[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



                         [H.A.S.C. No. 113-25]

                                HEARING

                                   ON

                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2014

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                         FULL COMMITTEE HEARING

                                   ON

             BUDGET REQUEST FROM THE DEPARTMENT OF DEFENSE

                               __________

                              HEARING HELD

                             APRIL 11, 2013



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                      COMMITTEE ON ARMED SERVICES
                    One Hundred Thirteenth Congress

            HOWARD P. ``BUCK'' McKEON, California, Chairman

MAC THORNBERRY, Texas                ADAM SMITH, Washington
WALTER B. JONES, North Carolina      LORETTA SANCHEZ, California
J. RANDY FORBES, Virginia            MIKE McINTYRE, North Carolina
JEFF MILLER, Florida                 ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina           ROBERT E. ANDREWS, New Jersey
FRANK A. LoBIONDO, New Jersey        SUSAN A. DAVIS, California
ROB BISHOP, Utah                     JAMES R. LANGEVIN, Rhode Island
MICHAEL R. TURNER, Ohio              RICK LARSEN, Washington
JOHN KLINE, Minnesota                JIM COOPER, Tennessee
MIKE ROGERS, Alabama                 MADELEINE Z. BORDALLO, Guam
TRENT FRANKS, Arizona                JOE COURTNEY, Connecticut
BILL SHUSTER, Pennsylvania           DAVID LOEBSACK, Iowa
K. MICHAEL CONAWAY, Texas            NIKI TSONGAS, Massachusetts
DOUG LAMBORN, Colorado               JOHN GARAMENDI, California
ROBERT J. WITTMAN, Virginia          HENRY C. ``HANK'' JOHNSON, Jr., 
DUNCAN HUNTER, California                Georgia
JOHN FLEMING, Louisiana              COLLEEN W. HANABUSA, Hawaii
MIKE COFFMAN, Colorado               JACKIE SPEIER, California
E. SCOTT RIGELL, Virginia            RON BARBER, Arizona
CHRISTOPHER P. GIBSON, New York      ANDRE CARSON, Indiana
VICKY HARTZLER, Missouri             CAROL SHEA-PORTER, New Hampshire
JOSEPH J. HECK, Nevada               DANIEL B. MAFFEI, New York
JON RUNYAN, New Jersey               DEREK KILMER, Washington
AUSTIN SCOTT, Georgia                JOAQUIN CASTRO, Texas
STEVEN M. PALAZZO, Mississippi       TAMMY DUCKWORTH, Illinois
MARTHA ROBY, Alabama                 SCOTT H. PETERS, California
MO BROOKS, Alabama                   WILLIAM L. ENYART, Illinois
RICHARD B. NUGENT, Florida           PETE P. GALLEGO, Texas
KRISTI L. NOEM, South Dakota         MARC A. VEASEY, Texas
PAUL COOK, California
JIM BRIDENSTINE, Oklahoma
BRAD R. WENSTRUP, Ohio
JACKIE WALORSKI, Indiana

                  Robert L. Simmons II, Staff Director
               Jenness Simler, Professional Staff Member
                Michael Casey, Professional Staff Member
                           Aaron Falk, Clerk















                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2013

                                                                   Page

Hearing:

Thursday, April 11, 2013, Fiscal Year 2014 National Defense 
  Authorization Budget Request from the Department of Defense....     1

Appendix:

Thursday, April 11, 2013.........................................    63
                              ----------                              

                        THURSDAY, APRIL 11, 2013
FISCAL YEAR 2014 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FROM THE 
                         DEPARTMENT OF DEFENSE
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McKeon, Hon. Howard P. ``Buck,'' a Representative from 
  California, Chairman, Committee on Armed Services..............     1
Smith, Hon. Adam, a Representative from Washington, Ranking 
  Member, Committee on Armed Services............................     2

                               WITNESSES

Dempsey, GEN Martin E., USA, Chairman, Joint Chiefs of Staff.....    10
Hagel, Hon. Chuck, Secretary of Defense, U.S. Department of 
  Defense........................................................     3

                                APPENDIX

Prepared Statements:

Dempsey, GEN Martin E............................................    85
Hagel, Hon. Chuck................................................    71
McKeon, Hon. Howard P. ``Buck''..................................    67
Smith, Hon. Adam.................................................    69

Documents Submitted for the Record:

    Letter from Secretary Hagel to Mr. Bishop....................    99
    Letter from Secretary Hagel to Mr. Turner....................   101
    Summary on TMA Demonstration Program Implementation since 
      January 2013...............................................   102

Witness Responses to Questions Asked During the Hearing:

    Mr. Bishop...................................................   107
    Mr. Larsen...................................................   107
    Mr. Turner...................................................   107
    Mr. Wittman..................................................   107

Questions Submitted by Members Post Hearing:

    Mr. Barber...................................................   123
    Ms. Bordallo.................................................   118
    Mr. Bridenstine..............................................   128
    Mr. Carson...................................................   125
    Mr. Forbes...................................................   113
    Mr. Johnson..................................................   122
    Mr. Kline....................................................   116
    Mr. Langevin.................................................   114
    Mr. McKeon...................................................   111
    Mr. Miller...................................................   114
    Mr. Nugent...................................................   127
    Mr. Rogers...................................................   118
    Ms. Sanchez..................................................   113
    Mr. Turner...................................................   115
    Mrs. Walorski................................................   129
 
FISCAL YEAR 2014 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FROM THE 
                         DEPARTMENT OF DEFENSE

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                          Washington, DC, Thursday, April 11, 2013.
    The committee met, pursuant to call, at 10:00 a.m., in room 
2118, Rayburn House Office Building, Hon. Howard P. ``Buck'' 
McKeon (chairman of the committee) presiding.

    OPENING STATEMENT OF HON. HOWARD P. ``BUCK'' MCKEON, A 
 REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, COMMITTEE ON ARMED 
                            SERVICES

    The Chairman. Committee will come to order.
    Good morning, ladies and gentlemen. The House Armed 
Services Committee meets today to receive testimony on the 
fiscal year 2014 budget request for the Department of Defense. 
I want to welcome Secretary Hagel to his first appearance with 
us.
    We are happy to have you here, Mr. Secretary.
    Secretary Hagel. Mr. Chairman.
    The Chairman. General Dempsey, thank you for being here, 
and Secretary Hale. We appreciate all of you and the great work 
that you do for our Nation.
    Our job on this committee is to weigh inputs from senior 
military leaders so that we may fulfill our constitutional 
obligation to provide for the common defense. Two months ago, 
General Dempsey told this committee that the military could not 
absorb any further cuts without jeopardizing the missions that 
we ask of them. Today I hope to hear how the President's 
budget, which asks for another $120 billion out of defense, 
will impact our military posture and readiness.
    Specifically, I would like to hear which missions we must 
now abandon, reduce, or cancel outright to comply with the 
President's budget, because I don't see the world getting 
safer, in fact, as recent events in North Korea, Iran, Syria, 
Africa attest. In fact, even as our forces draw down in 
Afghanistan, we are negotiating an agreement to maintain an 
enduring presence in that nation, which I strongly support.
    I am also curious why, after three rounds of cuts to our 
Armed Forces in as many years, our troops are again being asked 
to pay the bill for out-of-control spending in Washington.
    Carl Vinson, for whom this room is named, said a country 
does not need a navy of one strength when she is prosperous and 
a navy of another size when there is an economic depression. I 
believe that sentiment applies to all of our Armed Forces. It 
was true when Vinson said it during the Great Depression, and 
it is true today during the great recession.
    With that in mind, the budget we received asks us to take 
another $120 billion from the military and offers no solutions 
to repair the damage being done by sequestration this year. 
This is not simply a 2017 problem. I hope to hear how we can 
resolve the stark differences between the President's budget 
request and the President's national security strategy.
    Margaret Thatcher, who we lost this week, said during her 
time as prime minister the defense budget is one of the very 
few elements of public expenditure that can truly be described 
as essential. Our charge is to provide that essential security 
to the American people and by doing so assure our allies. I 
look forward to our witnesses' insights as we move forward 
through this hearing.
    Mr. Smith.
    [The prepared statement of Mr. McKeon can be found in the 
Appendix on page 67.]

