibility.
        In March 2010, the Army conducted a counselor requirements analysis
    based on each installation's average daily client census with a ratio
    of 1 counselor for 30 patients. Patient caseload was as high as 60
    patients per counselor at some installations. The 1:30 ratio is an
    accepted ratio based on literature and counselor input. Applying this
    ratio yielded a requirement of 563 counselors assuming a 20 percent
    growth in number of patients.
        An Army priority in this area includes the hiring of more
    counselors. There is a finite pool of qualified substance abuse
    counselors nationwide and the Army is competing for this scarce talent
    with private industry, the Veteran's Administration and State and local
    governments. As of January 1, 2012, the Army has hired 500 of the 563
    counselors needed. The Army is increasing the use of recruiting,
    relocation, and student loan reimbursement incentives to attract more
    qualified candidates, and is developing a ASAP Counselor Internship
    Program which will allow students with Masters degrees to work in a
    supervised internship for up to 2 years as they attain their licenses
    and substance abuse counselor certifications.
        The Confidential Alcohol Treatment and Education Program (CATEP),
    began in July 2009 and offers confidential alcohol treatment to
    qualified soldiers. For these soldiers, the chain of command is not
    informed of the soldiers enrollment as was previously customary. This
    pilot program was initially offered at Fort Lewis, Fort Richardson, and
    Schofield Barracks. An initial assessment was conducted in March 2010,
    and the Secretary of the Army directed that the pilot be expanded to
    include Forts Carson, Riley, and Leonard Wood.
        The initial assessment showed moderate success in attracting
    soldiers and placed more career NCOs and younger officers into
    treatment. Soldiers who participated in CATEP were very positive about
    the opportunity to take care of their issues without commander
    knowledge and were more motivated as patients. Some soldiers informed
    their commanders about their enrollment and these commanders had a high
    acceptance of the program. The program was assessed again during July
    2011. The results showed that many soldiers with an alcohol abuse or
    dependency diagnosis had walked away from treatment when asked to
    change their behaviors. After careful consideration, the VCSA directed
    implementation of several improvements to the pilot and consideration
    of the use of a contract for soldiers interested in CATEP, with the
    proviso that non-compliance with treatment would result in mandatory
    placement in the Command ASAP. The pilot will be assessed again in
    April and May 2012, after which the Secretary will decide whether to
    expand the CATEP to the remainder of the Army. To date 1,129 soldiers
    sought CATEP treatment and 784 were/are enrolled.

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                            congressional assistance
        As the Army prepares for reductions in the force, we will need
    congressional support to drawdown accurately and efficiently while
    maintaining readiness. The Army continues to work with the various
    parties to improve the physical disability system, so that our
    servicemembers receive the transition they deserve. The continued
    support of Congress for competitive military benefits and compensation,
    along with incentives and bonuses for soldiers, their families, and for
    the civilian workforce is critical in helping the All-Volunteer Army
    contine to recruit, retain, and support the highest caliber of
    individuals.
                                   conclusion
        We have invested a tremendous amount of resources and deliberate
    planning to preserve the All-Volunteer Force. People are the Army, and
    our enduring priority is to preserve the high quality, All-Volunteer
    Force--the essential element of our strength.
        While we transform to a smaller Army, we remain dedicated to
    improving readiness, and building resilience in our soldiers,
    civilians, and their families. The Army will not sacrifice readiness as
    it draws down. We must draw down wisely to preserve the health of the
    force or prevent breaking faith with the brave men and women who serve
    our Nation. The Army has gained the trust of the American public more
    now than at any other time in recent history, while fulfilling our
    responsibilities toward those who serve.
        The well-being of our force, regardless of its size, is absolutely
    dependent upon your tremendous support. The Army is proud of the high
    caliber men and women whose willingness to serve, is a credit to this
    great nation. To conclude, I wish to thank all of you for your
    continued support, which has been vital in sustaining our All-Volunteer
    Army through an unprecedented period of continuous combat operations
    and will continue to be vital to ensure the future of our Army.
        Chairman Webb, and members of the subcommittee, I thank you again
    for your generous and unwavering support of our outstanding soldiers,
    civilian professionals, and their families.

        Senator Webb. Secretary Garcia, welcome.

     STATEMENT OF HON. JUAN M. GARCIA III, ASSISTANT SECRETARY OF
    THE NAVY FOR MANPOWER AND RESERVE AFFAIRS; ACCOMPANIED BY VADM
    SCOTT R. VAN BUSKIRK, USN, CHIEF OF NAVAL PERSONNEL, U.S. NAVY;
    AND LT.GEN. ROBERT E. MILSTEAD, JR., USMC, ASSISTANT COMMANDANT
          FOR MANPOWER AND RESERVE AFFAIRS, U.S. MARINE CORPS

        Mr. Garcia. Thank you, Senator. I also will be short.
        Chairman Webb, Senator Graham, and distinguished members of
    the subcommittee, thank you for the opportunity to speak about
    the sailors, marines, and civilians who comprise the Department
    of the Navy.
        There have been many successful changes in the Department
    of the Navy since I testified before you last spring. We have
    23 female officers assigned to submarines, with more being
    assigned in the very near future.
        Last year I spoke of new Navy Reserve Officers Training
    Corp (ROTC) units at Arizona State University and Rutgers. This
    year I am pleased to report that we are expanding our ROTC
    presence at Harvard, Yale, and Columbia as part of our goal to
    make naval service a viable option for the young men and women
    from all regions and all segments of society.
        In addition to ensuring our manpower and personnel policies
    meet our country's security requirements, it is my honor and
    privilege to represent and advocate for the more than 800,000
    sailors, marines, and civilian employees. We are always
    prepared to respond to the needs of our Nation.
        Both sea services will strive to meet their operational
    requirements with as an efficient a force as possible. For the
    Navy, this means continuing to move sailors from shore support
    functions to sea duty to enhance operational readiness. Such a
    shift not only means fewer sailors will be available for
    important work ashore, but also that sailors will, on average,
    spend more time at sea away from their families. For the Marine
    Corps, the reduction of nearly 20,000 in end strength coincides
    with the planned withdrawal from Afghanistan.
        Our highest priority remains the care and recovery of our
    wounded, ill, and injured servicemembers. The Department of the
    Navy is leading the way in innovative, therapeutic treatments
    of our wounded warriors. At the National Intrepid Center of
    Excellence, the Department of the Navy is pioneering research
    into diagnosis and treatment of traumatic brain injury and
    PTSD, but more work remains in this area.
        I wish to thank the subcommittee members for your
    continuous and unwavering commitment to support the Navy and
    Marine Corps and the brave men and women who as sailors and
    marines serve bravely in Afghanistan, spend months at sea apart
    from their families, combat pirates in the Indian Ocean, board
    drug runners in the Caribbean, guard embassies throughout the
    world, conduct humanitarian missions whenever and wherever
    needed, and perform countless other missions, often under
    unimaginably demanding conditions and circumstances. Thank you.
        Senator Webb. Thank you, Secretary Garcia.
        [The prepared statement of Secretary Garcia follows:]
                   Prepared Statement by Hon. Juan M. Garcia
        Chairman Webb, Senator Graham, and distinguished members of the
    subcommittee, thank you for the opportunity to speak about the
    Department of the Navy's personnel programs and about the sailors,
    marines, and civilians who comprise the Department of the Navy.
        There have been many successful changes in the Department of the
    Navy since I testified before you last spring. By the end of March we
    will have 23 to 25 female officers assigned to submarines, with more
    being assigned in the very near future. The repeal of ``Don't Ask,
    Don't Tell'' is fully implemented across the force with no significant
    problems or incidents. National Naval Medical Center, Bethesda, has
    transformed into the new joint Walter Reed National Military Medical
    Center. Navy personnel comprise 27 percent of the hospital's staff.
        In addition to ensuring our manpower and personnel policies meet
    our country's security requirements, it is my honor and privilege to
    represent and advocate for the more than 800,000 sailors, marines, and
    civilian employees who are always prepared to respond to whatever our
    Nation demands.
        Vice Admiral Van Buskirk and Lieutenant General Milstead will
    address their respective Service's personnel plans in detail, but I
    would like to touch on some common challenges the Department of the
    Navy faces as a whole.
        Recently, the Secretary of the Navy unveiled the 21st Century
    Sailor and Marine Initiative, which is designed to place an increased
    focus on the resiliency and fitness of our servicemembers. With so much
    of our defense strategy dependent upon our Navy and Marine Corps, we
    must ensure that our resources support the most combat effective and
    the most resilient force in our history. We must set high standards,
    but at the same time provide individuals with the services and training
    needed to meet those standards. The 21st Century Sailor and Marine
    Initiative consists of five ``pillars'': readiness, safety, physical
    fitness, inclusion and continuum of service.
        Readiness will ensure sailors, marines, and their families are
    prepared to handle the mental and emotional rigors of military service.
    Both Services are introducing campaigns this year to deglamorize use,
    and treat and track alcohol abuse. We will also develop new means to
    deter Spice use, reduce suicides and increase our family and personal
    preparedness programs. This includes zero tolerance for sexual assault.
    We are continually working to improve the reporting, investigation and
    disposition of sexual assault cases, ensuring that commanders,
    investigators, and prosecutors receive sufficient training and
    appropriate resources.
        We will also increase our efforts to ensure the safest and most
    secure force in the Department's history, including a reinvigoration of
    our efforts to encourage the safe use of motor vehicles and
    motorcycles.
        Physical fitness is an important central pillar that resonates
    throughout the 21st Century Sailor and Marine Initiative. Personal
    fitness standards throughout the force will be emphasized. We will also
    improve nutrition standards at our dining facilities with the
    introduction of ``Fueled to Fight'', which ensures that healthy food
    items will be available at every meal.
        The Department of the Navy will be inclusive and consist of a force
    that reflects the Nation it defends in a manner consistent with
    military efficiency and effectiveness as it serves its primary function
    of defending the Nation. The Department will also reduce restrictions
    to military assignments for personnel to the greatest extent possible
    consistent with our mission and military requirements.
        The final pillar, continuum of service, will provide the most
    robust transition support in the Department's history. Individuals
    selected for either separation or retirement will be afforded myriad of
    assistance programs and benefits that are available to them as they
    transition to civilian life. These programs, which include education
    benefits, transition assistance, career management training,
    counseling, life-work balance programs, and morale, welfare and
    recreation programs have been recognized by human resource experts as
    some of the best corporate level personnel support mechanisms in the
    Nation.
        The budget process requires a careful balancing of resources and
    assessment of risk. Within in the President's fiscal year 2013 budget
    and the Future Years Defense Plan are the results of several other
    difficult decisions and tradeoffs. The final product meets mission
    requirements while providing appropriate compensation and benefits for
    our Active Duty, Reserves, civilian employees, and military retirees.
        Both sea services will strive to meet their operational
    requirements with as efficient a force as possible. For the Navy this
    means continuing to move sailors from shore support functions to sea
    duty to enhance operational readiness. Such a shift not only means
    fewer sailors will be available for important work ashore, but also
    that sailors will, on average, spend more time at sea away from their
    families. For the marines, the reduction of nearly 20,000 end-strength
    coincides with the planned withdrawal from Afghanistan.
        Our highest priority remains the care and the recovery of our
    wounded, ill, and injured servicemembers. The Department of the Navy is
    leading the way in innovative therapeutic treatments of our Wounded
    Warriors. At the National Intrepid Center of Excellence the Department
    of the Navy is pioneering research into diagnosis and treatment of
    Traumatic Brain Injury and Post-Traumatic Stress Disorder, but more
    work remains in this area.
        There are other initiatives that deserve mention. We continue to
    emphasize civilian hiring of veterans and of wounded warriors in
    particular, through both competitive and non-competitive hiring
    authorities. Similarly, the Department is continuing our participation
    in the Military Spouse Employment Partnership both as a resource for
    our members' spouses and as an employer.
        Last year I spoke of new Navy Reserve Officers' Training Corps
    (ROTC) units at Arizona State University and Rutgers. This year I am
    pleased to report that we are expanding our ROTC presence to Harvard,
    Yale, and Columbia as part of our goal to make naval service a viable
    option for young men and women from all regions and all segments of
    society.
        As many of you are aware, the Navy has recently closed a number of
    Junior ROTC programs at units that failed to meet the statutorily
    required participation numbers. To minimize the effects of these
    closings, I authorized the creation of National Navy Defense Cadet
    Corps (NNDCC) units at a number of these schools. The NNDCC program is
    virtually identical to Navy Junior ROTC, except there is only a 50
    student minimum enrollment requirement and the schools must provide the
    majority of the funding.
        We continue to search for innovative ways to improve the efficiency
    and capability of our forces as well as the quality of life of our
    members and their families. Modernization of the military retirement
    system could provide greater fairness and equity to servicemembers
    with, perhaps, some savings to the defense budget.
        We wish to thank the committee members for your continuous and
    unwavering commitment to support the Navy and Marine Corps and the
    brave men and women who, as sailors and marines, serve bravely in
    Afghanistan, spend months at sea apart from their families, combat
    pirates in the Indian Ocean, thwart drug runners in the Caribbean,
    guard embassies throughout the world, conduct humanitarian missions
    whenever and wherever needed, and perform countless other missions,
    often under unimaginably demanding conditions and circumstances.
        The following service specific information is provided for the
    committee. We look forward to your questions.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Webb. Admiral Van Buskirk and General Milstead,
    your full statements will be entered into the record at this
    time. We will also get back to you during questioning.
        [The prepared statements of Admiral Van Buskirk and General
    Milstead follow:]
              Prepared Statement by VADM Scott R. Van Buskirk, USN
                                i. introduction
        Chairman Webb, Ranking Member Graham, and distinguished members of
    the Senate Armed Services Committee, thank you for the opportunity to
    review Navy's fiscal year 2013 manpower, personnel, training, and
    education budget request. I am honored to be here to represent the
    outstanding men and women of the U.S. Navy, and their families, in this
    my inaugural appearance before the committee as the 56th Chief of Naval
    Personnel.
        In developing our budget request, we recognized that our Nation is
    at an historic inflection point, that we are shaping a Navy that will
    be more agile, flexible, ready and technologically advanced. As we
    continue our presence in the Middle East, maintain our commitments in
    Europe, add emphasis and focus in the Asia-Pacific region, Navy has
    continued to prove itself in providing a truly adaptive force
    capability and capacity, at sea, on land and in the air. While Navy's
    operations in Iraq and Afghanistan have been both sea and land based,
    the shift in focus toward the Asia-Pacific region will likely increase
    demands upon Navy's maritime role, even as the Nation works to address
    the national security imperative of deficit reduction through a lower
    level of defense spending.
        As we move into this new era, Navy is well positioned to recruit,
    develop, retain, and provide the American people the best and most
    capable maritime fighting force in history. Navy has worked to become a
    ``Top 50'' organization, an employer of choice, providing world-class
    benefits and opportunities. Moreover, as an All-Volunteer Force, we
    must adapt to changing economic times, while continuing to implement
    force management policies focused on incentivizing, encouraging and
    rewarding high performance. We will continue to strive for a Navy that
    attracts and retains top-performing sailors who possess the critical
    skills necessary for our mission. Further, we are making hard choices
    on sailor retention as Navy continues to transition, but we are
    committed to doing so in a fair, transparent and compassionate manner
    using performance as our benchmark.
        Our fiscal year 2013 budget request enables us to continue to meet
    the operational demands of the Fleet and the Joint Force while
    optimizing personnel readiness. As we look to the future, Navy is
    mindful that:

             The All-Volunteer Force is the foundation of our Navy
            and vital to the security of our Nation.
             Navy life involves unique challenges and stresses as a
            global, full spectrum sea service.
             War related deployments since September 11 have placed
            extraordinary demands on many sailors and their families.

        We believe our request appropriately balances risk in supporting
    the readiness requirements of the Fleet and Joint Force, changing
    strategic mission focus, and essential programs that provide for the
    care of our sailors and their families.
                      ii. a ready and capable global navy
        Shortly after assuming office as the Nation's 30th Chief of Naval
    Operations (CNO) last September, Admiral Greenert issued his inaugural
    guidance to the Fleet, the CNO's Sailing Directions. Coupled with our
    Navy Total Force Strategy for the 21st Century, it charts a course for
    Navy to deter aggression, and, when necessary, decisively win our
    Nation's wars. We will employ global reach and persistent presence
    through forward-stationed and rotational Forces to protect our Nation
    against direct attack, assure Joint Operational Access, and retain
    global freedom of action. With our global partners, we will protect the
    maritime freedom that is the basis for global prosperity. We will
    foster and sustain cooperative relationships with our allies and
    international partners as we enhance global security in a constantly
    changing environment.

              Informed by the Sailing Directions and our Navy Total Force
            Strategy for the 21st Century, we have crafted our focus areas
            . . .

        Warfighting First: We will manage military personnel strength to
    deliver an affordable, sustainable and resilient force that meets
    mission needs. We will deliver a Force that is operationally ready--
    assignable and deployable. To remain operationally effective, we will
    deliver a career-continuum of technical training and advanced
    education.
        Operate Forward: We will deliver ``fit'' and balance to the Fleet--
    not only the right number of sailors, but also the right skills and
    experience for the job. We must also anticipate fleet and combatant
    commander priorities to meet operational needs and provide the regional
    skills required for theater security and cooperation of our Joint and
    coalition partners.
        Be Ready: We will attract, recruit, and retain a high-quality Force
    through recruiting and outreach efforts--we must be competitive for the
    best talent in the Nation. Most importantly, we will continue to care
    for sailors and their families . . . the foundation upon which our Navy
    is built.
                               iii. end strength
        Our fiscal year 2013 Navy budget request appropriately balances
    risk, preserves capabilities to meet current fleet and joint
    requirements, fosters growth in emerging mission areas, and provides
    vital support to sailors and Navy families. The request supports active
    end strength of 322,700, and selected Reserve end strength of 62,500.
    These levels will allow us to meet Fleet and the Joint Force
    operational demands while optimizing personnel readiness as articulated
    in the recently released Sustaining U.S. Global Leadership: Priorities
    for 21st Century Defense. The President's $28.9 billion request for
    Active Navy Manpower, Personnel, Training and Education seeks $27.1
    billion in Military Personnel, Navy (MPN) appropriations and $1.8
    billion in related Operation and Maintenance, Navy (O&MN). The Reserve
    request includes $1.9 billion for Reserve Personnel, Navy (RPN) and
    $24.7 million in related Operation and Maintenance, Navy Reserve
    (O&MNR).
        In fiscal year 2013, there is no OCO funding requested for Active
    component end strength in support of non-core Individual Augmentee (IA)
    mission. Following an assessment of the Reserve component's funding,
    and ability to cover previous Active component-sourced non-core IA
    requirements, 5,900 man-years of OCO funding was requested to support
    4,500 Reserve IA billets throughout the fiscal year. We will continue
    to fill IA requirements, when possible, with Reserve component
    personnel funded through OCO appropriations.
        As we work to stabilize Navy end strength with emphasis on
    achieving warfighting wholeness, we continue to shift billets from
    shore duty to sea duty while preserving nearly 600 critical shore
    billets in sea-centric ratings, including regional maintenance centers,
    afloat training groups, Fleet electronic warfare training and Ballistic
    Missile Defense AEGIS billets. We expect last year's sea/shore-flow
    requirements changes to result in reduced at-sea gaps this year and in
    fiscal year 2013. We continue to apply Sea Duty Incentive Pay to
    encourage and reward sailors for extended or repeat sea duty service to
    help further mitigate our gaps at sea.
        Navy will continue to size, shape, and stabilize the Force while
    carefully monitoring personnel and Fleet readiness. As required, we
    will apply, evaluate and adjust existing and new force-shaping tools
    designed to retain the right skills, pay grade, and experience-mix
    necessary to provide mission-ready Naval Forces, as required.
        iv. force management: achieving balance, maximizing investments
        We must always remember that the men and women of the All-Volunteer
    Force in our Navy have remained versatile, adaptable and committed to
    the Nation during a time of unprecedented, sustained combat operations,
    and at tremendous personal sacrifice. As we take the necessary steps to
    properly size and shape the Navy to meet current and emerging
    requirements, we must be vigilant to ensure the readiness of the All-
    Volunteer Force, while maintaining trust with those who serve in our
    Navy.
        We expect to finish fiscal year 2012 below end strength controls,
    largely due to effective force management policies within the enlisted
    force. At the same time, we are over-executing our officer strength. To
    remedy this imbalance, we plan to stabilize enlisted strength while
    gradually reducing officer strength. Our strategy focuses on
    rebalancing the Force to achieve the right mix of officers and enlisted
    personnel by increasing enlisted accessions over time, reducing officer
    accessions in a controlled manner through judicious application of
    force management tools to address officer overages in specific skills.
    We will achieve proper force balance while respecting the sacrifices of
    sailors and their families by using voluntary measures to the extent
    possible before resorting to involuntary actions. Through careful
    combination of both, we will meet dynamic force management challenges
    and maximize investments in our people.
        Our use of force management tools will be continuously evaluated as
    end strength and force structure is reduced. We will keep a watchful
    eye on indicators of shifting behavior and on economic trends and act
    quickly to preserve our ability to attract and retain the highest-
    quality sailors while achieving and then maintaining the right balance
    of seniority, skills, performance, and experience to deliver optimum
    military personnel readiness to the Fleet.
        Perform-to-Serve (PTS) remains our primary, and most effective,
    enlisted force-balancing tool, allowing us to manage enlisted
    continuation behavior by rating. Based on performance ranking, PTS
    identifies sailors at career decision points, up to 14 years of
    service, who are best qualified for in-rate reenlistment, conversion
    from overmanned to undermanned specialties, or separation from the
    Navy. In fiscal year 2011, we converted 1,052 sailors, narrowing
    critical manning gaps, while 6,765 sailors identified by PTS separated
    at their End of Active Obligated Service. We plan to separate another
    6,650 sailors through PTS in fiscal year 2012, and fewer in fiscal year
    2013. PTS has significantly improved enlisted manning balance
    permitting us to offer in-rate reenlistment to significantly more
    sailors while returning advancement opportunity to historic norms.
        To further assist in rebalancing the Force and relieve pressure on
    sailors in a PTS reenlistment window, Enlisted Retention Boards (ERB)
    were implemented as an additional force management tool. The ERB was
    necessary to ensure we could reduce inventory within overmanned ratings
    in cases in which converting sailors to undermanned ratings was not a
    viable option. Unlike PTS, the ERB looked at all eligible sailors in 31
    overmanned ratings, not just the ones in a PTS window. This past
    summer, ERB examined the records of approximately 16,000 sailors in pay
    grades E4-E8, with at least 7 and less than 15 years of service, who
    are serving in overmanned ratings, and identified 2,947 for separation
    in fiscal year 2012. Approximately 300 of these sailors, who will have
    at least 15 years of service by September 1, 2012, are being offered
    the opportunity to apply for early retirement under Temporary Early
    Retirement Authority (TERA) enacted in the National Defense
    Authorization Act for Fiscal Year 2012. We do not intend to use ERB
    authority in fiscal year 2013.
        We have used, and continue to use, a host of other tools to
    contribute to ongoing force management efforts for both officer and
    enlisted sailors, including:

             High-Year Tenure separations in select pay grades and
            years of service. We separated 912 sailors in fiscal year 2011,
            and plan an additional 909 in fiscal year 2012, and slightly
            more in fiscal year 2013, through recent changes to High Year
            Tenure policy.
             Early Transition. In fiscal year 2011, we allowed
            1,541 sailors to separate up to 24 months before the end of
            their enlistments, and anticipate authorizing a similar number
            of separations in fiscal year 2012, but fewer in fiscal year
            2013.
             Annual performance-based continuation boards. We
            reduced the number of active duty sailors in pay grades E7-E9
            with over 20 years of service by 187 and expect an additional
            50 losses in fiscal year 2012 and fiscal year 2013.
             One-year time-in-grade (TIG) retirement waivers for
            select senior enlisted and officers. We executed 37 officer TIG
            waivers in fiscal year 2011 and expect approximately 45 for
            fiscal year 2012 and fiscal year 2013.
             Monthly probationary officer continuation and
            redesignation boards. These boards authorize release or
            redesignation of probationary officers (with <6 years
            commissioned service). We separated 242 officers in fiscal year
            2011 and anticipate separating 270 in fiscal year 2012.
             Permitting voluntary retirement of officers with prior
            enlisted service after 8, vice 10, years commissioned service.
            Enacted in the NDAA for Fiscal Year 2011, we expect to
            authorize approximately 60 retirements in fiscal year 2012 and
            fiscal year 2013.
             Selective Early Retirement (SER). SER Boards selected
            124 unrestricted line captains and commanders for early
            retirement in fiscal year 2012. In fiscal year 2013, we may
            select approximately 40 Restricted Line and Staff Corps
            officers for early retirement.
             Voluntary Retirement Incentive (VRI). An authority
            that allows Navy to precisely target specific commanders (O-5)
            and captains (O-6) with between 20-29 years of service in
            certain specialties and warfare areas to separate and retire
            voluntarily.
             Temporary Early Retirement Authority (TERA). In fiscal
            year 2012, we are offering early retirement to approximately
            300 sailors as an alternative to early separation required by
            Enlisted Retention Boards. We are evaluating options for
            further targeted use of TERA in fiscal year 2013.

        Despite significant progress, additional force management actions
    are necessary to maintain mandated end strength and officer levels with
    the right mix of skills and experience due to high retention and low
    attrition. For example, we will soon implement two new policies to
    facilitate further enlisted force management:

             In fiscal year 2012 and fiscal year 2013, we will
            apply Initial Training Separation Authority to separate fewer
            than 500 sailors per year who do not satisfactorily complete
            their training pipeline, but for whom no suitable vacancy
            exists.
             We will adjust High Year Tenure thresholds to separate
            fewer than 1,000 sailors in pay grades E2-E3 in fiscal year
            2013.

        We are contemplating whether additional authorities may be
    necessary to enhance our ability to properly shape and balance the
    Force. A range of broad, flexible, options to properly size and shape
    the Force remains vital to Navy military personnel readiness. We
    appreciate Congress enacting flexible authorities that provide
    voluntary means to effectively manage the Force in a way that preserves
    a positive tone across the Navy.
                          v. sailor and family support
        Our fiscal year 2013 budget request of $131.7 million for sailor
    and family care coupled with the items in the Secretary of Defense and
    Defense Health Care budgets sustains or enhances our comprehensive
    continuum of care. The health care proposals in the President's budget
    are consistent with our efforts in identifying processes that are more
    efficient, incentivizing positive health behaviors, promoting overall
    wellness and keeping our sailors fit and ready to deploy on a moment's
    notice. This budget keeps faith with those who serve and those who have
    served, and responsibly meets the demands dictated by the Federal
    budget crisis. With continued congressional support, Navy is committed
    to retaining funding levels necessary to address the medical, physical,
    psychological, and family readiness needs of sailors and their
    families. I hope you will agree, and support our efforts.
    Comprehensive Continuum of Care
        Through a comprehensive continuum of care, we place the highest
    priority on the medical, physical, psychological, spiritual and family
    readiness needs of sailors and families. Navy's Operational Stress
    Control Program, Navy Reserve Psychological Health Outreach Program,
    Warrior Transition Program, Returning Warrior Workshop, Navy Safe
    Harbor, and our Medical Home Port Program are critical continuum of
    care elements.

             The Operational Stress Control (OSC) program is our
            proactive approach to address the personal readiness of our
            sailors and their families. OSC is comprised of training,
            assessment, policy, and tools to support and build sailor,
            family, and unit resilience. It enables leaders to foster a
            climate in which sailors use available resources to stay fit
            and ready without stigma. OSC, with complementary and
            integrated support from the Navy Chaplain Corps, provides
            assistance for stress reactions before they become stress
            problems. A 2011 Behavioral Health Quick Poll found most
            sailors reported using positive methods to cope with stress.
             The Navy Reserve Psychological Health Outreach program
            improves the psychological health and resiliency of Reserve
            Component (RC) sailors and families. Teams of psychological
            health outreach coordinators and outreach team members, located
            at the five regional Reserve commands, provide psychological
            health assessments, education, and referrals to mental health
            specialists.
             The Warrior Transition program provides Individual
            Augmentees the opportunity to decompress and transition to life
            back home. Through small group discussions, chaplains and
            medical personnel prepare sailors to resume family and social
            obligations, return to civilian places of employment, and
            reintegrate into the community.
             Returning Warrior Workshops help remove stigma that
            may prevent sailors from seeking support during demobilization
            and reintegration.
             Navy Safe Harbor supports the non-medical needs of
            wounded, ill, and injured sailors, coast guardsmen, and their
            families. This network of recovery care coordinators and non-
            medical care managers, at 18 locations across the country,
            provides individually tailored assistance to 748 enrolled
            sailors, 43 enrolled coast guardsmen, and an additional 777
            sailors considered assist cases. The fiscal year 2013 budget
            request supports our enduring goal to provide the highest
            quality care to our wounded, ill, and injured.
             Medical Home Port program is a team-based primary care
            model focused on optimizing relationships between patients,
            primary care providers and other health care professionals to
            enhance health and readiness. Beginning this year, mental
            health providers will be embedded within Medical Home Ports
            alongside the rest of the care team, and will facilitate
            regular assessment and early behavioral intervention for
            sailors and families. This will enable treatment in settings in
            which patients feel most comfortable and will reduce stigma
            associated with seeking care. Early detection and intervention
            in the primary care setting reduces the demand for time-
            intensive intervention in behavioral health specialty clinics.
            The presence of behavioral health within the Medical Home Port
            promotes increased comfort among primary care providers in
            treatment of behavioral health issues within their scope of
            practice in collaboration with the embedded specialists.
    Behavioral Health
        The Navy Behavioral Health program goal is to develop an
    organizational climate that encourages psychologically healthy,
    resilient and mission-effective sailors. It provides Navy-wide
    resources for suicide awareness and prevention, intervention skills,
    and risk mitigation procedures. We track and analyze data on suicide-
    related behaviors and deaths to identify trends and develop additional
    policy, training and outreach to prevent suicide risk. A 2011
    Behavioral Health Quick Poll reflects positive trends in the percentage
    of sailors attending Suicide Prevention Training and who recognize
    proactive suicide-prevention efforts occurring at their commands.
    Suicide Prevention: All Hands, All of the Time
        Every Navy suicide represents a tragedy that affects command
    cohesiveness and the loss of a valued shipmate; a loss the Navy is
    determined not to accept. Our comprehensive strategy to combat suicide
    incorporates four pillars: Education and awareness; Operational Stress
    Control; Intervention; and Post-intervention support; a leadership-led
    effort with a foundation built on a comprehensive array of education
    and outreach.
        Navy's suicide prevention approach builds combined sailor, family,
    and command resilience with a goal of changing behavior through
    personal resilience; peer to peer support; leadership intervention
    throughout the chain of command; enhancing family support; and
    fostering a command climate where help-seeking behaviors, when
    required, are expected in order to restore personal readiness.
        We have implemented a year-round strategic communication plan
    focused on Navy's ``Ask-Care-Treat'' model, or ACT, which emphasizes
    the value of peer-to-peer support. Additionally, targeted suicide
    assessment training is provided for primary care providers at large
    Medical Treatment Facilities as another viable means to identify at-
    risk sailors.
        The Suicide Prevention Coordinator network is growing with the
    addition of webinar training that has trained more than 500 new suicide
    prevention coordinators in 18 webinars since December 2011 and
    additional webinar training is planned for members of the Public
    Affairs community. We are also continuing to make progress in
    implementing recommendations of the DOD Task Force on Prevention of
    Suicides Among Members of the Armed Forces. Moreover, in fiscal year
    2013, we will provide targeted chaplain training, guidance and tools
    for leaders, to facilitate successful reintegration of sailors into
    their units following behavioral health or other medical treatment. We
    will improve integration of suicide prevention into the broader array
    of resilience and prevention efforts to provide a coherent approach to
    comprehensive wellness, resilience and prevention.
    Sexual Assault: Not in my Navy
        There is no place for sexual assault in the U.S. Navy. We are
    committed to eliminating sexual assault completely; to ensuring
    compassionate support for sexual assault victims; to investigating all
    cases thoroughly; and to holding perpetrators accountable within the
    full extent of the law. Since 2005, we have worked to build a robust
    Sexual Assault Prevention and Response (SAPR) program, and we are
    already engaged in a number of new initiatives to combat sexual
    assault. These collectively are critical investments in both individual
    sailors and in Force readiness. In addition to other direct measures,
    we will use a proven process of tiered training for sexual assault
    prevention and response and provide Navy's SAPR-Leadership training to
    all E-7 and above leaders and every sailor through SAPR-Fleet training.
    This process served us well in the repeal of Don't Ask Don't Tell and
    we anticipate this will resonate in our campaign to eliminate sexual
    assault from our Navy.
        Our immediate goal is to measurably reduce the frequency of sexual
    assaults involving sailors. Our first and perhaps most important tool
    has been a strong, consistent, top-down leadership message of
    intolerance for sexual assault. We are pleased to already be seeing
    Department-level leadership forums translating into special workshops
    and other sessions conducted by regional commanders and commanding
    officers. Our second core strategy involves updated training tools for
    Navy-wide use. We have already worked with civilian experts to review
    relevant content in a broad range of Navy training curricula spanning
    the full continuum of leadership development. We are developing special
    new video programs for all sailors to emphasize the criticality of
    sexual assault issues, and the responsibly of every sailor to actively
    intervene in protecting shipmates in vulnerable situations. In
    addition, we have undertaken special initiatives focused on those most
    at risk--our youngest sailors just out of recruit training. Our
    ``Bystander Intervention'' program uses locally trained instructors in
    small-group sessions to educate and mentor sailors at ``A-Schools''
    Navy-wide. At TSC Great Lakes, we have combined this effort with a
    number of simultaneous other initiatives--and we have developed a
    process of periodic anonymous surveys to assess our impact. After a
    year of progressive effort, it is still too early to speak of
    definitive outcomes, but the initial signs are encouraging. In 2011,
    over 67,000 sailors participated in an anonymous, web-based sexual
    assault survey conducted by the Navy Secretariat. We plan to repeat
    that process every 2-3 years worldwide to help us understand issues and
    trends in the underlying incidence of sexual assault. If it is
    necessary along the way, we will use our best accumulated data and
    insight to adjust course in combating sexual assault. Civilian experts,
    including researchers at the Centers for Disease Control, tell us this
    kind of approach is cutting-edge and breaking new ground. However, that
    is not all we are doing.
        In just the past 2 years, we have conducted site visits and special
    training at Navy sites worldwide. We have talked to stakeholders
    including senior commanders, SAPR program mangers, sailor focus groups,
    and even individual sexual assault victims. We have brought Sexual
    Assault Response Coordinators and installation commanders together from
    across the Navy for programs civilian experts on sexual assault
    prevention summits. We have given special training to NCIS agents and
    JAG lawyers on the unique aspects of sexual assault cases. NCIS
    recently hired new criminal investigators with extensive civilian
    backgrounds in sexual assault cases for every major Navy (and Marine
    Corps) installation. We are working on tool kits for commanding
    officers to help them make the right decisions in complex cases.
        In summary, there is no place for sexual assault in the U.S. Navy.
    We take the challenge seriously, we are engaged on numerous fronts, and
    we are committed to a sustained effort.
                                 vi. recruiting
        Navy has worked hard to achieve strong recruiting success over the
    past 4 years by projecting the Navy as an employer of choice and
    attracting the Nation's very best men and women for America's Navy. Our
    brand, ``America's Navy--A global force for good'', captures the
    diversity of our Navy missions while also appealing to our target
    recruiting market. In fiscal year 2011 and through fiscal year 2012 to
    date, Navy's ``total force'' recruiting achieved accession recruiting
    goals for officers in the Active component (AC) and enlisted recruiting
    goals in both the Active and Reserve components (RC). Additionally, we
    attained the best quality future sailors in history with 98.7 percent
    of accessions entering as high school diploma graduates (HSDG) and 88.2
    percent of accessions scoring in the upper 50th percentile on the Armed
    Services Vocational Aptitude Battery (ASVAB).
        Adapting to the current challenges of the recruiting environment
    and in anticipation of an improving economy, Navy recruiting is
    investing in the future with improvement of its Information Technology
    (IT) systems and streamlining its processes as part of its innovative
    Recruiting Force 2020 strategy. This strategy will provide an agile,
    mobile and highly responsive capable recruiting force.
        Looking ahead, we will continue to aggressively attack specific
    recruiting areas, particularly in the healthcare profession where all
    military services have had difficulty in attaining specialized medical
    professionals. An additional challenge is RC General Medical Officer
    recruiting where we achieved nearly 80 percent of our fiscal year 2011
    goal primarily due to the high retention of active duty officers in the
    unrestricted line communities. We continue to work closely with the
    Office Chief of Naval Reserve (OCNR) and BUMED on several aggressive
    initiatives to address both challenges as we keep Medical and RC
    General Medical Officer recruiting as our top officer recruiting
    priorities.
        The fiscal year 2013 budget requests $276.0 million for recruiting
    programs including accession incentives, advertising, and support for
    our Active and Reserve recruiters. This represents a reduction of $34.1
    million from fiscal year 2012 mainly due to adjustments in marketing
    and advertising. Our budget request ensures that the recruiting force
    remains appropriately sized and resourced for success.
        Accession bonuses remain critical to meeting our goals for
    recruiting health professionals, nuclear operators, and special
    warfare/special operations personnel. We maintained bonus levels for
    nuclear officers and health professionals, and continue to offer
    enlisted accession bonuses to special warfare/special operations and
    other critical ratings to meet increased demand. A favorable recruiting
    environment has enabled us to reduce the number of ratings eligible for
    an accession bonus from 67 in 2008 to 6 in 2012. The fiscal year 2013
    active budget request for bonuses, special pays, and incentives,
    represents a $22.1 million reduction from fiscal year 2012.
        An integral component of achieving our force management goals
    include competing for the best talent in our Nation's colleges and
    universities. Our Naval Reserve Officers Training Corps (NROTC) program
    has 61 units located at 75 host institutions with 87 cross-town
    institution agreements. While the NROTC program has more than
    sufficient capacity for our current requirements, Navy recognizes the
    value of engagement and presence on the campuses of America's elite
    colleges and universities and appreciates the high quality educational
    experience provided to future military leaders at these institutions.
    The highest quality applicants ever for our NROTC program in fiscal
    year 2011 further reflected Navy's recruiting success.
        To broaden outreach efforts and generate recruiting leads, and to
    offset reductions in paid media advertising, we are expanding our use
    of social media and other technologies. Navy Recruiting Command has
    over 100,000 active followers across 19 prominent social media sites,
    including 15 Facebook communities of interest. However, face-to-face
    contact with recruits in the field remains the cornerstone of our
    sustained success in attracting high quality, diverse individuals.
                                 vii. retention
        We continue to closely monitor retention behavior across the Force
    and project we will meet our fiscal year 2012 overall officer and
    enlisted retention goals. While we have been able to make selected
    reductions in retention bonuses, sailor retention behavior indicates we
    must continue to apply bonus programs to critical skill areas that are
    less responsive to changes in the economic environment and which
    require significant investments in training and education.
    Enlisted Retention
        Despite a decade at war, Navy continues to experience high levels
    of retention among enlisted personnel across the force, due in large
    part to Navy's efforts to provide a quality lifework experience,
    increases in basic pay and housing allowances, and contributing
    economic conditions. Additionally, we experienced higher retention
    among female servicemembers, especially within critical technical and
    warfighting skilled areas. fiscal year 2011 aggregate enlisted
    retention was 63.9 percent, which is elevated relative to historical
    norms, even though we utilized several force management tools to
    suppress reenlistments.

    ------------------------------------------------------------------------
                                                        Fiscal Year 2011
                                                           Achievement
                 Active Navy Retention             -------------------------
                                                     Reenlisted    Expected
                                                     (Percent)    (Percent)
    ------------------------------------------------------------------------
    Zone A (0-6 yrs)..............................        66.0         59.0
    Zone B (6-10 yrs).............................        67.0         66.0
    Zone C (10-14 yrs)............................        72.7         72.0
    ------------------------------------------------------------------------

        Our new and existing policies encourage longer-term career behavior
    as sailors commit sooner to stay for longer periods. While affording
    increased predictability of future personnel readiness, higher
    retention also contributes to increased competition for reenlistment.
        This past year, 14,544 sailors were discharged before the end of
    their contracts, slightly above the projected attrition of 14,300; we
    project similar attrition in fiscal year 2012. Misconduct-related
    discharges this year are within 1 percent of misconduct discharges in
    fiscal year 2011. Reserve enlisted attrition rates continue to trend
    lower than the historical average, evidence of the high quality Force
    we have recruited.
        Demand in civilian industry for highly trained nuclear-qualified
    sailors challenges our ability to meet nuclear retention goals. We are
    committed to retaining sailors with critical skills in high demand in
    the civilian sector, as well as sailors in specialties that continue to
    experience high operational tempo in support of OCO, such as special
    warfare/special operations and independent duty corpsmen. Selective
    Reenlistment Bonus (SRB) remains the most important tool in our efforts
    to retain these highly-skilled sailors.
        By our close monitoring of retention behavior, we apply adjustments
    to SRB levels on a semi-annual basis, or as required. We have adjusted
    SRB levels five times in the past 18 months, reducing the number of
    eligible skill areas by 26 percent compared to fiscal year 2011. In
    fiscal year 2012, 33 of 84 ratings will receive SRB; the pool of
    eligible sailors is 2.3 percent of our Active Enlisted Force,
    representing a 60 percent reduction compared to fiscal year 2011. Our
    SRB plan targets high-demand skill sets unaffected by slowing or down
    economy, to include special warfare/special operations, information
    technology, medical, cryptology, and nuclear ratings. The fiscal year
    2013 budget request includes $107.3 million for new SRB contracts for
    Active Duty sailors, a slight reduction from fiscal year 2012. The
    fiscal year 2013 SRB budget for selected Reserve sailors is 13 percent
    less than fiscal year 2012, a reduction achieved by realignment of
    resources within the Navy Reserve Comprehensive Bonus Strategy to
    target the most critical specialties.
    Officer Retention
        Active and Reserve officer retention rates remain high due, in
    large part, to targeted incentive pays, improved mentoring, flexible
    career options, and increased emphasis on lifework integration
    initiatives and current economic conditions. Retention of female
    unrestricted line (URL) officers beyond initial minimum service
    requirement (MSR) has increased in the last 4 years in both the surface
    warfare community (19 percent for Year Group 2001 to 33 percent for
    Year Group 2004) and aviation community (14 percent for Year Group 1998
    to 27 percent for Year Group 2001).\1\ Initiatives to improve retention
    of Selected Reserve (SELRES) officer communities by 2014 include
    targeted officer affiliation and retention bonuses, increased accession
    goals, and Continuum of Service programs.
    ---------------------------------------------------------------------------
        \1\ Because Minimum Service Requirement (MSR) is different for
    Surface Warfare (5 years) and Aviation (7 years), 2 comparable year
    groups (i.e., includes women who are past their initial service
    obligation) were examined to more accurately capture overall URL female
    retention. YGs 98 and 01 which both had only 7 year MSRs for prop/helo
    and 8 years for jets (10 U.S.C. 653).
    ---------------------------------------------------------------------------
        Although the overall loss rate for junior officers increased
    slightly from fiscal year 2009 to fiscal year 2010, economic conditions
    have contributed to surface and submarine communities meeting retention
    goals for the third consecutive year. With signs of an improving
    economy, we are closely watching junior officer retention since
    retention through the operational department head tour is a critical
    metric for monitoring the health of these communities.
        After a decade of war, we are seeing signs of increased operational
    stress on Naval Special Warfare (SEAL), Special Warfare Combatant-Craft
    Crewmen (SWCC), Combat Support and Combat Service Support personnel;
    increased operational tempo, decreased dwell time, and deployment
    unpredictability have contributed to a decrease in junior officer
    retention, particularly at the lieutenant commander (O-4) level.
    Mentorship and increased access to family support programs and
    operational stress control resources are primary tools to mitigate the
    effects of stress on these officers and their families. The fiscal year
    2013 budget request includes $7.6 million for targeted incentive pays
    to retain these critical officers.
        We have experienced slight improvement in medical community
    retention, largely due to competitive incentives and bonuses. Select
    subspecialties; including dentistry, psychiatry, clinical psychology,
    clinical social work, physician assistants, general surgery, preventive
    medicine, family medicine, mental health nurse practitioner,
    perioperative, and nurse anesthetists, continue to require attention.
    The fiscal year 2013 budget request includes $76.4 million for special
    and incentive pays to retain these critical medical professionals.
    Retention and Compensation Going Forward
        The Budget Control Act of 2011 mandates reductions in Federal
    spending at levels that require every area of the budget to be
    scrutinized for efficiencies to produce cost savings. With the current
    budget situation, the Navy believes that every area of the budget, to
    include personnel costs, should be examined for efficiencies that could
    lead to cost savings. However, before any changes are made, complete
    understanding of the impact those changes might have on the
    servicemember and the Navy should be understood. The current
    compensation system, to include incentive pay, retirement and other
    benefits, is a major factor in retention for servicemembers. Any
    changes to this compensation package must be examined to ensure that
    Navy retention requirements are met.
        We routinely review special and incentive pay and bonus programs,
    adjusting bonus levels and eligibility in response to manning levels,
    in addition to reducing enlisted accession bonuses, Assignment
    Incentive Pay (AIP) and SRB. Over the past year, we have reduced
    officer bonuses in the aviation, and intelligence communities.
    Additionally, we restructured the Submarine Support Incentive Pay
    program to efficiently address shortfalls at specific career points and
    reduced total program costs by over 58 percent since fiscal year 2009.
    We will continue monitoring retention rates in fiscal year 2012 to
    determine the need for further adjustments for select officer
    communities.
        The current military compensation system, including retired pay and
    other monetary and non-monetary benefits, is a major factor in the
    success and quality of the All Volunteer Force. Navy strongly supports
    protecting the retirement benefits of those who currently serve by
    grandfathering their benefits; Navy is working closely with the Office
    of the Secretary of Defense (OSD) and other Services on this effort.
    Any changes to compensation, especially the retirement system, must be
    fair to the sailor and suitably reward the individual and their family
    for their service. As we examine the personnel budget, we must
    carefully consider, before imposing any cuts, the potential impact on
    sailors and Navy military personnel readiness.
                         viii. learning and development
        Education and training are strategic investments that enable our
    highly-skilled force to meet the demands of CNO's Sailing Directions
    and the Navy Total Force Strategy for the 21st Century. In response to
    the demands of our increasingly diverse and technologically complex
    world, we have increased our focus on Science, Technology, Engineering
    and Math (STEM) in our accessions and education programs. The $1.5
    billion fiscal year 2013 education and training budget invests in
    innovative training technologies and increases our investment in
    simulators, curricula, and instructors targeted at critical mission
    areas.
    Accessions Training and Education
        We continue to invest in the Navy's ROTC program as an essential
    contributor to a diverse work force and diversity of thought and, in
    concert with appropriately-sized U.S. Naval Academy and Officer
    Training Command accessions, we have the officer accessions capacity we
    need to meet USN and USMC requirements. New investments in cyber
    education at USNA will ensure our flagship institution produces
    officers with the technical education and core competencies necessary
    to excel in this area as 21st century warriors.
        We have no plans to close Navy ROTC units, and in fact have
    recently restored the historic Navy ROTC presence at Harvard, Yale, and
    Columbia, and have opened host units at Arizona State University and
    Rutgers. Although the Navy's Junior ROTC program has included closures,
    they have occurred in accordance with Federal guidelines, and the bulk
    of the affected units have substituted Navy National Defense Cadet
    Corps (NNDCC) units in their stead. We are evaluating re-opening some
    JROTC units previously closed under Federal guidelines, but which have
    restored student enrollment above the statutory minimum enrollment
    threshold. Recruit Training Command (RTC) is appropriately sized to
    support current enlisted accession requirements and prepared to meet
    the increases associated with economic changes.
    Technical Training and Skills Development
        The Navy continues to adjust staffing and student throughput of our
    accessions pipeline schools in response to the changing size, missions,
    and make-up of the Force. We have initiatives in progress to optimize
    the efficiency and responsiveness of the supply chain that takes a
    sailor from ``the street to the fleet''. For 2013 we made critical
    targeted investments in our technical training schoolhouses focused on
    improving readiness in key mission capabilities areas including
    Integrated Air & Missile Defense; Anti-Submarine & Surface Warfare;
    Command, Control, Communications, Computers, Combat Systems, and
    Intelligence; and Ballistic Missile Defense.
        The fiscal year 2013 budget request supports additional investments
    in simulators, trainers, and new technologies that allow us to deliver
    sailors to their commands with the skills needed to perform their
    missions faster and at reduced cost. Coupled with training aboard
    ships, simulators increase training opportunities and effectiveness
    across the Fleet while minimizing stress on equipment, operating costs
    and risk to our sailors. Examples of our fiscal year 2013 simulator
    investments include the Integrated Air & Missile Defense Advanced
    Warfare Trainer for our Ballistic Missile Defense platforms and the
    Aegis Ashore Team Trainer for shore based Ballistic Missile Defense.
    The Littoral Combat Ship (LCS) training program is based on the Virtual
    Ship Centric Training Strategy, which uses virtual simulators in the
    ashore LCS Training Facility to cover the full breadth and depth of
    ship operations and maintenance training.
        We continue to invest in the development and application of
    innovative training technologies that offer tremendous potential to
    provide our sailors the best technical training in less time with
    improved understanding and retention. The field of intelligent tutoring
    is a focus area for the Future Naval Capabilities Capable Manpower
    science and technology program, and our enlisted cyber-warriors are
    currently participating in a very promising Digital Tutor pilot course
    that combines classroom, instructor led training with advanced
    computer-based one-on-one tutoring to increase a student's motivation
    and problem solving skills.
    Joint and Professional Military Education
        In the past year, the Navy has held education summits to examine
    the role of joint education, professional education and technical
    education in the career paths of our unrestricted line, restricted line
    and staff officer communities. The results of these summits, combined
    with a thorough review of the education requirements coded to all Navy
    officer billets, are informing an ongoing review of the Navy's
    education strategy. A review of Naval Post Graduate School (NPS)
    curricula is underway to examine ways to reduce time required to
    complete in-residence degrees, which, in conjunction with expanded
    distance learning opportunities, will better align with our officer
    career tracks and allow greater flexibility in meeting the Navy's
    Joint, and professional education requirements. In the past year, we
    have also begun new masters degree programs at the NPS for cyber
    operations and for energy management.
        A progressive continuum of professional military education,
    including degree opportunities, also exists for enlisted personnel.
    Junior enlisted pursue professional military education through distance
    learning hosted by the Naval War College, while senior enlisted
    personnel are afforded the opportunity to attend the Senior Enlisted
    Academy (SEA), which graduated 505 senior enlisted sailors from its 6-
    week resident course in fiscal year 2011.
    Voluntary Education
        The Navy's on-line Virtual Education Center (VEC) website and
    counseling service has proven very successful in providing centralized
    management of Tuition Assistance (TA) requests, sailors' academic
    transcripts and virtual counseling. The VEC has enabled the Navy to
    reduce operating costs by downsizing or eliminating local Navy College
    Offices at some bases while also reducing paperwork and processing time
    and increasing accessibility to educational opportunities for our
    sailors.
        Navy continues to maximize education opportunities through programs
    specifically tailored to meet the needs of our sailors and their
    families. The Navy College Program for Afloat College Education
    (NCPACE) makes college courses available to sailors assigned to ships
    and submarines deployed around the world. The Navy College Program
    Distance Learning Partners (NCPDLP) program offers both associate and
    bachelor degree programs through partnerships with accredited civilian
    institutions. These institutions provide maximum credit for military
    training and experience for every Navy rating and combine those credits
    with courses they offer to meet degree requirements. Sailors may use
    Tuition Assistance to offset their education costs in both NCPACE and
    NCPDLP.
        The Tuition Assistance (TA) program is the primary means for Navy
    personnel to pursue their off-duty education goals. The TA program
    management controls we implemented in 2010 require sailors to have a
    plan with clear educational goals to emphasize both professional
    development and academic success. These controls have helped us remain
    within our established funding limitations while providing a more
    equitable opportunity to use the program. Our management controls have
    improved academic success as evidenced by the reduction in the non-
    completion rate of TA-funded courses from 16 percent in fiscal year
    2009 to 7.5 percent in fiscal year 2011.
    Credentialing
        The demand for credentialing examinations continues to be very
    high, indicating the significant value sailors place on gaining
    professional recognition for their training and experience. In fiscal
    year 2011, we funded 19,762 certification exams, a 43 percent increase
    over fiscal year 2010. The Navy Credentialing Opportunities Online
    (COOL) website experienced 497,002 visits, a 65 percent increase over
    fiscal year 2010, and 30,460,627 hits, an 11 percent increase. Sailors
    in all 83 ratings have applied for funding, and 94.2 percent of those
    completing voluntary certification examinations via Navy COOL funding
    passed, far exceeding the national average pass rate of 75-85 percent,
    and represents a positive return on investment. In 2011, Navy COOL and
    Navy's Credentialing Program was awarded ``Best Workforce Development
    Program`` by Human Capital Management Defense, and the Navy COOL
    program was recognized through the Training Top 125 Award for the
    second consecutive year.
        In 2012, work has already begun to implement several improvement
    recommendations from the President's Employment Initiatives DOD/VA
    Veterans Employment Task Force and to develop Navy COOL pages to
    display credentialing opportunities for Navy's 198,000+ civilian
    employees. In addition, we will waive the time-in-service prerequisites
    to make COOL available to all sailors affected by the ERB to help
    posture them for success as they transition to the civilian workforce.
    Navy Language, Regional Expertise, and Culture (LREC)
        Cultural, historical, and linguistic expertise remains essential to
    fostering strong relationships with global partners and to enhance our
    ability to execute missions in multinational environments. Over the
    past year, LREC efforts paid dividends in every geographic area of
    operations, including support for Operation Tomodachi in the Far East,
    Operation Odyssey Dawn in the Mediterranean, and Operation Continuing
    Promise in Latin America. Navy's LREC program in fiscal year 2011
    provided language and cultural training and products to over 67,000
    sailors and officers, 49 flag officers and 46 senior leaders heading to
    overseas assignments.
        We recently expanded the Navy Reserve Language Culture and Pilot
    Program to include all selected Reserve personnel. In fiscal year 2012,
    we are increasing opportunities for overseas study, language and
    cultural immersion, as well as professional exchanges with foreign
    navies for U.S. Naval Academy midshipmen. We are also pursuing full
    implementation of in-country language immersion training for Foreign
    Area Officers (FAOs), and transitioning the Personnel Exchange Program
    (PEP) to redefine long-standing agreements with traditional allies and
    partners, while realigning towards nations in regions of increasing
    strategic importance. In anticipation of the shift in focus outlined in
    Secretary Panetta's Sustaining U.S. Global Leadership: Priorities for
    21st Century Defense, LREC product development emphasis is
    transitioning from Central Command (CENTCOM) to the Asia-Pacific
    region, Indian Ocean perimeter, and West Africa.
        This past year we participated in Maritime Security Cooperation
    activities and supported the Joint Force in Afghanistan and Pakistan
    with enhanced language and cultural capabilities through the
    Afghanistan-Pakistan (AFPAK) Hands Program. We also provided timely,
    tailored language, and Afghanistan/Pakistan training and culture
    products to 3,695 Navy Individual Augmentees (IAs) and to sailors
    assigned to units deploying to the CENTCOM Area of Responsibility.
                          ix. building for the future
        As we navigate through a period of change, Navy must take action
    now to posture itself for success in the future. Evolving missions,
    shifting workforce demographics, and increased competition for skills
    will require new and innovative approaches to attracting, recruiting,
    and retaining the Nation's best talent. Mission success starts and ends
    with a highly skilled, highly capable workforce. To build an effective
    future force, we remain focused on developing and sustaining a diverse
    workforce, providing our sailors with opportunities for greater work-
    life balance, and promoting open, frequent communication with families.
    Diversity Initiatives
        Diversity is a Navy strategic imperative. By 2020, demographic
    projections indicate that minorities will comprise nearly 40 percent of
    the Navy's recruitable market, with minority representation continuing
    to increase over time. Navy's ability to access and retain the talents
    of varied sectors in our society has a direct impact on mission success
    at home and abroad.
        We recognize the value of diverse ideas, perspectives, and
    experiences to remaining competitive in an increasingly global
    environment; our Navy draws strength and innovation from this
    diversity. Navy continues to effectively execute our accession strategy
    of ``moving the needles,'' maintaining a high number of diverse
    applicants and enrollments in both NROTC and U.S. Naval Academy class
    of 2015. In recognition of our efforts, Navy received the 2011
    Diversity MBA Magazine's Best Places for Diverse Managers to Work,
    ranking number 26 on the list of the top 50 organizations for Diversity
    Leadership, and the only government organization included on the list
    of Fortune 500 companies. Additionally, the Association of Diversity
    Councils recognized the Navy's Strategic Diversity Working Group (SDWG)
    as the nation's number one diversity council for 2011.
    Expanding Opportunities for Women
        Gender diversity remains an important focus area for Navy, 23
    percent of our enlisted accessions were women in fiscal year 2010 and
    fiscal year 2011, and we are on-track to bring in a similar number of
    women in fiscal year 2012. We are exploring ways to further increase
    the number of women in the Navy in the future. With few exceptions in
    which the combat exclusion applies, the vast majority of billets (93
    percent) are available to women, including ship, aviation squadron,
    afloat staff, naval construction force units and most recently,
    specific submarine platform billets.
        In fiscal year 2011, Navy began the integration of female officers
    into the submarine force. Five of the eight crews being integrated
    during the first round are successfully integrated and the remaining
    three will be by the end of March 2012. Our second round will include
    one additional SSGN and SSBN (i.e., four additional crews); women are
    currently in the training pipeline for integration in November 2012. We
    will continue to integrate women on submarines in a brisk yet
    responsible manner, while leveraging the insights from the studies and
    the lessons learned from initial integration efforts.
    Life-Work Integration
        In an All-Volunteer Force, life-work integration and flexible
    career options are key to attracting, recruiting, and retaining the
    talent of a new generation just entering the workplace. With 75 percent
    of Fortune 500 companies reporting a chronic ``talent shortage'' among
    mid-level employers, Navy continues to address the imperative to retain
    talent and provide a work environment that is personally and
    professionally rewarding. Navy's ability to recruit and retain the
    talents of varied demographics has a direct impact on mission success.
    We are actively creating programs to enhance personal and professional
    development while providing life-work balance.
        Sailors and their families continue to benefit from comprehensive
    parental support programs including paternity and adoption leave,
    extended operational deferment for new mothers, and expanded childcare.
    We continue to support life-work integration while meeting mission
    requirements through initiatives such as Career Intermission, telework,
    and other flexible work options.
    Communication with Navy Families
        Navy recognizes that social networking and the Internet can greatly
    facilitate communication efforts with sailors and their families. We
    continue to promote open, frequent communication with our sailors and
    their families and encourage development of social networking accounts,
    mobile applications, public websites, and publishing newsletters to
    sailors and their families via email.
        The Navy Recruiting Command ``Navy for Moms'' website received a
    2011 Workforce Management Magazine Optimas Award for ``Service.''
    Through this award-winning website, families of current sailors can
    share information with families of future sailors and answer many
    questions about Navy life. Since its establishment in March 2008, more
    than 36,000 members have used the website to discuss issues with others
    who share common concerns. ``Military OneSource'' provides information
    on many topics, including parenting and childcare, educational
    services, financial information and counseling, civilian legal advice,
    crisis support, and relocation information. This free, 24/7 information
    and referral service offers practical solutions, background information
    and advice via the telephone, email, or the web to all Active Duty and
    Reserve sailors, and their families.
        Social media venues such as Facebook have quickly become a primary
    and effective means of communicating with a wide audience, including
    family members. Additionally, in cooperation with Navy's Chief of
    Information's social media team, we are able to connect to a much
    broader audience by taking advantage of the U.S. Navy official Facebook
    page, which currently has more than 400,000 fans.
    Recognized for Results
        Our efforts have culminated in Navy's recognition as a Top 50
    organization. Top 50 organizations encourage innovation and focus on
    performance, while taking care of their people through programs and
    policies that support a culture of trust, respect, and collaboration.
    In October 2011, Navy received several awards for Business Excellence
    in Workplace Flexibility from the Alfred P. Sloan Foundation. These
    awards recognize initiatives introduced at six different organizations
    across the Navy that promote flexible work options while still
    achieving business goals. For the third year in a row, Navy received
    the prestigious Workforce Management Magazine's Optimas Award. This
    marked the first time in the award's 21-year history an organization
    has won 3 consecutive years.
        Navy continues to earn recognition for its high quality training
    and development programs. In the 3 years since Navy began participating
    in the American Society for Training and Development (ASTD) awards
    program, no other organization has won more awards for ``Excellence in
    Practice.'' Most recently, Navy was honored with an ASTD BEST Award,
    ranking third out of 32 best training organizations from a prestigious
    list of recipients from 6 nations. For the second year, Training
    Magazine recognized Navy as one of the premier training organizations
    in the country, ranking seventh out of 125 organizations recognized. We
    remain committed to seeking out best practices across industry and
    benchmarking our programs against the best in the Nation.
                                 x. conclusion
        The President's fiscal year 2013 budget request supports critical
    programs that will ensure Navy's continued success in delivering the
    personal component of CNO's Sailing Directions, the Navy Total Force
    Strategy for the 21st Century, and key capabilities in support of
    Sustaining U.S. Global Leadership: Priorities for 21st Century Defense.
    I look forward to working with you as we continue to shape the Navy to
    meet current and emerging requirements, while confronting the
    challenges that lie ahead. On behalf of the men and women of the U.S.
    Navy, and their families, I extend our sincere appreciation for your
    leadership, commitment and unwavering support. Thank you.
                                     ______

          Prepared Statement by Lt. Gen. Robert E. Milstead, Jr., USMC
        Chairman Webb, Ranking Member Graham, and distinguished members of
    the subcommittee, it is my privilege to appear before you today to
    provide an overview on Marine Corps personnel.
                                i. your marines
        The Marine Corps is our Nation's expeditionary force in readiness.
    We are ready to respond to today's crisis--with today's force--TODAY!
    Currently, approximately 27,000 marines are forward-deployed in
    operations supporting our Nation's defense. Our individual marines are
    the Corps' most sacred resource, and the quality of our force has never
    been better.
                                ii. end strength
        New strategic guidance issued by the President and the Secretary of
    Defense provides the framework by which the Marine Corps will balance
    the demands of the future security environment with the realities of
    our current fiscal environment and the lessons learned from 10 years of
    combat. The new strategy includes a reduction in our Active component
    end strength from 202,100 to 182,100 by the end of fiscal year 2016,
    while maintaining our Reserve component at 39,600 marines. Although
    reshaping the Marine Corps to a force of approximately 182,100 marines
    entails some risk relative to current and anticipated capacity
    requirements, we believe that it is manageable. Your new Corps will
    have fewer infantry battalions, fixed wing, aviation squadrons, and
    general support combat logistics battalions than we had prior to
    September 11. However, it adds cyber warfare capability, special
    operators, wartime enablers and higher unit manning levels--all lessons
    gleaned from recent combat operations.
        Our intent will be to conduct our drawdown in a measured way
    beginning in fiscal year 2013. Our plan is to reduce our end strength
    by approximately 5,000 marines per year and will be accomplished by
    some accession cuts, natural attrition, and voluntary separation and
    retirement authorities. The drawdown cannot be accomplished by
    accession cuts alone--that is a lesson learned from the last drawdown
    in the 1990s. In addition, we have no plan to conduct a reduction-in-
    force (RIF) of our marines; they will be allowed to complete their
    current period of service. Our all-volunteer system is built upon a
    reasonable opportunity for retention and advancement; wholesale cuts
    undermine the faith and confidence in service leadership and create
    long-term experience deficits with negative operational impacts. Such
    an approach would no doubt do significant long-term damage to our
    ability to recruit and maintain a quality force.
        Our overarching goal must be to keep faith with our marines and
    their families.
                           iii. marine corps reserve
        Our Reserve component continues to make essential contributions to
    Total Force efforts in Overseas Contingency Operations. In 2011, we
    continued to refocus our recruiting and retention efforts on meeting
    our Reserve component authorized end strength. These efforts included
    increases to the non-prior service recruiting mission, lowering rates
    of attrition, and discreet targeting of those marines eligible to
    receive an incentive. As a result, we achieved over 99.8 percent--
    39,527--of authorized end strength in fiscal year 2011 (not including
    reservists who served on active duty at least 3 of the prior 4 years).
        Our incentives budget is $5.4 million in fiscal year 2012, and we
    project an end strength of 39,249, approximately 1 percent below our
    authorized level. For fiscal year 2012 and beyond, we have refined the
    use of incentives to strengthen manning in specialties and grades where
    we remain critically short. In particular, the recruitment of company
    grade officers and aviators remains most challenging. Targeted
    incentives and transition assistance outreach programs help us to
    attract junior officers who are leaving the Active component. While
    transitioning officers from the Active component provide the majority
    of our company grade officer leadership, we have had considerable
    success commissioning officers directly into the Reserve. The Reserve
    Officer Commissioning Program, which includes Officer Candidate Course-
    Reserve (OCC-R)--has produced a total of 431 lieutenants for the Marine
    Corps since its creation in 2006 and has increased company grade
    officer fills from 21 to 46 percent. More importantly, it enables the
    Marine Corps Reserve to place officers in critical small unit
    leadership positions at the platoon and company level.
        To complement outreach efforts and the use of incentives, and to
    address the challenges of geographic constraints, we offer occupational
    specialty retraining. The Prior Service Military Occupational Specialty
    Retraining Program is crucial in our efforts to join enlisted marines
    to units that are located in areas of the country where it is
    geographically challenging to recruit. This training has helped us to
    build positive trends with respect to recruiting and retention and are
    integral to our future success.
        This year we increased efforts to fully staff Reserve aviation
    squadrons. To achieve this goal, we developed a number of Reserve
    aviation manpower initiatives designed to encourage transitioning
    Active component aviators to affiliate with Reserve units. Since there
    are a limited number of Reserve squadrons, the use of travel
    reimbursement, incentives, and aviator retraining programs are critical
    to achieving our staffing goals. Altogether, these programs, combined
    with our prior service recruiting efforts, should provide for at least
    90 percent manning of critical combat arms and company grade officer
    billets by the end of fiscal year 2014, with Reserve squadrons reaching
    this mark 1 year later.
                                 iv. recruiting
        The Marine Corps is unique in that all recruiting efforts (officer,
    enlisted, regular, Reserve, and prior-service) fall under the direction
    of the Marine Corps Recruiting Command. Operationally, this provides us
    with tremendous flexibility and unity of command, allowing us to meet
    accession requirements.
        To meet future challenges in the recruiting environment, it is
    imperative that we maintain our high standards both for our recruiters
    and those who volunteer to serve in our Corps. Recruiting quality youth
    ultimately translates into higher performance, reduced attrition,
    increased retention, and improved readiness for the operating forces.
    Our actions, commitment, and investments today in recruiting ensure a
    high state of readiness in our Corps tomorrow.
        In fiscal year 2011, we achieved over 100 percent of our enlisted
    and officer recruiting goals for both the Active and Reserve
    components. On the enlisted side, we accessed over 99 percent Tier 1
    high school diploma graduates and over 74 percent in the upper Mental
    Groups of I-IIIAs, both exceeding Department of Defense quality
    standards. Our fiscal year 2012 Mission for enlisted marines is 28,500
    regulars (Active component) and 5,450 reservists. In fiscal year 2012,
    we expect to meet our annual recruiting mission to include all quality
    goals. Additionally, we expect to have a strong population of qualified
    individuals ready to ship to recruit training as we enter fiscal year
    2013. The fiscal year 2013 mission forecast is 28,500 regulars and
    5,800 reservists.
        The Marine Corps seeks to reflect the diversity of the Nation and
    be representative of those we serve. Diversity remains a strategic
    issue that raises our total capability by leveraging the strengths and
    talents of all marines. In fiscal year 2011, a tremendous amount of
    effort and resources was placed into communicating the Marine Corps
    diversity message through community outreach, recruit marketing,
    training and education. This enduring challenge requires the Corps to
    strategically evaluate our current efforts in order to drive toward
    improved capabilities.
        Our officer accessions mission for fiscal year 2012 is 1,450 Active
    Duty and 125 Reserve officers. Historically, the Active component has
    been the exclusive source of lieutenants and captains for the Reserves.
    As previously noted, filling company grade officer billets for our
    Selected Marine Corps Reserve units is traditionally our greatest
    challenge, but the success from the OCC-R program is proving to help in
    remedying this shortfall.
        Our recruiting command is taking a hard look at its advertising
    budget. It is imperative that we maintain the momentum within a
    competitive media environment and still provide the basic awareness
    level when reaching out to an increasing number of critical audiences
    (prospects and their influencers, officer candidates, and multicultural
    audiences) to include our diversity outreach. It is important that we
    acknowledge that today's successes are dividends from the investments
    made in recruiting and advertising 4 to 5 years ago.
        Our greatest asset is the individual marine and recruiting remains
    the lifeblood to the Corps and our bedrock to ``Make Marines, Win
    Battles, and Return Quality Citizens.'' We thank you for the generous
    support you have provided to us and look forward to working with you to
    ensure continued success in the future.
                                  v. retention
        In fiscal year 2011, the Marine Corps achieved both its accession
    and retention missions and completed the year with a 201,497 Active
    component end strength (including 340 reservists who served on active
    duty at least 3 of the prior 4 years). For fiscal year 2012, we will
    continue to assess all recruiting and retention missions, enabling the
    Marine Corps to successfully meet our mission requirements and poise
    the force for the impending drawdown.
        Even with our successes in recruiting, retention, and overall end
    strength, the Marine Corps must continue to shape our force to meet
    continuing mission requirements and fill critical military occupational
    specialties (MOSs) with the most qualified marines. Incentive pays
    remain critical to this effort, allowing the Marine Corps to fill hard
    to recruit positions, such as crypto linguists and reconnaissance.
    Enlistment bonuses also allow us to ship new recruits at critical times
    to balance recruit loads at the depots and meet school seat
    requirements. It is important to note that only 8 percent of new Marine
    Corps recruits receive an enlistment bonus; the Marine Corps budget for
    enlistment bonuses has decreased from $75 million in fiscal year 2008
    to $14.7 million in fiscal year 2012.
        Selective Reenlistment Bonuses (SRBs) similarly allow us to shape
    our career force. SRBs target critical MOSs and allow us to laterally
    move marines to these MOSs. There are currently 6 of 205 occupational
    specialties where the on-hand number of marines is less than 80 percent
    of what is required. Our SRB funding has decreased from $468 million in
    fiscal year 2009 to $108.6 million in fiscal year 2012.
                          vi. women in service review
        As directed by the National Defense Authorization Act for Fiscal
    Year 2011, the Marine Corps, alongside the other Services, conducted a
    review of the laws, policies and regulations regarding the service of
    female members. The findings were delivered to Congress in February
    2012. The Marine Corps requested an exception to policy that would
    allow for the assignment of Active component female company grade
    officers and staff noncommissioned officers (E-6 and E-7) into select
    Ground Combat Element (GCE) units (Artillery, Tanks, Assault Amphibian,
    Low Altitude Air Defense, Combat Engineer and Combat Assault) down to
    the battalion level, in military occupational specialties (MOSs)
    already open to female marines. This will open 97 officer billets and
    274 staff noncommissioned officer billets for assignment of female
    marines during 2012.
        Concurrent with the exception to policy, the Marine Corps will
    conduct responsible research to generate data that can be used to make
    informed decisions and potentially develop appropriate gender neutral
    tests to screen males and females prior to assignment to the GCE. We
    must ensure that all marines assigned to the GCE have the required
    physical aptitude. This research will include a force survey and a
    research study that will assess the potential impact on recruiting, MOS
    classification, entry level training, and promotions in order to inform
    future assignment decisions. We will report back to the Secretary of
    Defense with an initial assessment in November 2012.
        The Marine Corps is committed to utilizing the skills and abilities
    of our marines to achieve the highest levels of unit readiness and
    focus on mission accomplishment. We are proud of the contributions that
    women make across the Marine Corps and want to ensure female marines
    continue to have opportunities to be successful.
                                 vii. diversity
        The Marine Corps is committed to attracting, mentoring and
    retaining the most talented men and women who bring a diversity of
    background, culture and skill in service to our Nation. In both
    representation and assignment of marines, diversity remains a strategic
    issue. Our diversity effort is structured with the understanding that
    the objective of diversity is not merely to strive for a force that
    reflects a representational connectedness with the rich fabric of all
    the American people, but to raise total capability through leveraging
    the strengths and talents of all marines.
        We are near completion of a new comprehensive campaign plan to
    focus our diversity effort in areas where improvement is most needed
    and anticipate release of this roadmap this year. This is an effort
    facilitated through our standing Diversity Review Board and a Diversity
    Executive Steering Committee chartered to establish the foundations for
    diversity success in the Total Force. In addition, since 2010, we have
    conducted leadership seminars that introduce diverse college
    undergraduates to Marine leadership traits and leadership opportunities
    in the Marine Corps; we are actively seeking new communities within
    which to continue this effort.
        The Marine Corps has established minority officer recruiting and
    mentoring as the highest priority in our recruiting efforts. Because we
    acknowledge the accession and retention of minority officers has been a
    challenge for our Corps, we are committed to taking steps to further
    facilitate the mentoring and career development of all our officers
    with emphasis on our minority officers in order to encourage the
    retention of our best officers no matter their background.
        Overall, we seek to communicate the Marine Corps diversity mission
    through community outreach and recruit marketing; to ensure continued
    opportunities for merit based development and advancement; and to
    optimize training and education to increase the understanding for all
    marines of the value that diversity brings to the Total Force.
              viii. taking care of marines, sailors, and families
        Marine families are America's families and a model for the Nation.
    The Marine Corps will continue to take care of its marines and families
    through enhanced family readiness and family care programs. Marine
    communities are a team, and our programs promote increased
    socialization and community connection through official unit
    communication, readiness preparation and information, and referral
    opportunities. These programs seek to improve resiliency by training
    marines and families how to cope with the rigors of life in the Marine
    Corps, whether at home or deployed.
    Family Readiness
        The Marine Corps has 380 Family Readiness Officers, who connect
    marines and families at the grassroots level to critical information
    and referrals and assist families during all phases of deployments. We
    recently completed an overhaul of our Marine Corps Family Team Building
    Training to ensure we are providing relevant, standardized and timely
    support and information to our families. In fiscal year 2011, we
    provided 5,869 Marine Corps Family Team Building training sessions.
        Family readiness also benefits from dependable yet innovative
    communication tools that help families effectively manage their lives
    in times of stress. eMarine, a secure website, delivers readiness
    information to marines and their families whether they are on active
    duty stationed at large installations or in the Reserves living in
    remote locations. It gives family members access to documents, photos
    and videos, discussion forums, and vital information about their
    marine's unit from anywhere in the world, 24/7.
        The Marine Corps conducted a full review during fiscal year 2011 of
    its Family Readiness programs to ensure they adequately support the
    mission and operational requirements of the Marine Corps. While our
    programs conform to the Commandant's guidance and congressional
    direction, we are developing program plans and supporting resource
    requirements to maintain capabilities at appropriate levels.
    Family Care
        Family care programs support the care and development continuum of
    Marine Corps children from birth into their teens. Family care includes
    our school liaisons, who provide approximately 70 school districts with
    information about the needs of Marine Corps families and access to
    beneficial training and counseling services to support teachers and
    students. Marine parents are comforted by the support of a local
    education expert, who provides meaningful insight to new transfers and
    those with questions on local education policies.
        Child care services remain a high priority. In fiscal year 2011, we
    provided 15,927 child care spaces, which reflects an 18 percent
    increase in capacity from fiscal year 2010. The Marine Corps opened
    five new child development centers in fiscal year 2011 and plans to
    open eight more in fiscal year 2012. The Marine Corps has completed a
    Child Development Program and Facility Master Plan, which reviewed
    child care capabilities and costs across the Marine Corps. This plan
    will facilitate efforts to build multi-capable, adaptable services,
    reexamine structure, and ensure that our programs are prepared to
    deliver child care in an efficient manner. We will continue to
    standardize our processes in fiscal year 2012 and will work to enhance
    child care for marines and families serving on independent duty or at
    locations that are isolated from military bases and stations. We are
    also expanding our staffing model to include nurses at our Child
    Development Centers and behavioral health specialists at our
    installations across our family programs.
        Families enrolled in our Exceptional Family Member Program (EFMP)
    strongly endorse our focus on providing a continuum of care and the
    improvements made to their level of support. Two years of increasing
    enrollments and a reduction in issues experienced by families
    relocating to new duty stations demonstrate this approval. EFMP had
    only 4,500 enrolled family members in fiscal year 2008; it has over
    10,000 today. The Marine Corps continues to underwrite the cost of up
    to 40 hours of short-term respite care per month for enrolled families,
    providing more than 450,000 hours of respite care in fiscal year 2011.
    We continue to transform our program, which the Department of Defense
    (DOD) and our sister services continue to recognize as a premier
    program. Marine Corps policy ensures that the assignment and relocation
    process is sensitive to EFMP family needs and allows marines to remain
    competitive for promotion while maintaining a continuum of care for
    exceptional family members.
    Personal and Professional Development
        We recognize and encourage all marines and their spouses to pursue
    and achieve their life goals while serving in the Marine Corps or
    beyond as veteran marines. Our Personal and Professional Development
    (P&PD) program supports marines and their spouses with their education,
    employment, financial fitness, and transition readiness goals. This
    program integrates the efforts of several formerly-disparate programs
    (education services, transition assistance, spouse employment support,
    personal financial management, relocation assistance, library programs
    and the Marine For Life network) to ensure we provide our marines and
    spouses holistic education and support.
        One of our most significant initiatives is to revise and improve
    our Transition Assistance Management Program (TAMP) to better meet the
    needs of our transitioning marines and their families. TAMP is being
    integrated and mapped into the lifecycle of a marine from recruitment,
    through separation or retirement, and beyond as veteran marines. The
    Marine Corps efforts will comply with the multi-agency initiative, led
    by OSD and VA, to help improve employment prospects of veterans, as
    well as with implementing the provisions of the recently enacted
    Veterans Opportunity to Work (VOW) Act.
        The integration of our Marine For Life program in the P&PD Program
    has improved our ability to work with the civilian community to find
    opportunities for our transitioning marines and their spouses. Marine
    For Life also provides an avenue for marine veterans to reach back for
    assistance or to volunteer their services to assist transitioning or
    veteran marines in their communities.
        Regarding spouse employment opportunities, we see that tying these
    programs more closely with formerly marine-focused programs, such as
    transition assistance and on-base education, creates significant
    synergy. Many of the same employers who seek marine veterans are also
    interested in employing marine spouses. We look forward to working with
    the Joining Forces Initiative, which seeks to streamline certification
    and licensure procedures for marine spouses. We also support parallel
    efforts to qualify marines for certifications based upon military
    training and experience.
        Our P&PD Program includes personal finance counseling efforts to
    help marines make responsible financial decisions. We have created a
    new personal financial management curriculum that covers 34 major
    topics including saving and investing, credit and debt management, and
    smart home buying, selling and renting. These efforts help ensure that
    we are not focusing solely on those in financial distress but also on
    preparing marines and their families to be financially stable and
    prepared.
        Bringing all of these programs together to offer an integrated set
    of personal and professional development services will enable marines
    and their families to be more effective, and more ready. At the same
    time, these services will help marines be better prepared to make the
    transition back to civilian life whether it be after a 4-year
    enlistment or a 30-year career.
    Behavioral Health Integration
        The integration of our behavioral health programs seamlessly weaves
    our efforts in sexual assault, suicide, combat and operational stress,
    substance abuse and family advocacy/domestic violence into the larger
    support network of command structures and the health and human services
    across the Marine Corps. We focus on evidence-based practices to ensure
    we are providing effective support in these critical areas and utilize
    our Behavioral Health Information Network, which is a web-based
    clearinghouse, for the latest information on behavioral health. This
    integration further benefits from our Behavioral Health Advisory
    Committee, a committee chartered for the purposes of examining
    promising practices and making recommendations on our behavioral health
    programs. A universal prevention training module, which is in
    development, will reduce redundancy in our training efforts by
    integrating all behavioral health program information. This training
    will discuss common risk and protective factors across all behavioral
    health programs.
    Sexual Assault Prevention and Response
        Our Sexual Assault Prevention and Response Program follows a
    holistic approach to prevention and response, utilizing a top-down
    leadership message of support and an emphasis on bystander
    intervention. Marines have an inherent responsibility to step up and
    step in to prevent sexual assault. Our priority is to reduce the number
    of incidents as well as reduce the number of unreported sexual assaults
    by utilizing a consistent and focused emphasis on command climate. The
    Marine Corps has revitalized our curriculum for noncommissioned
    officers to include a new video-based bystander training, entitled
    ``Take a Stand,'' designed to reduce stigma by stimulating conversation
    and engaging marines with a more personalized message about sexual
    assault prevention.
        We are revitalizing our Command Team training module, updating our
    annual training and enhancing our training for all first responders. We
    have staffed our installations with subject matter experts, positioned
    to have the greatest impact on victims and victim care. In addition,
    24/7 Helplines are available at all major installations and Reserve
    headquarters to provide resources and advocacy for victims. These
    Helplines are answered by victim advocates who are trained to provide
    immediate services to victims of sexual assault.
        We continue our focus on accountability for those who violate the
    Uniform Code of Military Justice. The Marine Corps Trial Counsel
    Assistance Program (TCAP) trained 118 Judge Advocates in sexual assault
    investigation and prosecution best practices in fiscal year 2011. TCAP
    will continue this training in fiscal year 2012 and plans to train
    approximately 125 Judge Advocates and 75 enlisted paralegals. The DOD-
    wide release of the Defense Sexual Assault Incident Reporting Database
    will enhance current case management capabilities.
    Suicide Prevention
        In calendar year 2011, we lost 33 marines to suicide, and we
    preliminarily recorded 171 suicide attempts. While we have seen 2
    consecutive years of decreased suicides and evidence of change in
    marine attitudes toward behavioral health, we still have much work to
    do. Leaders prevent suicide by strengthening all marines and
    encouraging marines to engage helping services early, when problems are
    most manageable. We continually encourage marines to recognize,
    acknowledge and seek help for stress reactions, and we deploy evidence-
    based prevention practices such as peer-to-peer suicide prevention
    training. The Marine Corps will work closely with the DOD Suicide
    Prevention Office to implement recommendations of its Joint Task Force
    on the Prevention of Suicide. Our award-winning ``Never Leave a Marine
    Behind'' suicide prevention program, which is peer-led and continually
    updated to reflect emerging evidence-based practices, is tailored to
    reflect the culture and values of the Marine Corps. We will continue to
    forge strong relationships with Federal agencies, academia, and private
    industry in order to further our understanding of suicide prevention.
    Combat and Operational Stress Control
        Combat and Operational Stress Control (COSC) helps Marine leaders
    maintain their warfighting capabilities by addressing the negative
    impacts of stress. COSC enhances force preservation, readiness and the
    long-term health and well-being of marines and their families. Every
    battalion or equivalent unit across the Total Force will have an
    Operational Stress Control and Readiness (OSCAR) team by mid-2012.
    OSCAR teams are comprised of mentors (selected unit marines and
    leaders), extenders (unit medical and religious personnel), and mental
    health professionals, who provide a network of support. As of March
    2012, the Marine Corps had trained over 10,000 marines as OSCAR
    mentors, who help reduce stigma and act as sensors for the commander by
    noticing small changes in behavior and taking action early before
    stress becomes a medical issue. COSC is incorporating lessons learned
    into new courses in COSC fundamentals for all levels of enlisted
    professional military education.
        Our DSTRESS Line, which will have a global capacity by mid-2012,
    addresses the full spectrum of behavioral health needs, whether they
    are problems arising from the everyday stressors of life or a suicidal
    crisis. DSTRESS Line is a ``by Marine/for Marine'' counseling center
    for marines, attached Sailors, and families, who can call, chat online,
    or Skype with a veteran marine, Fleet Marine Force corpsman, or Marine
    Corps family member.
    Substance Abuse
        Our Substance Abuse Program works to reduce substance abuse and
    dependency disorders that negatively affect the operational readiness
    and health of the force. The program's tenets are prevention, treatment
    and drug demand reduction. We are executing an Alcohol Abuse Prevention
    Campaign throughout the Marine Corps this year to reduce the negative
    impact that alcohol abuse and misuse has on the Marine Corps' readiness
    and health.
    Marine Total Fitness
        In fiscal year 2012, we will also continue to develop our Marine
    Total Fitness concept to develop marines of exemplary physical,
    psychological, spiritual and social character. Marine Total Fitness,
    which will support the Department of the Navy's 21st Century Sailor and
    Marine Initiative will infuse resilience-based information and concepts
    into all aspects of a marine's training and readiness. A totally fit
    marine exhibits exemplary physical, mental, spiritual, and social
    character and is prepared to successfully operate in and respond to the
    rigors, demands, and stressors of both combat and garrison. The four
    pillars of Marine Total Fitness--physical, psychological, social, and
    spiritual--provide an avenue to deliver programs, initiatives and
    resources.
    Casualty Assistance
        The Marine Corps Casualty Assistance Program is committed to
    ensuring that families of our fallen marines are treated with the
    utmost compassion, dignity, and honor. Always seeking to improve
    survivor assistance and demonstrating a record of quick, effective
    action, our Casualty Assistance Program is a 24-hour-per-day operation
    manned by marines and civilians trained in casualty reporting,
    notification and casualty-assistance procedures. Casualty Assistance
    Calls Officers assist the next-of-kin with burial arrangements,
    applications for benefits and entitlements, contact with benevolent and
    philanthropic organizations, and obtaining reports of investigation.
    Within days of the incident, families are connected to representatives
    from the Tragedy Assistance Program for Survivors, a nationally-
    recognized provider of comfort and care to those who have suffered the
    loss of a military loved one. The Marine Corps reaches out to the next-
    of-kin approximately 60 days after the loss to help resolve any
    remaining issues and to let the families know that they are still part
    of the Marine Corps family. We will remain steadfast in our support of
    our Marine Corps families who have paid so much in service to our
    Nation.
                       ix. semper fit & exchange services
        I want to thank Congress, especially this subcommittee, for your
    continued support for our Marine Corps Semper Fit and Exchange
    programs. In the National Defense Authorization Act for Fiscal Year
    2012, you and your colleagues included a provision which allows us to
    access credit for business operations through the Federal Financing
    Bank and thereby lock-in the best possible interest rates. Thank you
    for your hard work on that bill.
        The Commandant continues to stress that the Marine Corps will keep
    faith with our marines, our sailors, and our families. We repeat this
    theme in all that we do as we strive to deliver capability-based
    programs all the way down to the unit level.
    Semper Fit & Recreation
        Our Semper Fit and Recreation programs support the readiness,
    resiliency, and retention goals of your Marine Corps. Our efforts are
    primarily focused on the areas of fitness, sports, health promotion,
    and recreation, as they are essential in maintaining a fit marine. We
    recently introduced High Intensity Tactical Training (HITT), a
    comprehensive strength and conditioning program geared towards
    optimizing physical performance and combat readiness. HITT is designed
    to reduce the likelihood of injury while in theater; initial feedback
    from marines is positive and Corps-wide rollout of the program,
    including use in Afghanistan, began in February and will be completed
    at all installations by June 2012.
        Social resilience is linked with unit cohesion and we are
    identifying unit-driven recreational activities to provide at Marine
    Corps installations. Operation Adrenaline Rush, currently offered at
    two installations, assists marines in reintegration by empowering small
    unit leaders, maintaining combat readiness, and reinforcing unit
    cohesion. The program offers opportunities for outdoor recreation
    activities such as whitewater rafting and deep sea fishing.
        Overall, Semper Fit makes every effort to deliver high quality
    programs and services to marines and their families. Our programs are
    vital to the continued success and development of your marines and your
    Corps.
    Marine Corps Exchange and Temporary Lodging Facilities
        The Marine Corps Exchange (MCX) is inextricably linked to our
    mission of taking care of marines and their families and is an
    important part of the overall non-monetary benefits package. Our
    success is measured on the program's value and contributions to the
    readiness and retention of our marines, as well as our ability to
    provide unparalleled customer service, premier facilities, and valued
    goods and services at a savings. With MCX, unlike any other retail
    store, marines can rely upon a high quality product at a fair price and
    know that the proceeds are returned to their community, creating a
    stronger Marine Corps. Like other Marine Corps Community Services
    (MCCS) facility master planning efforts, MCX is executing branding
    strategies, and our aggressive re-investment into our main stores is
    near completion. We are also expanding the branding strategies to focus
    on our Marine Marts and Temporary Lodging Facilities. All Marine Corps
    design standards are focused on energy efficiency and sustainability.
    Deployed Support
        Deployed support is one of the most important services we provide.
    Our Exchange, Recreation and Fitness, Communication, and MCCS Amenity
    Wi-Fi services not only boost and maintain morale, but also help to
    reduce mission-related stress.
        Exchange
        Ongoing missions in Afghanistan include the operation of two Direct
    Operation Exchanges Tactical at Camps Leatherneck and Dwyer, one
    Tactical Field Exchange at Camp Delaram II, one Imprest Fund Site at
    Forward Operating Base (FOB) Edinburgh, and numerous Warfighter Express
    Services Teams operating out of Camps Leatherneck, Dwyer, and FOB
    Edinburgh.
        Recreation and Fitness
        We assist in providing sports, recreational, and fitness equipment
    to units throughout Helmand Province. This transportable equipment
    includes sports/recreation cooler kits filled with sports gear and
    board games, electronic game kits, Theater-in-a-Box kits, and
    functional fitness equipment for use in austere environments. Reading
    materials, both electronic and paperback, are also available.
        Communication
        Morale Satellite services are available to forward operating bases,
    combat outposts, and other austere locations. We have delivered 13
    satellite communications systems to units in Afghanistan. Each system
    has 2 phones which each provide 6,000 free minutes per month and 5
    laptops that allow internet access, social networking, and chat/video
    capabilities to deployed marines. In 2011, we provided over a half-
    million minutes of telephone air time. In addition, approximately
    23,683 marines were able to use the Morale Satellite services at
    several different FOBs, including over 2,100 telephone calls over the
    Thanksgiving and Christmas holidays.
        MotoMail, supported by Marine and Family Programs and first offered
    in December 2004, is another form of communications support which
    continues to serve marines and families. MotoMail allows friends and
    family members to submit letters and pictures online to deployed
    marines. A marine will receive their letter within 24 hours of
    submission. Since implementing this free service, over 4.1 million
    letters have been created and delivered.
        MCCS Amenity Wi-Fi Solution
        The Marine Corps Community Services Amenity Wireless Fidelity (Wi-
    Fi) Solution program deploys Wi-Fi capability at no cost to marines and
    families. This morale and welfare initiative helps marines stay in
    contact while separated from their families. The Wi-Fi is conveniently
    located at temporary lodging facilities, exchange food courts,
    libraries, education centers, child and youth centers, clubs, and
    Wounded Warrior Program facilities. Since its inception, our Wi-Fi
    program has been popular with marines and their families. As of the
    first of this year, the program is available on 19 Marine Corps
    installations with 240 buildings receiving Wi-Fi coverage.
                          x. wounded warrior regiment
        The Marine Corps is grateful for this subcommittee's recognition of
    the service and sacrifices of wounded, ill, and injured (WII) marines
    and their families. Your marines continue to sustain wounds on the
    battlefield, including catastrophic injuries that present significant
    quality of life challenges. Marines also continue to be injured in
    training accidents, become ill, and experience other tragedies that
    require a wide range of interconnected non-medical care. Through our
    Wounded Warrior Regiment (WWR), we provide this care--from the point of
    injury or illness through return to duty or reintegration to civilian
    communities.
        Our WWR is a single command with a strategic reach that provides
    non-medical care to the total Marine force. The Regimental Headquarters
    in Quantico, VA, commands the operation of two Wounded Warrior
    Battalions (at Camp Lejeune, NC, and Camp Pendleton, CA) and multiple
    detachments in locations around the globe, including at major Military
    Treatment Facilities and Department of Veterans Affairs Polytrauma
    Centers. All WWR elements function as a cohesive team to allow for
    consistent, top-notch services for WII marines, their family members,
    and caregivers.
        The Marine Corps approach to wounded warrior care is to return
    recovering marines to their parent units as quickly as their medical
    conditions permit. Allowing marines to ``stay in the fight'' is what
    makes our care model unique and successful. When WII marines remain
    with their parent units, they are supported by their regular command
    structure with the full assistance of our WWR's comprehensive assets.
    WII marines with medically acute cases (typically when their recoveries
    are more complex and medical treatment or rehabilitation is expected to
    exceed 90 days) are joined to a WWR element where they are enrolled in
    programs to not only heal them medically, but also strengthen their
    mind, body, spirit, and family during recovery and rehabilitation.
        There is no one-size-fits-all approach to warrior care. Each case
    is unique based upon the marine's phase of recovery, their location and
    family situation. Care does not lend itself to a process, but rather,
    it is a relationship between the WWR and the WII marine. As leadership
    is an integral part of the healing process, our WWR assigns specially-
    trained Marine Section Leaders to various locations where WII marines
    are joined to maintain good order and discipline and ensure that these
    WII marines are provided leadership, mentorship, and encouragement on a
    daily basis.
    Assets and Capabilities
        Now in its fifth year of operation, our WWR continues to refine its
    programs and services. Many program improvements are based upon sound
    feedback from WII marines, their family members and caregivers. Our
    fundamental assets and capabilities are available to WII marines
    whether they are joined to the WWR or remain with their parent command.
        Recovery Care Coordinators (RCCs)
        We currently provide 49 RCCs to approximately 1,220 WII marines, 60
    percent of whom are joined to the WWR and 40 percent remain with their
    parent command. Our RCCs are located at 14 sites and serve as the WII
    marine's central point of contact to help them set and meet their
    recovery and transition goals. RCCs work in coordination with other
    members of the marine's recovery team (Marine leadership, medical case
    managers, non-medical case managers, and others) to ensure recovery and
    transition actions are fully coordinated. Recent improvements to the
    RCC program include standardizing Comprehensive Recovery Plans (CRPs),
    the WII marine's ``life map,'' by implementing a quality assurance
    program for consistent CRP development and documentation. We have also
    developed a robust training program that provides RCCs with the
    critical skills necessary to identify WII marines' needs, translate
    those needs into concrete goals, and then provide actionable steps to
    help the marine meet their goals. To facilitate a smooth transition
    process, the RCCs have instituted a practice whereby they hand-off
    cases of marines who leave the Marine Corps to other WWR assets for
    post-transition monitoring and to provide for any ongoing or residual
    care coordination requirements. Our RCCs coordinate with the Department
    of Veterans Affairs' Federal Recovery Coordinators (FRC) on cases where
    WII marines have been assigned an FRC to ensure a smooth transition to
    VA services.
        Warrior Athlete Reconditioning Program
        When a marine is wounded, ill, or injured, our WWR helps focus them
    on their abilities through the Warrior Athlete Reconditioning Program
    (WAR-P). WAR-P provides activities and opportunities for marines to
    train as athletes, to increase their strength so they can continue with
    military service or develop healthy habits for life outside of the
    Marine Corps. WAR-P, which is mandatory for marines joined to the WWR,
    does more than help WII marines maintain a healthy body; it counters
    declining self-perception, depression and stress that may be associated
    with their injury. Under WAR-P, WII marines have more than 20
    activities to choose from, including swimming, cycling, running,
    wheelchair basketball, and strength and conditioning.
        Sergeant Merlin German Wounded Warrior Call Center
        The Marine Corps continues to honor its commitment to keep faith
    with WII marines through our WWR's Call Center, a Department of Defense
    Best Practice, which renders resource and referral assistance to WII
    marines and Marine veterans. Our trained Call Center staff includes
    retired marines, other Marine veterans, and family members of marines
    augmented by a small staff of psychological health professionals. They
    not only receive calls on a 24/7 basis, but also conduct outreach
    efforts to check on the well-being of WII marines. Combat-wounded
    marines who remain with their parent units are contacted at prescribed
    intervals to determine if they have any needs or issues. If needs are
    identified, the marine is referred to a non-medical care manager for
    resolution. These calls can result in assignment to a Wounded Warrior
    Battalion or the assignment of a Recovery Care Coordinator, or both.
    This Call Center also serves as the WWR's hub for its new social media
    efforts, which includes Facebook, Twitter, and a new WWR App that can
    provide fact sheets, news updates, and other WWR-specific information.
        Strategic Communication
        Clear, consistent, and accurate information regarding services and
    eligibility must reliably reach WII marines, their family members, and
    caregivers. To address this need, the WWR continually disseminates
    information on its programs and services to various audiences,
    including Marine Corps leaders, to ensure the Marine Corps total force,
    including all wounded warriors and commanders are aware of the WWR's
    services.
        Community Reintegration
        As the vast majority of WII marines reintegrate to their
    communities, our WWR has taken steps to ensure they are highly
    competitive in a difficult job market. We provide specialized
    transition support through Transition Cells, located at WWR
    Headquarters and Wounded Warrior Battalions. Transition coordinators,
    both Marine Corps and civilian employees (including representatives
    from the Departments of Labor and Veterans Affairs), work closely with
    marines to reach their employment and education goals. Based on the WII
    marine's ultimate goals, the transition coordinators determine their
    needs, develop pathways, provide coaching and resources, and help
    network for employment and careers. For WII marines who are joined to
    the WWR, their transition to civilian life begins as soon as their
    medical conditions allow (typically at outpatient status). They must
    start an education program, participate in an internship, or return to
    work (ideally in a military occupational field commensurate with their
    established goals).
        Integrated Disability Evaluation System Support
        The Marine Corps supports the current Integrated Disability
    Evaluation System (IDES) process as it enables the recovering
    servicemember and family to continue to receive our support and
    transition smoothly to VA benefits from active duty status. While not a
    universal concern, some marines have expressed dissatisfaction with the
    IDES process due to the variance in their final DOD compensation
    package and their VA compensation based on the same VA disability
    rating determination. This is because DOD compensates for medical
    conditions that are determined to be military unfitting by the service
    Physical Evaluation Board (PEB), whereas VA compensates for all
    disabling medical conditions incurred or aggravated during a period of
    active duty. Although the Marine Corps does not own the IDES process,
    we own the marine and it is our responsibility to be their advocate.
    Over the past year, we have taken several actions to improve IDES
    performance. These actions include:

             providing Marine Corps leadership with detailed IDES
            case processing information, resulting in their ability to work
            closer with the Regional Medical Commanders on specific issues
            impacting IDES performance;
             enhancing the PEB administrative staff and bolstering
            manning to perform field-level counseling and case processing
            assistance;
             providing Marine Corps disability evaluation attorneys
            with a list of marines entering the IDES process for proactive
            advocacy prior to the Medical Evaluation Board (MEB) referral;
            and
             ensuring all marines referred into the IDES receive a
            pocket-sized information pamphlet on the IDES process which
            provides detailed information on the establishment of the DOD
            and VA compensation based on the VA determined disability
            rating. It also identifies all actors (PEBLOs, VA Military
            Service Coordinators, DES Attorneys, and Independent Medical
            Reviewers) in the IDES process and describes how the marine can
            work with that actor to achieve a better outcome.

        These initiatives have reduced case backlogs and improved case
    processing timeliness in the MEB and improved customer satisfaction.
    Program Assessment
        The WWR recognizes the importance of sound data to measure program
    effectiveness and inform changes in the way we serve WII marines and
    their families. Since the WWR was established in 2007, several surveys
    have been conducted. The most recent survey was administered to WII
    marines joined to or supported by the WWR and posed questions relating
    to our various care coordination assets: Section Leaders, Recovery Care
    Coordinators, the Wounded Warrior Call Center and Battalion Contact
    Cells, Family Readiness Staff, and District Injured Support
    Coordinators. Findings reveal that satisfaction levels have increased
    for marines injured prior to 2007 and are now consistent with WII
    marines injured post 2007. Much of this equalization can be attributed
    to the reach-back capability that the Call Center possesses, conducting
    outreach calls to offer assistance. There was also an increase in
    satisfaction levels in the following areas: WWR personnel; the level of
    information provided/ability to provide information; and ability to
    provide support to family members. One of the most important data
    points from the survey: 81 percent of respondents agreed or strongly
    agreed that WWR personnel do a good job of coordination with each other
    to make things easier.
        Our WWR has also been assessed by the Department of Defense Task
    Force on the Care, Management, and Transition of Recovering Wounded,
    Ill, and Injured Members of the Armed Services. We are pleased to point
    out that we were recognized for several best practices, including our
    Hope and Care Centers, customization and delivery of the Keeping It All
    Together Handbook to families at detachments, and our IDES Pocket Guide
    for Marines.
        WII marines and their family members and caregivers have sacrificed
    much and I can assure this subcommittee and Congress that we will fully
    honor their sacrifices by continuing to provide them quality care and
    support to posture them for success, whether they return to duty or
    transition back to civilian life.
                              xi. civilian marines
        Our civilian marines support the mission and daily functions of the
    Marine Corps and are an integral part of our Total Force.
        In recognition of the need to study and clearly define our civilian
    workforce requirements in light of civilian labor budget reductions, we
    proactively conducted a full review of the civilian workforce in late
    2010. This measure resulted in a self-imposed hiring freeze from
    December 2010 to December 2011, but allowed time to prioritize
    requirements within affordable levels and align resources with
    capabilities. It also ensured the civilian labor force was shaped to
    support the mission of the Corps today and for the future. As a result
    of our efforts, the Marine Corps avoided drastic reductions of civilian
    personnel and was able to reduce from a planned level of 21,000
    personnel in direct funded Full-Time Equivalencies to 17,501.
        Our fiscal year 2013 civilian personnel budget reflects efforts to
    restrain growth in direct funded personnel. By establishing budgetary
    targets consistent with current fiscal realities, we will be able to
    hold our civilian labor force at fiscal year 2010 end-of-year levels,
    with some exceptions for critical workforce growth areas such as
    acquisition, intelligence (National Intelligence Professionals),
    information technology, security (Marine Corps Civilian Law Enforcement
    Personnel), and cyber.
        The civilian labor budget represents less than 5 percent of the
    Marine Corps' fiscal year 2012 budgetary submission, demonstrating that
    our ``best value'' for the defense dollar applies to our civilians as
    well as our marines.
                         xii. health care efficiencies
        The Marine Corps supports the reforms in military compensation
    programs included in the President's fiscal year 2013 budget. The
    President's budget acknowledges the reality that military pay,
    allowances, and health care costs cannot be ignored in our
    comprehensive effort to achieve savings. The compensation reforms are
    sensible. Modest pay raises continue--no reductions, no freezes.
    TRICARE care enrollment and deductibles fees increase for retirees, but
    they are comparatively moderate and tiered based on retirement income.
    Pharmacy co-pays trend toward market rates and encourage the use of
    generic drugs and mail-order delivery. In all cases, costs remain
    substantially less than those in the private sector.
                                xiii. conclusion
        To continue to be successful, we must always remember that our
    individual marines are our most precious asset, and we must continue to
    attract and retain the best and brightest into our ranks. Marines are
    proud of what they do. They are proud of the ``Eagle, Globe, and
    Anchor'' and what it represents to our country. With your support, a
    vibrant Marine Corps will continue to meet our Nation's call.
        Thank you for the opportunity to present this testimony.

        Senator Webb. Secretary Ginsberg, welcome.

     STATEMENT OF HON. DANIEL B. GINSBERG, ASSISTANT SECRETARY OF
    THE AIR FORCE FOR MANPOWER AND RESERVE AFFAIRS; ACCOMPANIED BY
      LT. GEN. DARRELL D. JONES, USAF, DEPUTY CHIEF OF STAFF FOR
            MANPOWER, PERSONNEL AND SERVICES, U.S. AIR FORCE

        Mr. Ginsberg. Thank you very much, Mr. Chairman.
        Chairman Webb, Ranking Member Graham, and members of the
    subcommittee, General Jones and I would like to thank you for
    the opportunity to testify today on behalf of more than 700,000
    airmen--Active, Guard and Reserve, and civilian, who make up
    the most capable aerospace and cyberspace force the world has
    ever known. We know that you and members of the subcommittee
    are keenly interested in the well-being and support of our
    airmen. We must start by thanking you all for everything that
    you have done to support them each and every day.
        In the past year, our Nation's airmen have performed
    magnificently, carrying out operations precipitated by Arab
    Spring, major natural disasters, Homeland defense missions, and
    ongoing overseas contingencies in Afghanistan and the
    conclusion of our Iraq operations.
        It is vital to visit our airmen firsthand and see their
    contributions and challenges they face every day, and we can
    assure you that from Japan to Florida, from Wyoming to
    Kandahar, your members of the U.S. Air Force are laying it on
    the line for the Nation every single day.
        It is due to the quality of our All-Volunteer Force that
    your Air Force can project focused military power to achieve
    strategic, operational, and tactical objectives globally in
    support of our national security interests.
        We have no higher priority than taking care of our airmen
    and ensuring that they have the resources and support that they
    and their families need to stay focused and ready to perform
    the demanding missions we assign to them.
        As this subcommittee already is well aware, the Air Force
    had to make very hard choices in this year's budget submission.
    We had to reconcile top-line reductions with our requirement to
    fulfill our global commitments and maintain acceptable levels
    of readiness while still sustaining key quality of life and
    core services for our people. Despite a difficult budget
    situation, the Air Force is committed to providing cost-
    effective medical care services and programs to maintain a
    healthy and resilient force. We must support our people to meet
    the demands of high operational tempo and persistent conflict.
    Developing and caring for our airmen will remain a key focus as
    we continue to become more efficient and develop smarter and
    more agile approaches to our achieving security objectives.
        Again, on behalf of Secretary Donley and General Schwartz
    and all of our airmen, we thank you for your commitment and
    support to our Air Force. We look forward to answering your
    questions.
        Senator Webb. Thank you very much, Secretary Ginsberg.
        General Jones, both of your full statements will be entered
    into the record at this time.
        [The joint prepared statement of Mr. Ginsberg and General
    Jones follows:]
       Joint Prepared Statement by Hon. Daniel B. Ginsberg and Lt. Gen.
                             Darrell D. Jones, USAF
        The airmen of our great Air Force serve the Nation with
    distinction. They have performed valiantly during more than 20
    continuous years of combat operations dating back to Operation Desert
    Storm, while simultaneously supporting multiple broad-spectrum
    operations across the globe. Committed to meeting the requirements of
    the President's Defense Strategic Guidance, while confronting the
    realities of the current and future constrained fiscal environment
    facing our Nation, the Air Force remains committed to recruiting,
    developing and delivering to the battlefield innovative airmen who can
    smartly and skillfully meet any task or mission. Our commitment as the
    Air Force's Assistant Secretary for Manpower and Reserve Affairs and
    Deputy Chief of Staff for Manpower, Personnel and Services is to align
    the Air Force's greatest resource, our airmen, to support the national
    security strategy. We must do so with fiscal responsibility, making
    extremely difficult resource priority decisions while at the same time
    demonstrating that we fully support our airmen and their families. As
    we prioritize missions, it is critical we balance capabilities between
    our Active and Reserve components to maintain a robust national
    security posture in a dynamic global environment.
                             contingency operations
        Our airmen remain at the forefront of today's conflicts and
    contingency operations around the globe, serving proudly alongside our
    soldier, sailor, and marine counterparts. Today there are more than
    80,000 airmen either forward deployed or stationed abroad worldwide in
    our Nation's defense with an additional 134,000 airmen providing direct
    support to our joint warfighters from the continental United States on
    a daily basis. That means 43 percent of our Total Force is directly
    supporting combatant commander requirements every day. In late 2010,
    the Air Force began a transition to a 6-month baseline deployment
    length. This will increase at-home time for airmen between deployments
    and use pre-deployment training resources more efficiently. We are on
    track to complete this transition by October 2012. At the same time,
    Air Force 365-day deployment taskings have increased to 2,300, up from
    689 in 2005, and now represent 7 percent of the Air Force's total
    deployments.
                    military and civilian personnel budgets
        The Air Force is committed to maintaining and sustaining the
    appropriate size and force mix to align with the new defense strategy,
    ensuring we meet mission requirements with acceptable personnel tempo
    and associated stress on the force. Detailed assessments of future
    conflict scenarios and deployment rotation requirements drove force
    structure adjustments resulting in the corresponding personnel
    reductions. By the end of fiscal year 2013, end strength will be
    reduced a further 9,900 from 510,900 to 501,000. This will result in an
    Active Duty military end strength reduction from 332,800 to 328,900.
    Our Air Force Reserve (AFR) military end strength will decrease by 900
    (increase in 200 full-time; decrease in 1,100 part-time, including 700
    associated technician positions) to 70,500, and Air National Guard
    (ANG) military end strength will decrease by 5,100 (500 full-time;
    4,600 part-time, including 1,400 associated technician positions) to
    101,600. Approximately 80 percent of these reductions were driven by
    force structure changes.
        During the development of the fiscal year 2012 President's budget,
    the Secretary of Defense released efficiency guidance to improve the
    effectiveness and efficiency of business operations. As part of this
    guidance, the Department of Defense (DOD) civilian end strength funding
    was targeted at fiscal year 2010 levels. For the Air Force, this action
    effectively removed funding for 16,500 civilian positions that were
    planned growth between fiscal year 2010 and fiscal year 2012. To meet
    the DOD-directed civilian funded targets, the Air Force conducted an
    enterprise-wide review of efficiency initiatives, reducing overhead and
    eliminating redundancies, while protecting areas of strategic
    importance such as the nuclear enterprise, intelligence, reconnaissance
    and surveillance. The reductions ultimately resulted in the Air Force
    divesting 3,000 positions of planned civilian growth and approximately
    13,500 established positions, primarily from management and support
    staff areas.
        The fiscal year 2013 budget includes a total budget authority
    request of $34.2 billion for Active Duty, ANG and AFR military
    personnel. Included in this budget is a 1.7 percent military base pay
    increase, a 4.2 percent increase in the housing allowance and a 3.4
    percent increase in subsistence allowance. We also project an 11.4
    percent decrease in Overseas Contingency Operations (OCO) funds. In
    addition, the civilian personnel budget requested for fiscal year 2013
    is $12.4 billion for a programmed total force civilian strength of
    185,900, and includes a 0.5 percent pay raise following a 2-year pay
    freeze.
                              compensation reform
        We support the President's plan to establish a military retirement
    commission, undertaking a thorough review of the current retirement
    system and make recommendations to modernize that system with input
    from the Department We also support the recommendation that any changes
    be grandfathered. The costs for military pay, allowances and health
    care have risen significantly in the last decade. As part of a DOD-wide
    effort, we are participating in the development of multiple proposals
    to meet deficit reduction targets and slow cost growth. The adjustments
    to the TRICARE benefits included in the budget reflect the proper
    balance and the right priorities necessary to sustain the benefit over
    the long term. National health care costs continue to rise at rates
    above general inflation and DOD is not insulated from this growth as we
    purchase over 60 percent of our care from private sector. DOD
    beneficiaries' out-of-pocket costs with the proposed changes remain far
    below the cost-sharing percentage they experienced in 1995.
                           military force management
        The Air Force will continue to sustain excellence with a smaller,
    more agile and modernized force. We continue to realize record high
    retention and remain focused on tailored force management efforts as we
    continue to size and shape the force to meet congressionally mandated
    end strength. The Force Management Program is a targeted, multi-year
    program managing the force along the 30-year continuum of service,
    which leverages voluntary measures first, incentivized programs where
    needed, and implements involuntary measures as required to yield
    sustained support for combatant commanders across the globe.
        The fiscal year 2012 voluntary force management programs include
    active duty service commitment waivers; time-in-grade waivers; reduced
    enlistment contract waivers; 8 versus 10 commissioned years of service
    waivers for prior-service officer retirement, as granted in the
    National Defense Authorization Act (NDAA) for Fiscal Year 2011;
    voluntary separation pay; and Palace Chase transfers to the Air Reserve
    components. We plan to utilize the Temporary Early Retirement Authority
    granted in the NDAA for Fiscal Year 2012 by targeting a very limited
    and specific number of enlisted airmen in selected skills.
        The fiscal year 2012 officer involuntary force management program
    resulted in 610 losses through use of a force shaping board for
    probationary officers with less than 6 years Total Active Federal
    Commissioned Service (TAFCS), a reduction in force board for captains
    and majors, and lieutenant colonel and colonel selective early
    retirement boards. The fiscal year 2012 enlisted involuntary force
    management program currently only calls for date of separation
    rollbacks.
        In fiscal year 2013, the Air Force's voluntary programs are similar
    to those in fiscal year 2012 and the only involuntary action is a
    projected force shaping board for probationary officers with less than
    6 years TAFCS. Additionally, the Air Force will continue use of limited
    selective continuation and reduced promotion opportunities to captain
    (95 percent) and major (90 percent).
        While we must take proactive measures to manage the force to remain
    within end strength, the Air Force is also committed to ensuring an
    effective transition to civilian life for our airmen. We have increased
    our focus on improving Transition Assistance Programs and are actively
    participating with the White House Veterans Employment Initiative Task
    Force, in an effort to reduce veteran unemployment. We are committed to
    providing appropriate resources towards increased transition assistance
    and veteran employment efforts as we continue to collaborate with the
    Office of the Secretary of Defense (OSD), the Department of Veterans
    Affairs (VA), the Department of Labor, the Department of Education, and
    other government partners.
                           civilian force management
        The Air Force has initiated programs to achieve the necessary
    civilian force reductions while ensuring mission continuity to comply
    with the fiscal year 2010 funding levels as directed by DOD. The Air
    Force has implemented force management programs such as hiring
    controls, a 90-day hiring freeze, and two rounds of voluntary
    separation initiatives (Voluntary Early Retirement Authority (VERA) and
    the Voluntary Separation Incentive Pay (VSIP)). More than 2,900
    civilian employees have accepted VERA/VSIP incentives. A third round of
    voluntary separation initiatives are planned to begin 1 May and
    conclude on 31 August. During this time of reductions and reshaping the
    force, the Air Force's primary goal is to minimize the number of
    involuntary separations to the greatest extent possible.
              retention, recruitment, bonuses, and incentive pays
        The Air Force accesses, retains and grows motivated and uniquely
    qualified airmen to meet the security threats of today and the future.
    We must carefully tailor accessions to meet current needs, while also
    considering the future, as not bringing in enough new recruits can
    impact the force for 30 years to follow. Therefore, while our force
    management plan includes reducing some officer and enlisted accessions,
    those reductions are considered against future requirements. We project
    reducing enlisted accessions for fiscal year 2012 and fiscal year 2013
    by 1,030 and 1,232, respectively, and reducing officer accessions by 30
    in fiscal year 2012, but no planned reductions in fiscal year 2013.
        The Air Force seeks the highest quality recruits to fill our ranks
    as current airmen retire or separate through programmed attrition. To
    support these efforts, we have included $82 million in the budget for
    the Air Force Recruiting Service to support Total Force recruiting
    operations, and an additional $97 million for fiscal year 2013
    advertising, a slight reduction in the total recruiting budget from
    fiscal year 2012. In 2011, the Air Force experienced great recruiting
    success, meeting all enlisted and officer recruitment goals for the
    Active Duty and Reserve components. Just as notably, the quality of
    recruits entering the Air Force greatly increased. For our CAT I to
    IIIA recruits, the average score on the Armed Services Vocational
    Aptitude Battery increased from 90.5 percent in 2010 to 98.5 percent
    thus far in fiscal year 2012, and we anticipate continued overall
    recruiting success in fiscal year 2012 and fiscal year 2013. However,
    there are nine Air Force career fields, to include linguist, special
    operations, and explosive ordnance disposal specialties where critical
    shortages remain due to high operational demand, manning shortages, or
    lengthy training pipelines. We budgeted $14.5 million in Initial
    Enlistment Bonuses in fiscal year 2013 to attract airmen into these
    critical skill areas. Active duty, non-line officer recruiters met 99
    percent of their 2011 goal. We increased our efforts to recruit Fully
    Qualified Health Professionals (FQHP), meeting the goal of 25 FQHP
    officers in fiscal year 2011 while increasing our fiscal year 2012 goal
    to 55.
        The ANG met their fiscal year 2011 enlisted recruiting goal and are
    on track for fiscal year 2012. However, ANG officer recruitment fell
    short in fiscal year 2011 in both line officer and health professional
    areas. In response, the ANG is executing precision recruitment efforts
    in fiscal year 2012 towards officer candidates using a standardized
    processing system, focused lead generation, and a heightened
    advertising campaign to help meet officer recruiting goals by fiscal
    year 2013.
        The Air Force Reserve continues to attract and retain qualified
    prior service and nonprior service recruits. For the 11th straight
    year, the AFRC Recruiting Service has led DOD in meeting recruiting
    goals. The Air Force's ability to attract and retain trained Active
    component airmen into the AFR greatly reduces training costs, and
    enhances the repository of talent and expertise available to meet the
    Air Force's surge and steady state requirements.
        Retention remains at an all-time high in the Air Force as a whole,
    contributing to the need for multi-year force management programs to
    remain within authorized end strength. However, retention is still
    problematic for some skill sets and year groups, and we need investment
    to counter low accession year groups of the past and to retain critical
    warfighting skills for the future. Bonuses have proven the most
    effective, responsive, and measurable tool for retention to encourage
    airmen to remain in or retrain into career fields with high demand
    requirements. Training and replacement costs far exceed the amount
    invested in bonus programs, so the Air Force has allocated $420.4
    million in fiscal year 2013 for Special and Incentive bonus pay. The
    Air Force has portioned $232 million of this amount for Selective
    Reenlistment Bonuses (SRB) for 78 Air Force specialties, down from 89
    in fiscal year 2011. SRB investments have shown to improve retention up
    to 1 to 8 percent per SRB increment, depending on the enlistment zone,
    and have proven to be a critical tool in retaining our needed
    specialties for the future. Retention of senior noncommissioned
    officers (SNCO) in certain high-demand specialties such as combat
    control and pararescue is also challenging. critical skills retention
    bonuses (CSRB) remain a vital tool to target specific year groups
    within specialties experiencing low retention, manning shortfalls, and
    high operational demand. Therefore, the Air Force targeted $2.9 million
    in enlisted CSRB towards retaining these SNCOs beyond retirement
    eligibility. Additionally, we are investing $10 million in CSRB towards
    officer specialties with retention and manning problems including
    contracting, special tactics, combat rescue officers and health
    professionals.
                               airman development
        One of our primary initiatives in developing the force is an effort
    to better define, identify, and track institutional, occupational, and
    cross-functional competencies. During fiscal year 2013, we will
    continue to institutionalize a process allowing force development
    stakeholders at all levels to quantify and measure specific skills on
    both an individual and aggregate basis. Doing so will allow us to
    develop our Total Force airmen more deliberately by matching training,
    education, and experiential opportunities to real-world requirements.
    The Air Force is developing cross-cultural competence for all airmen,
    in order to prepare them to deliver the global vigilance, global reach
    and global power our Nation expects. To support this requirement, we
    will focus our efforts on: (1) building expertise in foreign language,
    regional, and cultural skills; (2) recognizing joint experience in an
    airman's career; and (3) ensuring our educational offerings address
    current and anticipated requirements for language and regional
    expertise.
                      support to airmen and their families
        Quality-of-life programs continue as one of our highest priorities.
    As our force changes, we must adapt our programs and services to ensure
    we meet the needs of today's airmen and families. Additionally, we must
    tailor our offerings based on the utilization of services and the
    availability of suitable alternatives.
        We recently completed the second generation of our Caring for
    People Survey. More than 100,000 Total Force airmen voiced their
    opinions in this online survey conducted from December 1, 2010 to
    January 3, 2011. The survey measured satisfaction with quality of life
    across the Air Force community, to include airmen, spouses, Air Force
    civilians, and retirees across multiple areas like medical care,
    housing and support for families. The respondents expressed
    satisfaction with housing, installation schools, military benefits,
    dining facilities, fitness centers, child development centers and youth
    programs. Information, Tickets and Travel, along with the Air Force
    Food Transformation Initiative were standouts, competing with
    comparable industry leaders in the travel and food service industries.
    Some areas of concern include a sense of Air Force community, financial
    issues, medical care for families and job satisfaction.
        We have a project team developing base prototypes, technological
    innovations and efficiencies to address concerns not just from the
    Caring for People Survey, but a variety of other surveys and focus
    groups as well. The team will provide installation commanders with
    tools to help them determine how to shape quality of life programs
    according to the needs of their local Air Force community. In that
    vein, another key focus area is strengthening partnerships within local
    communities to take advantage of the services they provide. In the end,
    we will consolidate or divest quality of life activities that are not
    financially viable or not well utilized in order to redirect resources
    to the places where they matter most to airmen, their families and the
    mission.
        Our successful Food Transformation Initiative (FTI) continues as a
    high priority through fiscal year 2012 and fiscal year 2013. A customer
    satisfaction rating of 75 at the 6 FTI installations, compared to 67 at
    other facilities, indicates we are on the right path as we work to
    improve the delivery of meal choices, food quality, speed of service,
    and the overall dining experience for our personnel. As another
    indicator of success in our first year, we served an additional 530,000
    customers and provided 133,000 more meals to our junior enlisted
    members at FTI installations as compared to the previous year. Based on
    the initial success of this program and with congressional support, we
    anticipate expanding FTI to seven additional installations in fiscal
    year 2013.
        It is important to recognize the contributions of non-pay programs
    in enhancing the quality of life for our airmen and their families. The
    Defense Commissary Agency operates as a nonprofit organization and can
    save a family of four an estimated $4,500 a year. Providing groceries
    and household items .at cost. saved patrons a total of $2.7 billion
    last fiscal year. Additionally, the Army Air Force Exchange Service
    (AAFES) provides merchandise and services to military members and their
    families at competitively low prices. The 3,100 facilities located in
    over 30 countries provided an average 24 percent savings to customers
    compared to comparable retail stores. Additionally, AAFES gives back to
    the military community through significant dividend contributions,
    which amounted to $90.6 million going back to the Air Force communities
    AAFES serves in fiscal year 2010. AAFES also offers employment benefits
    as 31 percent of employees are military family members.
        We continue to strengthen our Air Force community by meeting
    childcare needs through a robust construction effort to increase the
    number of available childcare spaces and reduce our shortfall by the
    end of fiscal year 2012. We are also adding 74 accessible childcare
    playgrounds and 26 community nature parks in support of Air Force
    families with special needs. The Air Force Expanded Child Care program
    assists airmen who need child care for unusual shifts, extended duty
    hours and drill weekends. Additionally, we funded our new respite
    childcare program for special needs children at seven bases and we will
    expand it to other locations throughout the upcoming year.
        We are also expanding our Exceptional Family Member Program (EFMP)
    to support more than 18,400 Air Force families with special needs
    members, a 10 percent increase since the end of fiscal year 2010. To do
    so, we placed 35 EFMP Family Coordinators at installations with the
    highest concentrations of families enrolled in the program. We are also
    adding 36 EFMP Medical Coordinators through fiscal year 2016 to support
    families needing specialized medical care and included $3 million
    starting in fiscal year 2013 to fund respite care and other EFMP
    related programs.
        The Air Force also recognizes the important role and sacrifices of
    our ANG and AFR airmen and their family members. While many of the same
    family support programs are offered to our Reserve components, we
    realize that ANG and AFR families have difficulty sometimes accessing
    those available resources. As a result, we have supported ANG and AFR
    unique programs such as the Home Community Care program, which provides
    fee-assisted, in-home quality childcare during scheduled drill
    weekends. Returning Home Childcare for deployed personnel is another
    ANG/AFR family program benefit, funding 16-hours of no-cost care per
    child following deployments of 30 days or more. Finally, a Defense
    Management Data Center survey administered to ANG/AFR families
    highlighted the high satisfaction with the congressionally-supported
    Yellow Ribbon Reintegration Program (YRRP), with 83 percent of
    respondents expressing high satisfaction with the YRRP events.
    Additionally, 77 percent said the information presented increased their
    confidence in their ability to find and utilize vital resources that
    would prepare them and their loved ones for continued military service.
                    military health system (mhs) governance
        The Air Force fully supports the MHS Governance Task Force
    recommendations. They are important because they represent the intense
    and informed deliberation of both line and medical professionals who
    were seeking the best solutions to maintain exceptional care for our
    servicemembers while finding more effective and efficient ways to
    deliver that care.
        The Air Force believes implementation of the task force
    recommendations will ensure the sustainment of this high level of
    mission success. We agree that a more effective and efficient joint
    medical solution can be attained without the expense of establishing a
    unified medical command. The Services should--and will--continue
    integrating common medical platforms to reduce redundancy and lower
    costs. The task force recommendations will move us quickly to a
    construct that curtails expenses and achieves savings to the greatest
    extent possible while meeting our deeply important mission; providing
    quality health care to the military member and their families, while
    being good stewards of American taxpayer dollars.
                          airman and family resiliency
        A key factor in maintaining the health of our Air Force is to
    increase the resiliency of our airmen. Our efforts include a number of
    programs in the Comprehensive Airman Fitness (CAF) model designed on
    four pillars of resilience: Mental, Physical, Social and Spiritual.
    This program provides tools to help Total Force airmen and their
    families withstand, recover or grow in the face of stressors and
    changing demands. It is our goal to expand education and training of
    the CAF model to our accession and professional military education
    units first. Next, we will provide Master Resilience training Air
    Force-wide to individuals who provide face-to-face resilience skills
    training at the installation level. Further, the Leadership Pathway is
    a program incorporating basic resilience and life skills for airmen and
    family members in utilizing existing resources offered at the Airman
    and Family Readiness Center, Health and Wellness Center, Air Force
    clinics/hospitals and base chapels.
        The Deployment Transition Center (DTC) at Ramstein Air Base,
    Germany, was established to provide valuable decompression,
    reintegration and resilience training for returning servicemembers who
    were exposed to significant danger and stress in combat zones. Since
    calendar year 2010, over 3,000 airmen have completed the center's 2-day
    program and have reintegrated with their home units and families. The
    Air Force fiscal year 2012 budget includes $7 million for DTC
    operations, research, curriculum development, materials and
    intervention training.
                               suicide prevention
        Suicide prevention remains a top Air Force leadership priority. The
    Air Force uses an integrated public health approach to suicide
    prevention, emphasizing leadership involvement, a supportive Wingman
    culture, and access to evidence-based care provided by Air Force
    helping agencies. The Air Force Suicide Prevention Program is one of
    only 15 evidence-based programs listed by The Substance Abuse and
    Mental Health Services Administration. Recent suicide prevention
    initiatives include requiring face-to-face suicide prevention training
    for all frontline supervisors in the three career fields with the
    highest suicide rates in 2010. Since implementation in November 2010,
    the suicide rates in these career fields dropped significantly.
        Other initiatives include developing the Airman's Guide for
    Assisting Personnel in Distress, a new web-based resource to assist all
    airmen with strategies and resources for a variety of behavioral
    concerns. We are also sponsoring a RAND study on the use of social
    media and its impact on relationships and emotional wellbeing, as well
    as research by the University of Rochester on specific clusters of risk
    factors associated with suicide. The Air Force Community Action
    Information Board/Integrated Delivery System (CAIB/IDS) links leaders
    and helping professionals at every level of the Air Force organization
    and monitors all our suicide prevention initiatives for continuity and
    completeness. An audit of its effectiveness will provide guidance on
    enhancing the functioning of these organizations and provide areas of
    further improvement in our evidence-based program.
        Proper public messaging on suicide prevention is important. Public
    messages must avoid the impression that suicide is common, so the Air
    Force has revised memorial service and public affairs guidance shifting
    the focus toward the positive message of resilience, stressing the
    benefits of early help-seeking and effective Wingmanship.
        Finally, the Air Force is working closely with our sister Services
    to implement recommendations made by the Defense Health Board's Task
    Force on Suicide Prevention and to clarify roles and responsibilities
    within the Department regarding suicide prevention.
                     sexual assault prevention and response
        The Air Force strongly supports the Secretary of Defense's
    commitment, focus, and initiatives aimed at eradicating sexual assault.
    Eliminating sexual violence is everyone's responsibility. Leaders,
    commanders and supervisors set the tone and must model zero tolerance
    and behaviors supporting zero tolerance. The goal of our Air Force
    Sexual Assault Prevention and Response (SAPR) program is to prevent and
    respond to sexual assault through a balance of focused education,
    compassionate advocacy and accountability, promoting respect and
    dignity throughout the Air Force.
        Prevention of sexual assault continues to be a high priority.
    Career long education and training creates a foundation for prevention.
    This education begins with accessions, continues through all phases of
    professional military education, and is refreshed during annual
    training. In February, we released a wing commander guide, An
    Opportunity to Lead, containing five core elements to help commanders
    provide immediate impact. The guide addresses personal leadership,
    climate and environment, community leadership, victim response, and
    offender accountability. In addition, Bystander Intervention Training
    has been established as a requirement for all airmen, focusing on the
    importance of recognizing signs of inappropriate or unsafe situations
    and intervening appropriately.
        The NDAA for Fiscal Year 2012 contained significant mandates
    addressing sexual assault including a requirement for full time Sexual
    Assault Response Coordinators (SARCs) and victim advocates at brigade
    or equivalent level. The Air Force SAPR program has included full time
    SARCs at installation level since 2005, including the six primary U.S.
    Central Command area of responsibility AF locations. Air Force SARCs
    receive training that meets national advocacy credentialing standards.
    Victim advocates are military and Air Force civilian volunteers who
    receive comparable training. Currently, 3,159 fully trained volunteers
    are available to assist victims. The Air Force projected $31.8 million
    to execute the SAPR program in fiscal year 2013. The budget funds full-
    time SARCs, 24 dedicated investigative agents specializing in sexual
    assault investigations, and operational program expenses for all first-
    responder agencies and field level activities. To meet the new NDAA for
    Fiscal Year 2012 requirement for full time Sexual Assault victim
    advocates at brigade or equivalent level, the Air Force will need to
    add 89 new positions (60 DOD civilians and 18 officers from the Active
    Duty component, and 11 traditional Reserve officers from the Air
    Reserve component). The associated cost is $7.5 million in fiscal year
    2013, increasing to $8.4 million by fiscal year 2017.
        Prevention and response are critical elements of the SAPR program.
    Holding those who commit the crime of sexual assault accountable is
    equally important. The Air Force is committed to accountability through
    effective investigations, knowledgeable staff judge advocate advice,
    and strong commander and senior enlisted support. The Air Force has 24
    Air Force Office of Special Investigations investigators dedicated to
    sexual assault investigations and funds 10 DNA analyst salaries at the
    U.S. Army Criminal Investigations Laboratory to analyze Air Force
    sexual assault case evidence. Investigators and judge advocates
    participate in combined training and attend courses specifically
    addressing sexual assault crimes. The recent Air Force Judge Advocate
    General Keystone annual leader summit provided a 4-hour session for
    staff judge advocates facilitated by subject matter experts on
    investigation and evaluation of sexual assault cases. Executive Order
    MRE 514 provides victim advocate privilege against disclosure of
    certain communications by victims, SAPR victim advocates and family
    advocacy program victim advocates, and we feel certain this provision
    will encourage more victims to come forward and report sexual assaults
    and incidents of domestic violence.
        In March, the Air Force launched the Defense Sexual Assault
    Incident Database (DSAID). The Air Force has worked closely with OSD
    from concept development to DSAID system design, so we look forward to
    implementing this valuable tool for enhanced reporting to Congress and
    to our leaders and commanders and we appreciate Congress's continued
    support in addressing this crime.
                                wounded warriors
        The Air Force continues to strengthen its support for our wounded,
    ill and injured population through our Warrior and Survivor Care
    Division. Our wounded, ill and injured airmen deserve our very best and
    the Warrior and Survivor Care Division is committed to providing them
    individualized and focused non-clinical support. Through the Recovery
    Care Coordinator (RCC) program, we have strategically placed 33 non-
    clinical care managers around the country and in Germany. This RCC
    network provides dedicated support and coverage from the moment Air
    Force Casualty reports that an airman is placed in a seriously or very
    seriously ill or injured status; serving as independent advocates for
    each airman and working to ease the burden of administrative and
    personal requirements as they navigate through their continuum of care.
        Our Family Liaison Officers (FLO) also provide an invaluable
    service to the families of our seriously or very seriously wounded, ill
    and injured airmen. The Air Force has taken the concept used to support
    families of the fallen and applied it to our wounded warrior families
    as well. The FLO coordinates all logistical support for family members
    to include arranging lodging, securing transportation, and seeing to
    the comfort and other arising needs of the family.
        While we provide excellent care for all our wounded, ill, and
    injured with RCCs and FLOs, the Air Force Wounded Warrior Program
    (AFW2) focuses exclusively on our combat wounded airmen. This program
    provides long-term, non-clinical care management for combat wounded who
    must meet a Medical Evaluation Board or Physical Evaluation Board to
    determine whether they are fit for duty. Focused, personal care from
    AFW2 allows our combat wounded airmen the opportunity to make informed
    decisions when their future career path changes due to their injuries.
                    integrated disability evaluation system
        The Air Force has collaborated with OSD and the VA to simplify the
    Integrated Disability Evaluation System (IDES) process for
    servicemembers by increasing transparency and reducing processing time
    to improve the transition for servicemembers from DOD to VA. Overall,
    the IDES monthly progress report for February 2012 indicates Air Force
    Active component case processing is averaging 360 days, down from an
    average of 540 days in recent years.
        The Air Force Medical Evaluation Board (MEB) and Physical
    Evaluation Board (PEB) are working diligently to meet timeliness goals
    and ensure quality outcomes. We have directed considerable leadership
    attention and resources targeting improved MEB and PEB decision
    timeliness and are on target to meet review and decision guidelines by
    October 2012. These focused efforts will ensure our wounded, ill and
    injured personnel receive timely reviews and adjudications of their
    cases. Along with the Army and the Navy, the Air Force is working with
    the Wounded Warrior Care and Transition Policy Office to identify a
    methodology for accurately tracking each step associated with the
    transition phase.
        Another venue of disability appeals administered by the Air Force
    is the DOD Physical Disability Board of Review (PDBR). As the lead
    component operating this Wounded Warrior Board, the Air Force recently
    partnered with the VA in its outreach efforts to ensure every PDBR-
    eligible veteran is made aware of their opportunity to have their
    service assigned disability ratings reviewed. The goal of this
    interdepartmental effort is to reach all 77,000 eligible veterans
    within the year.
                              operational reserve
        We appreciate the opportunity to also share information about the
    highest quality, most cost efficient Reserve component in history. As
    the new DOD strategy is implemented and planning occurs to conform with
    an increasingly austere budget environment, the Air Force Reserve and
    Air National Guard will continue to maximize the advantages of
    Associations. Associate units have proven themselves as a solid
    solution that exploits the strengths each component offers. They ensure
    that the experience and cost effectiveness of the Air Force Reserve and
    Air National Guard reach their full potential. This effort is critical
    to mission success in an environment wrought with fiscal challenges.
        Recently, Congress passed much-needed legislation allowing Service
    Secretaries to involuntarily mobilize up to 60,000 members of the
    Reserve component without a national emergency. The use of this
    authority still needs to be planned, programmed and budgeted before it
    can be implemented. The Air Force is working with OSD to develop the
    policies and procedures to offer the fastest, most enduring support to
    not only the combatant commanders around the world, but to all our
    members; balancing their time between service to our country, their
    families, and their employers.
        The Air Force Reserve and Air National Guard are currently
    sustaining combat operations in conjunction with our active duty
    colleagues on five continents--lengthy operations which have produced
    strains on our airmen and our equipment. We will continue to define the
    most efficient mix of Active, Air Force Reserve, and Air National Guard
    forces best suited to the strategy in terms of cost, operational
    requirements, surge or regeneration capability, and employment of Total
    Force assets. By ensuring optimal mix between the Regular Air Force,
    the Air Force Reserve, and the Air National Guard the Total Force will
    not only preserve previous investments in readiness, capability, and
    capacity, but also protect the operational expertise of the force for
    future use while ensuring a rapidly expandable, trained and ready
    military.
                military personnel appropriation (mpa) man-days
        The MPA man-day resource enables the Air Force to leverage Air
    Reserve Component capabilities supporting military missions beyond the
    Active component's level of capability. In late 2009, a decision was
    made to implement a requirements-based MPA man-day process as part of
    the Air Force Corporate Structure (AFCS) fiscal year 2012 Program
    Objective Memorandum (POM) development process. Since the fiscal year
    2012 POM build, Air Force Major Commands have worked closely with the
    combatant commanders to identify requirements. Once submitted,
    requirements are staffed, verified and vetted through the AFCS based on
    priorities established in the Annual Planning and Programming Guidance.
    Additional criteria such as mission impact, critical skills, active
    duty manning and level of support are also weighted to finalize the
    prioritization. The Air Force is committed to continuing this
    transparent process, which is designed to ensure appropriate deployment
    of Reserve Component forces, enabling the Total Force to properly
    respond to combatant command requirements.
            integration of air force component personnel management
        We are committed to fully integrating personnel management
    policies, organizations, systems and processes across the Air Force
    enterprise, with the outcome of providing more effective and improved
    service to our airmen, reducing barriers to continuum of service, and
    increasing emphasis on unified Total Force decisionmaking. This is not
    only the right thing to do for our Air Force; it will drive greater
    operational efficiencies and allow transfer of resources from tail to
    tooth.
        Since the Secretary of the Air Force directed the integration of
    the three Air Force Component Personnel Management Systems into one,
    personnel from across the Air Force headquarters have been working to
    facilitate the integration and standardization of human resource
    management with Total Force directives and instructions. As of this
    date, analysis is underway on more than two dozen human resource
    activities, with the high-level policy analysis phase on track for
    completion in May 2012. We are looking closely at existing policy
    guidance to standardize or consolidate management across components
    wherever practical and where allowed by law. This effort has a targeted
    implementation work plan of calendar year 2012, with follow-on actions
    through the Future Years Defense Plan (FYDP).
                                   diversity
        Diversity remains a top priority of Air Force senior leadership.
    The Air Force recognizes that a diverse force is a military necessity,
    and we continue on a strategic path to attract, recruit, develop and
    retain a diverse and inclusive workforce of highly qualified
    individuals who reflect the rich tapestry of the Nation we serve. In
    October 2011, a Declaration on Diversity signed by the Secretary of the
    Air Force, Chief of Staff of the Air Force and Chief Master Sergeant of
    the Air Force was distributed across the Air Force to highlight the
    importance of diversity to the mission. Additionally, we increased
    senior leader involvement in the Air Force Diversity Committee by
    adding the Major Command Vice Commanders, who provide invaluable
    insight on best practices throughout their respective commands. We are
    well on the way to institutionalizing our Strategic Diversity Roadmap,
    A Journey to Excellence throughout the Total Force.
        Results from our 2011 Internal Communication Assessment Group
    Diversity survey indicated 75 percent of airmen agreed it is important
    for the Air Force to attract, recruit, develop, and retain a qualified,
    diverse workforce as a way to maintain our edge as a superior military
    organization. Furthermore, 88 percent of airmen surveyed believe the
    Air Force is doing a good or excellent job creating diversity within
    the Total Force.
        Focus on Air Force outreach programs remains central to attracting
    and recruiting diverse talent. To that end, in partnership with OSD's
    Office of Diversity Management and Equal Opportunity, the Air Force
    plans, coordinates and oversees national-level diversity outreach
    programs supporting our diversity goals and objectives. Further, to
    maximize resources, we utilize a Total Force perspective to determine
    which events and opportunities provide the best return on investment.
    We have 80 outreach events planned for 2012, including the Black
    Engineer of the Year Awards, Joint Women's Leadership Symposium and the
    Hispanic Engineer National Achievements Award Corporation Conference.
    We continue to place emphasis on education, health, and mentoring in
    the Science, Technology, Engineering, and Mathematics disciplines
    through our community engagements, and feedback from community
    influencers has proven very positive thus far.
        Finally, the Air Force supports the Military Leadership Diversity
    Commission recommendations and is poised to support Executive Order
    13583, Establishing a Coordinated Government-wide Initiative to Promote
    Diversity and Inclusion in the Federal Workforce. Upon OPM's release of
    the government-wide Diversity and Inclusion Strategic Plan, we will
    work with OSD to develop a plan of action and milestones to support the
    President's goal of using the talents of all segments of society by
    enhancing our ability to recruit, hire, promote, and retain a more
    diverse workforce and creating a culture that encourages collaboration,
    flexibility, and fairness to enable individuals to participate to their
    full potential.
                             u.s. air force academy
        The U.S. Air Force Academy (USAFA) continues to provide an
    exceptional environment for educating, training and inspiring men and
    women to become outstanding officers, motivated to lead the U.S. Air
    Force in service to our Nation in a challenging global environment.
    Senior Air Force leadership continues to energetically engage in the
    Academy's oversight, ensuring cadet train, study and live in a safe and
    productive environment. We continue our close working relationship with
    the USAFA Board of Visitors (BOV), enjoying frequent interactions with
    Ambassador Susan Schwab, USAFA BOV Chair, who is keeping the BOV
    vitalized and actively engaged in providing external Academy oversight.
        In the past year, USAFA cadets received numerous accolades for
    their undergraduate work, including one Rhodes scholar and two Marshall
    scholars, recognition by U.S. News & World Report as having the #2
    Aerospace/Aeronautical/Astronautical Program in the Nation and #1
    undergraduate-only institution in research funding-over $70 million,
    and being ranked by Forbes #10 of 610 of America's Best Colleges. In
    addition to outstanding academics, the cadets have also excelled in
    athletics, being #2 of 120 NCAA Division I football programs in
    academic progress rates, #1 of 9 academically in the Mountain West
    Conference, and for the second consecutive year, the Academy's football
    team will visit the White House to receive the Commander in Chief's
    Trophy from the President. The President will also give this year's
    commencement address at the Academy.
        Respect for human dignity is at the core of the USAFA environment.
    USAFA is a leader in developing programs for the prevention of and
    responding to incidents of sexual assault and sexual harassment, gender
    relations issues, and religious tolerance. The Academy is currently
    conducting Religious Respect Training, which involves cadets, faculty
    and staff, using training scenarios designed to spur critical thinking
    on religious tolerance and actions. While the Academy had an uneventful
    ``Don't-Ask/Don't-Tell'' transition, it is unfortunately in the midst
    of investigating several cases of alleged sexual assault and illegal
    drug use.
        USAFA is working hard to preserve an outstanding training and
    educational environment in a fiscally challenging environment. As part
    of the AF response to the requirements of the Secretary of Defense's
    August 2010 Efficiency Memorandum, USAFA is reducing its civilian
    workforce by 67 positions (4 percent of its current workforce). The
    Academy is currently in the process of selecting members for the Class
    of 2016 while focusing efforts to ensure the size of that class
    supports the 1 Oct 2012 cadet wing end strength target of 4,000.
                                   conclusion
        The hallmark of the U.S. Air Force's success has always been, and
    will remain, our people. Nearly 2 decades of sustained combat,
    humanitarian, and stability operations have imposed extraordinary
    demands on our forces. Yet our airmen continue to contribute
    significant capabilities to the joint team and do so with the integrity
    and excellence familiar to the global community. We will continue to
    size and shape the force through all necessary means while retaining an
    intrinsic value that attracts and keeps the highest quality airmen. We
    are a smaller force, but a ready force. By sustaining accessions for
    the long-term and balancing the total force to meet operational
    requirements, your U.S. Air Force, with its joint partners, provides
    unmatched capabilities across the spectrum of operations.