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON, 
          RANKING MEMBER, COMMITTEE ON ARMED SERVICES

    Mr. Smith. Thank you, Mr. Chairman, and thank you for this 
hearing. And also thank you for your great leadership on the 
question of our budget and national security. It has been a 
very challenging time, and I think you have done an excellent 
job of bringing attention to those challenges and to what it is 
doing to our defense budget and to our ability to provide 
national security. I appreciate the hearings and your 
leadership, and I certainly thank our witnesses today.
    Secretary Hagel, welcome to your first House committee 
hearing. We appreciate you taking the job. Not an easy time to 
do it.
    General Dempsey, you have been here many times before, I 
appreciate your leadership.
    Under Secretary Hale is the guy who has to try to figure 
out the money. You have had a fascinating job the last couple 
of years.
    Because as is obvious, we have many national security 
challenges. Certainly we have been out of Iraq for a couple of 
years now, we are drawing down in Afghanistan, but Afghanistan 
remains, the challenges of the Afghanistan-Pakistan region 
remain. We have all heard what North Korea is up to, what Iran 
is up to. Al Qaeda is still out there in many places, in Yemen, 
in Somalia, growing in Mali. It is not like we have reached the 
point where you can think about anything approaching a peace 
dividend, where our national security challenges have somehow 
lessened in the last couple of years. They have changed in some 
ways, but they are still great and still require a very 
thoughtful and comprehensive response to protect the national 
security interests of this country.
    At the same time, our budget is a mess. You have to meet 
all of what I just described without even knowing within tens 
of billions, if not hundreds of billions of dollars how much 
money you are going to have from year to year.
    Now I will disagree slightly with the chairman on the fact 
that somehow the President's budget is what is reflective of 
that challenge. It is really all of us, it is Congress. 
Congress passed sequestration, allowed it to happen. The 
President, yes, signed it. All three, House, Senate, President, 
have got to come together to address our long-term budget 
challenges so that at a minimum we can give not just the 
Department of Defense, but our entire government some stability 
so they have some idea from month to month how much money they 
are going to have. Your ability to plan is just destroyed when 
in January we say, well, we are delaying sequestration for 2 
months, we hope we will fix it, in March it hits, and now we 
sit here in April trying to absorb it and wondering if it is 
going to continue into 2014.
    So let me just close by saying, I don't think it is any one 
party's fault, President, House, Senate, but all three pieces 
of the puzzle have got to come together and recognize that 
absent a clear, long-term decision we are having a devastating 
impact on many aspects of the government, but certainly on our 
national security, which is supposed to be paramount. We cannot 
plan any strategy when we do not know how much money we are 
going to have from month to month.
    So, again, I applaud the chairman for urging that same 
reconciliation to come together, and I look forward to working 
with him to find a solution to that. And today I look forward 
to hearing from our witnesses about how they are going to deal 
with those challenges. Because make no mistake about it, as 
challenging as that all is, we will deal with it. We will make 
the decisions, we will protect this country. We have certainly 
faced tougher times in the past and came through it. It is a 
challenge, but we will meet it, and I look forward to hearing 
from our witnesses today about their plans to do just that.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Smith can be found in the 
Appendix on page 69.]
    The Chairman. Mr. Secretary.

   STATEMENT OF HON. CHUCK HAGEL, SECRETARY OF DEFENSE, U.S. 
                     DEPARTMENT OF DEFENSE

    Secretary Hagel. Chairman McKeon, Ranking Member Smith, 
members of the committee, thank you for this opportunity to 
discuss the President's fiscal year 2014 budget request for the 
Department of Defense.
    Allow me to express my appreciation also to this committee 
for its continued support for our men and women in uniform and 
our entire civilian workforce. These people are doing 
tremendous work, and they are making great sacrifices, along 
with their families, as they have for more than 11 years. 
Eleven years our Nation has been at war. Whether fighting in 
Afghanistan, patrolling the world's sea lanes, standing 
vigilant on the Korean Peninsula, supplying our troops around 
the world or supporting civil authorities when natural 
disasters strike, they are advancing America's interests at 
home and abroad. Their dedication and professionalism are the 
foundation of our military strength. As we discuss numbers, 
budgets, and strategic priorities, we will not lose sight of 
these men and women serving across the globe.
    As you all know so very well, their well-being depends on 
the decisions that we all make here in Washington. Today, the 
Department of Defense faces the significant challenge of 
conducting long-term planning and budgeting at a time of 
considerable uncertainty, both in terms of the security 
challenges we face around the world and the levels of defense 
spending we can expect here at home.
    Even as the military emerges and recovers from more than a 
decade of sustained conflict in Iraq and Afghanistan, it 
confronts an array of complex threats of varying vintage and 
degrees of risk to the United States. These include the 
persistence of violent extremism throughout weak states and 
ungoverned spaces in the Middle East and North Africa; the 
proliferation of dangerous weapons and materials; the rise of 
new powers competing for influence; the risk of regional 
conflicts which could draw in the United States; faceless, 
nameless, silent, and destructive cyber attacks; the 
debilitating and dangerous curse of human despair and poverty, 
as well as the uncertain implications of environmental 
degradation.
    Meanwhile, the frenetic pace of technological change and 
the spread of advanced military technology to state and 
nonstate actors pose an increasing challenge to America's 
military.
    This is the strategic environment facing the Defense 
Department as it enters a third year of flat or declining 
budgets. The onset of these resource constraints has already 
led to significant and ongoing belt tightening in the military. 
That is military modernization, our force structure, personnel 
costs and overhead expenditures. It has also given us an 
opportunity to reshape the military and reform defense 
institutions to better reflect 21st century realities, as I 
outlined in the speech last week at the National Defense 
University.
    The process began under the leadership of Secretary Gates, 
who canceled or curtailed more than 30 modernization programs 
and trimmed overhead costs within the military services and 
across the defense enterprise. These efforts reduced the 
Department's topline by $78 billion over a 5-year period, as 
detailed in the Department's fiscal year 2012 budget plan.
    The realignment continued under Secretary Panetta, who 
worked closely with the President and the Joint Chiefs of Staff 
to craft new defense strategic guidance and a fiscal year 2013 
defense budget plan which reduced the Department's topline by 
$487 billion over the course of a decade.
    The President's request of $526.6 billion for the 
Department of Defense's base budget for fiscal year 2014 
continues to implement the President's defense strategic 
guidance and enhances the Department's efforts at institutional 
reform. Most critically, it sustains the quality of the All-
Volunteer Force and the care we provide our service members and 
their families, which again, as you all know, underpins 
everything we do in this organization.
    Before discussing the particulars of this budget request, 
however, allow me to address the profound budget problems 
facing the Department in fiscal year 2013 and beyond as a 
result of sequester. These challenges have significantly 
disrupted operations for the current fiscal year and greatly 
complicated efforts to plan for the future. The Congress and 
the Department of Defense have a responsibility, an absolute 
obligation, to work together to find these answers because we 
have, all of us, a shared responsibility, as the chairman and 
the ranking member have noted, to protect our national 
security. DOD [Department of Defense] is going to need the help 
of this committee and Congress to help manage through this 
uncertainty.
    The fiscal year 2013 DOD appropriations bill enacted by the 
Congress last month addressed many of these urgent problems by 
allocating DOD funding more closely in line with the 
President's budget request, giving the Department authorities 
to start new programs and allowing us to proceed with important 
military construction projects. Nonetheless, the bill still 
left in place the deep and abrupt cuts associated with 
sequester, as much as $41 billion in spending reductions over 
the next 6 months.
    Military pay and benefits are exempt from sequester, and we 
made a decision to shift the impact of sequester away from 
those serving in harm's way. That means the cuts fall heavily 
on DOD's operations, maintenance, and modernization accounts 
that we use to train and equip those who will deploy in the 
future. Furthermore, the military is experiencing higher 
operating tempos and higher transportation costs than expected 
when the budget request was formulated more than a year ago.
    As a result of all these factors, the Department is now 
facing a shortfall in our operation and maintenance accounts 
for fiscal year 2013 of at least $22 billion in our base budget 
for Active forces. In response, the Department has reduced 
official travel, cut back sharply on facilities maintenance, 
imposed hiring freezes, and halted many other important but 
lower priority activities. However, we will have to do more. 
Large, abrupt, and steep across-the-board reductions of this 
size will require that we continue to consider furloughing 
civilian personnel in the months ahead.
    The cuts will fall heavily on maintenance and training, 
which further erodes the readiness of the force and will be 
costly to regain in the future. And I know General Dempsey will 
address some of this in particular.
    As the service chiefs have said, we are consuming our 
readiness. Meanwhile, our investment accounts in the defense 
industrial base are not spared damage as we also take 
indiscriminate cuts across the areas of this budget.
    We will continue to need the strong partnership of this 
committee to help us address these shortfalls. If the 
sequester-related provisions of the Budget Control Act of 2011 
are not changed, fiscal year 2014 funding for national defense 
programs will be subject to a steeply reduced cap, which would 
further cut DOD funding by roughly $52 billion. And if there is 
no action by the Congress and the President, roughly $500 
billion in reductions to defense spending would be required 
over the next 9 years.
    As an alternative, the President's budget proposes some 
$150 billion in additional defense savings over the next 
decade. These cuts are part of a balanced package of deficit 
reduction. Unlike sequester, these cuts are largely backloaded, 
occurring mainly in the years beyond fiscal year 2018, which 
gives the Department time to plan and implement the reductions 
wisely and responsibly, anchored by the President's defense 
strategic guidance.
    The President's $526.6 billion fiscal year 2014 request 
continues to balance the compelling demands of supporting 
troops still very much at war in Afghanistan, protecting 
readiness, modernizing the military's aging weapons inventory 
and keeping with the President's strategic guidance, and 
sustaining the quality of the All-Volunteer Force. Today's 
budget request also contains a placeholder request for overseas 
contingency operations, OCO, at the fiscal year 2013 level, 
which is $88.5 billion. This submission does not include a 
formal OCO request because Afghanistan force level and 
deployment decisions for this year were delayed in order to 
provide commanders enough time to fully assess requirements. We 
will soon be submitting an OCO budget amendment with a revised 
spending level and account level detail.
    The following are the major components of the fiscal year 
2014 $526.6 billion base budget request. Military pay and 
benefits, including TRICARE and retirement costs, $170.2 
billion; that represents 32 percent of the total base budget. 
Operating costs, including $77.3 billion for civilian pay, 
total $180.1 billion, representing 34 percent of the total 
budget. Acquisitions and other investments, procurement, 
research, development, tests and evaluation, and new facilities 
construction, which represents 33 percent of the budget at 
$176.3 billion.
    The budget presented today at its most basic level consists 
of a series of choices that reinforce each of the following 
complementary goals. Making more disciplined use of defense 
resources. This budget continues the Department's approach of 
the last several years to first target growing costs in areas 
of support, acquisition, and pay and benefits before cutting 
capabilities and force structure. In order to maintain balance 
and readiness, the Department of Defense must be able to 
eliminate excess infrastructure as it reduces force structure. 
DOD has been shedding infrastructure in Europe for several 
years, and we are undertaking a review of our European 
footprint this year.
    But we also need to look at our domestic footprint. 
Therefore, the President's fiscal year 2014 budget requests 
authorization for one round of base realignment closure, BRAC, 
in 2015. BRAC is a comprehensive and fair tool that allows 
communities a role in reuse decisions for the property and 
provides redevelopment assistance.
    BRAC is imperfect. It is an imperfect process. And there 
are upfront costs for BRAC. The future year defense program 
adds $2.4 billion to pay for those costs. But in the long term, 
there are significant savings. The previous five rounds of BRAC 
are saving $12 billion annually, and those savings will 
continue.
    We are also taking other important steps to cut back on 
support costs. We will institute a study of our military 
treatment facilities, including many hospitals and clinics that 
are currently underutilized. By the end of the year, we will 
have a plan in place that suggests how to reduce that 
underutilization while still providing high quality medical 
care for all of our forces and their families. This 
restructuring, coupled with a BRAC round and other changes, 
would permit us to plan on a cut in our civilian workforce that 
will comply with congressional direction.
    We are also continuing our successful efforts to hold down 
military health costs. With the Department's proposed TRICARE 
benefit changes, our projected costs for fiscal year 2014 are 
about 4 percent lower than those costs in fiscal year 2012. 
That is a significant turnaround compared to healthcare trends 
over the past decade.
    Another important initiative is our effort to improve the 
Department's financial management and achieve auditable 
financial statements. I strongly support this initiative and 
will do everything I can to fulfill this commitment and the 
promises we have made to the Congress and the American 
taxpayer.
    These and many other changes led to total savings of about 