        Senator Webb. Thank you very much, Secretary Ginsberg,
        I am going to ask three questions, and then I am going to
    move along to whichever other Senators on the subcommittee wish
    to ask questions.
        First, Secretary Ginsberg, let me ask for your
    clarification on something. When I was in the Pentagon, the way
    the budget process worked was, first, the Services got together
    with their different components. They got the budget
    submissions. They argued against a top line. They figured out
    their budget. Then the different Services presented their
    budgets to OSD, and I sat on the Defense Resources Board (DRB)
    for 4 years. The DRB would examine the Service budgets. They
    would challenge different components of it. You came up with a
    DOD budget signed off by the Deputy Secretary of Defense and
    eventually by the Secretary. That was then brought to the
    Office of Management and Budget (OMB). OMB scrubbed it. Then
    you had a DOD budget, and it came over here to Congress. Once
    it came over to Congress, DOD as a whole was expected to
    support that budget.
        Is that the way things work?
        Mr. Ginsberg. Yes, sir. I think that is fundamentally the
    basic outline of the way it works today. We develop our budgets
    through what we call the corporate process. What that really
    does is bring together every component of the Air Force, every
    office that has equity in the budget, and we develop a program
    that is, of course, meeting the strategic guidance the
    President lays out then within the fiscal realities and we
    submit it to OSD. The other Services have a chance to look at
    it. We develop a program and then we submit it up through OMB.
        Senator Webb. It is a corporate process?
        Mr. Ginsberg. Yes, sir.
        Senator Webb. For instance, a little more than 20 years
    ago, there was an Air Force Chief of Staff named Larry Welch
    who I had served with in the Pentagon and who was widely
    expected to become Chairman of the Joint Chiefs of Staff. He
    went over to the House side and had a discussion with Les Aspin
    about a tradeoff at that time between Minuteman and Midgetman
    missile programs, how much money would go into one or the
    other. He made a statement that he would personally support--in
    his opinion, he could personally support something that had not
    been in the budget. By the time he got back to the Pentagon, he
    was reprimanded by the Secretary of Defense.
        There was an article in the New York Times yesterday about
    the Air National Guard lobbying the Hill against budget cuts
    that were in a scrubbed budget. Are you aware of that effort?
        Mr. Ginsberg. No, sir. I read that article. I do not know
    specifically what that was referring to. No, sir.
        Senator Webb. It said for 2 months the Air National Guard,
    with the help of Governors from every State, has been battling
    the Active Duty Air Force over proposed budget cuts. I can hear
    Senator Graham wanting to get to the mic here. [Laughter.]
        What do you think about that?
        Mr. Ginsberg. Sir, I do not know exactly what that is
    referring to again. So, of course, there you have the adjutants
    general of the States who are the chief military advisors in
    the State role to their Governors. When they are the adjutants
    general, they are----
        Senator Webb. What if they are over here in uniform?
        Mr. Ginsberg. What is that?
        Senator Webb. What if they are over here in uniform?
        Mr. Ginsberg. It depends on what business they are carrying
    out, sir.
        Senator Webb. If they are carrying out this particular
    business mentioned in this particular article.
        General Jones, do you have a thought on that?
        Mr. Ginsberg. I cannot comment on a specific hypothetical.
    Sir, I do not know exactly again specifically the specific
    situation.
        Senator Webb. General Jones, do you have a comment on that?
        General Jones. Senator, I am familiar with the article you
    are speaking of. When we prepared the budget, it was a budget
    that was designed to look at the new strategy, a balanced
    approach, and that is certainly what the Chief and the
    Secretary feel like they need to bring forward that balances
    the requirement for the Guard, the Reserve, and the Active Duty
    to coexist to support each other in a role that allows us to
    use each to their strengths. I feel like that is the proposal
    that was laid out by the Chief. Obviously, some people have
    opinions of the proposals and the details of it. But I really
    feel like the budget was something that was put together. The
    proposals were vetted. They were discussed, and it was a
    collaborative effort or a cooperative effort. Not every
    decision was agreed upon 100 percent, but when you have to make
    decisions, they will not all be agreed upon.
        Senator Webb. We may end up coming back to that or someone
    may end up coming back to that.
        General Milstead, you and I had a discussion about this.
    This is the front page of the Marine Corps Times this week.
    Grunt training for women starting now, infantry school
    admissions, new combat tests, et cetera. The Internet is abuzz
    with this decision. There are a lot of people wondering what
    the inception of it was, what the plan is. I think this is an
    opportunity maybe for you to explain how this decision took
    place, how you project this moving into the future as well.
        General Milstead. Yes, sir. It is important to put that
    story and the story that was in the New York Times as well in
    context. It is also important to make sure that folks
    understand what it is and, more importantly, what it is not.
        Assignment policy for women has not changed. We are not
    training women to be infantry officers. We do not have that
    authority. That authority resides with Congress.
        What we are doing is deliberate research. If I may, the
    National Defense Authorization Act (NDAA) for Fiscal Year 2011
    directed OSD and the Services to review the policies and the
    laws and the regulations that pertain to women in the Service
    and to report back. They stood up a working group with members
    from all the Services and they reported back in February. That
    report included a request from Congress to conduct an exception
    to policy and what we call a pilot program. It also asked for
    the authorities. It stated that they were removing the
    collocation restriction, and then the Secretary further
    directed----
        Senator Webb. Just for clarification, what was that
    request? What was the nature of that request when you said the
    report included a request for a pilot program? All Military
    Occupational Specialists (MOS)?
        General Milstead. Thank you, a request to take open MOSs
    and to establish them at a lower level. For instance, in the
    Marine Corps, we did not have women below the division level in
    certain MOSs. So it was a request for an exception to policy to
    take a woman in an MOS that she is already authorized to serve
    in and put her down to the battalion level. We intend to do
    that as part of the research.
        The Secretary further tasked the Commandant and the other
    Service Chiefs to come back to him in 6 months and give him
    their personal recommendation. So what we are doing is we are
    doing a measured, responsible, and deliberate research, a
    comprehensive plan, so that the Commandant, when he does give
    his recommendation to Secretary Panetta, it will be based on an
    analyses. It will be based on quantitative information and on
    research, and it will be an informed recommendation.
        Senator Webb. To clarify the record, because there are a
    lot of people who are following this, what I understand that
    you are saying is that this is pursuant to a request by the
    Secretary of Defense. The opening up of infantry schools, et
    cetera, is pursuant to a request by the Secretary of Defense
    for the Commandant to give him a report in 6 months on
    feasibility.
        General Milstead. That decision was ours. We felt that we
    could take volunteers--and they are volunteers. They have to be
    volunteers under the protocols--take women officers when they
    come out of the basic school, women volunteers, subsequent to
    the MOS that they will be going to, to attend the Infantry
    Officer Course (IOC), not to become infantry officers, but to
    see how they do and to capture data which will be given to the
    Commandant which will allow him to make an informed
    recommendation to the Secretary how we proceed.
        Senator Webb. We need to understand the origins of this
    experiment. That is why I am trying to get it clear for the
    record. The NDAA gave a broad recommendation, as I understand
    what you are saying. Then the Secretary of Defense gave a
    further request that within 6 months certain recommendations
    from the Services come to the Secretary of Defense?
        General Milstead. That is correct.
        Senator Webb. This is pursuant to that request?
        General Milstead. The decision being within our own wire.
    It is the Marine Corps. He did not tell us to open IOC. The
    Commandant--we came to him with a research plan and said we
    want to push people down to the battalion level, assess that.
    We want to take some women. We want to put them into IOC, see
    how that comes up. We want to come up with common gender-
    neutral standards. We want to do a test based on physical
    fitness for both men and women to see what the level playing
    field is. It is all to come to the Commandant and allow him to
    make an informed recommendation to the Secretary of Defense on
    the way he thinks that we should proceed.
        Senator Webb. So when a male officer finishes IOC, is he
    automatically entitled to one of two MOSs? Right?
        General Milstead. Yes, sir. That is correct.
        Senator Webb. So, if a female officer finishes IOC?
        General Milstead. If a female volunteer attends IOC, it is
    not for the purpose of getting the 03, 02, or 02, 03 MOS. She
    will not receive that MOS.
        Senator Webb. But if she successfully concludes----
        General Milstead. Even if she successfully completes. This
    is not to make female infantry officers.
        Senator Webb. You are going to get a lot of comment on
    that.
        General Milstead. Yes, sir.
        Senator Webb. Secretary Lamont, very quickly, because I
    wanted to ask a question of each of your Service
    representatives. Eight years ago this week, I spoke at the Army
    Infantry School on a lessons-learned package that they had
    talking about my experiences in Vietnam. That night, we had a
    reception at the commanding general's house, and they informed
    us that Pat Tillman had been killed. I think, first of all, it
    is a little sad that we are not remembering what this
    individual did for the respect of the military, leaving
    millions of dollars behind and voluntarily enlisting and going
    over and serving.
        But what happened after that, the way that his death
    wrongly characterized, apparently even when the Army knew it
    was a friendly fire incident, and the existence of private
    communication inside the general officer corps warning the Army
    that this was a friendly fire incident--even his family did not
    know it--was a really tragic circumstance for the family, and I
    think a stain on the Army's reputation.
        We then had an incident at Wanat where certain commanding
    officers were held accountable by a U.S. Central Command
    (CENTCOM) investigation and then their accountability was
    removed by the Department of the Army subsequently.
        We just had an incident not too long ago with a soldier who
    apparently was shot by his own platoon leader accidentally
    during a night engagement but was left on the battlefield when
    others were evacuated, and there does not seem to have been a
    lot of accountability.
        Maybe, General Bostick, you would like to comment on it,
    either or both of you. What is the Army doing in terms of
    reinforcing the notions of the accountability of senior
    leadership?
        Mr. Lamont. I am certainly aware of the situation with that
    captain, as I recall. Actually, I think he may have been a 1st
    lieutenant at the time. As I understand it, it was at night.
    They did not have awareness of where the fallen victim was
    until later. I do know he was reprimanded. Unfortunately, I
    also understand he was subsequently promoted. But I do recall
    that there was a significant review, and, in fact, the
    Secretary, as recently as 3 weeks ago, I think, met with the
    father of the young victim.
        General Bostick. First, our heart goes out to all of the
    loved ones that have lost soldiers on the battlefield.
        We realize that in our Army and the way we fight, we place
    huge responsibilities on the shoulders of young sergeants and
    lieutenants and captains. They have to make on-the-spot
    decisions that sometimes are life-threatening-type decisions.
    We count on them to do that every day.
        We also count on leaders to train them and to be
    accountable for their behaviors. When things go wrong--and they
    always will in war--then we expect to thoroughly investigate
    each one of these incidents. That is what happened in each of
    these.
        I can tell you in the case of Wanat, my wife taught that
    young man when he was in elementary school. So for us, it had
    special meaning, and I know the parents very well. I know Hondo
    Campbell, who was asked to review the situation by the senior
    leadership of the Army, took in the new evidence that came on
    board, and he made his decisions, and the Secretary of the Army
    stood by those decisions.
        But I think in each one of these cases, our responsibility
    is to make sure that if an investigation is due, it is
    thorough, it is proper, and that we report back to the families
    and we provide the care and compassion that they need to get
    through it.
        Senator Webb. Thank you.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        Secretary Lamont, you mentioned efforts to deal with sexual
    harassment and sexual assaults in the Army and the military, in
    general. Is there anything this subcommittee can do or tools we
    can provide or money we can appropriate or recommend to be
    appropriated that we are not doing?
        Mr. Lamont. I would hesitate ever to say you do not need to
    give us any more money. But on the whole----
        Senator Graham. You do not have to give a definitive answer
    today.
        Mr. Lamont. Right, and I appreciate the opportunity to do
    that.
        I think we are making every effort, frankly, to create the
    kind of professional climate that gives to every soldier the
    dignity and respect that he or she deserves. I do not know that
    it is a money question. Although under the new NDAA
    requirements that we shall have sexual assault counselors and
    victim advocates at the brigade level, we understand that our
    numbers would suggest roughly 980 personnel. The fact that we
    are under a civilian cap now at OSD will in itself create some
    problems because we will have to have a mix of both civilian
    and military to meet those requirements. I think right now that
    is the only thing that I would suggest that we would need from
    this committee.
        Senator Graham. Can I ask the same question of the Navy and
    the Air Force?
        Mr. Garcia. Senator, I would say that we believe we have
    the resources and the commitment and the emphasis on the issue,
    that we do not need any extra tools. You asked this question.
    At the end of our ``sexual assault awareness month'' where
    every unit in the Department of the Navy has just had four
    separate stand-downs over the course of this month to emphasize
    the priority that our leadership has in ending this scourge of
    sexual assault and harassment across the force.
        I am certain you are familiar with the Secrtary of
    Defense's new guidance on convening special courts martial at
    the 06 level.
        Prior to this across the Navy, we have trained our Naval
    Criminal Investigation Service personnel to be dedicated field
    experts in capturing and sustaining and protecting evidence in
    crime scenes. Our Judge Advocates General and our Staff Judge
    Advocates are trained in the most effective prosecution
    strategies where appropriate, expedited transfer for members
    who request it within 72 hours. That is all on the response
    side.
        If I could take one more second to speak to the prevention
    side. Every new sailor or marine in our department right now,
    when they go to their A school, their first training school,
    will receive bystander training, bystander intervention
    training. Every leader, enlisted leader and officer leader,
    will be trained in ensuring their command environment
    eliminates the stigma for an individual, preventing an
    individual from being willing to report such an incident.
        You may have followed--I guess it has been about 3 weeks
    now. Our Secretary, our Commandant, our Chief of Naval
    Operations rolled out our new 21st Century Sailor and Marine
    Initiative, and a key cornerstone of that, the readiness piece,
    includes an effort to end sexual assault and acknowledge the
    undeniable correlation, the link between irresponsible alcohol
    use--close to 50 percent of our sexual assaults involve it in
    some way or another, and that is why we are introducing the use
    of breathalyzers that I suspect you are familiar with.
        So I think we have the tools to combat this.
        Mr. Ginsberg. Senator, there is absolutely no place in the
    Air Force for sexual assault. This is really everyone's
    responsibility. It is a command responsibility. It is every
    airman's responsibility to not just go after those who
    perpetrate this action but also to create a climate that
    reduces the likelihood of this occurring. We are not just
    following up the direction, of course, that of Secretary
    Panetta who has, as Secretary Garcia laid out, mentioned later
    a whole series of actions from elevating the level for a
    disposition of case to the 06 level, but we are also taking a
    number of steps on our own, including putting $2.4 million for
    additional Office of Special Investigations investigators.
        As Secretary Lamont mentioned, though, there is going to be
    an additional resource requirement with the additional full-
    time victim advocates, and we are going to address that in the
    fiscal year 2014 budget.
        Senator Graham. I think the committee would appreciate in
    writing anything that you need from us, Uniform Code of
    Military Justice changes, regulatory changes, funding
    requirements, new positions, so that we can say in Congress we
    have done everything within our power to help you do a job that
    needs to be done and, quite frankly, has to be dealt with more
    seriously. So if you could do that in the next week or 2, we
    would appreciate it.
        Senator Webb brought up the conflict between the Reserve
    component and Active Duty component in the Air Force. I just
    want to say I have not been visited by anybody from the Air
    Guard to tell me what to do or not do about the proposed force
    structure. I have decided that on my own, right or wrong, that
    5,000 out of the Air Guard and Air Reserve and less than 1,000
    out of the Active-Duty Force is probably not the right mix.
    Some of the airframes that we will be retiring--I am not so
    sure that is wise. In a down-sized world, you have to have the
    right mix of Active Duty, Air Reserve, and Air Guard personnel.
        The Council of Governors entity--what is the latest on
    that?
        Mr. Ginsberg. Sir, I think you have received----
        Senator Graham. Yes, I think we got it yesterday.
        Mr. Ginsberg.--some correspondence, but their proposal from
    Secretary Panetta is basically to put back 24 C-130 and about
    2,200----
        Senator Graham. Right.
        Mr. Ginsberg. Sir, if I could just talk about that.
    Obviously, we talked about hard choices in my opening
    statement. This is, of course, one of the many hard decisions
    that the Air Force had to make. We had a new Strategic Guidance
    that came from the President that talked about being more
    flexible, agile, told the Air Force that we were going to have
    a very high operational tempo over the long term.
        At the same time, we had the BCA, $487 billion off the DOD
    top line over 10 years. For the Air Force, that meant about $54
    billion over a 5-year period over our FYDP.
        So in order to meet the strategy and to be responsive with
    the limited resources, we had to feed in overseas presence. We
    had to maintain rotational demand and make sure that the
    operational tempo was manageable across not just the Guard and
    Reserve and Active. So we were really concerned about balancing
    the budgets on the backs of our people.
        Senator Graham. I got you. I met with General Breedlove and
    Secretary Donley and had a real good discussion about what went
    into the decisionmaking process.
        The question for me and I think Members of Congress is $487
    billion, given the threats we face--is that too much? I think
    certainly we need to do north of $400 billion, but when it
    comes to the Air Force, the Reserve component got hit pretty
    hard.
        This Council of Governors negotiation, I think, is an
    appropriate thing for you to be doing because they are affected
    by the decisions. Hopefully, we can find some compromise that
    people will feel comfortable that we have the right mix
    particularly in the Air Force. I do not think it is really a
    concern in the other Services.
        But my final question is as we go forward in a down-sized
    environment of having to reduce the military, the Army by
    80,000, what should the Nation know about future conflicts in
    terms of how we meet future land engagements? Hopefully we do
    not have another Iraq, Afghanistan war anytime soon, but the
    possibility of a large land force being deployed is not unheard
    of or impossible to imagine in the future.
        General Odierno told the Appropriations Committee that if
    we had another Iraq-like conflict where you had a large number
    of forces deployed over a fairly significant period of time,
    that with the reduction of Active-Duty Forces of 80,000, that
    50 percent of that combat power and support power, personnel,
    would have to come from the Reserves and the Guard. Does that
    surprise you, Secretary Lamont?
        Mr. Lamont. Not greatly. Clearly we are going to be in need
    of a significant operational Reserve. To the extent that we
    have the trained and ready forces to support a smaller Active
    component, it is absolutely essential.
        Senator Graham. The only reason I mentioned that is, I
    think, that probably is true, and that does mean the Air Guard
    and the Air Reserve who do the fighting and the refueling and
    the transport--we have to look at the Guard and Reserve anew.
    If our Active Duty component is going to be reduced to the
    point, at least on the Army side and probably to the Air Force
    side too, where the next major engagement will be one out of
    two people will be a Guard member or a reservist for a very
    long period of time, we will have to come to grips with that as
    a Nation. Is that where we want to go? If we want to go, we
    will have to plan for it because I do not think anyone has ever
    planned for that before.
        Mr. Lamont. I think we have to be very careful because as
    we reduce the Active component of the Army, we may very well
    find it necessary to shift further capabilities into the Guard
    and Reserve. If we are going to do that, then we better make
    sure they are trained and ready to go. So as we get into the
    budget process, we have to ensure from our standpoint that we
    have sufficient funds for not only full-time support to assist
    the Guard and Reserve, but to also have the training monies. We
    are very good right now on the equipping level, but we are a
    little concerned that we have sufficient and adequate funding
    to train them at the readiness level that we know we will need
    to do.
        Senator Graham. Thank you. Mr. Chairman.
        Senator Webb. Thank you, Senator Graham.
        Just as an aside on your very important question, when I
    was responsible for the Guard and Reserve programs in the 1980s
    before this current evolution that we see in Iraq and
    Afghanistan, the way that the total force was designed at that
    time was approximately half of the combat support and about
    two-thirds of the combat service support, as I recall, in the
    Army was in the Guard and Reserve. They wanted to keep the
    immediate deployers, the combat units, fully manned up to, I
    think, 18 divisions at the time. We are probably going to end
    up with a similar formula as we draw down.
        General Bostick, what was the Army's Active Duty strength
    on September 11? Do you recall? The point being, just to get to
    it, is that the number you are going down to now is slightly
    above where it was on September 11. Is that not correct?
        General Bostick. Yes, Senator. It was about 482,000-
    483,000. We are going to come down to 490,000.
        Senator Webb. Are you comfortable with that number? Is the
    Army comfortable with that number?
        General Bostick. I think, Senator, given the strategy that
    has been laid out, we are comfortable given the assumptions
    that we can make. We are never very good in the assumptions
    that we make about the future, but given the assumptions that
    we have made, given the strategy that we have outlined, we are
    comfortable that if we stay on the ramp that we are on in terms
    of drawing down the Army end strength, that we can do this in a
    reasonable way and take care of soldiers and families as we
    come down and still meet the missions that we have been asked
    to do.
        Senator Webb. Thank you.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        General Bostick, if I can just follow up on the end
    strength reductions on a couple of different fronts. First of
    all, with the 72,000 in end strength reductions in the Army,
    how much--call it what you want, how much latitude did you
    build in there? How much contingency did you build in there?
    Where are we in terms of being on the edge of a position where
    we could put ourselves in a place where we would hollow out our
    force? As we think about 72,000, how much did we build in there
    that we may have made a mistake in terms of future
    contingencies that we are asked to respond to?
        General Bostick. From an operational standpoint, Senator, I
    would say again, given the strategy that has been outlined from
    the President, we look at that strategy, develop a force
    structure, and then our job is to man that force structure. So
    based on the strategy and the assumptions that go into that
    strategy, if we can stay on the ramp that the Secretary and the
    Chief have asked us to stay on through the end of 2017, there
    will be risks there but we believe we have mitigated the risk
    as best we can.
        Where we can get hollow is in a number of areas. A lot of
    folks think about hollowness of a force in terms of people. But
    the Chief and the Secretary have said that they need a balanced
    force, and we are not going to retain force structure to hurt
    ourselves in readiness, and readiness could be in training
    readiness, it could be in the quality of life for our soldiers
    and families, it could be in modernization. So currently the
    biggest portion of our budget, 45-46 percent of our budget, is
    in personnel and it is in manning. So we have put the risk in
    other areas beyond personnel.
        Senator Ayotte. What are our current dwell times and where
    would the end strength reductions--where will we be with dwell
    times? Also, can you tell me what the dwell times are in
    particular for the military occupational specialties?
        If what you have told us thinking about we have an
    unanticipated contingency because, as you have noted, we have
    been particularly bad at predicting our next conflict, where
    does that bring us in terms of needing to reverse the Army's
    end strength reductions?
        I know that is a series of questions, but if you can help
    me where we are with dwell times, where does this bring us with
    the end strength reductions. It is one of the concerns I have
    about the readiness of our forces.
        General Bostick. The dwell times--and it is a difficult
    question to answer simply because dwell is an individual
    metric. If you add it all up, when I testified last year, the
    dwell was about 1 to 1.5. Today it is about 1 to 2. But there
    are MOSs like our aviators, our infantry, and those low-density
    MOSs that have much lower dwell times. It varies on grade. So
    if you are a young junior enlisted, then your OPTEMPO and your
    dwell is lower than a senior officer or a senior non-
    commissioned officer (NCO). But if you add it up across the
    Army, it has been a long time that it has taken a reach of 1 to
    2 dwell, but we are there now except for some of the key MOSs
    that I talked about later.
        We are very concerned on end strength as we come down. If
    we come out of Afghanistan as planned in 2014, that is when the
    majority of--our bigger end strength reductions will happen in
    2014 and beyond. So the temporary end strength increase of
    22,000 that Congress and the Secretary of Defense have
    authorized us to have is helping us meet the demands of our
    deployers. So we have no issues with meeting our deployer
    strengths at their late arrival dates, have had no issues with
    ensuring that they are able to have end strength in addition to
    compensate for their disability evaluation system, the soldiers
    that are involved in that. So from an end strength perspective
    and the glide path that we are on, I feel fairly comfortable as
    long as we are able to maintain the Overseas Contingency
    Operations (OCO) dollars. Everything above 490,000 is not in
    our base. It is an OCO. So that is something that we have to
    fight for each year.
        In terms of your last point on reversibility, we have asked
    Congress for the ability to increase the affiliation bonus from
    Active component to Reserve component from $10,000 to $20,000,
    and we think that will allow us to put more of our NCOs and
    officers that are leaving the Active Force into the Reserves.
    What the Chief and the Secretary have asked us to do is put
    some of our young captains and senior NCOs in drill sergeant
    status and recruiting, more of them in those positions and more
    on the platform in our institutional Army, if you will, so that
    if we had to grow the Army quickly, the part that we cannot
    grow is our mid-grade officers, our mid-grade NCOs. So if we
    have them in some of our school locations where we have pulled
    them out or converted it to civilian positions, we would have
    some flexibility to grow the Army.
        Senator Ayotte. How many are going to receive involuntary
    termination in terms of officers and NCOs with the drawdown,
    the 72,000 drawdown?
        General Bostick. I do not have a specific number on that.
    We have asked Congress for the authorities to have involuntary
    separations. There will be some officers and there will be some
    very good NCOs that will want to stay in the Army and will
    probably not.
        What the Secretary of the Army and the Chief have said is
    that is our last resort. They want to do this without
    involuntary separations. Also on the voluntary separations like
    we had in the 1990s, we open it up to everyone, and a lot of
    our very best folks would leave.
        We think we can manage it, but there will be some
    especially in the 2014-2015 timeframe that on this ramp will
    have to leave by other than natural causes.
        Senator Ayotte. General, I would really very much
    appreciate if you could get us an estimate of how many
    involuntary terminations there will be both in the commissioned
    and then the NCOs.
        Also, I think it is really important for people to
    understand, as I understand it, that some of those people that
    are going to get involuntary terminations have done multiple
    tours for us in these conflicts that we have been fighting.
        Mr. Lamont. Could I just very quickly address a couple of
    your issues? You have mentioned the dwell time, but I want to
    let you know, we are moving our deployment cycle down to a 9-
    month cycle. So we hope that will help reduce some of our
    stress on the force and maybe even eventually, as we reduce in
    Afghanistan, our dwell time will then rise.
        As you say on the hollowing out of the force and our
    concern with our assumptions, the problem is the enemy always
    gets a vote. We never know what the enemy is going to do. We do
    not know what contingencies are going to arise, and we must be
    extremely careful in how we plan for reversibility and
    expandability as necessary.
        Just on some of the numbers, I hate to throw out numbers,
    but I have seen numbers that will approach in the enlisted
    category perhaps as high as the mid-20s, 23,000, 24,000, and on
    the officer contingent--again, these are very rough numbers and
    all based gain on assumptions and attrition rates, but officers
    may go up to 4.5 to maybe 5,000.
        Senator Ayotte. That is a very significant number for many
    who have done multiple tours for us. So I think the American
    people need to understand that in terms of some of the choices
    that we are making.
        I very much appreciate all of your being here. I have some
    follow-up questions that I will probably submit for the record
    on other issues. Thank you.
        Senator Webb. Thank you, Senator Ayotte.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        Thank you all for your excellent work in a time of great
    challenge, and thanks to all the men and women who serve under
    you.
        I have some questions that really relate to the
    responsibilities that will be increasingly important placed on
    our Reserve and National Guard and in particular on the
    transition assistance that we give them as they come, many of
    them, off Active Duty to go into the Reserve, which has been a
    focus of mine, and also on the employment opportunities once
    they return to civilian life.
        I am troubled by reports--and you may want to comment on
    them--that there are instances of discrimination. I do not know
    how to put it any more politely, but discrimination against
    reservists or National Guard because of the possibility that
    they may be deployed and therefore unavailable in their
    workplaces, number one.
        Number two, whatever transition assistance we can give them
    while they are in the military but also afterward when they are
    in civilian life, a Transition Assistance Program (TAP) type of
    assistance. I know that many of the Services--I am most
    familiar probably with the Marine Corps and what it is doing to
    expand the TAP.
        I would ask you to comment on those areas of transition
    assistance and employment opportunity when our Reserves and
    National Guard come off Active Duty and also the kinds of help
    we are giving to our veteran services.
        Secretary Ginsberg?
        Mr. Ginsberg. Senator, thank you. There are a couple issues
    there that you really raised that are very critical for our Air
    Force and our future. There is a very key readiness concern
    there that if our Guard and Reserve airmen do not feel like
    they have the support of their employers, they are not going to
    be raising their hands to volunteer for the missions, whether a
    pop-up contingency or some type of steady state action. So we
    need to make sure, in addition to the family support and the
    direct support we provide them, that we have the backing of
    their employers. So this is absolutely vital for our Air Force,
    and what we have been trying to do is communicate across the
    force to the families, to the employer partners that we are
    going to really need our Guard and Reserve over the long term.
        Of course, if an airman does have a problem, we encourage
    them to file a real complaint, obviously, to be investigated by
    the Department of Labor. So very vital there.
        But the other issue there, sir, is the one you mentioned
    about the transition support, and that is a realm where the
    President has made it a very top priority. We are going to be
    working to make TAP available to our Guard and Reserve in a way
    that really has not been available to them over the long term.
    So any Guard and Reserve member who goes on a deployment over
    180 days is going to be eligible for a full range of transition
    programs, counseling, resource databases. That is all going to
    be put at their fingertips. But we are moving out on that and
    it is a key concern to us.
        Senator Blumenthal. Thank you.
        Secretary Garcia?
        Mr. Garcia. Senator, thank you for your question.
        We too have heard anecdotally accounts of our reservists
    having difficulty in employment and coming back to returning
    employers. We have run each case to ground.
        But I think I would have to point out as well the other
    side of that coin, that on the Navy side alone, we have
    mobilized 67,000 reservists for year-long mobilizations over
    the course of this war. The Navy reservist model is a little
    bit different. They tend to follow their Active Duty service.
    They tend to be a little bit older demographic. The
    overwhelming evidence is that supporters, especially against
    the backdrop of a struggling economy, with these Navy personnel
    have accommodated in many cases voluntarily paying the
    differential between their mobilized salary and that which they
    have made in their civilian capacity, and it is real
    patriotism.
        Our Marine Reserve model is a little bit different. Those
    cases that have run up against the regulations and the law, and
    those cases--we have run each one to ground.
        Secretary Ginsberg mentioned the work we are doing with our
    counterparts at Labor, OMB, and the Department of Veterans
    Affairs (VA) in fleshing out the details of the Veterans
    Opportunity to Work to Hire Heros Act of 2011, known as the
    ``VOW to Hire Heroes Act.''
        But above and beyond that, the TAP reform that both
    Services are doing, initiatives like the American Corporate
    Partners, where heads of a stunning number of companies across
    America have reached out to serve as mentors for our separating
    personnel as they go through TAP. Within the Department of the
    Navy, every separating member, to keep them on the team to the
    maximum extent possible--for example, at Naval Sea Systems
    Command which is our largest civilian hiring entity, we set a
    goal of hiring 365 departing members last year, one a day, and
    we have hired 500. We have set a goal for 300 this year.
        So the transition process is receiving full priority.
        Senator Blumenthal. I do not mean to disparage employers in
    general. I think that the instances of alleged discrimination
    or non-hiring are a small minority, but as Secretary Ginsberg
    said, they create disincentives that may have a ripple effect
    or ramifications beyond that. I agree with you. My impression
    is the vast majority of employers want to do the right thing.
        I am very interested, I know Senator Graham has asked about
    sexual assault, and I commend the Secretary of Defense and all
    of you who have taken a really increasingly hard line on that
    issue. But I want to ask about an unrelated issue--and I would
    like to follow up in questions because I want to give my
    colleagues a chance to ask some questions and that is, suicide
    prevention. How are we doing? Any progress to report? Any
    comments for us?
        Mr. Garcia. I had the opportunity to respond to Senator
    Graham's question earlier. General, do you want to start this
    one off?
        General Milstead. Of course, one is too many, and nobody is
    dancing in the end zone, but we are doing better. If you look
    at the numbers, calendar year 2009 was the dark year for us. We
    were at 52. The next year we came down to 37, and this past
    year we were at 33. So the glide slope is right, but again,
    until you get a zero--and so far this year we are at 12, a
    little bit ahead of where we were last year, but I am not sure
    what that means.
        We continue to work this. In the Marine Corps, we have
    given this to our NCOs. We continue with our training. Now we
    have a training program for our junior marines, for our NCOs,
    and then for our young officers and staff NCOs, our platoon
    sergeants and our platoon commanders. But the NCOs--those are
    the guys that have their fingerprints all over the guys and
    gals, where we see this, the young ranks.
        So we are optimistically hopeful, but this is something
    that we will continue to work at until we have zero. As you are
    well aware, Senator, this is a national problem. It is just not
    within the military. But it has the Commandant's attention. It
    has all the Services' attention.
        Admiral Van Buskirk. Senator, I would like to add we are
    also putting more resources towards it, and just recently we
    have added--we have operational stress training teams out in
    the fleet concentration areas that can be out there among our
    sailors, our men and women, out there so they can help train
    our leadership to identify the signs of increased stress with
    our servicemembers and then additionally be a resource that
    they can actually go on board the ships to help counsel our
    people as well.
        24/7 hotlines as well that we are manning to ensure we have
    the people available to counsel at any time a person has some
    indication that they may have some problems.
        So I think adding that and adding additional leadership
    focus to this is critical. But certainly we do not like the
    trends we are seeing across the Services and we want to
    continue to combat and put the resources against it, sir.
        Senator Blumenthal. Thank you.
        Mr. Garcia. If I could just punctuate that point, Senator.
    I think in some part what makes this such an agonizing problem,
    each of us reviews the operations reports each morning from the
    night before, and to try to discern a pattern in these cases is
    so difficult. Across the Department of the Navy, we will
    typically see about five and a half suicide events per day,
    that is, ideation, attempts, or in the worst case, the act. It
    is not rare to have days, five and a half more incidents, where
    the members involved have never deployed. It is difficult to
    make the correlation, the formal link, between the operational
    tempo and the deployment piece.
        It took me a while to get to this point. What I take some
    comfort in is that an ideation event, if it does not culminate
    in an attempt, or, God forbid, the actual act, I want to
    believe is a sign that we are making progress in that a sailor
    or marine knows the resources to go to. His shipmates, his
    fellow marines, are recognizing the telltale signs and are
    reaching out and getting information to the right people.
        Senator Blumenthal. Thank you, all. I really appreciate
    your excellent answers. Thank you.
        Thank you, Mr. Chairman.
        Senator Webb. Thank you, Senator Blumenthal.
        Senator Vitter.
        Senator Vitter. Thank you, Mr. Chairman, and thanks to all
    of you for your service. In that vein, by the way, we just had
    Navy Week in New Orleans associated with commemoration of the
    War of 1812, and I got to meet a number of servicemembers. They
    happened to all be Navy. But I tell you what. We have a lot of
    problems and a lot of challenges, but it is not the young
    people in the military. So thanks for your leadership and
    thanks for them.
        I have some questions focused on some concerns I have with
    the cuts and proposals as it affects Louisiana. Let me put it
    in context. Look, these are very tough budget times. There are
    going to be a lot of decisions that are not popular to
    different States, and we all get that.
        I think what frustrates me and some other Members are two
    things.
        Number one, in a lot of these cases, we are not given and
    we do not see, even after digging, a clear metric and a clear
    justification and rationale.
        Number two, in a lot of these cases, I see jointness going
    out the window at a time when greater jointness, including
    greater efficiency, is more necessary than ever. In some of
    these decisions, I personally see the stovepipes hunkering down
    and sacrificing jointness and through it, greater efficiency.
        So that is the context of some of these concerns and
    questions.
        Specifically the Air Force--and I will ask you, Mr.
    Secretary--is recommending to cut out the 917th Fighter Group
    at Barksdale, the A-10s there. Now, when we looked into that,
    when we asked the folks on the ground in Louisiana, including
    the Army folks at Fort Polk who they help train, those folks on
    the ground said that about 70 percent of all of the joint Air
    Force/Army training at Joint Readiness Training Center (JRTC)
    at Fort Polk use that 917th Fighter Group during the Green Flag
    East exercises. So there was tremendous appreciation of that
    participation in that joint training.
        When we asked the Air Force--I just got a letter from the
    Secretary, and his response was that the same 197th group has
    only fulfilled its requirement, meaning that training, once
    over the last 3 fiscal years.
        Now, this is not a 10 percent difference of opinion. This
    is different planets, and so it is very concerning to me when
    you get wildly different statistics and numbers behind a
    decision. How am I to reconcile those wildly different
    statistics?
        Mr. Ginsberg. Senator, I certainly will reconcile the
    numbers for you. We will go back and validate and we will
    certainly get back to you on that.
        I will say a couple of things. One is on the decision to
    retire the A-10s, that was based on our force planners'
    assessment of what the future demand was going to look like,
    what was the range of scenarios that the Department of the Air
    Force would have to support the joint war fight in and what was
    the overall capacity of aircraft that were needed for that. A
    decision was made to take down more A-10s than F-16s because
    the F-16 is a multi-role aircraft versus the A-10 which is more
    single purpose. So that was the decision to take down--that was
    the approach to take down the capacity.
        In terms of where the specific units were in the
    distribution among the Guard and Reserve, it was similar to
    what I talked about. The thought was similar to what I
    mentioned before, that in order to maintain the overseas
    presence and to maintain an acceptable level of operational
    tempo across our force, to do more of those reductions in the
    National Guard and Reserve. So that was the overall thought
    process there.
        Sir, I would just like to highlight that. If there is a
    unit at JRTC that is in the box, ready to go deploy, whether it
    is the 917th or an A-10 unit from Moody Air Force Base in
    Georgia, that is a valid requirement, and in the same way that
    the Air Force plugs in with its Service counterparts down
    range, it will do so here in order to make sure that our
    comrades are ready to go and that we can train like we fight
    every day. So that is something we will be working through.
        But, sir, I do want to make sure we are providing you all
    the information that you need.
        Senator Vitter. Certainly, I would like that follow-up and
    reconciliation.
        More broadly we have asked for specific savings numbers and
    analysis for that, as well as Louisiana National Guard 259th
    Air Traffic Control Squadron from DOD. The only thing we have
    gotten are conclusory statements or the decision or a letter
    with a paragraph explanation. We have constantly, many times
    over, asked for a specific cost savings assessment. If you can
    get that to us more broadly.
        [The information referred to follows:]