$34 billion in fiscal year 2014 to 2018, including $5.5 billion 
in fiscal year 2014. However, we are concerned that these 
savings for more disciplined use of resources could be eroded 
by sequester as we are forced to make inefficient choices and 
drive up costs. Today, for example, we are being forced to 
engage in shorter and less efficient contracts and sharp cuts 
in units' buy sizes that will increase the unit costs of 
weapons.
    In this budget, the Department has achieved $8.2 billion in 
savings from weapons program terminations and restructuring. 
For example, by revising the acquisition strategy for the 
Army's Ground Combat Vehicle, the GCV, the Department will save 
over $2 billion in development costs. In other cases, the 
Department used evolutionary approaches to develop new 
capabilities instead of relying on leap-ahead gains in 
technology.
    To lessen the potential impact on local communities from 
the reductions in defense procurement, the Department is 
requesting an additional $36 million in support of the Defense 
Industry Adjustment Program.
    The Department is continuing to take steps to tighten the 
contract terms and reduce risk in our largest acquisition 
program, the F-35 Joint Strike Fighter. The fiscal year 2014 
budget request includes $8.4 billion for the Joint Strike 
Fighter program.
    The cost of military pay and benefits are another 
significant driver of spending growth that must be addressed in 
the current fiscal environment. In this budget, the Department 
is submitting a new package of military compensation proposals 
that take into consideration congressional concerns associated 
with those from fiscal year 2013. These changes save about $1.4 
billion in fiscal year 2014 and a total of $12.8 billion in 
fiscal year 2014 through 2018.
    This package includes a modest slowing of the growth of 
military pay by implementing a 1 percent pay raise for service 
members in 2014. The Department is also seeking additional 
changes to the TRICARE program in fiscal year 2014 to bring the 
beneficiary's cost share closer to the levels envisioned when 
the program was implemented, particularly for working age 
retirees.
    Today, military retirees contribute less than 11 percent of 
their total healthcare costs compared to an average of 27 
percent when TRICARE was first fully implemented in 1996. 
Survivors of military members who died on Active Duty or 
medically retired members would be excluded from all TRICARE 
increases. Even after the proposed changes in fees, TRICARE 
will remain still a substantial benefit.
    These adjustments to pay and benefits were among the most 
carefully considered and difficult choices in this budget. They 
were made with the strong support of the Joint Chiefs of Staff 
and senior enlisted leadership in recognition that in order to 
sustain these important benefits over the long term without 
dramatically reducing the size or readiness of the force, these 
rising costs need to be brought under control. Spending 
reductions on the scale of the current drawdown cannot be 
implemented through just improving efficiency and reducing 
overhead. Cuts and changes to capabilities--force structure and 
modernization programs--will also be required. The strategic 
guidance issued in January 2012 set the priorities and the 
parameters that informed those choices, and the fiscal year 
2014 budget submission further implements and deepens program 
alignment to this strategic guidance.
    The new strategy calls for a smaller and leaner force. Last 
year we proposed reductions of about 100,000 in military end 
strength between fiscal year 2012 and fiscal year 2017. Most of 
those reductions occur in the ground forces and are consistent 
with the decision not to size U.S. ground forces to accomplish 
prolonged stability operations, while maintaining adequate 
capability should such activities again be required. By the end 
of fiscal year 2014, we will have completed almost two-thirds 
of the drawdown of our ground forces, and the drawdown should 
be fully complete by fiscal year 2017.
    Increased emphasis on the Asia-Pacific and Middle East 
represents another key tenet of the new defense strategic 
guidance. This budget continues to put a premium on rapidly 
deployable, self-sustaining forces--such as submarines, long-
range bombers, and carrier strike groups--that can project 
power, project power over great distance, and carry out a 
variety of missions. As part of the rebalance to the Asia-
Pacific, the Department is expanding the Marine Corps presence 
in the region, including rotational deployments of Marine units 
to Australia. We continue to develop Guam as a strategic hub 
where we maintain a rotational bomber presence, among other 
capabilities.
    The Department will stage its most capable forces in the 
region, including an F-22 squadron at Kadena Air Force Base in 
Japan. The Navy has deployed a Littoral Combat Ship to 
Singapore and is increasing and more widely distributing port 
visits in the Western Pacific. This new strategy not only 
recognizes the changing character of the conflicts in which the 
U.S. must prevail, but also leverages new concepts of operation 
enabled by advances in space, cyberspace, special operations, 
global mobility, precision strike, missile defense, and other 
capabilities. By making difficult tradeoffs in lower priority 
areas, the fiscal year 2014 budget protects or increases key 
investments in these critical capabilities.
    The high quality of our All-Volunteer Force continues to be 
the foundation of our military strength, and the fiscal year 
2014 budget request includes $137.1 billion for military 
personnel, as well as $49.4 billion for military medical care. 
Together, these make up roughly one-third of our base budget. 
This budget seeks to ensure that our troops receive the 
training and equipment they need for military readiness and the 
world class support programs they and their families have 
earned.
    However, as in other areas of the budget, the steep and 
abrupt cuts of sequester would harm these programs. Even with 
flat and declining defense budgets, this budget seeks to press 
ahead with the transition from a counterinsurgency-focused 
force to a force ready and capable and agile of operating 
across a full range of operations across the globe.
    The service budgets all fund initiatives that seek to 
return to full-spectrum training and preparation for missions 
beyond current operations in Afghanistan. The Department 
continues its work to understand and quantify readiness 
activities as we seek to maximize our preparedness for real 
world missions. We do not yet know the costs of fixing the 
readiness of the force following the 6 months of sequester cuts 
to training in this fiscal year. Therefore these costs are not 
included in the fiscal year 2014 budget.
    The Department's budget submission makes clear that people 
are central to everything we do. While sequester cuts would, 
unfortunately, counter many of these initiatives, especially 
for our civilian workforce, the initiatives remain important 
statements of the intent in this budget.
    The Department continues to support key programs in fiscal 
year 2014 that support service members and their families, 
spending $8.5 billion on initiatives that include transition 
assistance and veteran's employment assurance, behavioral 
health, family readiness, suicide prevention, and sexual 
assault prevention and response.
    The fiscal year 2014 budget is a reflection of DOD's best 
efforts to match ends, ways, and means during a period of 
intense fiscal uncertainty. It is a balanced plan that would 
address some of the Department's structural costs and internal 
budget imbalances while implementing the President's defense 
strategic guidance and keeping faith with our men and women in 
uniform and their families. It is obvious that significant 
changes to the Department's topline spending would require 
changes to this budget plan. The Department must plan for any 
additional reductions to the defense budget that might result 
from Congress and the administration agreeing on a deficit 
reduction plan. It must be prepared in the event that sequester 
level cuts persist for another year or over the long term.
    As a result, I directed a Strategic Choices and Management 
Review in order to assess the potential impact of further 
reductions up to the level of full sequester. The purpose of 
this review is to reassess the basic assumptions that drive the 
Department's investment and force structure decisions. The 
review will identify the strategic choices and further 
institutional reforms that may be required, including those 
reforms which should be pursued regardless of fiscal pressures. 
It is designed to help understand the challenges, articulate 
the risks, and look for opportunities for reform and 
efficiencies presented by resource constraints.
    Everything will be on the table during this review: roles 
and missions, planning, business practices, force structure, 
personnel and compensation, acquisition and modernization 
investments, and how we operate, and how we measure and 
maintain readiness. We have no choice. This review is being 
conducted by Deputy Secretary Carter, working with General 
Dempsey.
    The service secretaries and service chiefs, Office of the 
Secretary of Defense principals, and combatant commanders are 
all serving as essential participants in this review. Our aim 
is to conclude this review, which is underway now, by May 31st. 
The results will inform our fiscal year 2015 budget request and 
will be the foundation for the Quadrennial Defense Review due 
to Congress in February of next year. It is already clear to me 
that achieving significant and additional budget savings 
without unacceptable risk to national security will require not 
just tweaking or chipping away at existing structures and 
practices, but, if necessary, fashioning entirely new ones that 
better reflect 21st century realities. That will require the 
partnership of Congress.
    The fiscal year 2014 budget and the ones before it have 
made hard choices. In many cases, modest reforms to personnel 
and benefits, along with efforts to reduce infrastructure and 
restructure acquisition programs, met fierce political 
resistance and were not implemented. We are now in a different 
fiscal environment, dealing with new realities that will force 
us to more fully confront these tough, painful choices and to 
make the reforms we need to put this Department on a path to 
sustain our military strength for the 21st century. But in 
order to do that, we will need flexibility, time, and some 
budget certainty. We will also need to fund the military 
capabilities that are necessary for the complex security 
threats of the 21st century.
    I believe the President's budget does that. With the 
partnership of Congress, the Defense Department could continue 
to find new ways to operate more affordably, efficiently, and 
effectively. However, multiple reviews and analysis show that 
additional major cuts, especially those on the scale and 
timeline of sequestration, would require dramatic reductions in 
core military capabilities or the scope of our activities 
around the world. As the executive and legislative branches of 
government, we have a shared responsibility to ensure that we 
protect our national security and America's strategic 
interests. Doing so requires that we make every decision on the 
basis of enduring national interests and make sure every policy 
is worthy of the service and sacrifice of our service members 
and their families.
    Mr. Chairman, thank you.
    [The prepared statement of Secretary Hagel can be found in 
the Appendix on page 71.]
    The Chairman. Thank you Mr. Secretary.
    General Dempsey.

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

    General Dempsey. Thank you, sir.
    Chairman McKeon, Ranking Member Smith, distinguished 
members of the committee, I welcome this opportunity to update 
you on the United States Armed Forces and to comment on the 
budget proposal for fiscal year 2014.
    Obviously, this hearing comes at a time of extraordinary 
uncertainty. As resources decline, risks to our national 
security rise. It is in this context that I offer my 
perspective on how we can work together to sustain a balanced 
and peerless joint force.
    One thing is certain: Our men and women in uniform are 
steadfast in their courage and in their devotion to duty. I saw 
it recently in their eyes in Afghanistan and when I had the 
honor of reenlisting 10 of them this past Sunday at Bagram 
Airfield.
    In Afghanistan, our forces are simultaneously fighting, 
transitioning, and redeploying. The Afghan military will soon 
take operational lead for security across the country. As they 
gain confidence, so, too, do the Afghan people. The coalition 
will remain in support as we transition to a sustainable 
presence beyond 2014. At every point along the way we must make 
sure that our force levels match the mission.
    Our joint force has been vigilant elsewhere as well. We are 
deterring aggression and assuring our allies in the face of 
provocation by both North Korea and Iran. We are working with 
our interagency partners to defend against cyber attack. We are 
acting directly and with partners to defeat Al Qaeda. We are 
rebalancing to the Asia-Pacific and adapting our force posture 
to a new normal of combustible violence in North Africa and the 
Middle East. We are also working with others to keep Syria's 
complex conflict from destabilizing the region. We are ready 
with options if military force is called for, and can, and if 
military force can be used effectively, to secure our interests 
without making the situation worse.
    We must also be ready with options for an uncertain and 
dangerous future. This budget was purpose built to keep our 
Nation immune from coercion. It aims to restore versatility to 
a more affordable joint force in support of our defense 
strategy. However, let me be clear about what it does not do. 
This budget does not reflect full sequestration. It does impose 
less reduction, and it gives us more time. However, uncertainty 
persists about what the topline will be for this or any other 
future budget. Nor does this budget include funds to restore 
lost readiness. We don't yet know the full impact or the cost 
to recover from the readiness shortfalls that we are 
experiencing this year.
    As expected, we have already curtailed or canceled training 
for many units across all of the services for those not 
preparing to deploy. And we know that, from experience, that it 
is more expensive to restore readiness than to keep it. 
Recovery costs will compete now with the costs of building the 
joint force in the future.
    This budget does, however, invest in our priorities. It 
keeps the force in balance. It supports our forward-deployed 
operations. It upholds funding for emerging capabilities, such 
as cyber. It funds those conventional and nuclear capabilities 
that are so critical and have proven so essential to our 
defense. It also lowers manpower costs, reduces excess 
infrastructure, and it makes health care more sustainable.
    Most importantly, it protects investment in our real 
decisive advantage--in our people. It treats being the best 
led, the best trained, and the best equipped force as the non-
negotiable imperative.
    Never has our Nation sustained such a lengthy war solely 
through the service of an All-Volunteer Force. We must honor 
our commitments to them and to their families. For many 
veterans, returning home is a new frontline in the struggle 
with wounds seen and unseen. We must continue to invest in 
world-class treatments for mental health issues, traumatic 
brain injury, and combat stress. We also have a shared 
responsibility to address the urgent issue of suicide with the 
same devotion we have shown to protecting our soldiers, 
sailors, airmen, and marines in combat.
    The risks inherent to military service must not include 
sexual assault. Sexual assault betrays the trust--the very 
trust--on which our profession is founded. We will pursue every 
option to drive this crime from our ranks.
    This is a defining moment for our military. Our warriors' 
will to win is undaunted. But the means to prepare to win are 
becoming uncertain. We have an opportunity, actually an 
obligation with this and any future budget to restore 
confidence. We have it within us to stay strong as a global 
leader and as a reliable partner.
    The joint force is looking to us to lead through this 
period of historical fiscal correction. But we can't do it 
alone. As I have said before and as the Secretary just said, we 
need budget certainty, we need time, and we need flexibility. 
And this means a predictable funding stream. It means the time 
to deliberately evaluate tradeoffs in force structure, 
modernization, compensation, and readiness. And it means the 
full flexibility to keep the force in balance.
    Thank you for all you have done to support our men and 
women in uniform. I only ask that you continue to support a 
responsible investment in our Nation's defense. And I look 
forward to your questions.
    [The prepared statement of General Dempsey can be found in 
the Appendix on page 85.]
    The Chairman. Thank you very much.
    I think we won't have any votes on the floor before 1 
o'clock. It is my intention to get in as many questions as we 
can, but to take a brief break at around noon.
    Among the critical aspects of the transition in Afghanistan 
is the negotiation of the Bilateral Security Agreement [BSA] 
with the Government of Afghanistan. I am concerned with the 
progress in these negotiations and the failure to reach an 
agreement will put at risk U.S. vital national security 
interests in Afghanistan and the region by creating a vacuum 
that regional state and non-state actors would exploit. 
Clearly, we need a willing partner, and President Karzai's 
public statements have been erratic at best. A bad agreement is 
worse than no agreement at all. Yet I am convinced that not 
only is the agreement imperative, but we need to secure it this 
spring to allow our NATO [North Atlantic Treaty Organization] 
allies time to negotiate similar agreements and to send the 
strongest signal possible that we will not abandon Afghanistan.
    I know when I was there not too long ago--Secretary, you 
were there same time, General Dempsey, you have been there 
since--everyone in Afghanistan is asking, when are you leaving? 
Because the Taliban is telling them we are leaving. And we need 
to counter the Taliban's narrative and reverse the crisis of 
confidence that I saw in our Afghan partners resulting from our 
accelerated redeployment and ambiguity about the residual 
force.
    To that end, I strongly believe that an announcement about 
our residual force or at least an announcement of a narrow 
range of U.S. troop levels is a necessary prerequisite for 
securing a BSA. I think this is one of the problems we had with 
Iraq. We didn't come up with a number sufficient that the Iraqi 
leadership would expend the political capital to do what is 
necessary to make an agreement possible.
    By sitting on the announcement, all parties with a stake in 
the outcome of the BSA--Afghanistan, its neighbors, our allies, 
and Members of Congress--will be reluctant to expend the 
political capital necessary to secure a good agreement. The 
politics become significantly more complicated as the BSA gets 
caught up in the Afghan Presidential election and campaigns for 
the midterm congressional elections. Karzai will only become 
more challenging to deal with as his term comes to an end. 
Silence and speculation will become self-fulfilling prophecies, 
just as we saw in Iraq. Repeating such an outcome is not 
acceptable given the sacrifices that we have made.
    Nevertheless, Chairman Dempsey, you stated this week that 
pinning down post-2014 troop levels is not a matter of urgency. 
Why do you believe we can secure a Bilateral Security Agreement 
in a timely manner without a decision on residual force levels?
    General Dempsey. Thanks, Chairman. First, let me align 
myself with your assessment that it is really the confidence of 
the Afghan people, and I would say a subset of that, the 
confidence of the Afghan security forces, that really are the 
center of gravity now, that which will allow this mission to 
succeed and endure. Secondly, let me align myself with your 
suggestion that the Bilateral Security Agreement should be 
achieved as soon as possible.
    The reason I said it wasn't important to nail down the 
exact number is that we already have--you know, this is a NATO 
mission in which we are the lead nation, clearly, but we are 
part of the NATO mission, and NATO has declared that the range 
of trainers, advisers, and assisters post-2014 will be between 
8,000 and 12,000, and I find that to be a reasonable target 
toward which to aim. And so I think we can move ahead with the 
Bilateral Support Agreement on that basis because that should 
inform the number of bases we might need to retain and what 
authorities we might need.
    There is also some physics involved. We are going to be at 
34,000 in the middle of February, and to get from 34,000 to 
8,000-12,000 between then and the end of 2014, we can actually, 
we can do the math. So tactically I don't need the exact number 
because I have a range available to me, and I know what it 
takes to retrograde from 34 K [thousand] down to something 
between 8,000 and 12,000.
    The Chairman. I know when I spoke to General Allen and when 
I spoke to General Dunford they both had talked about the 
number 13,600, and then an additional 6,000 NATO troops, which 
would give about 20,000, which would allow advisers down to 
the, I think battalion level is the way they had it laid out. 
So even if we could come out with that range that they could 
feel comfortable with in the negotiations, I think that would 
be helpful.
    General, in February, you testified before this committee, 
and I am going to quote, what do you want your military to do? 
If you want it to be doing what it is doing today then we can't 
give you another dollar out of our--I am adding--out of our 
budget.
    A year ago you testified, if we have to absorb more cuts we 
have got to go back to the drawing board and adjust our 
strategy. And that is what the Secretary asked for, I believe, 
a couple of weeks ago, commented we are going to have to adjust 
the strategy.
    What I am saying to you today, and back to your quote, is 
that the strategy that we would have had to adjust to would in 
my view not meet the needs of the Nation in 2020 because the 
world is not getting any more stable. Nevertheless, in the 
budget request, the President has proposed taking an additional 
$120 billion to $150 billion from the military depending on how 
you measure the cut. He also offers no proposal to rectify the 
$53 billion shortfall in fiscal year 2013.
    General, did the DOD conduct any analysis that offers a 
strategic rationale for these cuts? If not, who proposed the 
number, and did OMB [Office of Management and Budget] or the 
White House ask for this analysis? In light of your previous 
testimony, what missions have you recommended that we 
eliminate, and what changes to last year's strategy will you 
endorse?
    General Dempsey. So, sir, the reality of budgets, and I 
think you probably know this as painfully as anyone, is they 
take about a year to prepare. And so we have been working on 
the FY [fiscal year] 2014 budget for a year. Sequestration 