        The new Defense Strategic Guidance states that U.S. forces will no
    longer be sized to conduct large-scale, prolonged stability operations.
    Analysis based on scenarios consistent with the Strategic Guidance
    resulted in a reduced requirement for tactical combat aircraft and a
    preference for multi-role fighters to provide the most flexible
    capability within each scenario. As a result, A-10 retirements were
    selected in lieu of other combat aircraft and the Air Force made the
    difficult choice to retire five A-10 squadrons comprised of 102 A-10
    aircraft. Previous reductions in fighter force structure shifted the
    Total Force ratio toward Reserve component forces, and Air Force
    decisions in the fiscal year 2013 President's budget request (20 A-10s
    from Active Duty, 61 from the Air National Guard, and 21 from the Air
    Force Reserves) rebalanced that ratio to create a more sustainable
    force structure over the long term.
        Before I explain how we determined where to take the A-10
    reductions out of the Air Force Reserve, I'd like to clarify the
    discrepancies you noted in the A-10 taskings for the 917th Fighter
    Group and their support of the Joint Readiness Training Center (JRTC)
    at Fort Polk. The Air Force has formally tasked the 917th Fighter Group
    one time through the Air Combat Command Consolidated Planning Schedule.
    However, due to their proximity to Fort Polk, the 917th Fighter Group
    routinely accepts ad-hoc requests from the JRTC for close air support
    training outside of Air Combat Command Consolidated Planning Schedule.
        The Air Force Reserve reduction of 21 A-10 aircraft required a
    decision between two unit-equipped bases, Barksdale and Whiteman AFB.
    The Air Force Reserve employed four realignment strategy principles
    that influenced the selection of specific locations for aircraft
    reductions. It first ensured aircraft reductions would not negatively
    impact operational support to the combatant commands. Second, it
    considered if force structure movements would create any new Air Force
    bills. Third, it attempted to minimize risk by optimizing crew ratios
    to exploit expected increase in mission capability rates. The final
    principle considered locations that continued to have an Air Force
    mission due to the presence of another Air Force component. In
    addition, although not stated as one of the four guiding principles,
    our sphere of influence also factored in and allowed for maximum
    reversibility at minimum cost.
        The decision between Barksdale and Whiteman Air Force Base (AFB)
    Reserve A-10 units was difficult, as both units are tenant
    organizations on Active Air Force installations, have excellent
    recruiting capabilities, sound track records of performance, and
    provide support to joint warfighting and training. Ultimately, the Air
    Force Reserve determined that the B-52 classic association at Barksdale
    AFB would be best positioned to absorb some of the adverse impact of
    closing the A-10 squadron at Barksdale. Conversely, the A-10 unit at
    Whiteman AFB is a stand-alone tenant unit. Closing the Whiteman unit
    would make it difficult to absorb the personnel. The Air Force will
    continue to provide support to joint warfighters at the JRTC through
    the Air Combat Command Consolidated Planning Schedule system.
        By divesting the A-10 squadron at Barksdale AFB, the Air Force
    expects to save approximately $336 million over the Future Years
    Defense Program. The savings account for operations and maintenance
    personnel, flying hours, aircraft modifications such as wing
    replacements, and depot sustainment funding.
        The decision to divest the 259th Air Traffic Control Squadron
    (ATCS) was based on the lack of an Air National Guard flying mission
    assigned to the Alexandria International Airport. The cost savings to
    the Air Force will include cost avoidance for the purchase of a next
    generation deployable radar and deployable instrument landing system as
    well as non-flying and depot level repair cost savings that exceed
    $500,000 per year. Additionally, the manpower saved by divesting the
    ATCS allowed the Air National Guard to realign the corresponding end
    strength towards bolstering readiness in areas such as aircraft
    maintenance, intelligence, surveillance, and reconnaissance, and
    domestic operations.

        Senator Vitter. On the 917th, if it is true that they have
    participated in a big number, a majority--folks on the ground
    say 7 percent of that training at Fort Polk--what will be the
    replacement for that type of training?
        General Jones. Senator, I think it is important that when
    they talk about what will be the replacement, not that they ask
    for what type, what specific aircraft, but what capability.
    That is where we were stuck with the tough decision to have to
    eliminate single capability aircraft to go with multi-role
    aircraft so we could bring in something that could do more than
    just one thing. So what we would be providing them is a multi-
    role aircraft that could perform the same function the A-10 was
    performing.
        Sir, if I could just go back and comment on one thing you
    said earlier about jointness, the question of Services
    hunkering down and trying to back away from jointness--I really
    do not agree with that. I would have to tell you that having
    served in the U.S. European Command  when  I  was  a  younger
    officer,  having  been  the  J-1 at CENTCOM during much of the
    conflict when General Abizaid was the commander, we are all so
    bought into jointness that it would be impossible for us as a
    department to walk away from how we fight now. We fight as a
    joint, integrated team. Our leadership teams are integrated.
    Our relationships across the Services have been solidified, and
    that is the only way we will be going to war in the future.
        Senator Vitter. Okay. To follow up on that thought,
    regarding this A-10 decision, let me ask your Army colleagues
    when in the process was the Army consulted regarding the impact
    of this A-10 decision? How early or late and who was consulted
    about that on the Army side?
        Mr. Lamont. I frankly cannot respond to that. I will have
    to take that for the record and find out. I assume it would be
    within our G-3 staff, our training and operational concerns.
        General Bostick. Senator, we will go back and find out, but
    I would agree with my Air Force colleague. We will never walk
    away from jointness, and any opportunity that we have to train
    is going to be a good opportunity for the country. So just like
    we cannot walk away from the Reserve component, we cannot walk
    away from jointness and the combined nature of how we fight is
    the only way that we can do this.
        Senator Vitter. If you would follow up because I think it
    would be an interesting test of this debate to see when in time
    and at what level the Army was actively in a meaningful way
    consulted on this decision.
        Mr. Lamont. We will find out.
        Senator Vitter. Okay. I will look for that follow-up, and I
    appreciate it.
        [The information referred to follows:]

        The Air Force did not consult with the Army regarding moving the A-
    10 mission out of Barksdale. The Air Force made difficult choices to
    closely align with the new Department of Defense strategy. In doing so,
    it favored aircraft with multi-role capabilities versus those focused
    on niche missions. The Air Force Reserve was faced with a fair share
    reduction of A-10 fleet and had to make a decision between two unit-
    equipped bases, Barksdale and Whiteman Air Force Base (AFB), to reduce
    21 A-10s. Both units are tenant organizations on Active Air Force
    installations, have excellent recruiting capabilities, sound track
    records of performance, and provide support to joint warfighting and
    training. The Air Force Reserve determined that the B-52 classic
    association at Barksdale AFB would be best positioned to absorb some of
    the adverse impact of closing the A-10 squadron at Barksdale.
    Conversely, the A-10 unit is a stand-alone tenant unit on Whiteman AFB.
    Closing the unit would make it difficult to absorb the personnel.

        Mr. Ginsberg. Senator, could I just say that during the
    development of our budgets, each Service's plan is vetted
    through the other Services, and of course through our Office of
    Secretary of Defense overseers. So there are smaller forums and
    larger forums. We have our programmers, plans, and programs. We
    call them the ``eights.'' They regularly review the budget
    submissions towards the tail end, once each Service is
    developed, and then our budgets go through something they call
    the Defense Management Action Group, and that is where the
    Services can look before it is submitted to Congress, before it
    goes to OMB. Every Service gets to peer into what each other
    Service is doing. Also, there are lots of communications back
    and forth where we highlight some of the big issues that are
    going to be coming forward in the year ahead.
        Senator Vitter. Secretary Ginsberg, again on the Air Force
    side, Global Strike Command is a relatively new command at
    Barksdale.
        Senator Webb. Senator Vitter, I am going to have to
    interrupt you because we are on a 7-minute clock, and a vote
    has been called. I know Senator Brown wants to ask a question.
    You could submit that question for the record as can anyone
    else on the subcommittee before close of business tomorrow
    night.
        Senator Vitter. I will submit that for the record. Thank
    you, Mr. Chairman.
        Senator Webb. Senator Brown.
        Senator Brown. Thank you. I will be brief. Thank you.
        How much time do we have before the vote?
        Senator Webb. The vote has been called.
        Senator Brown. I will be done long before then. Thank you.
        General Milstead, first of all, I am encouraged to hear
    that General Amos is opening up some slots for the training of
    women at Marine Corps Infantry School right down the road in
    Quantico. I want to commend him for that.
        I read a quote from General Gray who said every marine is
    first and foremost a rifleman. All other conditions are
    secondary. I agree with that also. I am a strong proponent of
    women in combat, providing they fit the qualifications.
        Where do you think the perception comes from that somehow
    female servicemembers could, ``compromise the mission''? Have
    you heard that? Do you think it is relevant? Do you think it is
    something that is being handled appropriately?
        General Milstead. Sir, again, I do not believe the Senator
    was in here when I first responded to Senator Webb's response
    that this is research so that the Commandant can make an
    informed recommendation to the Secretary.
        But we have approximately a little over 13,000 women
    marines. I have been in combat twice with them. They are in
    combat. That is a misunderstanding of a lot of people. Our
    women are in combat. I am a Cobra pilot. We have women Cobra
    pilots. But we are talking a difference between closed and open
    MOSs. Our women marines, just like our women sailors and our
    women soldiers and our women airmen, make a great contribution
    and have made a great contribution, and we have no inclination
    at all in turning our back on that.
        Senator Brown. It means a lot. I appreciate the effort and
    I will convey that to General Amos.
        I know that Senator Graham and I and others are deeply
    concerned about the Air Force, and I think the Army has struck
    a good balance between Guard and Reserves and regular Army. The
    Air Force--I have to tell you I am not quite happy with the way
    things are shaking out. I feel that the Guard and Reserves are
    getting the short end of the stick. A lot of the input that has
    been given, I feel, has fallen on deaf ears.
        I am deeply concerned about the fact that the Air Force has
    taken all the toys and is holding them and then really having a
    difficult time sharing and especially because I feel we get a
    very good value for the dollar in the Guard and Reserves
    especially in Massachusetts. Some of the units are at 70-80
    percent mission-capable and yet we are going to take away
    that--destroy some of those teams and shift and adjust. It is
    deeply, deeply concerning to me. So if we were to make these
    irreversible cuts to the Guard based on disputable facts or
    flawed assumptions, could that be reversed? Could those actions
    be reversed, do you think?
        Mr. Ginsberg. Senator, we really have struck a balance,
    given again the strategic demands----
        Senator Brown. You have been given guidance from Secretary
    Panetta, but then you have gone and done it how you felt it was
    appropriate. Is that a fair statement?
        Mr. Ginsberg. Yes, sir.
        Senator Brown. The Army has done the same thing, but they
    have a different model.
        Mr. Ginsberg. Sir, we just looked at what the demands were
    going to look like over the future, what were the war plans
    that we would have to fulfill, what are the rotational
    requirements, and then we had to, again, balance those
    considerations with the fact that there was a very significant
    change in our resourcing over the fiscal year plan.
        Senator Brown. Yes, but you are going to get a better value
    for your dollar with the Guard and Reserves. You know that the
    OSD Reserve Affairs report basically said the method of
    calculating the baseline costs and capabilities of the Guard
    and Reserves--without having the appropriate information, is it
    possible the Service Chiefs are assuming key data that would
    show how to preserve the greatest amount of military capability
    at the lowest cost or not?
        Mr. Ginsberg. Sir, there has been a lot of discussion about
    the costs, of course. If there is a way to do a mission more
    cheaply and to get it done, we are going to do that, sir. The
    challenge has been when you are using the Guard and Reserve in
    a very high operational intensity, that some of the cost
    benefits become more ambiguous.
        Senator Brown. But if you shift some of the Active
    components to some of the Reserve bases like has been done in
    the past, you are going to get that good value for the dollar
    and also stretching out the mission.
        Mr. Ginsberg. We foresee a very intense deployment schedule
    for the Guard, Reserve, and the entire force, and like I said,
    as you are using them more intensely, again the cost
    differences among the various components become more ambiguous.
        In the meantime, sir, we also have to be, of course,
    concerned about what is the demand that is placed on the force
    and what is the stress level that we put on everybody. We are
    concerned that if we get these balances wrong, that a member of
    the Guard or Reserve is going to have to deploy at an intensity
    that will just be unacceptable to them, and our airmen are
    going to walk with their feet not just on the regular Air Force
    side but across our entire force.
        Senator Brown. I do not know if I agree with that
    assumption. I have been in 32 years. I have met with all the
    Guard and Reserve air components in Massachusetts and
    throughout, and I will tell you what, this conversation is not
    over. If it is not going to be addressed by you guys keeping
    and staying at the table, we will handle it in committee and we
    will do it for you. I do not know how else to say it. We will
    make sure we play a very active role.
        Unfortunately, we do have to go vote, but I do have a
    question or two for the record I will submit.
        Thank you, Mr. Chairman.
        Senator Webb. Thank you, Senator Brown.
        Again, all members of the subcommittee will have until the
    close of business tomorrow to submit any further questions for
    the record.
        I thank all of you for your testimony and for your
    continued service to our country.
        This hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                  Questions Submitted by Senator Kelly Ayotte
                    integrated disability evaluation system
        1. Senator Ayotte. Secretary Lamont and General Bostick, while
    speaking at the Warrior Care and Transition Program Training Conference
    in Orlando, Florida, in 2011, the former Vice Chief of Staff for the
    Army, General Chiarelli, said that the current Army Disability
    Evaluation System (DES) is ``complex, disjointed, hard to understand,
    and it takes too long to complete.'' How long does it take for the
    average soldier to complete the DES process?
        Secretary Lamont and General Bostick. Active component soldiers who
    completed the Integrated Disability Evaluation System (IDES) in April
    2012 averaged 396 days from referral through notification of the
    Department of Veterans Affairs (VA) benefits decision, Reserve
    component soldiers averaged 401 days.

        2. Senator Ayotte. Secretary Lamont and General Bostick, what is
    the Department of Defense's (DOD) goal for completing the DES process?
        Secretary Lamont and General Bostick. The goal for completing the
    IDES is 295 days for Active component soldiers and 305 days for Reserve
    component soldiers, measured from date of referral to the IDES through
    notification of the VA benefits decision.

        3. Senator Ayotte. Secretary Lamont and General Bostick, how long
    does this process take and why is it taking so long?
        Secretary Lamont and General Bostick. Active component soldiers who
    completed the process in April 2012 averaged 396 days and Reserve
    component soldiers averaged 401 days. The Army is enduring the effects
    of 10 years of war and lacks sufficient capacity to efficiently process
    the increasing number of soldiers now in the IDES.

        4. Senator Ayotte. Secretary Lamont and General Bostick, how many
    soldiers are currently enrolled in the Army's DES?
        Secretary Lamont and General Bostick. As of April 23, 2102, there
    were more than 24,000 soldiers enrolled in the DES, including over
    18,800 who are enrolled in the IDES and over 5,100 who are enrolled in
    the legacy DES.

        5. Senator Ayotte. Secretary Lamont and General Bostick, would it
    be correct to say that as these soldiers progress through the 400-day
    process, they are obviously nondeployable and count toward the Army's
    overall end strength?
        Secretary Lamont and General Bostick. Yes, these soldiers are
    nondeployable and do count against the overall Army end strength. The
    purpose of the DES is to maintain a fit and ready force. Soldiers going
    through that process are being evaluated to see if they are fit enough
    to continue to serve in the Army. Approximately 5 percent of those who
    begin the process are deemed fit and continue to serve. The remainder
    are evaluated for disability ratings and are separated.

        6. Senator Ayotte. Secretary Lamont and General Bostick, what can
    we do to fix this?
        Secretary Lamont and General Bostick. The Army is aggressively
    working to improve performance of the DES. We are currently
    implementing a number of initiatives designed to improve the
    performance, including: adding over 1,100 in staffing; publishing
    guidance to standardize the process across the Army; enhancing our
    training; and establishing procedures that will enhance the sharing of
    information with the VA. However, the Army believes we need to
    fundamentally change the DES; and remain convinced statutory reform is
    the only way we can achieve a sustainable system worthy of the
    sacrifices of our volunteer force in this era of persistent conflict.
        The Army is looking at several different options to improve the
    DES--one of which would be a process where DOD determines a disabled
    servicemember's fitness for duty, and if found unfit, provide a
    lifetime annuity based on the member's rank and years of service. The
    VA would then establish compensation for service-connected injuries,
    disease, or wounds. We believe this type of system would achieve an
    average disability process outcome in less than 90 days: improved
    readiness; reduced complexity; decreased impact on limited medical
    resources; and less adversarial.

        7. Senator Ayotte. Secretary Lamont and General Bostick, is part of
    the problem the dual DOD/VA adjudication systems?
        Secretary Lamont and General Bostick. The IDES was designed to
    eliminate the duplicative elements of the separate disability processes
    previously operated by VA and the military. It employs a model that
    features a streamlined exam process using VA protocols and a single
    disability rating to be issued by VA. One of the principal goals of the
    new system was to ease servicemembers' transition to veteran status so
    they can quickly access VA benefits to reduce the risk of financial
    hardship. From this perspective IDES was successful.
        IDES allowed for a move toward a single process with a single
    examination and a single source for all disability ratings. However,
    soldiers continue to receive two ratings. The Services can only
    compensate for military unfitting (fit for duty) service-connected
    conditions, while the VA compensates for all service-connected
    conditions. This duality creates confusion, and the belief the Services
    are not being loyal to or fair with servicemembers; it is also wasteful
    and time consuming.
        We need to move to a system where the Services determine a disabled
    servicemember's fitness for duty, and if found unfit, provides benefits
    based on the member's rank and years of service and let VA establish
    compensation for disabling service-connected conditions. We believe
    this type of system would achieve an average disability process outcome
    in less than 90 days, improve readiness, while decreasing the impact
    the system currently has on our limited medical resources. It would be
    a less adversarial system.

        8. Senator Ayotte. Secretary Lamont and General Bostick, could
    these two systems be combined into one in order to streamline the
    process, help our troops, and save taxpayers' money?
        Secretary Lamont and General Bostick. The Army believes there is a
    need to clarify the objectives of each respective system. The current
    DES is over 60 years old and was designed for a draft-based military,
    in an industrial/agricultural economy. Its focus on disability and
    compensation reduces incentives or creates conflicting incentives to
    participate in rehabilitation or to return to work and is not adequate
    for the needs of today's professional all volunteer military.
        The Army believes the system requires reform. We recommend a
    simpler process where DOD determines a disabled servicemember's fitness
    for duty, and provides benefits based on the member's rank and years of
    service. VA continues to determine disability benefits as it does now
    using one of its predischarge programs. We believe this type of system
    would achieve an average disability process outcome in less than 90
    days and ensure that VA benefits were available to soldiers immediately
    after separation.

                                   dwell time
        9. Senator Ayotte. General Bostick, what is the impact on readiness
    when there is insufficient time at home between deployments?
        General Bostick. Over the past 11 years, the Army has successfully
    satisfied the high demand for conventional ground forces throughout two
    conflicts. The Army works hard at ensuring that our deploying units are
    adequately manned and ready to meet operational demands. The price of
    meeting the increase in the operational demand has significantly
    stressed our military personnel and their families. To fully
    reconstitute our units, soldiers and their families must be given the
    time and resources they need to reintegrate and reverse the effects of
    the sustained operational tempo. A study completed in 2009 confirmed
    what we already intuitively knew: soldiers require more than 2 years to
    fully recover, both mentally and physically, from the rigors of combat
    deployment. The Army's goal is to achieve and maintain a dwell time of
    at least 2 months at home for every month deployed for the Active
    component soldier and 4 months at home for every month mobilized for
    the Reserve component soldier.
        The withdrawal of forces from Iraq will assist the Army with
    restoring its operational depth and returning strategic flexibility in
    our formations and among our leaders. In the second quarter of fiscal
    year 2012, the median Active component Army individual boots-on-the-
    ground (BOG):dwell reached the goal ratio of 1:2. The ongoing drawdown
    of forces in Afghanistan will continue to improve the BOG:dwell ratio
    of the force, and as dwell times increase, the Army will be able to
    focus on sustaining the rotation rates of 1:2 as envisioned. This will
    ensure the force's long-term health, and will, once again, allow the
    necessary time to train units to perform missions across the full
    spectrum of operations.

        10. Senator Ayotte. General Bostick, what impact does insufficient
    dwell time have on families?
        General Bostick. Most families focus on the quality of the dwell
    time rather than the length. But it does take time to adjust and become
    reacquainted with what it's like to be together again. Soldiers'
    reintegration with their families is an individual process. It is
    important for soldiers to spend quality time with their families in the
    reset period following deployment. With less dwell time, returning
    members may not have enough time to reconnect with their families and
    fit back into the home routine before they have to deploy again.
    Children worry about the next deployment, which impacts their ability
    to get to know their parent again. To help families with this process,
    the Army is educating family members about reintegration, helping them
    recognize changes in family structure and functioning, and the
    importance of establishing expectations before the soldier returns.

        11. Senator Ayotte. General Bostick, what impact does insufficient
    dwell time have on the Army's ability to train for full spectrum
    operations, including major combat operations?
        General Bostick. The amount of dwell time required for a
    redeploying unit to progressively build readiness for a broad range of
    military operations (including major combat operations) depends on
    complexity of the unit's design, functions, interaction with external
    organizations, and degree the unit will be employed in harm's way or
    employ deadly force. Whether or not dwell time is sufficient depends on
    a number of factors, primarily how quickly the Army is able to reset
    the unit with personnel and equipment and how much training resources
    and venues are available to support the unit's progressive training
    strategy. If dwell time proves insufficient for the unit to fully
    prepare before expected to be available for contingency operations,
    then the Army must accept either more training time or risk before
    deploying the unit, as allowed by exigencies of the situation.
        Risk associated with insufficient dwell time is somewhat mitigated
    by developing unit leaders throughout their career in professional
    military education and through participation in Army training venues
    like Combat Training Centers; by providing training support
    capabilities that allow unit components to sharpen skills using
    virtual/constructive/gaming venues through iterative execution of
    increasingly complex tasks, conditions, and enabler integration--
    complexity which is simply infeasible to create for live training at
    the unit's home station due to constraints on maneuver space, airspace,
    joint/interagency/multinational availability; by training on
    fundamentals first and progressively building the proficiency of
    individuals, crews, sections, small units, then larger formations; and
    by integrating adaptability into training, which enables a
    professionally disciplined force to apply their mastery of fundamentals
    to any assigned mission and adapt to circumstances. Units deploying
    with insufficient dwell may not have had opportunity to perform as a
    large formation, to fully integrate external enablers required of
    unified operations, or to practice against the full arrange of threats
    presented by contemporary operating environments.

        12. Senator Ayotte. General Bostick, what are the Army's current
    goals for dwell time between deployments for the Active and Reserve
    components?
        General Bostick. Because individuals follow a variety of deployment
    patterns, we measure dwell as a ratio of time spent deployed (boots-on-
    the-ground (BOG)) to time spent not deployed (dwell). Our near-term
    goals are for Active component soldiers to have 2 months of dwell for
    every 1 month deployed (a 1:2 BOG:dwell ratio) and for Reserve
    component soldiers to have 4 months of dwell for every month deployed
    (1:4 ratio).

        13. Senator Ayotte. General Bostick, what military occupational
    specialties and types of units are receiving the least time at home
    between deployments?
        General Bostick. Because individuals and units follow a variety of
    deployment patterns, we measure dwell as a ratio of time spent deployed
    BOG to time spent not deployed following the deployment (dwell). In
    terms of this ratio, aviation units and aviation-related specialties
    have been the most taxed. This is especially true among junior enlisted
    soldiers and warrant officers, who have seen slightly more than 3
    months of dwell for every 2 months deployed. Other units such as civil
    affairs, intelligence, military police, psychological operations,
    engineers, and special forces have also been heavily taxed and remain
    just above the mandated 1:1 BOG:dwell ratio for units. However, the
    soldiers in these units tend to have better median individual BOG:dwell
    ratios than aviation soldiers, suggesting a wider variety of assignment
    opportunities or partial-unit deployments.

        14. Senator Ayotte. General Bostick, what are the current dwell
    times for individuals with these specialties and for these types of
    units?
        General Bostick. Because individuals and units follow a variety of
    deployment patterns, we measure dwell as a ratio of time spent deployed
    BOG to time spent not deployed following the deployment (dwell). As
    previously stated, aviation units and aviation-related specialties have
    been the most taxed. This is especially true among junior enlisted
    soldiers and warrant officers, who have seen slightly more than 3
    months of dwell for every 2 months deployed, a 1:1.5 ratio. This ratio
    is highly correlated with the unit ratios, as these soldiers do not
    have many assignment opportunities outside of these units. More senior
    noncommissioned officers and commissioned officers have been
    experiencing ratios better than 1:1.8, largely because they have more
    assignment opportunities.

        15. Senator Ayotte. General Bostick, do you believe the Army should
    be reducing its end strength before achieving its dwell time goals?
        General Bostick. For the last several years, the Active Army has
    enjoyed the benefits of a temporary end strength increase that was as
    much as 22,000 soldiers above its 547,000 permanent end strength.
    Because of this increase, the Active component was able to achieve its
    median 1:2 individual BOG:dwell goal in second quarter of fiscal year
    2012. With the expected decrease in demand for deployed forces, we do
    not anticipate that the median individual BOG:dwell will worsen.

        16. Senator Ayotte. General Bostick, if future unanticipated
    contingency operations emerge and the Army's dwell time predictions
    turn out to be too optimistic, at what point would you recommend
    pausing or reversing the Army's end strength reductions?
        General Bostick. Once the Army is no longer able to sustain the 1:2
    BOG:dwell ratio assigned to it in the Guidance for Employment of the
    Force, the senior Army leadership would need to assess the risk to the
    force and recommend to the Secretary of Defense that he pause or
    reverse the end strength reductions.

                             traumatic brain injury
        17. Senator Ayotte. Secretary Lamont, Secretary Garcia, Secretary
    Ginsberg, General Bostick, Admiral Van Buskirk, General Milstead, and
    General Jones, can you give me a sense as to how many of your
    servicemembers have suffered from a traumatic brain injury (TBI)?
        Secretary Lamont and General Bostick. Since 2000, there have been
    233,425 DOD servicemembers including 134,938 U.S. Army soldiers
    diagnosed with TBI.
        Secretary Garcia and Admiral Van Buskirk. From 2000 through 2011,
    Navy has had 32,379 TBI cases among Active and Reserve sailors while
    Marine Corps has had 33,989 such cases among Active and Reserve
    marines. In 2011 alone, Navy had 2,825 instances of TBI while Marine
    Corps had 4,747. Mild TBI accounts for approximately 77 percent of TBI
    cases documented across the Services since 2000, and 84 percent of all
    TBIs occur in garrison.
        Secretary Ginsberg and General Jones. The Air Force accounts for 14
    percent of the total TBI cases in the military, with 32,119 cases from
    2000 through 2011 (deployed and nondeployed, all severity). There are
    approximately 2,500-3,500 total cases per year, with the majority not
    being associated with deployment. According to the Medical Surveillance
    Monthly Report, there were 242 cases of deployment-associated TBI in
    airmen in calendar year 2010 (0.56 percent of Air Force deployments).
    Of the total cases, 81.8 percent were mild, defined by the duration of
    alteration of consciousness, loss of consciousness, or post-traumatic
    amnesia at the time of injury. As reported in the civilian TBI
    literature, 85-90 percent of those who sustain mild TBI recover fully
    within 3 months, often sooner. Early identification, education, rest,
    and symptom management facilitate recovery. Those who sustain recurrent
    concussions and/or have co-morbid conditions such as Post-Traumatic
    Stress Disorder (PTSD) may take longer to recover.
        General Milstead. The official TBI data for DOD is reported through
    the Defense and Veterans Brain Injury Center (DVBIC). Current DVBIC
    data indicate 233,425 total TBI cases throughout DOD from 2000 through
    2011. In that same time period, the Navy has had 32,379 TBI cases
    within Active and Reserve components, while the Marine Corps, Active
    and Reserve components, has had 33,989 such cases. In 2011, the Navy
    had a total of 2,825 TBIs while the Marine Corps had 4,747. Mild TBI
    accounts for approximately 77 percent of TBI cases documented across
    the Services since 2000, and 84 percent of all TBIs occur in garrison.

        18. Senator Ayotte. Secretary Lamont, Secretary Garcia, Secretary
    Ginsberg, General Bostick, Admiral Van Buskirk, General Milstead, and
    General Jones, what is your Service doing to address this problem and
    care for our servicemembers who have sustained a TBI?
        Secretary Lamont and General Bostick. The Army has instituted a
    comprehensive program to better detect, diagnose, treat, and track TBI.
    This program contains four essential elements: (1) baseline
    neurocognitive testing of all deploying soldiers; (2) a comprehensive
    in-theater policy for assessing and treating soldiers exposed to
    potentially concussive events, who may have been exposed to a traumatic
    event; (3) establishment of an expansive garrison clinical care program
    to meet the medical and rehabilitation needs of patients with all
    severities of TBI; and (4) an aggressive research program looking at
    ways to better diagnose and treat TBI.
        Army policy directs that all soldiers who have been exposed to
    possible concussive events are screened for TBI and are given mandatory
    recovery time. The Army has improved provider education and training
    with regard to screening, evaluation, and management of concussion in
    both the deployed setting and the garrison environment. Research is
    being conducted to find possible biomarkers of TBI, to improve accurate
    and timely diagnosis of TBI, and to increase the treatment options for
    individuals with a positive diagnosis of TBI.
        Secretary Garcia, Admiral Van Buskirk, and General Milstead. TBI
    care on the battlefield has improved significantly since the beginning
    of Operations Enduring Freedom and Iraqi Freedom. Most improvements
    have targeted early screening and diagnosis followed by definitive
    treatment. In 2010, the Deputy Secretary of Defense issued Directive-
    type Memorandum 09-033, ``Policy Guidance for Management of Concussion/
    Mild Traumatic Brain Injury in the Deployed Setting,'' which has
    resulted in improved diagnosis and treatment of battlefield concussion.
        For Navy and Marine Corps, the primary treatment site for concussed
    servicemembers has been the Concussion Care Restoration Center (CRCC)
    at Camp Leatherneck in Afghanistan. Since its opening in 2010, the CRCC
    has treated over 964 servicemembers, resulting in a greater than 98
    percent return-to-duty (RTD) rate and an average of 10.3 days of duty
    lost from point-of-injury to symptom-free RTD. There is also a
    Concussion Specialty Care Center (CSCC) at the North Atlantic Treaty
    Organization (NATO) Role III Hospital in Kandahar, with a neurologist
    on staff.
        Upon return from deployment, enhanced screening methods for TBI and
    mental health conditions are being piloted at several Navy and Marine
    Corps sites. These efforts include additional screening and follow-up
    for any servicemember noted to have sustained a concussion in theater.
    Efforts are underway to increase use of the National Intrepid Center of
    Excellence (NICoE) across DOD, and development of NICoE satellite
    sites, to provide state-of-the-art evaluation and treatment for
    patients who do not improve with routine clinical care.
        Secretary Ginsberg and General Jones. Of the total TBI cases from
    2000 to 2011, 81.8 percent were mild, defined by the duration of
    alteration of consciousness, loss of consciousness, or post-traumatic
    amnesia at the time of injury. As reported in the civilian TBI
    literature, 85-90 percent of those who sustain mild TBI recover fully
    within 3 months, or often sooner. Early identification, education,
    rest, and symptom management facilitate recovery. Those who sustain
    recurrent concussions, and/or have co-morbid conditions such as PTSD
    may take longer to recover.
        As outlined in the 2009 Department of Veterans Affairs/Department
    of Defense Clinical Practice Guideline (CPG) for Management of
    concussion/mild TBI, most of the initial management of mild TBI can be
    accomplished by primary care in the patient-centered medical home, with
    referral to specialty services when needed. In addition to the CPGs,
    providers also have tools produced by the Defense Centers of Excellence
    for Psychological Health and TBI, such as the Pocket Guide for
    Management of TBI and the Co-Occurring Disorders Toolkit. The Air Force
    has one stand-alone multidisciplinary TBI clinic at Joint Base
    Elmendorf-Richardson. This TBI clinic stood up in 2008 and was started
    to support the local Army units who account for over 90 percent of the
    patients treated. Additional efforts to standardize mild TBI care are
    in place for higher risk units in the Air Force, such as explosive
    ordnance disposal. One example is a provider-to-provider video
    teleconsult pilot project that brings together primary care providers
    with a TBI team of experts using video teleconference capability to
    allow exchange of knowledge and de-identified case discussion.
        A theater system of TBI care has evolved since the release of
    Directive Type Memorandum (DTM) 09-033: ``Management of Concussion of
    mild TBI in the Deployed Setting.'' Leadership's responsibility to
    identify and report servicemembers involved in mandatory events (within
    50M of blast, direct blow to head, and motor vehicle crash) ensures
    early identification of TBI. Medics and providers standardize care by
    using clinical algorithms for evaluation and management of mild TBI,
    including mandatory rest periods. Located throughout Afghanistan, 11
    concussions care centers, which are overseen by the theater neurology
    consultant, allow servicemembers sufficient time to rest and recover,
    resulting in an over 95 percent return to duty rate. Clinical history
    and examination, together with post-injury neurocognitve testing in
    theater, aids in return to duty decisionmaking.

        19. Senator Ayotte. Secretary Lamont, Secretary Garcia, Secretary
    Ginsberg, General Bostick, Admiral Van Buskirk, General Milstead, and
    General Jones, do you have all of the resources and authorities you
    need to care for our servicemembers with TBI?
        Secretary Lamont and General Bostick. While resources are adequate
    for current efforts, continued congressional support of the Army's TBI
    clinical and research efforts will ensure improved screening and
    delivery of care.
        Secretary Garcia, Admiral Van Buskirk, and General Milstead. Caring
    for sailors and marines who have sustained a TBI remains a top
    priority. While we are making progress, we recognize that there is much
    work ahead of us to determine the acute and long-term impacts of TBI on
    our servicemembers. Our strategy must be both collaborative and
    inclusive, by actively partnering with the other Services, our Centers
    of Excellence, the VA, and leading academic medical and research
    centers, to make the best care available to warriors afflicted with
    TBI.
        We are grateful to you and your colleagues for your outstanding
    support of our efforts in improving the care of our sailors and marines
    and their families. We believe we have both the resources and
    authorities required for the diagnosis, treatment, and recovery of our
    servicemembers who have sustained a TBI. While we are resourced well,
    we should continue our vigilance in the area of TBI policies that
    support tracking and surveillance efforts. We need to ensure sailors
    and marines receive the optimal care at all points in the continuum
    from point of injury to reintegration.
        Secretary Ginsberg and General Jones. At this time, the Air Force
    has sufficient resources and authority to provide care for airmen who
    sustain TBI. In addition to the steps taken to identify and care for
    airmen with TBI, the Air Force has support from our sister Services,
    the Defense Centers of Excellence for Psychological Health and TBI, the
    Defense and Veterans Brain Injury Center, and the NICoE.
                                     ______

        [The prepared statement of the Reserve Officers Association
    follows:]

                                   APPENDIX A

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        [Whereupon, at 2:20 p.m., the subcommittee adjourned.]

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

                                  ----------

                            THURSDAY, JUNE 21, 2012

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

        DEPARTMENT OF DEFENSE PROGRAMS AND POLICIES TO SUPPORT MILITARY
                          FAMILIES WITH SPECIAL NEEDS

        The subcommittee met, pursuant to notice, at 2:35 p.m. in
    room SD-106, Dirksen Senate Office Building, Senator Jim Webb
    (chairman of the subcommittee) presiding.
        Committee members present: Senators Webb, Begich,
    Gillibrand, and Blumenthal.
        Committee staff member present: Leah C. Brewer, nominations
    and hearings clerk.
        Majority staff members present: Jonathan D. Clark, counsel;
    Gabriella E. Fahrer, counsel; and Gerald J. Leeling, counsel.
        Minority staff member present: Diana G. Tabler,
    professional staff member.
        Staff assistants present: Jennifer R. Knowles and Brian F.
    Sebold.
        Committee members' assistants present: Brian Burton,
    assistant to Senator Lieberman; Lindsay Kavanaugh, assistant to
    Senator Begich; Elana Broitman, assistant to Senator
    Gillibrand; Ethan Saxon, assistant to Senator Blumenthal; and
    Lenwood Landrum, assistant to Senator Sessions.

            OPENING STATEMENT OF SENATOR JIM WEBB, CHAIRMAN

        Senator Webb. The subcommittee will come to order. The
    subcommittee meets today to receive testimony on the Department
    of Defense (DOD) programs and policies to support military
    families with special needs in review of the National Defense
    Authorization Act (NDAA) for Fiscal Year 2013 and the Future
    Years Defense Program.
        At the outset, let me say a few things. First, I know that
    this is a hearing that was supposed to have been held
    yesterday. Some of you have been required to stay over a day in
    order to testify. I want you to know I appreciate that, and I
    think everybody here is aware of what we have been doing on the
    Senate floor for the past 3 days. We had the Farm Bill up and
    we entertained more than 70 amendments in 3 days.
        Having spent 4 years as a committee counsel on the House
    side, I can tell you it is a lot different on the Senate side
    in terms of how we address amendments because each of these
    amendments is debated. There is a time for a vote, and each
    senator has to personally present themselves when they vote. It
    is a very timeconsuming process, and I think there is actually
    a pretty good bipartisan feeling right now that we were able to
    get through such a complex piece of legislation, nearly a $1
    trillion piece of legislation during that time period.
        But I do apologize for not having been able to have held
    this hearing yesterday. We thought about trying it, but quite
    frankly, we would have been in and out of here constantly, and
    I do not think it would have been the best use of the time of
    the people who have come here to testify.
        I would also like to acknowledge Senator Gillibrand, who
    is, I have heard, on her way, for having expressed an interest
    in a couple of these issues, which resulted in Senator Levin
    and Senator McCain suggesting that we hold a hearing on these
    issues. So this is what we are doing. This was during the
    recent markup of the Defense Authorization bill. She requested
    that some specific special needs programs be examined in an
    open subcommittee hearing. We are doing that today and very
    pleased to be doing that today.
        We are fortunate to have with us today a diverse panel. Our
    witnesses are Dr. Karen S. Guice, Principal Deputy Assistant
    Secretary of Defense for Health Affairs, and Principal Deputy
    Director of TRICARE Management Activity; Dr. Rebecca L.
    Posante, Deputy Director of DOD's Office of Community Support
    for Military Families with Special Needs; Dr. Vera F. Tait,
    Associate Executive Director, and Director of the Department of
    Community and Specialty Pediatrics of the American Academy of
    Pediatrics; Mr. Jeremy L. Hilton, a military spouse, a veteran,
    and a military family advocate, as well as the 2012 Armed
    Forces Insurance Military Spouse of the Year as voted by his
    fellow military peers in Military Spouse Magazine; Dr.
    Geraldine Dawson, Chief Science Officer of Autism Speaks, and
    Professor of Psychiatry at the University of North Carolina at
    Chapel Hill; and Mr. John O'Brien, Director of Healthcare and
    Insurance for the U.S. Office of Personnel Management (OPM).
        This panel represents a variety of interests and
    viewpoints: the Federal Government, clinicians, the military
    family community, non-profit organizations, and academia. We
    look forward to hearing from each of you today.
        I have said in many previous hearings that ensuring that
    our uniformed personnel and their families receive first-rate
    healthcare is one of the critical elements in what I view as
    the military's moral contract with those who volunteer to serve
    our Nation. I say that as someone who grew up in the military,
    who had the honor of serving as a marine rifle platoon and
    company commander during Vietnam, whose son served as a marine
    infantryman in Iraq, whose brother served, and both my sisters
    married military professionals. I care deeply about this, as I
    am sure everybody on this panel does also.
        Families play a significant role in maintaining our
    volunteer force, and this is true now more than ever. Our
    servicemembers must know that their families are receiving
    timely and professional medical care, especially when they are
    so frequently deployed. This can be even more imperative in
    cases where military family members have special needs.
        We are mindful that the term ``special needs'' is very
    broad. For some families, ``special needs'' may mean obtaining
    necessary care and treatment for complex medical issues. For
    others, it means gaining access to resources necessary to
    accomplish goals set out in a child's individual education
    program at school. For many, it can mean a combination of
    medical treatment, educational services, and systems of support
    for caregivers.
        Given the unique challenges inherent to military life,
    including frequent relocations to new homes and schools, and
    having a new team of medical providers with each permanent
    change of station (PCS), not to mention deployments, it is no
    wonder that DOD felt it necessary to establish the Exceptional
    Family Member Program (EFMP). This program provides support to
    our military families with special medical and educational
    needs through identification and enrollment, assignment
    coordination, and family support. Currently, more than 120,000
    servicemembers are enrolled in this program.
        Beyond support through EFMP, DOD reports that in fiscal
    year 2011, more than 10,000 beneficiaries were enrolled in the
    Extended Care Health Option (ECHO) program, which supplements
    basic TRICARE coverage. This program provides eligible Active
    Duty families with up to $36,000 a year to help cover the costs
    of services and supplies necessary for qualifying medical and
    physical conditions.
        Data for the ECHO program provides us with a sense of the
    scope of conditions that some military families face today. For
    example, DOD tells us that more than 6,000 dependents have been
    diagnosed with autism. More than 1,000 have infantile cerebral
    palsy. Another 2,700 have disorders including epilepsy, hearing
    loss, digestive disorders, spina bifida, or muscular dystrophy.
    These are just the major categories of medical conditions
    military families with special needs must address.
        Today, we aim to increase our awareness of the challenges
    facing our military special needs families. Some examples: we
    recently heard of the need for better outreach to military
    families with special needs, some of whom may be unaware of
    resources that are available to them, continued effort to
    provide more uniform support through EFMP from installation to
    installation, and assisting our servicemembers and their
    families to navigate the various medical and educational
    services available from State to State.
        We have also been informed that OPM recently determined
    that applied behavior analysis (ABA) therapy for autism
    spectrum disorders is considered medical therapy for purposes
    of offering it to beneficiaries under the Federal Employees
    Health Benefits (FEHB) program. DOD has been offering ABA
    therapy for several years, but not under its basic TRICARE
    program as it has determined that ABA is an educational
    intervention and not a medical therapy. We are interested in
    hearing the thoughts of today's witnesses about this
    distinction.
        We appreciate the breadth of knowledge the panel before us
    today possesses. I hope that our witnesses can help us to
    identify the key issues and concerns facing military families
    with special needs, the steps DOD has taken to address those
    concerns, and where DOD and Congress can do a better job.
        We look forward to your testimony. I encourage all of you
    to express your views candidly, to tell us what is working and
    what is not, and to raise any concerns and issues you may want
    to bring to this subcommittee's attention.
        I would also point out at this time that we have received
    written statements from the National Military Family
    Association and the National Council on Disability. These
    statements will be included in the record at the end of the
    testimony of the witnesses that we have today.
        [See Annexes A and B]
        Senator Webb. We will now hear brief opening statements
    from each of our witnesses. I would like to say to each of our
    witnesses that your full prepared statements will be entered
    into the record in their entirety at the end of your opening
    statements. I would ask that you look to keeping your opening
    statements to about 5 minutes.
        We have six witnesses, so that is going to take us probably
    a little more than a half hour to do that.
        Please proceed. Dr. Guice, welcome.