kicked in on 1 March. The President's budget backloads in years 
beyond the 5-year defense plan, backloads most of the 
reductions he proposes. So they don't have an effect--they 
don't have a significant effect on this 5-year defense plan 
that we have submitted.
    Now, that said, this is precisely why the Secretary of 
Defense has taken us on the path toward a strategic review, 
because as we look at not only the President's budget proposal 
but also full sequestration, we have got to understand what 
that will do to the force. But the reason that I still stand by 
what I said but it doesn't affect this FY 2014 submission is 
that most of those cuts are backloaded, I think $6 billion or 
so in FY 2014. But that is the reason I can still state with 
confidence what I said before.
    The Chairman. Thanks.
    Mr. Smith.
    Mr. Smith. Thank you, Mr. Chairman.
    I want to drill down on that budget question a little bit 
because I think we frequently in this committee act like, you 
know, if you cut one penny from defense, you know, it is 
unsustainable, unworkable, national security falls completely 
apart, and that is obviously ridiculous. Anywhere in government 
there is places to cut and there is places to cut. It kind of 
depends on where you are cutting and what you are doing. And 
the problem we have right now is sequestration. It is across 
the board, mindless, deep, done right in the middle of a fiscal 
year. So the problems that you have described in your testimony 
are being caused by sequestration and by that just snap change 
you have to make to existing budgets.
    So again I will emphasize for this committee if we want to 
help you the best thing we can do is stop sequestration as soon 
as possible because it is the classic gift that keeps on 
giving, 2014, 2015, 2016. It is going to keep happening unless 
we stop it. That is first.
    Second, when you look out, as you pointed out, the cuts 
that are in the President's budget beyond that are 2017 and 
beyond of roughly $119 billion depending on how you calculate 
it. But the other problem that we have is there are places 
where we can cut in the defense budget that will not affect our 
national security that Congress rather consistently stops you 
from doing. And I want to just explore two of those: base 
closure and personnel costs on the TRICARE fees. As Secretary 
Hagel mentioned in his opening remarks, when TRICARE was put in 
place, your average service member I think was paying 27 
percent of healthcare costs; it is now down to 11. There is 
plenty of room, certainly, over the course of the next 10 years 
in both of those areas to find savings.
    And I guess my question is, if we find savings in those 
areas, isn't it true that that doesn't really affect the plans? 
And, General Dempsey, you have been very good about saying, if 
you are going to give us less money, tell us what less you want 
us to do. Here is the strategy, we are going to match to it, 
but there are cuts and savings. We have seen dramatic 
improvements--and, Mr. Hale, maybe you can comment on this--in 
some of our acquisition programs as a result of some of your 
initiatives.
    So I personally think that to look at our budget over the 
course of the next 10 years and say not one more penny can come 
out of defense is dead wrong, just as a matter of efficiency. I 
mean, forget for the moment the fact that we have got a deficit 
that is eating us alive, that we have a massive deficit in 
infrastructure in this country, that the implications for taxes 
and on and on. You know, clearly money can be cut out of the 
defense budget over the course of the next 10 years that won't 
impact our national security and that will help our budget 
picture.
    So just talk a little bit about BRAC and some of those 
TRICARE fees and where we might be able to save money in a way 
that doesn't impact national security, for whichever one of you 
wants to take a stab at it.
    Secretary Hagel. Well, thank you, Congressman. I will 
respond and then I will ask General Dempsey, and you mentioned 
the Comptroller, Mr. Hale. He may want to respond, as well. Let 
me address your larger question in the context of that 
question.
    If, in fact, we are facing the reality that we are facing, 
then we are going to have to plan, adjust, review, and take a 
pretty hard look at everything. And I think the chairman's 
comments in his testimony, matching the resources with the 
mission, is a particularly important comment because we can't 
put our military and all those who support our military in a 
position where they are under-resourced and then there is an 
expectation by the people of this country that they are secure 
and that we are guaranteeing their security. That is, as the 
chairman and Mr. Smith, as you noted in your comments, the 
highest order, it is the highest responsibility of a 
government, the security of the nation. So it is going to 
require some tough choices across the board. And I generally 
hit some of those choices in my testimony.
    BRAC is an area that we do have to look at, I believe, 
because there is not one answer to this. It is everything, it 
is every component of our budget, including TRICARE, including 
compensation, including benefits. I don't have to engage this 
body, this Congress, on the issue of Social Security, our 
current entitlement systems. I doubt if there are many people 
in this country who don't understand that unless we do 
something then actuarially it is not sustainable, the current 
programs we have. The same as in the military.
    So we have to manage this, but we have to also project as 
well as we can with our strategic priorities and our national 
interests how do we do this, how are we going to do this? And 
with, as you noted, the reality of sequestration, it is not 
some theory, it is law, the Congress passed, the President 
signed the Budget Act.
    Mr. Smith. And as long as we are talking about the budget I 
would be remiss if I didn't point out that over the course of 
the last 12 to 14 years we have cut taxes by nearly $7 trillion 
right into the face of the baby boom generation retiring and 
two wars. So revenue is part of this discussion as well, which 
I know we have fought about before but I just want to put that 
out there for the record.
    But can you answer just a straightforward question: Can 
money be cut from the defense budget over the course of the 
next 10 years that will not negatively impact our ability to 
protect national security?
    Secretary Hagel. Well, my answer is it is going to be cut.
    Mr. Smith. Right, but I am getting at the larger point 
here, because when you make those cuts you hear, mostly from 
that side, oh, my goodness, we had a strategy, you cut money, 
there goes the strategy. But that is, forgive me, ridiculous. 
Clearly we can cut money from the defense budget that does not 
jeopardize our national security. I am just wondering if you 
gentlemen agree with that.
    Secretary Hagel. Well, I will respond and ask General 
Dempsey. But as you said in your opening comments, I don't know 
of an institution that can't find some efficiencies somewhere. 
I don't think the Defense Department is any different. But back 
to an important point I think that General Dempsey made, you 
all deal with every day as the authorizing committee for the 
Department of Defense: What are our priorities? What do you 
expect? What do the American people expect the Defense 
Department to do? What are those missions? How are we going to 
resource those missions? Those capabilities are going to be 
required to secure our Nation.
    There is where you have to start. I think you can find 
savings. They have done a very good job over the last few years 
of finding those savings in acquisitions and other areas. So, 
yes, it is possible, but we don't have any choice.
    Mr. Smith. And I am sorry, I want to give other members a 
chance to ask questions, we have had a chance, but that more or 
less answers my question. If you have something quick that 
would be great. If not, I would like to give other members a 
chance to get in.
    General Dempsey. We are still trying to figure out where to 
find the $487 billion. So this process doesn't start from a 
stable platform, frankly. Secondly, even with sequestration, 
this wouldn't be the deepest cut the military has ever 
suffered, but it is by far the steepest.
    And so the answer to your question really has to be taken 
in the context of what we are faced with now. And we really do 
need time to figure out what these cuts would do before they 
are imposed.
    Mr. Smith. And make no mistake about it, I understand that 
sequestration, the way it is done, and like you said, the 
dropoff, that is ridiculous. But when you put together a 10-
year plan, you know, you can find savings, I do believe, and I 
think you guys have done an admirable job of that in a number 
of areas.
    I yield back. Thank you, Mr. Chairman.
    The Chairman. I think we can find savings all across 
government. The point is that we have taken 50 percent of the 
savings out of defense when they only account for 18 percent of 
the savings. I just think we need to be more rational in the 
whole approach.
    Mr. Thornberry.
    Mr. Thornberry. Thank you, Mr. Chairman.
    Mr. Secretary, in your speech at NDU [National Defense 
University] last week, in talking about your Strategic Choices 
and Management Review, you said the goal is not to assume or 
tacitly accept that deep cuts, such as those imposed by 
sequester, will endure. And then in the next paragraph, though, 
you said this exercise is also about matching missions with 
resources, which we have had a longstanding discussion on this 
committee about what comes first. Do you have a dollar amount 
and then you figure out what you can do with it, or do you 
figure out what it takes to defend the country and then talk 
about what resources are required to do that mission?
    And as you know, there is a widespread view that you were 
brought into the Pentagon to cut defense. And some of the 
people who were concerned about that are pointing to the fact 
that the Cost Assessment and Program Evaluation folks are 
playing a key role in this strategic review, and CAPE doesn't 
do strategy. They are more of the green eyeshade people.
    So I guess kind of at a broader level, it seems to me that 
more than anyone else in the government, the Secretary of 
Defense has got to be the one who says this is what it takes to 
defend the country, and to fight for that publicly, but also 
internally within the administration. And I guess I would just 
be interested in how you see your role. Is it to manage the 
decline or is it to be explicit about the dangers in the world 
and what it takes, and then the more political part of the 
government, Congress and the President, have to accept the 
consequences of the decisions?
    Secretary Hagel. Congressman, thank you.
    First, I have been in this job 6 weeks. The cuts that we 
are talking about occurred long before I ever got here, so I 
don't think I had a lot to do with any of the decisions to cut 
defense spending.
    As to my responsibilities, you have listed accurately some, 
and that is I lead, preside over the one institution in this 
country that is charged with only one mission, and that is the 
security of this country. I have no other job. I report to the 
Commander in Chief, the President of the United States. I work 
with the Congress as an agent of the executive.
    Yes, part of my job is to manage, to see that the 
Department of Defense is managed efficiently, effectively, 
within the laws that the Congress passes and the directives 
that Congress gives us. Yes, also my role is to be an advocate 
for our men and women in uniform and the job we do, and I have 
done that, I intend to do that, and I don't think I take a back 
seat to anyone. Look at my entire life, my career. Now, I have 
not done as much as most of you in the Congress here or 
certainly as General Dempsey has done, but I have been devoted 
my entire life to veterans and military, and I think my record 
is pretty clear on that.
    So, yes, I am an advocate for this Department. I am an 
advocate in the National Security Council, my advice that I 
give to the President of the United States. But I also have to 
be realistic, Congressman, in that what we are dealing with in 
sequestration, as I noted to Mr. Smith, is the law. It is not 
debatable for me. This is what is on the books now. This is 
what the Congress, last month, the House and Senate budget 
resolutions, you passed a budget resolution for 2014 that 
essentially is pretty close to what the President's budget is 
for 2014. Now, I have to deal with that reality, and I have to 
manage and lead with that reality.
    Now, your last point about accepting these kinds of things. 
As I said, as you noted, in the NDU, whether I accept it or not 
is one thing. No, we don't want to accept it. No, we are up 
here explaining in our testimony and in interviews, I think 
clearly, what sequestration, in some specificity, is doing and 
will continue to do to our capabilities and to our readiness 
and the hard choices we are going to make, but I can't lead my 
institution into a swamp of knife-fighting over protesting what 
is already in place.
    We will respond honestly and directly. I think the General 
has made it pretty clear in his testimony. I think I did. If 
you want to go deeper into any programs with the Comptroller, 
he will, on how difficult this is going to be.
    So I think it is a combination, Congressman, of all the 
things that you said, as at least the way I see my job. And I 
will also say the President did not instruct me, when he asked 
me to consider doing this job and when he asked me to do this 
job, to go over and cut the heart out of the Pentagon. That 
wasn't his instruction to me, nor in any implication in any 
way.
    The Chairman. Thank you.
    Ms. Sanchez.
    Ms. Sanchez. Thank you, Mr. Chairman.
    And thank you, gentlemen, for being before us today. I 
think there were many of us in the room when Secretary Gates 
was before us and he spoke about how the U.S. debt and deficit 
was one of his biggest concerns with respect to national 
security, and so we are really trying to do what so many across 
America believe is correct to do, and that is to get our fiscal 
house in order. And I have been one of those people who have 
said that everybody has to put something on the table--
entitlements, defense, and so many of the other discretionary 
programs that some people like to cut all the time.
    And I also remind you that this Congress, you know, because 
the supercommittee was not able to come up with a list of cuts, 
this is where we are. We actually voted on this. So, Secretary 
Hagel, I don't think you were brought in to cut defense. I 
think you were brought in to follow the law and to try to best 
advise us, if we need to change course of action, how to do 
that and why we need to do that.
    And I might add that in the 17 years that I have been on 
this committee, when I first came to Congress our defense 
budget was about a little bit under $300 billion a year, and 
that as we went into two wars over a decade, our budget, when 
you really looked at all the spending, rose to about $800 
billion a year. I don't think there has been a single 
department that can say that it has seen that. So now we are 
getting out of the second war, we are coming back, and so I 
think that there are cuts to be made.
    But, Secretary, over the next 5 years, when I look at this 
budget, there is a transfer of billions of dollars going to 
support nuclear weapon sustainment, to cover the cost of 
escalation of existing programs and increased requirements. And 
as you know, I sat as the ranking member on Strategic Forces 
Subcommittee, so we have looked at this quite a bit, and I 
support the increased oversight the Department of Defense is 
doing with respect to NNSA's [National Nuclear Security 
Administration] costs. But I wonder why I only see the 
increases in the nuclear weapons program and I see nothing with 
respect to nuclear nonproliferation programs. So that would be 
my first question to you.
    And the second one is about the 14 add Ground-Based 
Interceptors at Alaska. And as we move to do this, as the 
Department of Defense moves to do this, what is the 
Department's commitment to ensure that the interceptors are 
successfully operational and realistically tested before we 
deploy them since GBIs [Ground-Based Interceptors] have not 
been successfully flight tested since 2008?
    Secretary Hagel. Congresswoman, thank you. Let me respond 
to the Ground-Based Interceptors question. When I made the 
announcement regarding increasing our 30, present 30 GBI 
inventory to 44--and as you know, they are located and the new 
ones will be located at Fort Greely and Vandenberg--I noted 
that we did have a problem in one of the last tests with the 
guidance system, the gyro system. And when I was asked the 
question, would you put those new interceptors in, still with 
some uncertainty until that problem was resolved, I said no.
    So we are testing, we will continue to test, and would 
certainly not employ any new interceptors anywhere until we 
were completely satisfied that they are operational and we have 
complete confidence in their ability.
    As to the nonproliferation question in the budget, as you 
know, DOD does not have responsibility for funding 
nonproliferation programs. Our responsibility is funding and 
maintaining, securing the stockpile, the nuclear stockpile, and 
we will continue to do that. The nonproliferation programs, 
which we work with State on specifically, also Energy, and we 
participate in that process, but the funding doesn't come from 
DOD. Thank you.
    Ms. Sanchez. Thank you, Mr. Chairman.
    General Dempsey. I wonder, Congresswoman, if I could----
    Ms. Sanchez. General.
    General Dempsey. I don't want to miss the opportunity to 
point out that although Iraq and Afghanistan are winding down, 
as you say, the world that we are inheriting here is far less 
stable than the one that existed when you entered the Congress 
of the United States. So I would just ask you not to make any 
direct correlation between the end of the conflict in 
Afghanistan and where you think our budget should end up.
    The Chairman. And also to clarify the record, so that 
people don't think that we have had a budget of over $800 
billion a year for the last 10 years, we had one budget over 
$700 billion.
    Mr. Jones.
    Mr. Jones. Mr. Chairman, thank you.
    Mr. Secretary, it is good to see you again, General 
Dempsey.
    Mr. Secretary, you were saying in your comments what the 
American people want. What they want is a smart, efficient 
foreign policy. I do not think we have had a foreign policy 
that made a hell of a lot of sense, truthfully, going back to 
George Bush. I am not being critical of the President, but, 
General Dempsey, I talked to John Sopko recently, who is the 
Inspector General for Reconstruction, I spoke to Stuart Bowen 
two days ago, and yet we continue to spend money in those 
countries.
    Today I had General Gardner, Jake Gardner was in my office 
for an hour and a half. He is of the firm belief that in the 
next year to three years there will be a civil war in Iraq. And 
I don't know and I hope, Mr. Secretary, that you and General 
Dempsey, for goodness sakes, how can America continue to police 
the world, keep all these bases overseas open, and then I hear 
you, in your testimony, and General Dempsey, and I agree with 
you, we are in a financial collapse.
    And I saw an Army corporal on Tuesday of this week from my 
district who has lost a leg, three fingers, and brain injury. 
He has got a wife and four children. He lives in Moyock, North 
Carolina. And I don't know, somebody has got to wake up this 
country. Yes, we have got to have a strong military. We have 
got to have a strong defense. But they deserve better than what 
they get from an administration and a Congress that wants to 
send them around the world and change the culture of countries 
that could care less about freedom.
    Now, if they are a threat to us, I will vote every time to 
make sure we defend the American people. But I hope, Mr. 
Secretary, that you will be a leader with this administration 
and say, walk carefully, let's make sure it is justified. 
Because we failed in Iraq. It was never justified. And so I 
hope that you will bring, as you work through these problems, 
and my friends on both sides have certainly articulated and 
have agreed, but it is just like how in the world can we 
continue to play the game.
    I gave this analogy recently in my hometown of Farmville, 
North Carolina. Everybody in my neighborhood knows I am broke. 
I still drive a fancy car. I call up my neighbors and say, let 
me take you to dinner. You know what they are saying? What a 
fool. He can't even pay his bills and he wants to take me to 
dinner?
    Somebody has got to bring some sanity to this program and 
rebuild the military, and I will support you, sir, and your 
leadership to make it more efficient and streamlined. But 
again, we need to change the way that we get involved in these 
foreign wars with no end to it. So if you want to comment on 
that, you don't really have to, but if you want to, I would 
appreciate it
    Secretary Hagel. Congressman, thank you, and good to see 
you again. You and I have had, over the years, many 
conversations about this issue, and I am grateful that you, 
over many years, in difficult situations, have spoken up and 
made clear your thoughts on what you just talked about and on 
other issues.
    I would respond this way very briefly. If you recall the 
last sentence of my testimony, the last sentence of my 
testimony was any decision we make should always be worthy of 
the service and sacrifices of our men and women and their 
families. I believe that. And I will do that as Secretary of 
Defense. The day I think that that is not being done, I will do 
everything I can to make sure it is done. But if that day would 
ever come, I would have to resign, because it is the essence of 
who we are, first of all, as Americans.
    To your bigger point, I think we are all in this country, 
certainly those responsible for foreign policy and our national 
security and all the connecting dynamics that flow into that, 
our economics and everything, energy, are now defining, as they 
analyze what we went through the last 12 years, and I am not 
here to debate that, but it is important we review what we did, 
why we did it, where we are. And we have some new opportunities 
here to restructure and take that review and hopefully put 
America maybe on a path here where we can do more, certainly, 
with allies, and it is central to everything we do
    Last point I will make is, the comment I made in my 
testimony, and General Dempsey noted it, it isn't all bad 
sometimes to have these situations when each of us in our 
personal lives or government lives are confronted with the 
uncontrollables coming down on us, because it forces us to take 
inventory and stock. What are we doing? Why are we doing it? 
How are we doing it? And that is essentially what is going on.
    So there is an opportunity here. I wish it would come in a 
different way, but it is what it is. So we have got to be smart 
how we use this opportunity to restructure and rethink, and 
foreign policy guides everything because it is our national 
interest. And I know that is not the purview of this committee, 
but you are not disconnected from it. Nor are we, by the way. I 
serve on the President's national security team, and there is 