      STATEMENT OF DR. KAREN S. GUICE, PRINCIPAL DEPUTY ASSISTANT
     SECRETARY OF DEFENSE FOR HEALTH AFFAIRS AND PRINCIPAL DEPUTY
                 DIRECTOR, TRICARE MANAGEMENT ACTIVITY

        Dr. Guice. Mr. Chairman, members of the subcommittee, as
    you can tell, I have laryngitis. I would like to beg your
    indulgence in letting me talk a little over the 5 minutes, if I
    have to.
        Thank you for the invitation to discuss the military health
    system----
        Senator Webb. Very convenient, Dr. Guice, that you would
    have laryngitis when we have called you to this hearing.
    [Laughter.]
        You are getting a lot of empathy right now, so if you want
    to make your statement briefer, that is fine. We can do it any
    way possible to accommodate you.
        Dr. Guice. Thank you. Military service brings unique
    challenges to anyone who wears the uniform. Those
    servicemembers who have special needs children have additional
    challenges.
        DOD is proud of the programs and services we offer to these
    families in conjunction with other support services provided by
    State and local governments and the private sector. Dr. Rebecca
    L. Posante will talk about those services provided by the
    Office of Community Support for Military Families with Special
    Needs. I will briefly touch on the health benefits and
    supplemental services we provide through our basic medical plan
    and the ECHO program.
        DOD offers a comprehensive and uniform medical benefit for
    military beneficiaries delivered worldwide through our military
    treatment facilities or purchased care. For our beneficiaries,
    these medical benefits include access to a variety of
    providers, including specialists, inpatient and outpatient
    care, as well as prescription medication.
        In addition to the basic health plan, the military health
    system offers the ECHO program. This program provides
    additional beneficiaries not otherwise available under the
    basic health plan to eligible Active Duty servicemembers with
    special needs. By ensuring our Active members have access to
    these services, we support military retention and readiness for
    DOD.
        One example of the services covered under the ECHO program
    is ABA treatment for patients with autism spectrum disorders
    (ASD). Since 2001, DOD has covered ABA services for qualifying
    members. Because many of our Active Duty families found it
    difficult to access certified ABA providers under the
    traditional ECHO program's criteria, we implemented a
    demonstration project in 2008, to determine if we could expand
    the availability of providers.
        Under the demonstration program, we cover ABA services when
    provided by tutors who are under the direct supervision of
    certified ABA therapists. This demonstration project has
    succeeded in expanding access to services, and participation in
    the demonstration project has grown by average of 3 to 5
    percent per month per year. We are now in the process of
    converting the demonstration project into a permanent part of
    the ECHO program.
        Military families also asked us to help sustain continuity
    of care and service during reassignments and relocations. We
    work closely with our TRICARE regional offices and TRICARE
    contractors to ensure that there is a smooth transition for
    families with children who have special needs when they
    relocate.
        I understand that one of the primary purposes of this
    hearing is to address medical coverage decisions by OPM for the
    FEHB Plan and TRICARE relative to ABA for patients with ASD. In
    2010, DOD conducted an assessment to determine if ABA qualified
    as medically necessary and appropriate under existing TRICARE
    law and regulation. Through robust analysis, peer review
    literature, and independent technical analyses, ABA was
    determined to be an educational intervention, and as such, did
    not meet the criteria for coverage under the basic medical
    program.
        Our determination is consistent with the 2011 Agency for
    Healthcare Research and Quality's Comparative Effectiveness
    Review, Therapies for Children with Autism Spectrum Disorders.
    In this review, the investigators found the literature to be
    highly variable in quality, limited in those specific areas,
    and inconclusive. They identified the need for more research to
    determine which children benefit from a particular intervention
    or combination of interventions.
        In the same report, the investigators clearly separated
    education and behavioral interventions for medical
    interventions. They did not consider ABA to be a medical
    intervention, which is consistent with DOD's 2010 review.
    However, we also understand that OPM has recently reviewed
    evidence that they believe now meets their threshold for
    determining ABA as a covered medical service. We have formally
    requested that OPM provide us this evidence so we can evaluate
    it against our coverage criteria.
        Medical care evolves over time, and we continuously
    evaluate new medical interventions or treatments for
    effectiveness and safety prior to a coverage determination. Our
    coverage determinations are strictly governed by statute and
    regulations, and require an extensive assessment of reliable
    medical evidence. Our determinations are also based on what is
    medically or psychologically necessary to diagnose and treat
    disease or injury.
        DOD is committed to providing comprehensive services for
    military families who have children with special needs. By
    providing robust medical care for our Active Duty members and
    their families, along with supplemental services to further
    support those with special needs, we contribute to a stronger
    warfighter.
        I am proud to be here with you today to represent the
    military health system and our exceptional health providers who
    provide exceptional service to exceptional people. I look
    forward to answering your questions.
        [The joint prepared statement of Dr. Guice and Dr. Posante
    follows:]
       Joint Prepared Statement by Dr. Karen S. Guice and Dr. Rebecca L.
                                    Posante
        Mr. Chairman, members of the subcommittee, it is a privilege for
    both of us to appear before you today, and we appreciate the
    opportunity to testify on our efforts to support military families that
    include a member with special medical or educational needs.
        The Department of Defense is proud of the programs and services we
    provide to military families with special needs. We have been providing
    specialized services to families for decades. In response to the
    landmark legislation for military families with special needs (Sec. 563
    of the National Defense Authorization Act, Pub. L. No. 111-84), the
    Secretary of Defense established the Office of Community Support for
    Military Families with Special Needs (OSN) in October 2010. This office
    is leading efforts to streamline processes that can be improved, to
    develop policies that guide the provision of support by the military
    departments, and to generally help families identify, understand and
    navigate the systems they will encounter. This office is closely linked
    with our colleagues in the Office of the Assistant Secretary of Defense
    (Health Affairs) and the TRICARE Management Activity (TMA) within the
    Office of the Under Secretary of Defense (Personnel & Readiness).
        Support to military families with special needs is an especially
    important task for the Department. Military families with special needs
    are first military families. They have the same challenges any other
    military family may encounter in the face of periodic moves,
    deployments, and separation from family. Further, they face additional
    challenges, navigating often complex systems to obtain the services and
    benefits their families need to help their loved one function to their
    maximum potential. Each time a military family moves the process starts
    over, and they face questions such as: Who provides early intervention
    services in this State? Am I going to the local school system, public
    health or a regional board to get help? What do they call their
    programs here? Is there a waiting list for Medicaid, or perhaps, how
    long is the waiting list? Where do I sign up for the women, infants,
    and children program, and will they accept the certification from my
    current state? What will we do when we can no longer take our non-
    verbal child to the dentist who has finally achieved his trust? Will
    there be anyone at the new location who will understand what we need?
    What school district can best meet the needs of my child?
        We recognize that these military families need assistance with
    these questions, and we have worked to make this process less
    challenging wherever possible.
           the current state of the exceptional family member program
        For over 30 years, the Military Services have administered the
    Exceptional Family Member Program (EFMP), which identifies family
    members who have special medical or educational needs, documents their
    needs and ensures they are considered when the servicemember is being
    considered for the next assignment. Since the NDAA for Fiscal Year
    2010, the EFMP has been expanded to include a requirement for family
    support and to extend the coordination of assignments based on the
    family member's special needs to permanent change of station (PCS)
    moves within the United States as well as overseas.
        Currently, over 400 EFMP family support personnel serve military
    families with special needs. All installations have either a full- or
    part-time staff person, or (in smaller locations) a point of contact
    for military families with special needs. Installations with greater
    numbers of families with special needs may have multiple EFMP family
    support personnel. All providers have been trained in their roles, the
    agencies with which they will work, and the requirements of supporting
    military families with special needs.
        The OSN developed an EFMP Family Support Reference Guide and
    disseminated it to all EFMP family support providers (to include
    Reserve and Guard Components) as a guide to providing family support
    and networking with community support systems. Through a Memorandum of
    Understanding with the U.S. Department of Agriculture (USDA), the OSN
    partnered with Cornell University and the University of Kansas to
    conduct a benchmark study identifying the concerns of military families
    with special needs, the support they require, and the systems that have
    been effective in providing services. The research team conducted focus
    groups with military families from all branches of Service and with
    civilian populations. This study will generate recommendations for the
    military in refining our support programs including staffing models,
    metrics, evaluation standards, and a family satisfaction scale.
        The OSN is working closely with the Military Services to
    standardize the EFMP across Services. Military families want
    consistency, and we are improving their ability to navigate internal
    processes more easily by having standard forms, terms, and procedures.
    The OSN embarked on a multi-year project to analyze current systems
    (medical, personnel and family support) that make up the EFMP
    (identification/enrollment, assignment coordination and family support)
    to even more closely integrate service delivery. We have concluded the
    first year of the functional analysis. Over the longer term, we will
    create an integrated, longitudinal electronic record that works across
    all military departments. This system will prevent families from
    reinventing paperwork with every PCS, allow the medical command to
    alert the personnel command about availability of medical services, and
    regardless of Service affiliation the family will receive a warm
    handoff to the receiving location. This is a detailed, iterative
    process involving multiple data and case management systems. The end
    result, however, will offer an important enhancement to the families we
    serve.
                       listening to our military families
        In the last 2 years, we have held two EFMP family panels
    representing military families of all ranks, Service affiliation,
    Active Duty and Reserve components, and ages and disabilities of the
    family member with special needs. We have conducted three studies on
    access to special education in the public schools, access to Medicaid,
    and a benchmark study on what makes a support system work. The lack of
    State and local data identifying military-connected families who use
    public sector programs, including special education, remains a gap.
        We have also consulted with non-governmental agencies on their
    knowledge of the relevant issues regarding special needs families, and
    participated in several of the Military Family Caucus sessions. These
    Caucus sessions pertained to special needs, and military family members
    who advocate for families with special needs were invited to discuss
    issues in our office. We have read the National Council on Disability's
    report, How to Improve Access to Health Care, Special Education, and
    Long-Term Support and Services for Family Members with Disabilities,
    and met with the researchers who developed the report. The same issues
    for our families emerge in each forum: access to special education,
    access to Medicaid, transition problems with access to TRICARE when
    families change locations, and a request for inclusion of applied
    behavior analysis as a medical benefit within TRICARE rather than
    through the Extended Care Health Option.
        We have focused on providing the information military families with
    special needs members need, particularly during critical transition
    moments; we work to educate them about what is available to them and
    assist them with obtaining resources and benefits within the scope of
    the law. Our efforts have been directed at identifying the problems
    families encounter, addressing those we have the authority to address
    (such as consistency across the military departments) and collaborating
    with the agencies/programs responsible for services not within our
    control.
                             educating our families
        While the Department does not have authority over programs in other
    governmental agencies or programs administered by the States, we have
    the responsibility to educate our families on how to identify resources
    available to any American citizen and obtain benefits. We can provide
    information about special education and the Individuals with
    Disabilities Education Act (IDEA) and all its requirements and
    protections. Many military family children benefit from special
    education and the families must know how these systems work. Our
    military families need and benefit from programs such as Medicaid,
    Supplemental Security Income, and early intervention, too.
        The OSN has created a wealth of information for military families
    available on line at the MilitaryOneSource.mil website or by calling
    Military OneSource. These include written guides for families whose
    children have disabilities and a new guide for families where there is
    an adult family member with special needs. Both guides will be
    accompanied by a facilitator's manual, which can be used by EFMP staff
    (or families) to conduct training sessions on special education, early
    intervention, TRICARE, and much more. We conduct monthly webinars
    utilizing the talents of leaders in our field on such subjects as care
    giving, assistive technology, guardianship and estate planning, and
    advocacy. We have produced a series of podcasts available on smart
    phones and a mobile website that allows families to access EFMP
    providers, EFMP enrollment forms, and all of our online content.
    Several e-learning modules have been developed to increase parents'
    knowledge about special education and how to collaborate with school
    personnel, about the EFMP and about other Federal and State programs.
        We are in the process of revising the content and presentation on
    the Military OneSource website and anticipate completion of this
    revision by September 1. From one landing page families with special
    needs will be able to learn about military and community programs,
    access an EFMP provider, sign up for a webinar or view archived
    webinars, request materials, or make an appointment for a specialty
    consultation with a Military OneSource consultant who is a professional
    in special needs.
       supporting dod programs to serve family members with special needs
        OSN has created an internal coalition of Defense organizations to
    address issues of access for our military families with special needs.
    Through effective collaboration with the military departments, the EFMP
    and Morale, Welfare and Recreation, we have built over 200 accessible
    playgrounds for children with disabilities and installed pool lifts in
    all military swimming pools. We have developed online tools for
    families who are moving with a special needs family member to help them
    plan their move. For the past 2 years in cooperation with the military
    children and youth programs, we have funded ongoing training and
    support to enable those programs to integrate children and youth with
    disabilities. The OSN purchased and distributed books and electronic
    subscriptions to all military departments' installation libraries and
    family centers to create an EFMP library. The set of references is
    intended to assist professionals and family members in accessing
    materials on disability-related topics. In addition, special education
    law resources were provided to military department legal offices and
    selected medical offices. We work closely with the DOD Education
    Activity to ensure the 9,700 children with special needs attending a
    DOD schools receive appropriate special education services.
                          access to special education
        Military families are concerned about access to special education
    services. Obtaining comparable services from one assignment to the next
    is the most consistently reported obstacle for military families and
    often reflects differences in eligibility and services between States.
    For example, the American Association for Employment in Education
    (AAEE) has reported shortages of special education teachers, speech-
    language pathologists, school psychologists, vision and hearing
    specialists, school nurses, physical therapists and occupational
    therapists, with many regions of the country reporting considerable
    shortages for several years in a row (AAEE, 1996-2010). There are wide
    disparities in school nurse staffing ratios; some exceed 1: 4,000. Only
    75 percent of schools have a full or part time nurse; 25 percent have
    no registered nurse. Seventeen percent of schools with more than 750
    students have no registered nurse on duty (National Association of
    School Nurses (NASN)). Forty-eight States and the District of Columbia
    identified special education teaching and/or at least one of the
    related service provider categories as an official ``shortage area''
    for the 2011-2012 school year (Teacher Shortage Areas Nationwide
    Listing, U.S. Department of Education, Office of Postsecondary
    Education, March 2011). Given well-documented fiscal pressures on State
    budgets, it is likely that discrepancies in which resources are
    available between school districts and among States will persist.
        To address family member information needs in this area, OSN has
    initiated multiple efforts including establishing a resource
    clearinghouse to help families with relocation; identifying and
    promulgating effective support practices among service branches; and
    sponsoring research studies on evidenced-based educational practices.
    OSN developed an online Education Directory to inform families of
    points of contact, resources, and procedures in public school districts
    in the States with the highest number of military assignments. The
    project continues and by the end of fiscal year 2014, we will publish a
    directory that includes all 50 States and the District of Columbia.
        Through the USDA MOU previously mentioned, we are partnering with
    Ohio State University and Pennsylvania State University to collect more
    detailed data about the extent and types of issues impacting families
    as they attempt to access comparable special education services in
    their new duty station. This project will support the identification of
    special education issues for which parents and family support providers
    need additional training and assist in determining if a formal military
    complaint documentation system should be explored in collaboration with
    the U.S. Department of Education.
    access to medical services--tricare, extended health care option (echo)
                                  and medicaid
        In managing health and health benefit issues, we first ensure we
    are faithfully following public law regarding what is a covered medical
    benefit. We also seek to align our initiatives to the Military Health
    System (MHS) strategic plan, the Quadruple Aim, which is comprised of
    four interrelated missions--Assure Readiness; Improve Population
    Health; Enhance the Patient Experience of Care; and Responsibly Manage
    the Cost of Care. We consider ``family readiness'' as an essential
    element of our Readiness strategy.
        The MHS has long been a leader in offering benefits and services to
    military families with special needs. We have directed considerable
    effort in formulating policy for coverage of effective therapies under
    the TRICARE Basic Program and the Extended Care Health Option (ECHO)
    program.
    TRICARE Basic Program
        The TRICARE Basic Program--whether TRICARE Prime, TRICARE Extra, or
    TRICARE Standard--offers a comprehensive health benefit that covers any
    medically or psychologically necessary care for special needs
    beneficiaries, to include physician visits, immunizations,
    psychological testing and medical interventions such as speech therapy,
    physical therapy and occupational therapy. TRICARE offers exceptionally
    comprehensive coverage with very low out of pocket costs to our
    beneficiaries. For active duty families enrolled in TRICARE Prime, the
    out of pocket costs are almost non-existent, and families are further
    protected by a $1,000 out of pocket catastrophic cap, after which DOD
    pays 100 percent of allowable costs. By law, the TRICARE Basic Program
    may not cover non-medical services such as Applied Behavior Analysis
    (ABA).
    Extended Care Health Option
        The ECHO program, established under Title 10 U.S.C. Code 1079,
    provides additional benefits not otherwise available under the TRICARE
    Basic Program to certain eligible active duty family members with
    special needs. As established by law (National Defense Authorization
    Act for Fiscal Year 2009, Public Law 110-417), the government will
    cover up to $36,000 per beneficiary per year in ECHO benefits.
        As we noted at the beginning of our testimony, similar to other
    military families, our active duty families with special needs members
    must move frequently from one location to another. To ensure continuity
    of care for ECHO participants when they move, our TRICARE contractors
    have established case management hand-off processes so that the
    receiving contractor will be prepared to maintain for a family the set
    of ECHO services it had been receiving before moving. Because of the
    complexity and diversity of the services required to effectively
    address the special needs of many participants in ECHO, TRICARE
    requires its regional managed care support contractors to provide case
    management services to ECHO participants. Applied case management
    ensures access to a comprehensive, coordinated set of required
    treatments and services.
        Each of the three TRICARE contractors is required to deliver a
    uniform TRICARE benefit. Consequently, a family can expect to receive
    the same ECHO services upon arrival at the new duty station. However,
    families may notice some differences in the administration of these
    services by our regional contractors. The Department does permit some
    variation in administrative practices in order to permit the use of
    contractor best practices. In the unlikely event a family should be
    denied coverage under either TRICARE Basic or ECHO it had been
    receiving in another TRICARE region, there is a well-designed appeal
    process beneficiaries may use, and the contractors are required to
    assist them in understanding and exercising their appeal rights.
        Examples of benefits not available through the TRICARE Basic
    Program, but available through ECHO include: assistive services,
    expanded in-home medical services, institutional care when a
    residential environment is required, and other services that the
    Director of TMA determines are capable of reducing the disabling
    effects of a qualifying condition. These ``qualifying conditions''
    include Autism Spectrum Disorders (ASD). At the end of fiscal year
    2011, DOD had over 10,000 TRICARE beneficiaries registered in the ECHO
    program.
        The Department has worked to ensure our special needs families with
    ASD have access to the most widely-accepted educational intervention,
    known as ABA. Since 2001, the Department of Defense has covered ABA
    services for eligible active duty family members under the ECHO program
    (and its predecessor, the Program for Persons with Disabilities).
    Originally, we covered ABA services only if provided by a Board
    Certified Behavior Analyst (BCBA). We found there were not enough of
    them available to satisfy the demand from Active Duty family members
    for services. So, in 2008 we constructed a demonstration to increase
    access to ABA services by permitting tutors, under the supervision of
    BCBAs, to provide the services. Even today, ECHO enrollees with an ASD
    who want ABA services but who do not want to participate in the
    demonstration may obtain the services directly from a BCBA, if
    available from that source.
        This demonstration has succeeded in expanding access to services--
    and we continue to witness increased participation by ABA supervisors,
    tutors and TRICARE beneficiaries. As of March 31, 2012, there were
    3,783 beneficiaries enrolled in the demonstration--a number that has
    grown by 3-5 percent annually, on average, since the program was first
    introduced in 2008. Just as importantly, a recent DOD survey of
    military parents of dependent children with autism reported that the
    improved access to ABA services contributed to improved military family
    readiness and retention.
        The Department is now moving beyond a demonstration program and
    seeking to embed the supervisor-tutor model of ABA provision as a
    permanent element of the ECHO program. We published a proposed rule in
    the Federal Register on December 29, 2011, to establish coverage of
    this ABA provision under ECHO for eligible beneficiaries with ASD. Upon
    final implementation of this rule, we intend to categorize ABA as an
    ``Other Service'' under the ECHO statute and permanently adopt a more
    robust ABA services delivery and reimbursement methodology.
        While we are pleased that we have been able to broaden access to
    these services, we do recognize that some families experience
    additional out-of-pocket costs when needed services exceed the
    government's statutory limit of $36,000. Based on our own claims data
    from 2011, 207 beneficiaries using the ECHO program had expenditures
    above $35,000 per year. Another 489 beneficiaries had expenditures
    between $30,000 and $35,000. Thus, in 2012, we estimate that
    approximately 86 percent of TRICARE beneficiaries with an ASD diagnosis
    and using the ECHO program have had 100 percent of their expenses
    covered within the $36,000 government maximum.
        Several Members of Congress have inquired about the feasibility of
    categorizing ABA services as a medical benefit covered under the
    TRICARE Basic Program. The Department conducted a thorough technical
    assessment of ABA in 2010 to determine whether ABA met the requirements
    for inclusion as a TRICARE covered service.
        Our technical assessment looked at the following: Does the reliable
    evidence, as that standard is defined in law and regulations for
    TRICARE Basic Program coverage determinations, support a conclusion
    that ABA is medically or psychologically necessary and that it is
    appropriate medical care for Autism Spectrum Disorders (ASD)? (2) Does
    the reliable evidence support a conclusion that ABA is proven as
    medically or psychologically necessary and that it is appropriate
    medical care for ASD in accordance with the requirements of 32 Code of
    Federal Regulations Sec. 199.4. Can ABA be covered as a TRICARE benefit
    under Chapter 55 of Title 10, U.S.C. if it is concluded that ABA is not
    medically or psychologically necessary and that it is not appropriate
    medical care for ASD, or that it is not proven as medically or
    psychologically necessary or that it is not appropriate medical care
    for ASD?
        We found that ABA is an ``educational intervention'' and does not
    meet the TRICARE definition of medically or psychologically necessary
    care. The majority of the reliable evidence characterizes ABA as not
    being a medical treatment, as that standard is defined in law and
    regulations for TRICARE Basic Program coverage determinations, but
    instead as involving non-medical, behavioral intervention services.
        Consequently, the Director, TRICARE Management Activity has
    concluded that ABA is not medically or psychologically necessary or
    appropriate medical care within the meaning of the law and regulations
    governing coverage of medical benefits under the TRICARE Basic Program.
    However, the assessment indicates that TRICARE has authority to pay for
    ABA to reduce the disabling effects of ASD for ECHO-registered
    dependents with an ASD diagnosis, and this assessment helped guide our
    decision to make ABA services a permanent part of the ECHO program. The
    assessment and Director's conclusion serve as the administrative record
    of the agency's decision and is reflected in the proposed rule. The
    TMA's Medical Benefit & Reimbursement Branch reviews information about
    Medicare's and other payers' coverage, regular medical technology
    updates available through a subscription to Hayes, Inc. reports (a
    medical technology assessment firm), data/evidence submitted by
    beneficiaries and providers on appeal, evolving practice information
    from the Office of the Chief Medical Officer, and TRICARE Managed Care
    Support Contractors' evolving practice reports. TMA decides on the
    basis of these information sources whether it is warranted to conduct a
    formal review to determine if a medical technology can be confirmed by
    the hierarchy of evidence specified in 32 CFR 199.2 to be considered
    medically safe and efficacious.
        Medicaid. Some military families with special needs beneficiaries
    also qualify for Medicaid. There are select services that TRICARE does
    not cover that are available through this Federal-State medical
    program. Example of items and services that TRICARE (and most civilian
    health insurance) does not cover includes long-term care, custodial
    care (assistance with daily living), adult day services, or expendable
    items such as diapers.
        Because Medicaid is State-administered, military families that
    include member(s) with special needs face difficulties each time they
    move and they are required to reapply for Medicaid eligibility. In some
    cases, this includes placement on waiting lists. Because of the
    frequency of military rotations, some families do not move off the
    waiting list before they once again relocate.
        The Department has contracted with West Virginia University to
    study the problems military families face with accessing Medicaid.
    Preliminary findings of the West Virginia study indicate that families
    and EFMP providers need more training on how to access Medicaid. The
    final report from this study will be available in fall 2012.
        The DOD State Liaison Office held an open meeting recently to
    discuss adopting this as one of the issues to address with States much
    as they have addressed the transition of school-aged children. We will
    provide an update on the outcome of this recommendation in the near
    future.
        The Department recognizes the enormous challenges that military
    families with special needs beneficiaries experience, and we have
    aggressively sought to meet their needs with targeted programs and
    services. As we stated earlier--family readiness is a military
    readiness issue. We have made tremendous progress over the past several
    years, consistent with the law that Congress has established.
        In the case of military children with special needs, we have
    crafted programs that have only been enhanced and improved over the
    last 10 years--in the areas of education, special education, community
    wide information and education. In the medical arena, we have
    successfully expanded programs that allow for the delivery of services
    beyond the traditional medical services authorized under TRICARE. We
    have continuously worked to expand both service delivery and reduce
    their out of pocket expanses. Congress has also expanded the
    government's maximum cost-share for the ECHO program from $2,500
    monthly maximum to $36,000 annually.
        We are committed to maintaining our passion for excellence and
    service to these very special families. We are proud of what we have
    accomplished to date, and we are optimistic about our ability to
    continue to meet family member needs for the long-term.
        Again, we thank you for inviting us to be here today, and we look
    forward to your questions.

        Senator Webb. Thank you very much, Dr. Guice.
        Dr. Posante, welcome.

    STATEMENT OF DR. REBECCA L. POSANTE, DEPUTY DIRECTOR, OFFICE OF
      COMMUNITY SUPPORT FOR MILITARY FAMILIES WITH SPECIAL NEEDS,
                         DEPARTMENT OF DEFENSE

        Dr. Posante. Thank you, Senator Webb, for inviting me to
    testify today. Supporting individuals and families with special
    needs has been a passion of mine for over 30 years. I really
    appreciate the attention being paid to this topic today.
        When I brief the NDAA for Fiscal Year 2010 to military
    audiences, I always refer to it as landmark legislation. It
    established the Office of Community Support for Military
    Families with Special Needs, for which it has been my pleasure
    to serve as the Deputy Director for nearly 2 years. It served
    as a catalyst for our efforts to streamline processes that can
    be improved, to raise issues that need to be raised, to develop
    policies that guide the provision of support by the military
    departments, and to generally help families identify,
    understand, and navigate the systems they will encounter.
        Military families with special needs are military families
    first. They face the same challenges that other military
    families face due to periodic moves, deployments, and
    separation from their extended families. But in addition, our
    families with special needs face the challenge of navigating
    often complex, stovepiped, and confusing educational, medical,
    and community support systems. Our families have children with
    intellectual, physical, communication, and emotional
    disabilities. In about a third of our families, it is the adult
    member that has a special need.
        The good news is that there are a myriad of systems,
    military, State, and local community systems, available to
    support them. The bad news is there are a myriad of systems.
    Our office has been charged with bringing order to this chaos
    and helping our families access the support they need.
        Currently, over 400 family support personnel serve military
    families with special needs. All of our installations,
    depending on their sizes, have a full or part-time staff person
    or, in some very small locations, a point of contact for
    military families with special needs. Over the last 2 years,
    all of our providers have been trained on their roles, on the
    agencies with which they should be working, and on the
    requirements of supporting military families with special
    needs.
        Communicating with our families is important. Educating
    them on programs, benefits, and resources is crucial. Working
    jointly with the military departments, we have provided a
    wealth of information to military families with special needs,
    including materials available online and through Military
    OneSource.
        My written testimony outlines our ongoing work in greater
    detail, where we are succeeding, and where we have more work to
    do. Thank you so much for your support.
        Senator Webb. Thank you, Dr. Posante. Again, I would remind
    the witnesses that your full written statements will be entered
    into the record at the end of your opening statements. Also,
    just for the subcommittee, that the hearing record will remain
    open until close of business tomorrow in case there are written
    questions that anyone would like to present to you.
        Senator Webb. Dr. Tait, welcome.

     STATEMENT OF DR. VERA F. TAIT, ASSOCIATE EXECUTIVE DIRECTOR,
      DEPARTMENT OF COMMUNITY AND SPECIALTY PEDIATRICS, AMERICAN
                         ACADEMY OF PEDIATRICS

        Dr. Tait. Thank you. Chairman Webb and members of the
    subcommittee, thank you for holding today's hearing on such an
    important topic: military families who have children with
    special healthcare needs. I am Dr. Vera Fan Tait, and I
    represent the American Academy of Pediatrics (AAP), a
    professional organization of more than 60,000 primary care
    pediatricians and pediatric sub-specialists. I am honored to
    join this panel, which includes such extraordinary advocates
    and experts.
        I am a pediatric neurologist and an Associate Executive
    Director at the AAP. Prior to joining the AAP, I was in
    practice for more than 25 years with my major areas of
    expertise including children and youth with special healthcare
    needs, traumatic brain injury, neurodevelopmental disabilities,
    and neurologic rehabilitation. Caring for our Nation's military
    families and their children has always been of paramount
    importance for AAP. I am proud to say that one of the oldest
    sections in our academy is the section on uniform services.
        The impacts of long or multiple deployments on all military
    families can be significant. For families with children who
    have neurodevelopmental disabilities or disorders, these
    impacts are often significantly exacerbated. The AAP believes
    that the optimal health and well-being of all infants,
    children, adolescents, and young adults, including those in
    military families, is best achieved with access to appropriate
    and comprehensive health insurance benefits. These benefits
    must be available through public health insurance plans, like
    Medicaid, the Children's Health Insurance Program (CHIP), and
    TRICARE, as well as the private health insurance plans.
        AAP policy recommends that minimum health benefits for
    infants, children, and youth should provide all medically
    necessary care within the medical home. We believe that medical
    and other services must be delivered and coordinated, as you
    said, Senator Webb, in a comprehensive patient- and family-
    centered medical home, which is the quality setting where
    physicians who are known to the family and to the child have
    developed a partnership of mutual responsibility and mutual
    trust.
        The health insurance plan that most military families use
    is TRICARE, and services, as we have heard, covered by TRICARE
    provided by pediatricians who are Active Duty military, but
    also community pediatricians and pediatric sub-specialists, who
    provide care near military facilities. Military families often
    face challenges navigating the TRICARE program, many times
    struggling to find the appropriate pediatric providers or have
    certain pediatric services covered.
        One area of particular concern among military families, and
    the reason we are here today, is to look at children with
    special healthcare needs and the coverage of services for
    children with neurologic disorders, especially the ASD.
    Unfortunately, there is often no simple solution for families
    whose children must receive care often from numerous providers.
    A coordinated approach to intervention and treatment among the
    medical home, the educational institutions, and the family is
    really critical for success.
        One demonstrated effective treatment for autism is ABA. The
    symptoms associated with autism are directly addressed by ABA
    methods, which have proven effective in addressing the core
    symptoms of autism, as well as helping children develop skills
    and improve and enhance functioning in other areas that affect
    health and well-being.
        The effectiveness of ABA-based interventions and autism has
    been well-documented through a long history of research.
    Children who receive early intensive treatment have been shown
    to make substantial gains in cognition, language, academic
    performance, and adaptive behavior, as well as social behavior.
    Their outcomes have been significantly better than those of
    children who have no access to these interventions. Though more
    research and ongoing research is needed, ABA has both long-term
    empirical and research data to demonstrate its effectiveness in
    helping children who are diagnosed with ASD.
        The AAP has endorsed the use of ABA treatments when
    determined appropriate by physicians within a medical home in
    close consultation with families.
        Thank you for allowing me to testify before the
    subcommittee today. We must do all that we can to support our
    military families, but especially those who have the added
    challenge of raising children with special healthcare needs.
    Thank you, and I look forward to the questions.
        [The prepared statement of Dr. Tait follows:]
                Prepared Statement by Dr. Vera F. Tait MD, FAAP
        Chairman Webb and Ranking Member Graham, thank you for holding
    today's hearing on such an important topic--the programs and policies
    that the Department of Defense has in place to support military
    families with children with special needs. My name is Vera Fan Tait,
    MD, FAAP, and I am representing the American Academy of Pediatrics
    (AAP), a nonprofit professional organization of more than 60,000
    primary care pediatricians, pediatric medical subspecialists, and
    pediatric surgical specialists dedicated to the health, safety, and
    well-being of infants, children, adolescents, and young adults.
        I am a pediatr--ic neurologist and am an Associate Executive
    Director at AAP, as well as the Director of AAP's Department of
    Community and Specialty Pediatrics. In addition to my role with the
    American Academy of Pediatrics, I am also a member of the Child
    Neurology Society and the Association of Maternal and Child Health
    Programs. Prior to joining the AAP, I was in practice for more than 25
    years and my major areas of expertise include children and youth with
    special health care needs, traumatic brain injury, neurodevelopmental
    disabilities, and neurological rehabilitation. It was my privilege to
    care for families with children with autism spectrum disorders and
    other neurodevelopmental disabilities.
        I have personally experienced the struggle that many pediatricians
    face every day when trying to access needed medical, educational and
    other services for children with special health care needs. Finding
    needed services can be difficult even when they are adequately covered
    by health insurance. It is only more difficult when a primary care
    pediatrician or subspecialist can locate care only to find it is not
    covered by a family's insurance.
        Caring for our Nation's military families and their children has
    always been of paramount importance for the Academy. I am proud to say
    that one of the oldest sections we have at the Academy is the Section
    on Uniformed Services. Created in 1959, the AAP's Section on Uniformed
    Services has helped direct the Academy's leadership on the health and
    well-being of our Nation's military children and adolescents. The
    Section is comprised of over 900 members who are active duty or retired
    military, as well as civilian pediatricians who serve military
    beneficiaries. The section works closely with the pediatric consultants
    to the surgeon general of each branch of the military.
        An example of one of the Section's most recent accomplishments is
    the development of the Military Youth Deployment Support Video Program,
    which is designed to help children and adolescents cope with the
    deployment of one, or sometimes even both, of their parents or
    guardians to other countries around the world. The video was initially
    designed by the Section on Uniformed Services and was subsequently
    utilized by the U.S. Army Medical Command. So far more than 20,000
    copies of the program have been distributed worldwide to military
    families, various military youth serving professional agencies, and
    primary care offices.
        The health and well-being of children in America's military
    families ranks as one of the top priorities of the Academy, and that is
    why I am honored to represent AAP here today. The impacts of long or
    multiple deployments on all military families can be significant and
    for families with children with autism spectrum disorders,
    neurodevelopmental disorders or other disabilities, these impacts are
    often significantly exacerbated.
        The American Academy of Pediatrics believes that the optimal health
    and well-being of all infants, children, adolescents and young adults
    through 26 years of age-including those in military families-is best
    achieved with access to appropriate and comprehensive health care
    insurance benefits. These benefits must be available through public
    insurance plans like Medicaid, the Children's Health Insurance Program
    and TRICARE, as well as private health insurance plans.
        AAP policy recommends that minimum health benefits for all infants,
    children, and youth should provide all medically necessary care, and
    include such services as:

             preventive care
             hospitalization
             ambulatory patient services
             emergency medical services
             maternity and newborn care, and
             mental health and substance abuse disorder services.

        Also included in the set of benefits should be:

             behavioral health
             rehabilitative and habilitative services and devices
             laboratory services
             chronic disease management, and
             oral, hearing and vision care.

        In short, all children must have a medical home. AAP believes that
    medical and other services should be delivered and coordinated in a
    comprehensive, patient and family-centered, physician-led medical
    home--the quality setting for primary care delivered or directed by
    well-trained physicians who are known to the child and family, who have
    developed a partnership of mutual responsibility and trust with them,
    and who provide accessible, continuous, coordinated, and comprehensive
    care.
        The health insurance plan that most military families use is
    TRICARE. Services covered by TRICARE are provided by pediatricians who
    are active duty military but also community pediatricians and pediatric
    subspecialists who provide care near military bases and other military
    facilities. AAP members providing care to children and families covered
    by TRICARE face unique challenges compared to other public and private
    programs and plans. For example, one of the challenges that military
    families with children face is that the TRICARE program is largely
    based on Medicare, a health system designed to provide coverage for
    senior adults. Because of this program alignment, military families
    often face challenges navigating the TRICARE program, many times
    struggling to find appropriate pediatric providers or have certain
    pediatric services covered.This is especially true for parents of
    children with special health care needs. AAP has worked closely with
    TRICARE programs to ensure needed services are available from routine
    immunizations to highly specialized and acute pediatric care.
        One area of particular concern among military parents of children
    with special needs is the coverage of services for children with autism
    spectrum disorders or other neurological disorders. Recently released
    data from the Centers for Disease Control and Prevention confirms that
    the prevalence of children with autism spectrum disorder (ASD) is
    growing, as is the need for effective services to help children with
    ASD maximize their potential.
        Autism spectrum disorders, similar to other neurodevelopmental
    disabilities, are generally not ``curable,'' and complex care is
    required for the child along with services for the family.
    Unfortunately, there is often no simple solution for families and
    effective, family-centered care will include numerous providers. A
    coordinated approach to intervention and treatment among the medical
    home, educational institutions and the family is critical for success.
        Optimizing medical care and therapy can have a positive impact on
    the habilitative\1\ progress and quality of life for the child.
    Medically necessary treatments ameliorate or manage symptoms, improve
    functioning, and/or prevent deterioration. Thus, in addition to routine
    preventive care and treatment of acute illnesses, children with ASD
    also require management of sleep problems, obsessive behaviors, hygiene
    and self-care skills, eating a healthy diet, and limiting self-
    injurious behaviors.
    ---------------------------------------------------------------------------
        \1\ ``Habilitative or rehabilitative care'' means professional,
    counseling, and guidance services and treatment programs that are
    necessary to develop, maintain, and restore, to the maximum extent
    practicable, the functioning of an individual.
    ---------------------------------------------------------------------------
        Effective medical care and treatment may also allow a child with
    ASD to benefit more optimally from therapeutic interventions.
    Therapeutic interventions, including behavioral strategies and
    habilitative therapies, are the cornerstones of care for ASD. These
    interventions address communication, social skills, daily-living
    skills, play and leisure skills, academic achievement, and behavior.
        An example of a demonstrated, effective treatment for ASD is
    Applied Behavior Analysis (ABA). ABA uses behavioral health principles
    to increase and maintain positive adaptive behavior and reduce negative
    behaviors or narrow the conditions under which they occur. ABA can
    teach new skills, and generalize them to new environments or
    situations. ABA focuses on the measurement and objective evaluation of
    observed behavior in the home, school, and community.
        ASD is a medical/neurodevelopmental condition with behavioral
    symptoms that are directly addressed by applied behavior analysis
    methods. ABA has proved effective in addressing the core symptoms of
    autism as well as developing skills and improving and enhancing
    functioning in numerous areas that affect the health and well-being of
    people with ASD.
        The effectiveness of ABA-based interventions in ASD has been well
    documented through a long history of research in university and
    community settings.\2\ Children who receive early intensive behavioral
    treatment have been shown to make substantial gains in cognition,
    language, academic performance, and adaptive behavior as well as some
    measures of social behavior, and their outcomes have been significantly
    better than those of children in control groups.
    ---------------------------------------------------------------------------
        \2\ ``Management of Children With Autism Spectrum Disorders,''
    Scott M. Myers and Chris Plauche Johnson, Pediatrics 2007; 120; 1162;
    originally published online October 29, 2007; DOI: 10.1542/peds.2007-
    2362
    ---------------------------------------------------------------------------
        Late last year, TRICARE proposed to extend coverage under the
    Extended Care Health Option for Applied Behavior Analysis interventions
    for Active Duty servicemembers who have family members with autism
    spectrum disorders. AAP commented on the proposed rule and commended
    the Department of Defense for undertaking the important task of
    proposing measures to make it easier for Active Duty servicemembers
    with children with ASD to better access needed health care services for
    their children.
        In short, though more research is needed, ABA has both long-term
    empirical and research data to demonstrate its effectiveness in helping
    children who are diagnosed with ASD, and AAP has endorsed the use of
    ABA treatments when determined appropriate by physicians within a
    medical home, in close consultation with families. ABA remains an
    active subject of research and we encourage the Department of Defense
    to maintain flexibility in the provision of ABA services as new data
    may emerge.
        Beyond just ABA services, one way to make it easier for military
    parents with special needs children would be to examine how TRICARE
    currently works for its beneficiaries. The Academy supports legislation
    introduced in the House-the TRICARE for Kids Act,\3\ which could begin
    the process of making TRICARE work better for all parents, but
    especially those with children with ASD or other special health care
    needs.
    ---------------------------------------------------------------------------
        \3\ The TRICARE for Kids Act was subsequently included as an
    amendment to the House's National Defense Authorization Act for Fiscal
    Year 2013.
    ---------------------------------------------------------------------------
        TRICARE for Kids would require TRICARE to establish a working group
    of relevant stakeholders to review TRICARE policies and practices and
    develop a plan to ensure that TRICARE meets the pediatric-specific
    needs of military families, including those children with chronic and
    special health care needs. We believe this is an excellent
    collaborative model to ensure that TRICARE polices work for all
    children in military families.
        Thank you for allowing me to testify before the subcommittee today.
    As I said earlier, caring for our Nation's military families and their
    children has always been of paramount importance for the American
    Academy of Pediatrics. We must do all that we can to support our
    military families, especially those who have the added challenge of
    raising children with special health care needs.
        I look forward to your questions.

        Senator Webb. Thank you very much, Dr. Tait.
        Mr. Hilton, welcome.

     STATEMENT OF MR. JEREMY L. HILTON, MILITARY SPOUSE, VETERAN,
                      AND MILITARY FAMILY ADVOCATE

        Mr. Hilton. Mr. Chairman and distinguished subcommittee
    members, thank you for allowing me to discuss our military
    families impacted by disabilities.
        I am a Navy veteran. My wife is Active Duty Air Force. When
    our daughter, Kate, was born in 2002 with significant
    disabilities, I resigned my commission to take care of her.
    This year I was honored as Military Spouse of the Year by my
    peers in Military Spouse Magazine. It is an amazing privilege
    to be able to represent a million-plus military spouses and
    their families.
        A recent National Council on Disability Military Families
    study concluded, ``Far reaching systemic changes are needed in
    our Nation's health, education, and long-term service systems
    to address the significant barriers faced by exceptional family
    members.'' This hearing is a critical step in addressing and
    acting on these extraordinarily important issues to our
    military families.
        Caring for a child with a disability can be exceptionally
    expensive and remarkably stressful. We have higher medical
    bills, therapy bills, home modification and equipment bills,
    and other large expenses. Many families will need Medicaid
    waiver assistance for their children, but State Medicaid waiver
    wait-lists are very long, lasting for years. Every time a
    military family moves, they go to the bottom of the next
    State's wait-list. They rarely reach the top before moving
    again. Those that do lose their Medicaid when the military
    moves them.
        There are a variety of ways in which this problem could be
    rectified, including a military Medicaid waiver, an interstate
    compact addressing Medicaid portability, allowing
    servicemembers to maintain wait-list eligibility based on their
    home of record, or extending the ECHO benefit into retirement.
    In the end, we ask that our children are not penalized for the
    service their mother or father renders to the Nation.
        The extended care health option was created to bridge the
    needs of families unable to access the State Medicaid waiver
    programs. But experience shows it fails to come close to
    replacing Medicaid waiver benefits. We are grateful for this
    benefit, but we would like to see it updated and made more
    flexible so it better fulfills its purpose.
        We support the Senate report language directing DOD to
    explore more flexible ECHO options. We respectfully ask that
    EFMP families are included on any working groups considering
    this and other issues that impact our families.
        While we look forward to enhanced functionality and
    flexibility of the ECHO program, the treatment of autism for
    our military children is one area that I do not believe
    requires further study. It requires action. TRICARE currently
    segregates ABA, the standard of care, and the treatment of
    autism into ECHO as a non-medical educational service.
    TRICARE's classification of ABA as nonmedical allows TRICARE to
    limit care to dependents of Active Duty servicemembers, and
    places a financial cap on treatment services which fall far
    below recommended standards. There is no other disease,
    disability, or chronic health condition which is treated
    similarly as autism and its segregation of treatment outside
    the basic TRICARE benefit.
        Because the ECHO benefit is only available for dependents
    of Active servicemembers, dependents of our retirees are not
    able to access ABA treatments under TRICARE. Prior to the
    hearing, we supplied 80-plus stories to the subcommittee. Many
    are heartbreaking, but inspiring at the same time. I am going
    to read from a letter written by Lance Corporal Hardy Mills,
    U.S. Marine Corps, Retired.
        ``In 2004 while serving with the 1st Marine Expeditionary
    Force in Fallujah, Iraq, I was wounded severely by a rocket
    propelled grenade. Because of my injuries, I retired medically
    from the Marine Corps in 2006 with full disability benefits. I
    am blessed with a supportive wife, and we have two beautiful
    children.
        Our son, Shane, has autism. As a retired Marine and
    disabled veteran, my family depends on the military healthcare
    system, TRICARE, for coverage of medical services and
    interventions. Unfortunately because of my retired status,
    Shane's medically recommended autism treatment, ABA, is not
    covered by TRICARE. My family faces out-of-pocket costs of
    $4,600 a month associated with this vital service because of
    current TRICARE policy deficits. We have sold our home to
    provide Shane the care he requires, but we are running out of
    funding and ask for your intervention.''
        The other letters are no less important and show the
    struggles our military families have gone through to be able to
    provide therapy to their children. In the end, many of these
    families are still coming up significantly short, particularly
    those with younger children and our retirees.
        You will hear Dr. Tait and Dr. Dawson testify on the
    scientific evidence that proves ABA is effective. Many other
    reputable organizations and members of the medical community
    have endorsed ABA therapy as the standard of care for autism. I
    sincerely hope that the Senate Armed Services Committee will
    take this into consideration and support an amendment to the
    2013 NDAA to help our military kids impacted by autism.
        These military families are remarkable Americans who endure
    exceptionally trying circumstances in addition to their service
    in an already stressful military lifestyle. I would encourage
    you to take a moment and get to know each of them. As I am
    certain you realize after reading these stories, we have much
    work left to do in order to provide the appropriate level of
    medical care, services, and support these military families
    deserve.
        I would like to personally thank the subcommittee members
    and the professional staff for their leadership in providing
    much-needed oversight to these issues. Thank you to this
    subcommittee for not forgetting our military families. I look
    forward to your questions.
        [The prepared statement of Mr. Hilton follows:]
                   Prepared Statement by Mr. Jeremy L. Hilton
        Mr. Chairman, Senator Graham, and distinguished members of the
    subcommittee, thank you for the opportunity to discuss the issues
    facing our military families impacted by disabilities and your
    consideration of actions and initiatives that I submit need to be
    accomplished to ensure our Nation honors its obligations to our
    military families. By doing so, I believe we enhance the readiness of
    our All-Volunteer Force and improve the lives of our military children.
                                  introduction
        I am a 1995 U.S. Air Force Academy graduate that cross-commissioned
    into the Navy and served 8 years in the submarine force. In 2002, while
    on shore duty at the Washington Navy Yard, our daughter, Kate, was born
    with a number of significant disabilities. Seven months later, I
    resigned my commission and have been taking care of our children ever
    since. Since Kate's birth we have moved six times, five of those within
    a 5-year timeframe due to deployments, training, and military Permanent
    Changes of Station (PCS). Kate has undergone nine surgeries and
    received thousands of hours oftherapy, provided by our family and
    outside therapists. Our primary goal is to ensure she lives life to her
    fullest and is educated and lives in the community to the greatest
    degree possible. My wife remains Active Duty Air Force, and we are
    currently stationed at Andrews AFB where she is the commander of an
    AFOSI squadron. We have a 1-year-old son, Jackson.
        In May 2012, I had the distinct honor of being selected as the
    Military Spouse of the Year, based on my advocacy for military
    families. I started as an advocate for our daughter. That advocacy
    expanded within the Air Force, then the Department of Defense (DOD),
    and then to the larger disability population. I quickly discovered
    there are so many unruet needs in the disability world. Our families
    are overwhelmed. There is little to no time to be advocates because
    many families are simply surviving. We don't have the defense industry
    or unions to ensure our programs receive the funding they require. We
    have a very small group of volunteer parents that do their best to
    raise these tough issues when they happen to be stationed in the DC
    Metro area. What I have learned from being part of this process is that
    our families do have a voice, but many times it is very quiet, at least
    relative to the normal buzz in DC. However, what we lack in volume, we
    make up for with passion. In the short amount of time we've had since
    the hearing was announced, these amazing families have provided me the
    most astonishing and personal insights into their lives and the hope
    they have for their children. I hope the Committee finds their stories
    instructive (see attachments after written testimony).
        This committee plays an integral role in both legislation and
    oversight on the issues that enable our families to support our
    servicemembers while they protect our country. Your support continues
    to be instrumental in making needed changes to the DOD infrastructure,
    policy, and procedures which will allow our special needs military
    families to deal with the significant stresses associated with service;
    PCS, multiple deployments, and the high operational tempo that has
    marked these past 10 years of war.
        There are a number of areas that I will be discussing today:
    Medicaid Waivers, the Extended Care Health Option (ECHO), TRICARE,
    Autism, Education, the Exceptional Family Member Program (EFMP),
    Survivor Benefits, and Legal Issnes. Each of these programs and issues
    has a substantial impact on the health and wellbeing of our military
    families with disabilities and it is critical that the Committee
    understand what areas require improvement.
        Many of these areas were considered in a recent National Council on
    Disability (NCD) study on Marine Corps EFMP families (transmittal
    letter included as Attachment A). In the preamble to the study, the NCD
    Chairman, Jonathan Young stated:

              ``However, many of the changes necessary to improve the
            supports available to military families with [Exceptional
            Family Members] are beyond the control of the Marine Corps and
            may require statutory and regulatory changes to meet these
            needs.
              NCD has concluded that far-reaching systemic changes are
            needed in our Nation's health, education, and long-term service
            systems to address the significant barriers faced by EFMs. NCD
            thus seeks support from Congress, the military, and the
            administration to build the critical Federal partnerships
            necessary to effect systemic change and ensure that the men and
            women serving our country can do so knowing their family
            members with disabilities will have the supports and services
            they need.''

        This hearing is the first step in addressing these extraordinarily
    important issues to our military families.
                                medicaid waivers
        Caring for a child with a disability can be exceptionally expensive
    and remarkably stressful. We have higher medical bills, therapy bills,
    home modification, equipment and supply bills, and other large
    expenses. Many, if not most, families impacted by disabilities will
    come to rely on public assistance programs in some fashion for our
    children who are disabled. The majority of such programs relate to
    State-run Medicaid waiver programs which provide short and long term
    benefits that TRICARE does not. Examples of such supports include
    incontinence supplies, respite, employment supports, housing, and more
    flexible medical coverage. Most of the Medicaid waiver programs run by
    the States have significant waiting lists for citizens to access these
    benefits because the need is simply much greater than the available
    benefits. It is not uncommon for a family to place a 1-year-old on the
    State Medicaid waiver waitlist with the hope the child will receive
    benefits by the time they are a teenager or an adult, depending on the
    type of waiver and the State in which they reside. For our highly
    mobile military families, that means our children constantly remain at
    the bottom of any given State's waitlist. If by chance they get off the
    waitlist and receive services in one State, they will lose their
    eligibility once they PCS, and they will find themselves back on the
    bottom of the next State's waitlist. Upon retirement after a career of
    service, our children, yet again, find themselves on the bottom of
    waitlist at their new and final home.
        There are a variety of ways in which this problem could be
    rectified, including a military Medicaid waiver, an Interstate Compact
    addressing Medicaid portability, allowing servicemembers to maintain
    list-eligibility based on their home of record, or extending the ECHO
    benefit into retirement. Given the cross-committee jurisdictional
    nature of this issue, Medicaid reform may seem like a bridge too far,
    but it is one that will have a significant impact on our families.
        Parent advocates are currently working with a variety of partners
    on finding a fix that addresses the problem. The DOD has funded a grant
    for West Virginia University to study this issue and we expect findings
    this summer. We would ask that this committee remain engaged on this
    issue moving forward to ensure State Medicaid services for our military
    children are provided for equally in comparison to their civilian
    counterparts.
                      extended care health option program
        The ECHO, created in 2005, was originally designed to bridge the
    needs of families due to the inability to access State-run Medicaid
    programs. Our experience has been that it does not replicate those
    benefits because of the lack of flexibility in the ECHO program.
    Military families strongly support the Senate report language that
    directs the DOD:

              ``to assess participation in the ECHO program by eligible
            dependents with special needs, and to explore options to
            provide more flexible benefits.'' [sec. 703]

        Our families are grateful for the ECHO benefit. However, it is time
    to reassess its effectiveness to meet the requirements for which it was
    created. As one is considering the benefits typical families might
    need, it is imperative that DOD consider best practices as applied by
    the States. Please understand that while these studies are taking
    place, children may be very well going without necessary items or
    therapy. We would hope for an aggressive timeline for dissemination and
    prompt action on the basis of the results from the study.
        There are two helpful resources when considering both Medicaid and
    ECHO issues:

             United Cerebral Palsy's annual ``Case for Inclusion''
            which ranks the 50 States and DC on its Medicaid waiver
            programs: http://www.ucp.org/the-case-for-inclusion/2011/
             Medicaid's Web based resources: http://
            www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/
            Waivers/Waivers.html?filterBy=1915%28c%29#waivers

        One striking item included in the Medicaid website highlights that
    there are 423 different Medicaid waiver programs and demonstration
    projects throughout all 50 States and the District of Columbia. There
    must be a way we can find to serve the military family appropriately.
                                    tricare
        As most parents are quite aware, children are not simply little
    adults. It is why the children's hospital model exists, to provide for
    a child's unique health care needs. This is why TRICARE, being based on
    Medicare, sometimes doesn't provide the best possible care for our
    military children, particularly those who have special health care
    needs. It is also why military families support the TRICARE for Kids
    Amendment (Attachment B) included in the National Defense Authorization
    Act (NDAA) for Fiscal Year 2013 recently passed by the House. This bi-
    partisan amendment was co-sponsored by Representative Steve Stivers (R-
    OH15), Representative Susan Davis (D-CA53), and Representative Bobby
    Schilling (R-IL17) and has been endorsed by the Military Officers
    Association of America (MOAA), the National Association of Children's
    Hospitals (NACH), the National Military Family Association (NMFA), and
    the March of Dimes.
        From a recent endorsement letter by the March of Dimes (Attachment
    C), they noted:

             ``Unfortunately, because TRICARE utilizes a
            reimbursement structure based on Medicare, it often adopts
            policies and practices from Medicare that do not address the
            unique health care needs of children. Moreover, despite the
            best efforts of the Department of Defense, military families
            with children with special health care needs and chronic
            conditions often have difficulty accessing resources and
            services from local or regionally specialized providers. This
            problem is further exacerbated by the mobility of military
            families, who must repeatedly locate and obtain specialized
            health care service in unfamiliar geographic regions as their
            assignments change or they are deployed.
             The TRlCARE for Kids Act seeks to better shape the
            policies and practices of TRICARE to meet the needs of
            children, including those with special health care needs or
            chronic illnesses.''

        Our hope is to ensure that the final NDAA includes the Tricare for
    Kids amendment, section 723 in the House bill, and that the conference
    committee report will mirror the Section 703 report language provided
    by the Senate, thus providing a specific panel to address children's
    health needs, and adding ECHO to DOD's ongoing evaluation and reporting
    of cost, access, and quality.
                                     autism
        While we look forward to enhanced functionality of the TRICARE
    program, the treatment of autism for our military children is one area
    that I do not believe requires further study; it requires action.
        TRICARE currently segregates Applied Behavioral Analysis (ABA), the
    standard of care in the treatment of autism, into ECHO, which is an
    entirely separate arm of TRICARE, as a ``non-medical educational''
    service. TRICARE's classification of ABA as ``non-medical'' allows
    TRICARE to limit care to dependents of Active Duty servicemembers and
    places a financial cap on treatment services which falls far below
    recommended standards. There is no other disease, disability or chronic
    health condition which is treated similarly as autism in its
    segregation of treatment outside the basic TRICARE benefit. Families
    are forced to make the difficult decision of paying thousands of
    dollars out of pocket to address these deficits or forgo medically
    recommended care. Because the ECHO benefit is only available for
    dependents of active-duty servicemembers, dependents of our retirees
    (including Wounded Warriors retired due to injuries sustained in
    combat) are not able to access ABA treatments under TRICARE and Guard/
    Reserve families receive intermittent care.
        Contrary to DOD's stated position, in April of this year, the U.S.
    Office of Personnel Management (OPM) concluded that ABA treatment for
    autism is a ``medical therapy.'' In a letter dated 19 April 2012
    (Attachment D), OPM stated [bottom of page 5]

             ``The OPM Benefit Review Panel recently evalnated the
            status of Applied Behavior Analysis (ABA) for children with
            autism. Previously, ABA was considered to be an educational
            intervention and not covered under the FEHB Program. The Panel
            conclnded that there is now sufficient evidence to categorize
            ABA as medical therapy.''

        The previous findings are instructive as well as they point to what
    level of evidence was required to overcome OPM's original objection. In
    a 2006 letter to Representative Christopher Smith (R-NJ4) (Attachment
    E), the Director of OPM, Linda Springer, stated

             ``It is OPM's most sincere hope that one day
            randomized trials will demonstrate ABA to be an effective
            course of treatment for autism and no longer be considered
            investigational. OPM has great empathy for the families
            affected by this tragic disorder, and regret our decision could
            not be more favorable''.

        Coverage of ABA care in the civilian sector also exceeds that of
    TRICARE. Currently, 30 States have laws requiring private insurers to
    cover autism-related therapies, including ABA, as a medically necessary
    service. TRICARE's position that ABA therapy is ``non-medical'' is now
    contrary to the Federal Government and laws in 30 States.
        We now stand at a point where, without action by Congress, we will
    soon see Federal workers provided medically prescribed autism therapy
    for their children while military families receive either an inferior
    level of care or, as in the case of the retired veteran's child,
    receive no care. Our families simply cannot imagine that Congress would
    find that appropriate.
        With strong bipartisan leadership, the House's 2013 version of the
    NDAA includes important language clarifying that military dependents
    with autism, regardless of duty status, have access to medically
    necessary behavioral health treatments including ABA through the
    TRICARE basic program. Our military families ask that you work to
    ensure comparable language is included with the Senate version of the
    NDAA.
                                   education
        Special education as a career is truly a calling and the vast
    majority of teachers who instruct our children are competent
    professionals whose greatest desire is to see our children succeed.
    However, with the pace, length, and number of deployments over the past
    10 years, as well as the normal structure of the military lifestyle,
    military families whose children require special education have
    struggled to receive a free appropriate public education.
        According to the Military Child Education Coalition, the average
    military child will transfer schools 6 to 9 times between grades K to
    12. For the special needs military family, the frequent moves present
    additional challenges: reestablishment of medical care, educational
    services, and necessary therapies each time they move to a new
    location. For many of our families, this means the primary caretaker
    parent will devote countless hours ensuring their child's needs are
    met. In the event the spouse is employed outside the home, or in the
    case of a dual active duty couple, there is little time to digest the
    changing special education laws and regulations required to ensure a
    child receives a free, appropriate public education. In many
    situations, military families either go into debt to hire advocates or
    lawyers to ensure their child is receiving an appropriate education or
    they go without and watch their child regress in an inappropriate
    placement without proper supports.
        In the event that a school district does not provide appropriate
    services for a military child, the family must weigh the following
    before attempting to hold a school district accountable under the
    Individuals with Disabilities Education Act (IDEA):

        1.  Legal fees, many lawyers no longer will take a case on
    contingency
        2.  Expert witness fees (not reimbursable even if you win your
    case)
        3.  Length of time left in the current assignment
        4.  Family and life considerations (financial and medical stress,
    spouse deployed, wounded, or otherwise unavailable).

        Military families have little control over where they will be
    stationed, sometimes as part of a normal base reassignment, and
    sometimes when a spouse and child(ren) have to live close to family
    when a member deploys for a year or more.
        Some school districts take advantage of military families,
    calculating how long they will likely spend at a current base, and the
    families' emotional, physical, and financial abilities to utilize their
    procedural safeguards under IDEA.
        The average due process case to hold a school district accountable
    lasts a number of years, making IDEA's procedural safeguards
    essentially meaningless for the large maj ority of military families,
    particularly when confronted with an aggressive, cost-cutting school
    administration. Most school districts have law firms retained from
    taxpayer funds with unlimited time to run out the clock against a
    military family. Military families have few resources to hire lawyers
    or retain experts to ensure our children receive an appropriate
    education.
        Included in the 2011 NDAA was a directive to DOD to consider these
    issues for study (sec 583). The DOD's response was that the evidence
    was anecdotal therefore they could not make any conclusions without
    appropriate data. This lack of data has been a consistent issue for all
    military connected children as evidenced by the DOD report as well as
    two GAO reports sparming over the last 5 years (GAO study entitled
    ``Military Personnel: Medical, Family Support, and Educational Services
    Are Available for Exceptional Family members'' (2007) and GAO study
    entitled ``Education of Military Dependent Students, Better Information
    Needed to Assess Student Performance'' (2011)). Over the last 5 years,
    we could have been collecting data to take action, but for some reason,
    we haven't. It seems clear to me that a data element is needed to
    identify our military connected students so we can access and evaluate
    their needs.
        In August 2011, four Service representatives wrote a letter to the
    Assistant Secretary for Special Education and Rehabilitative Services,
    Ms. Alexa Posny, for clarification and guidance on issues specifically
    related to military families (Attachment F). To date, no response has
    been provided. While many of the educational challenges facing our
    military connected special needs students involve cross jurisdictional
    issues, we desperately need this committee's strong leadership to
    ensure our children our appropriately take care of.
        Finally, the new Post-September 11 or Bill offers a terrific option
    to transfer educational benefits to dependents; expanding these
    benefits to cover more options beyond traditional degree-granting
    education would be a welcome improvement for our special needs
    dependents.
                       exceptional family member program
        DOD support for families with special needs has been a work in
    progress for many years. The 2010 NDAA included the creation of the
    Office of Special Needs (OSN) within the Military Community and Family
    Policy Office. The next year's NDAA provided for the creation of the
    Military Exceptional Family Member Panel, which includes military
    family members and adults impacted by disability. The goal of the panel
    is to provide specific real world input to the OSN on issues facing our
    families. Each of these has been a forward step in improving our family
    member's ability to access a life that any parent would want for their
    child. We thank the committee for taking legislative action to improve
    DOD support for military families with special needs. However, the
    proof is in the implementation of these directives.
        The specific mandate provided to the OSN included ``The development
    and implementation of a comprehensive policy on support for military
    families with special needs''. Two years later, this hasn't been
    completed. Without appropriate policy to review, it is not clear where
    we stand with many of the other mandates assigned to the OSN.
        Our families ask that appropriate oversight be provided to ensure
    that the Office of Special Needs has the funding and personnel to carry
    out its mandates and then ensure that they are completed in a
    reasonable amount of time.
        To consider best practices within DOD, one need look no further
    than the Marine Corps, which is universally lauded as providing the
    best care for its exceptional family members. Attached you will find a
    recent brief provided by the head of the USMC Family Programs branch,
    Rhonda LaPorte, which provides an immediate overview of the current EFM
    Program as well as future direction. (Attachment G). We believe the
    other Services should follow the lead of the Marine Corps as they
    review their EFMP programs.
                               survivor benefits
        Today, servicemembers with permanently disabled children face an
    unfortunate dilemma. Under current law, the servicemember can only
    direct survivor benefits to that child, and not a trust of any sort.
    Because the Survivor Benefits Plan (SBP) annuity cannot be placed into
    a special needs trust this survivor benefit ironically will make the
    beneficiary ineligible to receive the Medicaid waiver which allows many
    individuals with a disability to survive. One example of a consequence
    includes a disabled adult being removed from a group home or other
    long-term care facility provided by Medicaid because the SBP amount
    exceeds State income thresholds for Medicaid waiver programs and
    disqualifies the individual from that program. Please see Attachment H
    for a more detailed analysis of this issue by a lawyer who specializes
    in special needs trusts.
        Civilian families are able to create special needs trusts for their
    pennanently disabled children that preserve their access to Medicaid
    while providing them additional supports that enable them to live in
    their communities. We believe that members of the military should have
    the assurance that their surviving family members with disabilities
    will have the same opportunities after they are gone.
        The Disabled Military Child Protection Act, H.R. 4329, was
    introduced in this Congress to correct this disparity. Unfortunately,
    because of a very modest cost and lack of a means to pay for it, the
    measure was not included in the House version of the NDAA. We request
    the Committee to file an amendment to be added to the Senate NDAA in
    order to resolve this issue.
                                  legal issues
        There are a whole host of issues our military families face when
    trying to access the legal system. For military families with special
    needs, these primarily include issues related to guardianship, wills,
    trusts, and special education. Each one of these issues create
    significant out of pocket expenses above and beyond that of a typical
    military family. The issues are not ones that the on-base JAG officers
    are qualified to provide counsel on, and most JAG officers do not have
    the connections required to even provide a referral.
        Our families are encouraged by the Senate language regarding its
    support for the American Bar Association's Military Pro Bono Project.
    We would encourage the Secretary of Defense and the DOD's General
    Counsel to consider the unique issues of our military families impacted
    by special needs as they are investigating the report request by the
    Senate (detailed in Senate Report 112-173).
                               disability issues
        There are a variety of issues which impact the disability community
    as a whole, including our active duty military families, our veterans
    and retirees, and particularly our Wounded Warrior community. The
    Senate will soon consider the Convention on the Rights of Persons with
    Disabilities. The Senate Health, Education, Labor, and Pensions
    Committee will hold a hearing on restraint and seclusion in our publics
    chools on June 30. While the Senate Armed Services Committee does not
    specifically play a role in these issues, please appreciate the fact
    that these issues are ones that our families care about and your
    support in ensuring these issues are resolved significantly impacts our
    military community.
                                   conclusion
             ``Disability is a natural part of the human experience
            and in no way diminishes the right of individuals to
            participate in or contribute to society.''

        These are the congressional findings from the IDEA, the Federal law
    that ensures children with disabilities are provided a public
    education. If the concept that having a disability is a natural part of
    our world is foreign to you, you are not alone. But like so many things
    in our world, your perception can change in a millisecond. For some of
    us, this will happen in a split second, whether that is an IED
    explosion or from the doctor telling you something is wrong with your
    baby. For others, it will be the shocking realization of the road you
    are about to travel as you deal with your MS, cancer, or Alzheimers.
    Smart disability policy is the right thing to do, both for our military
    families and for its positive impacts on our force's readiness. Short-
    term thinking and budgeting will in fact have significant long term
    cost, whether we are talking about the rehabilitation of a young airmen
    with traumatic brain injury or a child with cerebral palsy or autism.
    Our entire society as a whole has made significant strides in the last
    four decades in supporting people with disabilities. The strides our
    society as a whole has made have been mirrored in many of the programs
    within the Department of Defense and the VA. However, there continue to
    be significant stovepipes within DOD, the VA, Tricare, the individual
    services as well as individual States as opposed to an appropriate
    sharing of best practices and implementing changes needed. What we need
    is leadership at all levels of the chain of command, within Congress,
    and within our local communities to make change reality.
        I've attached a number of stories of individual military families
    immediately after this written testimony. [See Attachment I]. These are
    amazing Americans, who endure exceptionally trying circumstances and
    somehow find ways to serve their nation and many times try to help
    others. I would encourage you to take a moment and get to know each of
    them. If you look ``hero'' up in the dictionary, you'd see the faces of
    these moms, dads, and their children.
        We don't pretend to think that there are any easy tasks in front of
    us as a nation. How we deal with these tough issues will define us as a
    Nation. Our families appreciate the opportunity and leadership
    demonstrated by holding this hearing. Thank you to this committee for
    not forgetting our military families.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Webb. Thank you very much, Mr. Hilton.
        Dr. Dawson, welcome.

       STATEMENT OF DR. GERALDINE DAWSON, CHIEF SCIENCE OFFICER,
    AUTISM SPEAKS, AND PROFESSOR OF PSYCHIATRY, UNIVERSITY OF NORTH
                        CAROLINA AT CHAPEL HILL

        Dr. Dawson. Good afternoon, Chairman Webb, and members of
    the subcommittee. I am Dr. Geraldine Dawson. I am the Chief
    Science Officer at Autism Speaks, and I serve as Professor of
    Psychiatry at the University of North Carolina at Chapel Hill.
    Prior to joining Autism Speaks, I directed the University of
    Washington Autism Treatment and Research Center for close to
    two decades.
        Autism Speaks is the world's leading autism science and
    advocacy organization. We are dedicated to funding research
    into the causes, prevention, treatments, and cure of autism,
    and to increasing awareness and advocating for individuals with
    autism and their families.
        I am honored to appear before the Senate Armed Services
    Subcommittee on Personnel, and to participate in this hearing
    on issues facing military families who have dependents with
    special needs.
        Like their counterparts in civilian life, many military
    families face challenges in providing proper treatment for
    their child with autism. I am here today to talk about those
    challenges and how the military healthcare system can lessen
    their effect on families.
        But first some information about autism. Autism is a
    development disorder that affects a person's ability to form
    social relationships and communicate with others. People with
    autism also exhibit repetitive behaviors, some of which can
    interfere with their ability to learn and function. Autism is
    caused by a combination of genetic and environmental risk
    factors.
        But autism is no longer considered a rare condition. It
    affects 1 in 88 children in the United States, 1 in 54 boys.
    This year, more children will be diagnosed with an ASD than
    AIDS, diabetes, and cancer combined. The prevalence of autism
    has risen dramatically over the last several decades. In fact,
    statistics show a tenfold increase in the past 40 years. Many
    in the autism community use the word ``epidemic'' when
    describing autism.
        Fortunately, there are effective treatments for autism that
    can change a person's course and outcome. Numerous controlled
    clinical trials have shown that early intensive behavioral
    treatment significantly increases IQ, language abilities, daily
    living skills, while reducing the symptoms of autism.
        In fact, a 2010 randomized control trial, funded by the
    National Institutes of Health and published in the prestigious
    Journal of Pediatrics, found that 50 percent of children with
    autism who received early intensive behavioral treatment for 2
    years had a 15-point increase in IQ. One-third of the children
    showed an increase in IQ of greater than 30 points. This means
    that early treatment changed these children's life
    trajectories, setting them on a course that increases their
    chance of living productive and satisfying lives.
        These children will likely attend a regular classroom,
    develop spoken language, and make friendships. This is not only
    good for these individuals, it results in significant cost-
    savings, as fewer services will be needed in the long-run, and
    these individuals now can become more productive members of our
    society.
        Behavioral health treatments that are based on ABA have
    become widely accepted among healthcare professionals as an
    effective treatment for autism. These treatments are provided
    by highly-trained licensed and certified professionals. Early-
    in-life treatment involves working one-on-one with a child
    typically for 25 to 40 hours per week.
        Thirty States now require coverage of ABA treatment as part
    of medical care. Employers, such as Microsoft and Home Depot,
    universities, such a Ohio State, Harvard, and Princeton, and
    healthcare facilities, such as the Mayo Clinic, do so as well.
        Earlier this year, OPM concluded that there is enough
    evidence to classify ABA as a medical therapy. In contrast to
    the benefits covering ABA treatment that now will be made
    available to the Federal civilian workforce, the healthcare
    program for uniform servicemembers and their families, TRICARE,
    provides only limited coverage for ABA treatment.
        TRICARE classifies ABA treatment as an educational
    intervention, and makes it available only through ECHO, and
    caps coverage at $36,000 a year.
        Furthermore, ABA treatment is restricted to dependents of
    Active Duty servicemembers. Dependents of retirees, including
    dependents of wounded warriors who were retired due to their
    injuries sustained in combat, are unable to access ABA
    treatment for their child with autism. Guard and Reserve
    families receive intermittent care as they move between Active
    and Reserve status.
        $36,000 a year pays for about 11 hours of ABA treatment per
    week. Many children with autism, particularly early in life,
    and some who face severe challenges, need more treatment hours
    in order to fully benefit from the treatment.
        Given all that our military families have shouldered for
    the past decade, they deserve better. On behalf of thousands of
    military families affected by autism, I strongly urge Congress
    to require TRICARE to provide behavior health treatment,
    including ABA, to military families regardless of duty status,
    and at the level of care prescribed.
        Thank you, Chairman Webb and members of the subcommittee,
    for this opportunity to speak about this important issue
    affecting military families. I look forward to your questions.
        [The prepared statement of Dr. Dawson follows:]
               Prepared Statement by Dr. Geraldine Dawson, Ph.D.
        Good afternoon, Chairman Webb, Ranking Member Graham, and members
    of the subcommittee. I am Dr. Geraldine Dawson, Chief Science Officer
    of Autism Speaks. I also serve as Professor of Psychiatry at the
    University of North Carolina at Chapel Hill.
        Autism Speaks was founded in February 2005 by Bob and Suzanne
    Wright, grandparents of a child with autism. Since then, Autism Speaks
    has grown into the world's largest autism science and advocacy
    organization, dedicated to funding research into the causes,
    prevention, treatments and cures for autism; increasing awareness of
    autism spectrum disorders; and advocating for the needs of individuals
    with autism and their families. We are proud of what we've been able to
    accomplish and look forward to continued success in the years ahead.
        I am honored to appear before the Senate Armed Services
    Subcommittee on Personnel at this hearing on issues facing military
    families with dependents who have special needs. Like their
    counterparts in civilian life, many military families face the
    challenge of providing proper treatment for a child on the autism
    spectrum. I am here to talk about those challenges and how the military
    health care system can lessen their effect on families.
                            the challenges of autism
        I will begin by providing an overview of autism. Autism is a
    developmental disorder that affects a person's ability to form social
    relationships and communicate with others. People with autism also
    exhibit repetitive behaviors, some of which can interfere with their
    ability to learn and function. Most scientists agree that autism is
    caused by a combination of genetic susceptibilities that interact with
    environmental risk factors.
        Autism is no longer considered a rare condition. It affects about 1
    in 88 children, including 1 in 54 boys. Let's compare autism's
    prevalence to that of some other conditions:

             Pediatric AIDS - 1 in 300;
             Type 1 diabetes - 1 in 400; and
             Childhood cancer - 1 in 2,000

        This year, more children will be diagnosed with an autism spectrum
    disorder than AIDS, diabetes, and cancer combined. The prevalence of
    autism has risen dramatically over the past several decades; in fact,
    statistics show a ten-fold increase in 40 years. Although broadening of
    the diagnostic criteria for autism and increased awareness account for
    some of this increase, experts estimate that approximately 50 percent
    of the increase remains unexplained. Many in the autism community use
    the word ``epidemic'' when describing autism.
        Based on metrics used by the World Health Organization, autism
    represents a significant public health challenge. It is a highly
    prevalent and chronic condition with an early onset and is associated
    with significant functional impairments and costs. Its burden is higher
    than childhood leukemia, cystic fibrosis, and type 1 diabetes--an
    estimated $137 billion per year.
        Of course, the impact of autism cannot be measured in dollars
    alone. Autism takes a significant toll on families. Compared to the
    families of children with special health care needs other than autism,
    the families of children with autism are more likely to:

             cut back or stop working;
             spend 11 or more hours per week providing care;
             pay more than $1,000 annually in out-of-pocket medical
            expenses;
             experience financial problems; and
             avoid changing jobs in order to maintain health
            insurance.

        According to a national survey, only one in five children with
    autism has adequate health insurance coverage, receives coordinated,
    ongoing, comprehensive care within a medical home, and had at least one
    preventive medical visit in the past 12 months.
        Military families with a child on the autism spectrum face the
    added burdens of stress associated with their service. Relocating to a
    new duty station can cause gaps in care with lifelong consequences.
    When one parent is deployed, the other may bear the full
    responsibilities of child care. When a parent returns from deployment,
    the family may have the additional challenge of combat-related mental
    or physical health problems.
                      screening, diagnosis, and treatment
        The care of a child with autism often begins with a sense by a
    family member or health care professional that the child's development
    is not typical. It is now possible to screen for autism at 12 months of
    age, and autism can be reliably diagnosed by 18 to 24 months of age. In
    2007, the American Academy of Pediatrics recommended that all children
    be screened for autism at 18 and 24 months of age and that appropriate
    referrals be made if autism is suspected. Yet, the average age of
    diagnosis in the United States remains close to 5 years. Children from
    ethnic minority backgrounds are at a particular disadvantage. Research
    shows that these families have to go to the doctor many more times
    before receiving a diagnosis, and the age of diagnosis is much older.
        Fortunately, there are effective treatments for autism that can
    change a person's course and outcome. Controlled clinical trials have
    shown that early intensive behavioral treatment significantly increases
    IQ, language abilities and daily living skills, while reducing the
    symptoms of autism. In fact, a 2010 randomized controlled trial funded
    by the NIH and published in Pediatrics reported that 50 percent of
    children with autism who received early treatment for 2 years had a 15
    point increase in IQ (1 standard deviation). One third of the children
    showed an increase in IQ of greater than 30 points (2 standard
    deviations). This means that treatment changed these children's life
    trajectories, setting them on a course that increased their chances of
    living productive and satisfying lives. This is not only good for the
    individual; it results in significant cost-savings for society as
    children and adults need fewer services and can become productive
    members of society.
        Among the many treatment methods available, behavioral treatments
    that use the methods of applied behavior analysis (ABA) have become
    widely accepted among health care professionals as an effective
    treatment for autism. Mental Health: A Report of the Surgeon General
    states, ``Thirty years of research demonstrated the efficacy of applied
    behavioral methods in reducing inappropriate behavior and in increasing
    communication, learning, and appropriate social behavior.'' Study after
    study has provided evidence for the efficacy of early intensive
    behavioral treatment based for improving outcomes of children with
    autism.
        Let me say a little more about ABA. Treatments based on behavior
    analysis use a scientifically validated approach to understanding
    behavior and how it is affected by the environment. Through decades of
    research, the field of behavior analysis has developed many techniques
    for increasing useful behaviors and reducing those that may cause harm
    or interfere with learning. These techniques bring about meaningful and
    positive changes in behavior. Success in an ABA program is measured by
    direct observation and data collection and analysis. Early behavioral
    treatment based on ABA is provided by highly trained licensed/certified
    professionals with expertise in ABA and involves one-on-one treatment
    with the child typically for 25-40 hours per week for at least 2 years.
    This early intensive investment in treatment results in significant
    cost savings in the long run, as many children with autism who receive
    such treatments can now carry on a normal conversation, enter a regular
    classroom, and form friendships with their peers.
            the growing trend towards comprehensive autism coverage
        Autism Speaks is committed to passing insurance legislation that
    provides access to behavioral health treatments for people with autism.
    Back in 2001, only the State of Indiana required insurance coverage of
    effective therapies like ABA. Now 30 States (representing over 70
    percent of the country's population) require coverage of ABA treatment
    as a medical care.
        Large employers like Microsoft and Home Depot provide coverage for
    autism therapies, as do universities such as Ohio State, Harvard, and
    Princeton and health care facilities like the Mayo Clinic.
        After conducting an internal review earlier this year, the U.S
    Office of Personnel Management (OPM) concluded there is enough evidence
    for OPM to classify ABA as a medical therapy. This means that Federal
    Employees Health Benefits Program (FEHBP) carriers may propose 2013
    benefit packages that offer behavioral treatments based on ABA. In
    communicating this decision to Autism Speaks, OPM stated, ``This
    decision reflects our perspective that families covered under the FEHBP
    should have access to medical treatment that is safe, effective for
    their individual diagnosis, supported by sound medical evidence, and
    delivered by appropriate providers.''
        In contrast to the benefits that will be made available to the
    Federal civilian workforce, TRICARE--the health care program for
    uniformed servicemembers and their families--currently provides only
    limited coverage for ABA treatment. TRICARE classifies ABA as an
    educational intervention and makes it available only through the
    Extended Care Health Option (ECHO), a supplement to the basic TRICARE
    program. ECHO benefits are cumulatively capped at $36,000 per year
    which may not adequately cover the early years when intensive treatment
    is needed. ECHO is restricted to dependents of active-duty
    servicemembers. Dependents of retirees--including dependents of wounded
    warriors retired due to injuries sustained in combat--are unable to
    access ABA treatment under TRICARE. Guard/Reserve families receive
    intermittent care as they move between active and non-active duty
    status.
        Families report that the ECHO $36,000 limit on care does not
    address the need for intensive ABA services. Using TRICARE billing
    rates, $36,000 pays for an average of 11 hours of ABA therapy per week,
    whereas the recommended number of hours is between 25 and 40. Many
    children with autism, especially those who are newly diagnosed or who
    face severe challenges, need this level of initial treatment. The out-
    of-pocket costs associated with this additional medical care are
    unaffordable to the military family. Even the limited available benefit
    is difficult to access for some eligible families, who report
    significant enrollment delays and a lack of TRICARE authorized
    providers.
        Without access to needed services, many military families depend on
    State Medicaid waiver programs. A change in duty station, however, may
    move a family to the bottom of a long waiting list and force a stark
    choice: incur significant debt or do without treatment for their child.
        Given all our military families have shouldered for the last
    decade, they deserve better. The warfighter in Afghanistan should not
    have health care inferior to that of the civilian employee working
    within the Pentagon. We owe more than this to the families who are
    making tremendous sacrifices for our country.
        This is not a matter for further study. Action is needed to provide
    the quality of care our military families deserve and have earned. On
    behalf of the thousands of military families affected by autism, we ask
    that Congress require TRICARE to provide behavioral health treatment,
    including ABA, to military families regardless of duty status and
    without a dollar cap.
        Thank you, Chairman Webb, Ranking Member Graham, and members of the
    subcommittee, for your time, for your commitment, and for your
    leadership.

        Senator Webb. Thank you very much, Dr. Dawson.
        Mr. O'Brien, welcome.

       STATEMENT OF MR. JOHN O'BRIEN, DIRECTOR OF HEALTHCARE AND
             INSURANCE, U.S. OFFICE OF PERSONNEL MANAGEMENT

        Mr. O'Brien. Chairman Webb, members of the subcommittee,
    thank you very much. Thank you for the opportunity to make a
    statement on behalf of the FEHB program administered by OPM. We
    appreciate the subcommittee's interest in our program and its
    support of families whose children have special needs,
    specifically those with ASD.
        We understand that the subcommittee seeks information on
    our recent reclassification of ABA as a medical therapy. In
    contrast to the single provider model of TRICARE, the FEHB
    program contracts with 91 separate insurance carriers to offer
    health plans to over 8 million Federal employees, annuitants,
    and families. All plans are required to provide basic services,
    and may propose and negotiate to offer a range of additional
    benefits. All FEHB plans are required to provide children with
    autism access to pediatric care, physical therapy, occupational
    therapy, speech therapy, mental health treatment, and
    medications.
        However, during the current 2012 contract year, the FEHB
    benefit--ABA is not an FEHB benefit because it is classified
    for the FEHB as an investigational or educational intervention,
    and, therefore, is subject to a blanket exclusion. That means
    that children of a Federal employee cannot access ABA services
    through their health insurance regardless of whether the plan
    they have selected would have normally considered such a
    treatment as medically necessary and provide it to its non-
    Federal subscribers.
        Beginning in 2010, Members of Congress, families, and other
    stakeholders asked OPM to reexamine this blanket exclusion. The
    OPM Benefit Review Panel evaluated the status of ABA for
    children with autism. Previously, ABA was considered to be an
    educational intervention and not covered under the FEHB
    program. The Benefit Review Panel concluded that there is now
    sufficient evidence to categorize ABA as a medical therapy.
    Accordingly, plans may propose a benefit package that include
    ABA.
        The insurance marketplace in which the FEHB operates is
    changing rapidly with regard to ABA therapy. At present, 30
    States require some health insurance coverage of ABA. In a
    week, that number will be 31. Had I been before this
    subcommittee in June 2010, the number of States requiring ABA
    would have been 14. In June 2008, just 4 years ago, the number
    would have been two.
        OPM has made the decision to reclassify ABA as a medical
    therapy rather than as an educational service based on the
    evolving body of clinical research and the maturing provider
    infrastructure to deliver this modality under a medical model.
    This reclassification does not presume medical necessity, and
    does not specifically require FEHB plans to add ABA service to
    their basic benefits package. Rather, it allows plans to
    propose ABA as an additional benefit under conditions where
    medical necessity is satisfied and appropriate and qualified
    providers are available.
        Medical necessity criteria are evaluated by each health
    plan in FEHB, not by OPM. Plans assess whether a proposed
    treatment is safe, supported by sound medical evidence,
    effective for an individual, more effective than alternative
    treatments, and conforms to relevant standards of medical
    practice. Our decision only applies to the FEHB and not to
    TRICARE programs, and accordingly, was published as technical
    guidance to our carriers.
        The evidence is not yet sufficient to support an official
    OPM position requiring coverage by all FEHB carriers. In the
    interval, our administrative change will allow FEHB plans that
    choose to make ABA services available as the research and
    provider base matures. OPM will periodically re-review ABA as
    the research develops.
        We are grateful for the subcommittee's support of Federal
    employees and their families. Thank you for this opportunity. I
    am happy to answer any questions you may have.
        [The prepared statement of Mr. O'Brien follows:]
                     Prepared Statement by Mr. John O'Brien
        Chairman Webb, Ranking Member Graham, and members of the
    subcommittee, thank you for the opportunity to make a statement on
    behalf of the Federal Employees Health Benefit (FEHB) Program,
    administered by the U.S. Office of Personnel Management (OPM). We
    appreciate the subcommittee's interest in our program and its support
    of families whose children have special needs, specifically those with
    Autism Spectrum Disorders.
        We understand the subcommittee seeks information about our recent
    classification of Applied Behavior Analysis (ABA) as medical therapy.
    In contrast to the single provider model of TRICARE, the FEHB program
    contracts with 91 insurance carriers to offer health plans to over 8
    million Federal employees, annuitants, and families. All plans are
    required to provide basic services, and may negotiate to offer a range
    of additional benefits. All FEHB plans are required to provide children
    with autism access to pediatric care, physical therapy, occupational
    therapy, speech therapy, mental health treatment, and medications.
    However, in 2012, ABA is not an FEHB benefit because it is classified
    as an investigational or educational intervention. This means that the
    child of a Federal employee cannot access ABA through their health
    insurance regardless of whether the plan would normally consider such
    treatment medically necessary and provide it to its non-Federal
    subscribers.
        Beginning in 2010, Members of Congress, families, and other
    stakeholders asked OPM to re-examine this blanket exclusion. The OPM
    Benefit Review Panel evaluated the status of ABA for children with
    autism. Previously, ABA was considered to be an educational
    intervention and not covered under the FEHB Program. The Benefit Review
    Panel concluded that there is now sufficient evidence to categorize ABA
    as medical therapy. Accordingly, plans may propose benefit packages
    which include ABA.
        Over the last 2 years, the infrastructure to support the delivery
    of ABA has matured rapidly. Today 30 States require at least some
    health insurance coverage of ABA, and 14 have licensure procedures for
    ABA providers. ABA providers most frequently have a graduate degree in
    Psychology with additional training in ABA, leading to formal Board
    Certification in Behavior Analysis. States often exercise their
    supervision of certified or licensed providers through the same pathway
    which oversees other health care practitioners, such as a Board of
    Medicine or Psychological Examiners. It is also common practice to
    require a physician's or Psychologist's prescription before a health
    plan will approve ABA for a specific child.
        OPM made a decision to reclassify ABA as a medical therapy rather
    than an educational service based on the evolving body of clinical
    research and the maturing provider infrastructure to deliver this
    modality under a medical model. This reclassification does not presume
    medical necessity and does not specifically require FEHB plans to add
    ABA services to their basic benefits package. Rather, it allows
    families of Federal employees to receive the same treatment as families
    of non-Federal employees by allowing plans to propose ABA as an
    additional benefit, under conditions where medical necessity is
    satisfied and appropriate, qualified providers are available. Medical
    necessity criteria are evaluated by each health plan in FEHB, not by
    OPM. Plans assess whether a proposed treatment is safe, supported by
    sound medical evidence, effective for an individual, more effective
    than alternative treatments, and conforms to relevant standards of
    medical practice. Our decision applies only to FEHB, and not to TRICARE
    programs, and accordingly, was published as technical guidance to our
    carriers.
        The evidence is not yet sufficient to support an official OPM
    position requiring coverage by all FEHB carriers. In the interval, our
    administrative change will allow FEHB plans that chose to do so to make
    ABA services available as the research and provider base mature. OPM
    will periodically re-review ABA as the research develops. We are
    grateful for the subcommittee's support of Federal employees and their
    families.
        Thank you for this opportunity, I am happy to address any questions
    that you may have.

        Senator Webb. Thank you very much, Mr. O'Brien. Let me
    begin by thanking all of you for your extraordinary breadth of
    experience that has been reflected in your testimony today,
    both written and oral.
        Just as an immediate reaction, before we get into some of
    these more complex issues that are being addressed with respect
    to ABA therapy, I think that, Mr. Hilton and some of the
    others, you raised some very valid points about inconsistencies
    in the ability to get treatment, and the eligibility
    requirements when people move. I think that is something I am
    going to right now encourage staff to pursue further. These are
    things that could be handled administratively perhaps working
    with DOD on these sorts of issues.
        I remember what it was like to move around when I was a
    kid. I remember at one point I went to nine different schools
    in 5 years between the 5th and the 10th grade. We were in
    England, Missouri, Texas, Alabama, California, and Nebraska. I
    remember what it was like to be at the bottom of the pile in
    these types of things. We did not have Medicaid waiver programs
    when I was a kid. I do not think we had Medicaid when I was a
    kid. I do not remember any of it.
        But certainly there are issues that have been raised that
    could be dealt with in a more immediate sense just by working
    with DOD to see if we cannot iron out some of those matters
    that have been raised.
        As I mentioned in my opening statement, let me begin with
    this. There is a lot of debate with respect to the OPM
    determination that you, Mr. O'Brien, discussed. I would like to
    start by getting a better understanding of the factual nature,
    the specific nature of the treatments. Maybe the best place to
    start would be with Dr. Tait and Dr. Dawson. If you could help
    us understand the difference in current practices that are
    regarded as medical therapy in these cases as opposed to what
    have been educational interventions. Just in basic terms, what
    are the differences? Dr. Tait, maybe we will start with you.
        Dr. Tait. Thank you. When I am thinking about and when we
    are talking in terms of whether this is medical versus
    educational, unfortunately, when we are looking at any therapy,
    whether it is occupational therapy, physical therapy, speech,
    ABA, it has both educational and medical effects. I think maybe
    the best way that if I could give some examples of that.
        If you are looking at ABA, as I mentioned in the testimony,
    it certainly affects cognition or thinking. It affects
    language. It affects academics. That is the school piece of it.
    But if you look at children who have ASD, many of them have
    specific medical issues that have to be dealt with through a
    behavioral approach. Examples of that would be self-injury.
    Many of the children actually are involved in self-injurious
    behaviors.
        Another example would be eating. One of the things that we
    look at, some children at the extreme of ASD really have such
    very specific eating habits that unless you look at it
    behaviorally, they can be malnourished. That is the medical
    piece of it. They can have what we call Pica disorder, which is
    eating other objects that you should not be eating, and then
    you go to the doctors for that.
        Another piece of that is, behavior can be such a part of
    what we are talking about that they cannot get the basic needs
    they need, like going to a dentist, or getting the medical
    needs that they have addressed unless they are sedated.
        All of those are behavioral in one sense, Senator, but they
    are also educational. When I am thinking in terms of ABA, I
    think that it certainly is medically-based. It is also
    educationally-based.
        Senator Webb. Just for clarification here, in terms of
    programmatically what is now funded and what is considered
    educational intervention, what type of program is now funded
    that does not reach the ABA area? Programmatically, when we say
    there are certain practices that are acceptable, and at the
    same time we are saying that the ABA is educational
    intervention and, as a result, not funded, what are we treating
    and what are we not?
        Dr. Tait. The way that I look at this is if you look at
    therapies that are funded--maybe that is the best way to
    approach it. The therapies that we know that are funded are
    things like occupational therapy, physical therapy, speech
    language pathology. If you look at those therapies, they are
    very specific and individualized with respect to the children
    that need them.
        Those therapies are not as behaviorally-based where you set
    up a specific behavior program that has to be carried through
    at home, at school, by the family. You are looking at
    different, what we call, trials, where you look at behavior
    changes and trials. I think that is why when we are looking at
    this, you are saying it is educational because it is looking at
    the cognition, language, academic performance, and adaptive
    behavior. But all of that rolls into the medical piece of it
    too.
        Not all children need 40 hours of ABA per week that have
    autism, and that is why we were saying it has to be
    individualized. You look at the therapy that is appropriate.
        Senator Webb. Dr. Dawson?
        Dr. Dawson. One way to look at it has to do with who
    delivers the treatment and the scope of the treatment. When we
    think about an educational service, it is typically provided in
    an educational context by educators. When we think about ABA
    treatment, early intensive behavioral intervention, first of
    all, it is often prescribed by a physician. Second, it is
    delivered by either a licensed clinical psychologist or a board
    certified behavior analyst, not necessarily a special educator.
    Then, third, it requires many hours of intensive intervention
    that is not accommodated within an educational program.
    Educational programs simply do not offer either the level of
    expertise in this area or the number of hours and intensity. It
    really goes beyond the scope of a typical educational program
    that we might offer. Even a child with special needs would not
    be offered these kinds of services typically in an educational
    program. So it really goes beyond the scope of what we think of
    is education.
        The other thing to point out is that it has an impact on
    brain development. In fact, there is study in press right now
    that shows that it not only impacts things like IQ and language
    ability, but can change the pattern of brain activity in these
    children to normalize them over time. It is much more of a
    whole medical intervention than we think of as restricted
    specifically to an educational activity.
        Senator Webb. I want to finish this thought with Mr.
    Hilton. In your own experience with the program, what does it
    cover, and what does it need to be covered? How does the
    $36,000 annual cap fit into that?
        Mr. Hilton. Sir, I am just going to back up for a second
    and piggyback on something that the lady said and give you an
    example. A lot of these children, for whatever reason, are
    runners, meaning they run and run. Another thing, they like
    water for a reason I do not understand.
        We lost a little girl, a little Army girl, 7 years old in
    May, who had autism. She ran and they ended up finding her in a
    pond not far from the family. This is documented in a variety
    of different circumstances. So from our perspective, for a lot
    of our families, this is life or death. I do not think that
    qualifies educational. That qualifies as medical.
        To answer your specific question, what my friends and what
    I have seen is that particularly when you are talking about
    younger children, 2- to 5-year range, or the children who need
    much more intensive therapy, that $36,000 simply is not enough
    to cover their costs. I have a friend who is a Navy commander.
    I served with him a long time ago. He has a child with autism,
    and this is an 05 that you would think might be able to cover
    this therapy. He has had to take out a second mortgage on his
    house. That just gives you an example of what an 05 has to deal
    with. Imagine an E3 or E4. They are simply just going without
    the therapy.
        Senator Webb. Mr. O'Brien, we have been told that DOD has
    asked OPM to see the studies and the basis for OPM's decision.
    Is OPM going to share that study with DOD?
        Mr. O'Brien. Yes.
        Senator Webb. Good. Senator Begich.
        Senator Begich. Thank you very much, Mr. Chairman.
        First, Mr. Hilton, congratulations again on your award as
    Military Spouse of the Year. I know you corresponded off and on
    with my wife by e-mail. I thank you. We really appreciate your
    effort and your lead and your leadership today in representing
    families in a very succinct way. I will have some questions for
    you in a second, but I just wanted to acknowledge that I really
    appreciate your being here today.
        I am actually going to take the question that the chairman
    just asked. If the answer is yes, the question is obviously how
    long will it take you to review it? When will you do it? That,
    to me, is very simple.
        Dr. Guice. When we get the information, we will put it in
    our normal review process and evaluate it according to our
    requirements by statute and by regulation as to whether or not
    it serves as medical care according to our criteria.
        It may take us very little time, 6 months. It just depends
    on all the information that we get. We invite others to submit
    information as well if they have credible evidence, peer review
    publication of studies, that would help us, inform us about a
    better or a different coverage decision, we would be delighted
    to receive those as well, sir.
        Senator Begich. Can you do that administratively? In other
    words, once you review and if you determine you can move it to
    medical therapy, can you then do it?
        Dr. Guice. Yes, sir. If it is deemed to be appropriate
    according to our criteria, and statute and regulations that we
    evaluate evidence by, then it can be made a coverage decision.
        Senator Begich. Okay. Here is the question I have. I guess
    if I am able to do it right, because I am under one of your
    policies somewhere in the mix because I pay a bunch of money. I
    know that despite what people think, we actually have lots of
    premiums as senators. I think I had my co-payment premiums at
    $6,000 last year. So if I wanted to buy additional coverage for
    one of my policyholders or one of the folks I have under
    Federal insurance, that is covered as additional, I can get it,
    correct?
        Mr. O'Brien. Assuming the plan offers service.
        Senator Begich. Right.
        Mr. O'Brien. But it is not a required part of our basic
    benefit plan. We are offering plans the opportunity to propose
    this benefit. So this does not guarantee anyone would get this
    benefit.
        Senator Begich. I understand that. I understand, but it is
    now offered where several years ago we had a couple only that
    offered it, correct?
        Mr. O'Brien. Right. As of today for the 2012 contract year,
    there is no child in the FEHB program who is receiving ABA. It
    is under a blanket exclusion as we have identified it as an
    educational service. We have removed that blanket exclusion.
        Senator Begich. Because the evidence is telling you
    something, and it is worthwhile to ask the question for
    policyholders to consider, correct?
        Mr. O'Brien. In our benefit review panel, we went back
    there. We considered the evidence, and the evidence has said
    this is a promising therapy. There is also a wiggle around it.
    Additionally, we looked at the costs and we looked at what the
    evolution of the provider infrastructure and the insurance
    market.
        Senator Begich. Let me ask you. What have you done there,
    do you do that frequently?
        Mr. O'Brien. We have other services we are going to be
    doing in the future. This is a relatively new process we are
    doing.
        Senator Begich. That helps me because you have a standard.
    You are not just doing it for anything. You are reviewing it,
    and then you are moving it to the next stage. Then it could
    move to the next stage. Is that fair to say?
        Mr. O'Brien. Yes, that is fair to say.
        Senator Begich. Okay. Your process, once this information
    and other information may come in, you may have 6 months or so
    to review. Then at that point, you will determine if it fits
    your criteria. If not, you will identify what those gaps are.
    Is that fair to say?
        Dr. Guice. Yes, sir.
        Senator Begich. Okay. You will keep, I am assuming, the
    chairman, the subcommittee informed on that process?
        Dr. Guice. We will be happy to.
        Senator Begich. Great. Mr. Hilton, you brought up a lot of
    good questions. I am going to take one which the chairman
    mentioned that I want to follow up on, and that is the Medicaid
    waiver.
        It is interesting. We do not know what the Supreme Court is
    going to do in the next 4 or 5 days, but under that new
    program, we pay--when I say ``we,'' I mean the Federal
    Government--when it is all done and said, all new entrees into
    Medicaid at a certain level, we pay 90 percent to any State. So
    it seems logical to me that there should be probably a veteran
    or an Active Duty military Medicaid program because we are
    going to pay 90 percent of it anyway, that is portable.
        So you serve in one community, because the way it is going
    to work--I think this is the way it is going to work. Let us
    say you are in Alaska. You serve a year or 2. You get
    transferred. You go to another State. You are going to be a new
    member on their Medicaid roll. You are going to be a new entry.
    So, therefore, we are going to pick you up at 90 percent. So,
    do we not just figure this out now because within a 2- or 3-
    year period, every military person who needs a service and a
    Medicaid waiver will be actually a new entry onto States'
    rolls, which we pay 90 percent of. So why not just cut through
    it all and create a Medicaid waiver program for military that
    will actually go into play anyway? Your thoughts on that?
        Mr. Hilton. Sir, I think I would be obviously supportive of
    that.
        Senator Begich. Yes, I thought that would be the case.
        Mr. Hilton. In my written testimony, I list the Medicaid
    waiver website. There are 423 different Medicaid waiver
    programs in the Federal Government at the various States. So
    you can see why we sometimes get confused as we move from State
    to State. However, as I note in my testimony, there has to be a
    way to figure out how to serve our military families.
        Senator Begich. Just sitting here listening to you and
    thinking about the law by the example I just gave, every
    military person who needs the Medicaid waiver will
    automatically become a Medicaid new entry in the State they go
    to. Those are people we are going to be covering 90 percent of
    under the new law. So why not just do it? That is just a
    thought that I wanted to share.
        I am giving it through the chairman and the staff, and
    maybe some thought there because I think you bring up, if I can
    in my last minute here, Mr. Hilton, what other things do you
    think we in the Federal Government can do? You mentioned a
    couple in your testimony, and I appreciate that--that we can do
    to better really serve families that have children with
    disabilities and special needs?
        Mr. Hilton. Sure. If I had to prioritize the variety of
    things I put in my written testimony--it was pretty lengthy--I
    would obviously put high on the top of the list the ABA issue.
    We have been admiring this problem----
        Senator Begich. To get it classified as a medical----
        Mr. Hilton. Yes, sir, as medically necessary. I will be
    honest with you. I hear medical therapy, but not medically
    necessary. I hear educational. I hear sea lawyer combined with
    insurance adjuster, to be honest. That is what our families
    hear, and that would be at the top of the priority list for me.
        Obviously, getting in place appropriate policy to
    standardize the EFMP process such that, exactly as the chairman
    said, as we move from base to base, it is consistent. From my
    perspective, disabilities do not care what uniform you wear,
    and it is one of those things where we all scratch our head and
    wonder why are we receiving different services.
        Senator Begich. Very good. Thank you very much. Thank you,
    Mr. Chairman.
        Senator Webb. Thank you, Senator Begich. Before I call on
    Senator Gillibrand, let me just say to her that I was talking
    well about her before she got here. She was really one of the
    principal motivating forces behind having this hearing. So we
    welcome her, and she is now recognized.
        Senator Gillibrand. Thank you, Mr. Chairman, and thank you
    so much for holding this hearing. Thank you to each of the
    witnesses. This is so helpful because this is not an issue that
    I think gets enough sunlight, enough discussion, and one that
    so urgently does for families that have children that are
    suffering. That is what I am really worried about.
        I am worried that this would take 6 months; 6 months is a
    long time. That could be a whole half year for a 1-year-old or
    a 2-year-old where those therapies are the difference between
    whether they will ever reach their God-given potential. I think
    that is too long.
        I am very concerned because the prevalence is so high. One
    in 54 boys today are being diagnosed with autism. The fact that
    these therapies actually work is the greatest hope that we
    have. We should not be denying them to any child, certainly not
    children of military families, certainly not children of
    wounded warriors or veterans. We have to do better, in my view.
        Now, I was very interested in both of the doctors'
    testimonies because what you described to me sounded very much
    like psychological therapies that are similar to what we do for
    post traumatic stress disorder (PTSD). So I want to go to our
    first witness, Dr. Guice. Could you tell us, when we look at
    PTSD, are those therapies covered as medically necessary?
        Dr. Guice. Those are covered as medically necessary, yes.
        Senator Gillibrand. What is the difference between the
    types of therapies, because as Dr. Dawson described, she
    described them being administered by psychologists, by people
    who have specific training for these needs, very similar to
    PTSD.
        Dr. Guice. The difference is when we looked at providing
    ABA back in 2010, the evidence at that point in time convinced
    us it was still considered a behavioral intervention, and as
    such could not be covered under our statutory and regulatory
    requirements for determining medical care that is medically and
    psychologically necessary to treat a disease or an illness.
        Senator Gillibrand. So, even as you just described it, that
    perfectly describes PTSD therapy, something that is
    behaviorally necessary that actually is an intervention that
    actually does help these men and women in life and death
    situations.
        Dr. Guice. The treatment actually treats the underlying
    condition of PTSD. It is designed to treat PTSD.
        Senator Gillibrand. Exactly. That sounds exactly what
    behavioral therapies for ABA are. So I feel that if you did
    reexamine it, where the literature is today, and since studies
    are being published every month that show that it is
    scientifically and medically necessary, that it actually
    affects the brain and the development of the brain, I think
    every criteria that you have been using for all these other
    diseases and disorders and treatments, it will match up
    perfectly just from the testimony I have heard today.
        My question is, how can we do this more quickly? Is there a
    way for us as the Senate Armed Services Committee, as we do
    this authorization legislation, to write something that allows
    you to do this immediately, and to have the resources put in
    place to understand the literature immediately, to be able to
    say this is a psychologist offering medical treatment so
    children can develop their brains, their behavior, their
    abilities properly?
        Dr. Guice. We have it separate. We have a very defined
    process through which we look at these potential coverage
    decisions, and we use that routinely and standardly. It is
    about getting information and assessing it according to our
    criteria. We will do it as expeditiously as we possibly can.
        Senator Gillibrand. I would like to turn my attention now
    to Mr. Hilton. I want to thank you, sir, for your service. The
    men and women who serve and their families are the greatest
    Americans we have. They are some of our best and brightest, and
    certainly sacrifice more than anyone else. So I want to thank
    you for coming to this panel to tell us about what the lives of
    these families are actually like.
        Can you describe to me, to the extent you know, and if Dr.
    Dawson or Dr. Tait can amplify this, I would be grateful.
    Explain what happens when a child is newly diagnosed? How do
    they navigate the current system? Please tell me how they
    navigate whether you are Active Duty or whether you are
    recently separated or whether you are injured and in wounded
    warrior status. What are the differences for each of those
    types of members of our military families, and what needs to be
    addressed for each person?
        Mr. Hilton. That is a pretty big question.
        Senator Gillibrand. Take your time.
        Mr. Hilton. I will just tell you part of our experience
    from our daughter being in born in 2002. In 2004 to 2008, we
    moved five times. That was due to deployments, regular PCS. My
    wife was in training. During that period of time, every time
    you move, I would start preparing for the next move 6 months
    prior to. I can consider myself a pretty decent advocate for my
    daughter, and we only had one daughter at the time. As you are
    going through the normal PCS process and you are dealing with
    the deployment, it takes probably 6 months from getting to the
    next duty station for you to get all the pieces of the puzzle
    back in play.
        Reading through some of the testimony or some of the notes
    from the parents, and you are talking about the retirees or the
    veterans or the wounded warriors particularly, I cannot even
    imagine frankly dealing with those situations and having a
    child with autism or another developmental disorder.
        Senator Gillibrand. Because they are not eligible at all?
        Mr. Hilton. Correct. If you think about that, going from
    something to nothing is like hitting a brick wall for these
    families. For that child, and again, I would really encourage
    everyone to read their stories. You read again and again how
    devastating that is for the family and the child.
        Senator Gillibrand. Dr. Dawson, could you speak a little
    bit to what is the difference for a child that you are treating
    that they have now 11 hours covered a week. Imagine it is a
    child that you have actually prescribed 40 hours a week. What
    is the difference for that child's future to the extent you can
    describe it?
        Dr. Dawson. First of all, it is important to keep in mind
    that the National Academy of Sciences did convene a group. It
    has been a while now, but they convened a group to look at how
    many hours should be standard of care. At that point, and this
    was actually a number of years ago, 2001, it could have even
    changed now. But standard of care was a minimum of 25 hours a
    week for a child during the pre-school period.
        Senator Gillibrand. That was a decade ago.
        Dr. Dawson. That was a decade ago, and the difference is
    really in IQ points, language ability, and adaptive behavior.
    So even in the last few years, there have been studies that
    have examined the difference in IQ, language, and adapted
    behavior of a child who gets fewer hours versus more, and it
    does make a difference.
        If we want children to have the best possible outcome, then
    they need to have access to the number of prescribed hours. It
    is important to keep in mind that that can vary, and it should
    be looked at by each physician working with a family, as Dr.
    Tait has said. For some children, it is going to be 40 hours,
    particularly early on. Other children may only need 10 hours,
    and that needs to be an individual decision so that that child
    has the best outcome.
        Senator Gillibrand. Thank you, Mr. Chairman.
        May I submit a statement for the record that Senator
    Lieberman asked me to submit?
        Senator Webb. That will be entered into the record at this
    point.
        [The prepared statement of Senator Lieberman follows:]
               Prepared Statement by Senator Joseph I. Lieberman
        I would like to lend my strong support for expanded coverage for
    military families affected by autism. I am struck by the figures
    provided by our witnesses that show how autism has reached near-
    epidemic levels in our country: one out of every 88 children, including
    one out of every 54 boys, is affected, far beyond the rates of
    childhood AIDS, diabetes, and cancer combined. The Department of
    Defense estimates that 23,000 military dependents have an autism
    diagnosis, and I have heard the deeply moving personal stories of but a
    few of them. It is clear that this is a growing problem that we as a
    country have yet to address.
        Studies have shown that early diagnosis and intensive therapy are
    the keys to effectively mitigating the effects of autism in children.
    Therapies informed by applied behavior analysis (ABA) can significantly
    help the development of life skills for those affected. The efficacy of
    these methods has been recognized by the U.S. Surgeon General, and 30
    States recognize ABA as a medical treatment that should be covered by
    private insurance. Most notably, the Office of Personnel Management has
    concluded that ABA is a medical therapy that can be covered in Federal
    Employees Health Benefits programs.
        Unfortunately, TRICARE is behind the curve in this critical area.
    Unlike the rest of the Federal workforce and a growing majority of the
    private sector, servicemembers, veterans, and their families continue
    to face restrictions on these effective autism treatments under
    TRICARE's Extended Health Care Option (ECHO) program, which I believe
    place an undue burden on our military families with autistic dependents
    and thereby affect overall readiness. TRICARE classifies ABA as a
    nonmedical educational service. Under TRICARE's current allowances for
    nonmedical services, members can receive limited financial help that is
    capped annually at $36,000, sharply limiting the allotment of
    behavioral analysis hours to less than half what it recommended to make
    a real difference in the life of an autistic child. Furthermore, the
    classification of ABA as a nonmedical service limits provision of even
    this limited support to Active Duty members, leaving retirees and even
    those who have been separated due to combat wounds.
        I believe that our military families should be provided with the
    best available care, and it is clear to me that behavioral analysis-
    based therapies constitute the best available means to address autism.
    The time to address this critical gap in TRICARE is now. I look forward
    to supporting legislation to address this issue when the Senate takes
    up the National Defense Authorization Act for Fiscal Year 2013.

        Senator Gillibrand. Thank you, Mr. Chairman. Thank you,
    witnesses.
        Senator Webb. Thank you, Senator Gillibrand.
        Let me make one point, if I may, just as a follow-on to
    Senator Gillibrand's comments about PTSD. I was committee
    counsel on the House Veterans Committee many years ago when we
    did the initial studies on PTSD. If I were to see a parallel
    here--first of all, let me be careful. I know there are a lot
    of frustrated people out here, but I do not think this is a sea
    lawyer syndrome. I do not think that is fair to the people who
    have the burden of having to make these determinations.
        I think it is more that the process of trying to figure out
    how to take care of people is an evolutionary process. We went
    through this back in the late 1970s and early 1980s with
    respect to PTSD. I think the question is a legitimate one in
    terms of evaluating the methodology in order to determine
    whether a particular therapy is medically effective. That is
    what our challenge is here. I think Senator Gillibrand has
    given our subcommittee a great shot in the arm in terms of
    putting this issue in front of the subcommittee.
        With that, Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman, and thank you
    for having this hearing, and to all our witnesses for being
    here, and all who have been such effective advocates for
    families in this situation.
        Dr. Dawson, I have read a lot of materials and witness
    testimony regarding ABA. My impression is that ABA is a widely
    accepted, successful set of tools that can be used in assisting
    people who are facing the challenges of being diagnosed with
    autism and other developmental disorders. You have immensely
    impressive background experience, as do all of our witnesses
    here today. I would like to ask you to describe how ABA is
    being used to assist in the treatment and the effectiveness of
    this treatment in relation to autism. If you could highlight
    the differences between the TRICARE coverage of ABA and the
    coverage in the civilian sector.
        Dr. Dawson. Let us first look at the evidence in terms of
    what is the impact of ABA on children's outcomes. There have
    been numerous clinical trials that have been conducted and
    published. There was a study that was funded by the National
    Institutes of Health. It was published in the Journal of
    Pediatrics. This is the flagship journal of the American
    Academy of Pediatrics, and it was published in 2010, that
    showed that the impact of the early intervention for 50 percent
    of the children, they had a 15-point IQ gain, and for 30
    percent of the children, they had a 30-point IQ gain. That is
    to standard deviation.
        So the majority of children who received this treatment
    actually moved from a status of intellectual disability into
    the normal range of cognitive functioning. We know that in
    terms of predicting long-term outcome, that IQ is the strongest
    predictor.
        Also, let us think about the cost to society. The current
    estimates, based on an analysis that was conducted this year,
    are that the costs are $137 billion annually to care for people
    with autism in the United States. Most of that cost is based on
    adult care. The average cost per individual is reduced by about
    half if they do not have intellectual disability.
        Imagine now that we provide this early intervention. You
    change the life course. This individual has either less severe
    intellectual disability or none at all, and they have a chance
    now to go to a regular classroom, form friendships, have
    language, go on to have a job, and be productive members of
    society. From a cost benefit analysis, it saves taxpayers a
    tremendous amount of money.
        In terms of TRICARE, the issues are several. One is the
    fact that they limit the amount of coverage to cover about 11
    hours of ABA. For some children, particularly in that early
    period, they need more than that in order to get the kind of
    gains that I am talking about. The parents are not getting
    adequate medically prescribed treatment, what the physician
    would recommend.
        The second has to do with the status, and this has to do
    with when you retire, you no longer have access to treatment.
    Or if you are in the National Guard, you are going to have
    intermittent access to treatment. So if you can imagine your
    child is doing well and they are in intervention, and then you
    change your status, and suddenly the treatment program is gone.
    What happens is that families will do anything. They will
    mortgage their home. They will give up their other children's
    college savings in order to get treatment because they know
    that these are effective. They are aware of the literature. The
    idea of a parent, after learning about a diagnosis and then
    rising to the challenge, and then finding that the treatments
    that we know are effective and that can make a difference for
    their child are not available to them, it is just not something
    that we should be doing. We really need to do better by these
    families.
        Senator Blumenthal. It strikes me as I listen to you Dr.
    Dawson, and I want to thank you for your service, this hearing
    room is a very colorless, antiseptic, majestic, but still very
    abstract setting to talk about what a parent faces in this
    situation. Since many of us--I have four children--are parents,
    if we were called in the middle of a family emergency out of
    the most important hearing in this room or the most important
    vote ever, we would all be gone in a flash.
        The instinctive reaction that you have described to
    disregard cost and to sacrifice almost anything to mortgage
    homes, to, in effect, put a family's future under a severe
    financial cloud, is one that I think we need to understand. We
    as a Nation, we as a Congress, need to understand.
        The hopes offered by ABA, I think, are very impressive.
    Maybe I can ask others who are on this panel whether they have
    any comments on what we have just heard.
        Dr. Tait. If I may comment for just a moment, thank you so
    much. I was just keying off of some of the things that have
    been said thus far, and I think whether you are looking at PTSD
    or whatever we are talking about here. We spend a lot of time
    not separating our head from our body. So when we are talking
    about health of children, that includes the behavioral health.
    That includes the physical health.
        For a child to be healthy and learn and grow, we have to
    look at all of those issues, and that is exactly what parents
    want. They just want their kids to have the services that they
    need to be able to have them fulfill their potential. I know
    that is what you all want too.
        I just wanted to comment on the navigation of families
    within systems. I can remember when I have talked to families,
    and one mother said to me, I want you to know that I spend all
    my day trying to navigate the payment system and nine care
    coordinators. I coordinate the care coordinators. They do that
    willingly, and day-in and day-out so that their children can
    receive the services that they need.
        From the perspective of this hearing, what we want is to
    make that as successful and easy to the families as we can make
    it. If they have to worry about what is getting paid or what is
    not getting paid and not concentrate on the children and the
    families, then that just puts extra stress on a family that is
    already stressed for a number of reasons. Thank you.
        Mr. Hilton. Sir, if I could offer one other thought.
    Looking through these 80-plus testimonies of individual
    military families, I realize it is not a scientific study, so
    you cannot rely on it exactly. But there is no one in here in
    this enormous population that says, ``oh, we tried ABA and it
    did not work out.'' Literally in every story, they say ABA--and
    it has been beneficial through the ECHO program, and we are
    thankful, I will admit. It is an amazing program, and it has
    been helpful to a lot of families.
        Every one of them then says, ``what we are worried about is
    retirement,'' and retirement is one of the stories. It is
    literally a week away for this family, and they are looking
    forward to retirement after multiple deployments, after many,
    many years. I know families that have put off retirement for a
    variety of reasons when they would like to, and they simply
    cannot.
        Senator Blumenthal. Thank you. Again, thank you, Mr.
    Chairman. My time has expired, but I am going to continue my
    interest. I would like to, again, thank the chairman for being
    very much attuned to this issue, and my colleagues, especially
    Senator Gillibrand, for being so active and attentive to it.
    Thank you.
        Senator Webb. Thank you, Senator Blumenthal. Again, let me
    emphasize that I do not think there is any disagreement in this
    room about wanting to help the people who are in need, and
    particularly for us at this moment, family members and people
    who are serving and who have served.
        Our question, our burden, is evaluating the methodology in
    order to determine whether this therapy is medically effective.
    If it is, in those cases where it should be applied, there
    should not be any question about what we do. But that is the
    question that is before us.
        I understand there are people who would like a second
    round. Senator Begich?
        Senator Begich. No, I am good.
        Senator Webb. Okay. Senator Gillibrand, I know you want to
    ask questions or have other comments.
        Senator Gillibrand. I would like to go back to the
    conversation about specifically what we can do to hasten the
    re-review process. I would like guidance to this subcommittee
    about how we can help you legislatively.
        Dr. Guice. I do not believe at this point that we would
    require additional legislation to do it. I think it is just
    getting the evidence and having the time to sift through it.
        I would like to add, though, I think one of the witnesses
    said that TRICARE limits the ECHO or the payment available for
    ABA therapy to the $36,000 per year. That limit is set by
    Congress.
        Senator Gillibrand. We could change that. What would the
    limit have to be to cover the prescribed ABA therapies, Dr.
    Dawson or Dr. Tait?
        Dr. Tait. We have looked at some of those costs, and they
    run anywhere from $30,000 to $50,000 depending on where you are
    and whether you need the 40 hours versus the 20 hours. I
    believe that it is in that range, and that is generally what we
    are asking at the State level per child, of course.
        Dr. Dawson. I think that is the way to look at it. Think
    about it from the point of view of a physician making a
    prescription, and I do not think many children would go above
    40 hours. One would look at the range that would cap at 40
    hours a week and what that would cost, particularly during that
    early intensive period. Obviously, when children are entered
    into school and they are spending the majority of their time in
    school, they are not going to require 40 hours. So it would
    over time, that amount would be lessened. But to have that
    option during the early period is what is critical.
        Senator Gillibrand. Is there a way to facilitate, both Dr.
    Dawson and Dr. Tait, getting the studies that you mentioned
    today to DOD so that you can have immediate answers on trying
    to prove the case to DOD so when they do their re-review, they
    have those studies on hand and those peer review studies?
        Dr. Dawson. Absolutely. In fact, just to point out, since
    the evaluation was done, which I think was based on 2010, there
    have been well over a dozen studies that have been published
    since then. I can certainly provide that literature. Even the
    Agency for Healthcare Research and Quality (AHRQ) report, which
    I think was referred to in the testimony, is historically
    already out of date, and also very limited in its scope. It
    only looked at 10 years worth of literature, and the literature
    now that actually began in 1987 was the first clinical trial
    that was published. None of those studies were included in that
    particular report.
        I think we really need to include the breadth of knowledge
    in the review that is available today.
        Senator Webb. If I may, as chairman, if there are studies
    that have not been provided to our staff along those lines, I
    think we would appreciate being able to look at them as well.
        Senator Gillibrand. I have at least an informal commitment
    of this group of people to be a working group to coordinate
    data, coordinate studies, get it done. To the extent this
    subcommittee asks for a recommendation in the near future from
    DOD, that might be a way to formally, at least, request that
    this process continue as quickly as possible. We could either
    do that by letter or put something as an amendment into the
    authorization bill. I would like to work with you on how that
    should be requested in the way most effective to help your team
    apply the proper resources to do it now.
        Dr. Guice. We would appreciate that. Thank you.
        Senator Gillibrand. Thank you very much. Thank you, Mr.
    Chairman.
        Senator Webb. Thank you, Senator Gillibrand. Again, I
    appreciate all of the testimony from a very wide breadth of
    knowledge and experience, and it has been extremely useful to
    us.
        Your written testimony will be reviewed in very thorough
    detail as well. Thank you, Senator Gillibrand, for being the
    motivating factor in having this hearing. I think it has been
    very useful for us.
        This hearing is now adjourned.
        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator Scott P. Brown
                           applied behavior analysis
        1. Senator Brown. Dr. Guice and Dr. Posante, recently the Office of
    Personnel Management (OPM) stated there is enough evidence to classify
    Applied Behavior Analysis (ABA) as a medical therapy rather than an
    educational service. Can you please explain how the TRICARE Management
    Activity continues to rely upon information regarding ABA that it
    gathered in 2010?
        Dr. Guice and Dr. Posante. The TRICARE program medical benefit
    coverage determinations are governed by separate statutory and
    regulatory mandates not applicable to the insurance plans that
    participate in the Federal Employees Health Benefits (FEHB) Plan.
    Currently, the TRICARE program has no authority to provide coverage of
    educational services, behavior modification modalities, or other
    nonmedical services under the Basic Medical Program. The authority and
    scope of the TRICARE program to cover medical treatments under the
    Basic Medical Program are defined by statute.
        In addition, any proposed TRICARE Basic Medical Program benefit
    characterized as a drug, device, medical treatment, diagnostic, or
    therapeutic procedure must be determined to be safe and effective in
    accordance with the longstanding, reliable evidence criteria set forth
    at Title 32, Code of Federal Regulations Part 199.4(g)(15). The
    Department of Defense (DOD) has used this published ``reliable
    evidence'' standard for the TRICARE Basic Medical Program benefit
    coverage determinations since 1997 (see 62 Federal Register 625, 629,
    January 6, 1997). The requirement to use peer-reviewed evidence of
    safety and efficacy allows DOD to ensure the benefits our beneficiaries
    receive are tested and proven safe and effective in either the
    diagnosis or treatment of an injury, illness, or disease.
        It should be noted that apart from the medical benefits provided
    under the TRICARE Basic Medical Program, DOD is authorized to provide
    additional non-medical services to dependents of Active Duty
    servicemembers eligible for and enrolled in the Extended Care Health
    Option \1\ (ECHO) to reduce the disabling effects of a qualifying
    condition. This program was created to support the readiness of Active
    Duty members who might have a dependent with special needs not
    otherwise covered under the health plan ECHO supplements other public
    resources for Active Duty dependents that are subject to geographic
    relocations based on their sponsor's duty assignment.
    ---------------------------------------------------------------------------
        \1\ ECHO is a supplemental program to the basic TRICARE program.
    ECHO provides financial assistance for an integrated set of services
    and supplies to eligible Active Duty family members (including family
    members of activated National Guard or Reserve members). There is no
    enrollment fee for ECHO; however, family members must have an ECHO-
    qualifying condition, enroll in the Exceptional Family Member Program
    (EFMP) as provided by the sponsor's branch of Service, and register in
    ECHO through ECHO case managers in each TRICARE region.

        2. Senator Brown. Dr. Guice and Dr. Posante, how is TRICARE
    Management Activity able to rely upon dated information regarding ABA?
        Dr. Guice and Dr. Posante. The TRICARE program medical benefit
    coverage determinations are governed by separate statutory and
    regulatory mandates not applicable to the insurance plans that
    participate in the FEHB Plan. Currently, the TRICARE program has no
    authority to provide coverage of educational services, behavior
    modification modalities, or other non-medical services under the Basic
    Medical Program. The authority and scope of the TRICARE program to
    cover medical treatments under the Basic Medical Program are defined by
    statute.
        In addition, any proposed TRICARE Basic Medical Program benefit
    characterized as a drug, device, medical treatment, diagnostic, or
    therapeutic procedure must be determined to be safe and effective in
    accordance with the longstanding, reliable evidence criteria set forth
    at Title 32, Code of Federal Regulations Part 199.4(g)(15). DOD has
    used this published ``reliable evidence'' standard for the TRICARE
    Basic Medical Program benefit coverage determinations since 1997 (see
    62 Federal Register 625, 629, January 6, 1997). The requirement to use
    peer-reviewed evidence of safety and efficacy allows DOD to ensure the
    benefits our beneficiaries receive are tested and proven safe and
    effective in either the diagnosis or treatment of an injury, illness,
    or disease.
        It should be noted that apart from the medical benefits provided
    under the TRICARE Basic Medical Program, DOD is authorized to provide
    additional non-medical services to dependents of Active Duty
    servicemembers eligible for and enrolled in ECHO to reduce the
    disabling effects of a qualifying condition. This program was created
    to support the readiness of Active Duty members who might have a
    dependent with special needs not otherwise covered under the health
    plan ECHO supplements other public resources for Active Duty dependents
    that are subject to geographic relocations based on their sponsor's
    duty assignment.

        3. Senator Brown. Dr. Guice and Dr. Posante, can you please explain
    the reasons behind why children of DOD civilians have greater access to
    ABA rather than children of the men and women we send off to war?
        Dr. Guice and Dr. Posante. For DOD civilians, OPM's
    reclassification of ABA as a medical therapy rather than an educational
    service is an administrative decision and does not require FEHB plans
    to add ABA services to their basic benefits package. Rather, it allows
    plans to propose ABA as an additional benefit, under conditions where
    medical necessity is satisfied and appropriate, qualified providers are
    available. Those plans that include ABA may adjust their premiums
    accordingly.
        The ECHO program for Active Duty servicemembers that allows DOD to
    help our beneficiaries minimize the disabling effects of Autism
    Spectrum Disorder (ASD). Importantly, the ECHO program exists to
    supplement other public resources for Active Duty dependents who are
    subject to geographic relocations based on their sponsor's duty
    assignment. Beneficiaries are required by law to first seek services
    from the State in which they reside, but DOD realizes the requirements
    of military service are demanding and may, at times, place a family in
    a State with more limited State benefits. The ECHO program allows us to
    augment public services to assist special needs dependents of our
    Active Duty servicemembers.
        To increase access to ABA services, DOD implemented, within ECHO,
    the Enhanced Access to Autism Services Demonstration in March 2008. The
    demonstration expands the opportunity for access to ABA through a
    variety of provider types, including tutors. TRICARE extended the
    demonstration to March 2014, pending inclusion of the demonstration
    model as a permanent benefit within ECHO.

             As of May 31, 2012, there were 3,793 beneficiaries
            enrolled in the demonstration, 1,881 ABA supervisors, and 9,201
            ABA tutors across all three TRICARE regions.
             DOD's evaluation of the results of the demonstration
            concluded that it increased the number of and access to the
            services of authorized ABA providers, as evidenced by the
            sustained 3 to 5 percent monthly growth in the number of
            demonstration enrollees since implementation in 2008.
             Parents of dependent children with autism who
            responded to a DOD survey reported that improved access to ABA
            contributed to improved military family readiness and
            retention.
             A proposed rule to establish TRICARE coverage under
            ECHO of ABA for the Assistant Secretary of Defense was
            published in the Federal Register, Vol. 76, No. 250 on December
            29, 2011. Upon final implementation of this rule, DOD intends
            to categorize ABA as an ``Other Service'' and adopt a tiered
            ABA services delivery and reimbursement methodology.

        4. Senator Brown. Dr. Guice and Dr. Posante, with the eventuality
    that ABA is considered a medical therapy, I realize there may be some
    challenges that will need to be worked through to make this change a
    reality. One is the possible shortage of qualified professionals
    available to provide. How do you suggest this issue be addressed?
        Dr. Guice and Dr. Posante. The National Defense Authorization Act
    for Fiscal Year 2007 directed the Secretary of Defense to develop a
    plan within the authority of the ECHO program to provide services to
    military dependent children with autism. The legislation mandated that
    DOD develop: (1) requirements for the education, training, and
    supervision of autism service providers; (2) the ability to identify
    the availability and distribution of those providers; and (3)
    procedures to ensure that such services provided by DOD supplement
    those available through other public sources. In response to Section
    717, DOD submitted the required plan (DOD 2007) to Congress in July
    2007. In addition to meeting the requirements of Section 717, the
    report outlined a proposed demonstration that would test the
    feasibility of expanding the types of providers authorized to deliver
    autism treatment services to include those not meeting the strict
    requirements of the then-current departmental regulations. However, the
    requirements for establishing TRICARE-authorized providers coupled with
    the relative newness of the Behavior Analyst Certification Board (BACB)
    and the ABA profession resulted in a shortage of qualified providers
    available to TRICARE beneficiaries with autism. To mitigate this
    shortfall, TRICARE has used its authority in ECHO to use non-
    professional ``tutors'' to provide ABA through the Enhanced Access to
    Autism Services Demonstration. The demonstration has been extended to
    March 14, 2014. The demonstration expands the provider model by
    including tutors under the supervision of a TRICARE-authorized ABA
    provider to deliver the hands-on therapy. The supervisor retains all of
    his/her other responsibilities.
        To be eligible for the demonstration, the Active Duty family member
    must be registered in ECHO. Eligible beneficiaries can receive ABA
    services under ECHO but that program recognizes only ABA providers who
    are State-licensed or certified or are certified by the BACB. Under
    ECHO, those providers are responsible for developing a behavior plan,
    providing periodic beneficiary assessments, and delivering ABA therapy.
        TRICARE continues to increase access to ABA services and is leading
    the Nation in fielding an effective ABA provision model that overcomes
    the national shortfall in available BACB credentialed providers.
    Regular reports to Congress demonstrate increasing participation by ABA
    supervisors, tutors, and TRICARE beneficiaries. Based on positive
    results from the demonstration (as noted in the response to Question
    #3), a proposed rule to establish TRICARE coverage under ECHO of ABA
    for Assistant Secretary of Defense was published in the Federal
    Register, Vol. 76, No. 250 on December 29, 2011. Upon final
    implementation of this rule, DOD intends to categorize ABA as an
    ``Other Service'' and adopt a tiered ABA services delivery and
    reimbursement methodology. However, reducing or eliminating the
    national shortfall of board-certified providers of ABA will require a
    concerted national effort that falls outside of DOD's mission area and
    might best be led by other departments.
                                     ______

                               Appendix A

        [The prepared statement of the National Military Family
    Association follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               Appendix B

        [The prepared statement of the National Council on
    Disability follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        [Whereupon, at 3:55 p.m., the subcommittee adjourned.]