no discussion that General Dempsey has or I have with the 
President or Secretary of State that does not include all of 
these parts. So I understand what you are saying, Congressman, 
and I appreciate your comments.
    Mr. Jones. Thank you, Mr. Secretary.
    The Chairman. Thank you.
    Mr. McIntyre.
    Mr. McIntyre. Thank you, Mr. Chairman.
    And thanks to each of you for your service to our country.
    Secretary Hagel, I have three questions, I will just go 
straight to them. If you can answer them yes or no and then if 
you need an explanation.
    First of all, with possible delays in the F-35 procurement, 
do you believe that the Navy and the Air Force have budgeted 
sufficient funds to maintain the necessary strike fighter 
inventory to meet the national military requirements, the 
National Military Strategy requirements?
    Secretary Hagel. Yes, I do.
    Mr. McIntyre. With regard to the National Guard, in your 
opinion, given the current restrained budget atmosphere we know 
we are in, can we continue to adequately resource and equip the 
National Guard and Reserve Component as an operational force or 
do you feel like you are going to be in a position that you 
have to revert back to the Strategic Reserve model?
    Secretary Hagel. Well, the way I would answer it, I think 
the National Guard and Reserves are key components of our 
military force structure and will continue to be, and I think 
that has become quite obvious the last few years. And without 
going into a long oration of this, and Marty Dempsey can handle 
it in a lot more depth than I can, I don't think we could have 
the projected force structure that we now have counting on the 
assets we have and adequately managing those assets without a 
strong National Guard and Reserves, if for no other reason than 
the professionalization that has occurred in our Reserve and 
National Guard Components over the last 12 years, I think, has 
been probably historic. We now have a member of the Joint 
Chiefs of Staff who sits there who is a National Guard 
representative. I think that tells you something. So I am a 
strong supporter of our National Guard and Reserves.
    Mr. McIntyre. And my third question is, it is two-part, but 
to the extent you can clarify if you need to, do North Korea 
and Iran currently possess the capability to reach the United 
States with long-range missiles? One, in general, perhaps a 
conventional warhead; secondly, with a WMD [weapon of mass 
destruction] warhead?
    Secretary Hagel. I want to be careful with this answer 
because it might imply some intelligence here. But I don't 
believe that neither of those countries has that capacity right 
now. Now, does that mean that they won't have it or they can't 
have it or they are not working on it? No. And that is why this 
is a very dangerous situation.
    I would also add, and I will ask General Dempsey for his 
thoughts, but this country is capable of dealing with any 
threat and any action by any country, including Iran or North 
Korea.
    I don't know, General Dempsey?
    General Dempsey. I have nothing to add.
    Mr. McIntyre. So your answer is no to both questions, they 
do not possess the capability to reach the U.S. with long-range 
missiles even in a conventional warhead as well as a WMD 
warhead?
    Secretary Hagel. Yes. But again, we have to always be 
mindful of uncertainty of anything, and you can't accept what 
you are never, ever, ever sure of. Right now I don't think we 
believe they have that capacity, but I have qualified that 
answer as I did.
    Mr. McIntyre. In preparation, just in case. Thank you.
    Thank you, Mr. Chairman
    The Chairman. Thank you.
    Mr. Forbes.
    Mr. Forbes. Thank you, Mr. Chairman.
    Mr. Secretary, I am going to duplicate the request of my 
good friend from North Carolina and ask that you as be succinct 
as possible in your answers because, like him, I only have 5 
minutes.
    I believe the impact of this administration's fiscal cuts 
to our national security are unwise and will have long-lasting 
repercussions, but I also believe this administration's attacks 
on faith, religious freedom, and religious liberty in our 
military are also unwise and will have long-lasting 
repercussions. From the Pentagon we had an order issued that 
you don't have a copy of, but I am sure you are probably 
familiar with, that our commanders can no longer even inform 
those under his or her command of approved programs in the 
chaplain's office.
    In addition, we have from the Pentagon an order where a 
patch from the Air Force had to be removed, and we were told 
from the liaison's office that it was because the legal 
department had said you couldn't use ``God'' even if it was in 
a nonreligious context.
    We have here, of course, approval that was given by the 
Assistant Secretary of Defense to allow individuals to march in 
uniform in a San Diego gay pride parade, which was a political 
parade, using their uniforms. And then we have an order by the 
Department of the Navy prohibiting Bibles from being used in 
Walter Reed hospital. And in addition to that--and these are 
just a few of the items because I only have 5 minutes, and as I 
am sure you are familiar, recently we have had a training 
program, which I have given you a copy of, where we list 
evangelical Christians, Catholics, and Mormons in the same 
category of religious extremism as we do Al Qaeda.
    Now, because of those kind of things, and I don't expect 
you to know all of those things or keep your hands on all of 
them, but because of those, we had a provision that was put in 
the National Defense Authorization Act last year that was 
Section 533 for the protection of rights of conscience of 
members of the Armed Forces and chaplains. Particularly it said 
that our servicepeople couldn't have their beliefs on the basis 
of adverse--they couldn't have any adverse personal action, 
discrimination, or denial of promotion, schooling, training, or 
assignment based on their religious beliefs, and also it said 
that our chaplains, that no member of the Armed Forces could 
require a chaplain to perform any rite, ritual, or ceremony 
that is contrary to the conscience, moral principles, or 
religious beliefs of the chaplain or discriminate or take any 
adverse personnel action against the chaplain, including denial 
of promotion, schooling, training, or assignment on the basis 
of the refusal by the chaplain to comply with the requirement 
prohibited by paragraph 1.
    And my question to you, Mr. Secretary, because this is a 
big issue as we get statement after statement sent to us almost 
on a weekly basis about these issues, we had 75 percent of the 
Members of the House, 85 percent of the Senate, 350 Members of 
the House, 81 members of the Senate who voted for that 
authorization bill with that provision in it because they 
thought it was necessary, that it was well advised. Do you 
believe that those rights and the provisions of Section 533 are 
necessary and well advised?
    Secretary Hagel. Well, first, Congressman, I don't know 
about all the specifics of the information that you presented. 
I will get it and I will find out about it and I will get back 
to you on it, first.
    [The information referred to can be found in the Appendix 
beginning on page 113.]
    Secretary Hagel. Second, obviously we will comply with all 
the NDAA [National Defense Authorization Act] directives. 
Protection of religious rights is pretty fundamental to this 
country.
    Mr. Forbes. Mr. Secretary, my time is running out. My only 
question is, do you think that provision is a necessary 
provision and well advised? Just yes or no.
    Secretary Hagel. Well, it is in the NDAA, right?
    Mr. Forbes. But I am asking you if you feel it was 
necessary and well advised.
    Secretary Hagel. Well, I haven't seen it, so if you can 
give me a sentence of it again.
    Mr. Forbes. Well, I will try to follow up. So then I take 
it, let me just ask you also to come back to me and let me know 
the status of the regulations that are supposed to be passed to 
ensure that that is done, and I take it you are not aware of 
those today or that status?
    Secretary Hagel. Well, no. And unless I had it in front of 
me, I don't know. I am well aware of the NDAA directives and 
all the different directives----
    Mr. Forbes. Then the final thing I would ask in the last 20 
seconds I have is, I just can't understand why the Department 
is issuing orders prohibiting people in the chain of command 
from talking about chaplains' programs supporting faith but 
they are not prohibiting people in the chain of command from 
making anti-faith statements and doing anti-faith training. And 
I hope you will just take that into consideration and get back 
to us because this seems to be a growing problem, not one that 
is heading in the right curve direction.
    Secretary Hagel. Well, that should not be happening, and I 
could say that without seeing anything, and I will get back to 
you and I will find out about it. Thank you.
    [The information referred to can be found in the Appendix 
beginning on page 113.]
    The Chairman. Thank you.
    Mr. Andrews.
    Mr. Andrews. Thank you.
    Mr. Secretary, General, Mr. Hale, thank you for your 
service to our country and please convey to the men and women 
you represent how proud we are of them and the great job that 
they do for our country every day.
    It is my understanding, Mr. Secretary, that because of 
sequestration, that nine fighter squadrons and three bomber 
squadrons have been grounded. Is that correct?
    Secretary Hagel. I think nine is the accurate number, but--
--
    General Dempsey. It is.
    Secretary Hagel. It is? It is the accurate number.
    Mr. Andrews. And if the Congress were able to reach an 
agreement where we could swap out these sequester cuts for some 
other cuts in various parts of the budget and perhaps have some 
revenue in there as well, if the sequester were not in effect 
today, would those planes be flying?
    Secretary Hagel. I assume that they would be, yes.
    Mr. Andrews. General, what are the consequences, both in 
terms of readiness and in terms of our technical capability, of 
those airplanes not flying?
    General Dempsey. Well, fundamentally, Congressman, what we 
are doing is we are meeting near-term requirements at the 
expense of downstream readiness. I think this is March, or it 
is April. Basketball season just ended. You got 12 players on a 
team. You teach them individual skills. Then you bring them 
together as a team and you run team drills, then you scrimmage, 
and eventually you get into the season. What we are doing right 
now is we are not scrimmaging and we are limiting the number of 
collective drills and focusing on individual skills because 
that is where the budget situation has taken us.
    Mr. Andrews. If the Congress doesn't----
    General Dempsey. They won't be ready to play.
    Mr. Andrews. Thank you. If the Congress doesn't reach the 
kind of agreement that I just talked about and we have year two 
or the first full year of sequestration, which it would be, 
what kind of other changes would you have to make in the 
defense posture of the country?
    Secretary Hagel. Well, we will have to continue to 
effectively cut into our readiness, and the grounding of wings 
is a good example of that. We are doing the same thing in the 
Navy, not sailing, and some of our ships remain docked. Our 
training of our soldiers. So it is across the board. It isn't 
just one service.
    Mr. Andrews. I noticed that in the President's budget 
proposal that he does propose the replacement of sequestration. 
He also suggests that there still would be $150 billion in cuts 
in defense, not the $550 billion or so that we have otherwise. 
What kinds of things would you do in the defense budget to hit 
the $150 billion target that is in the President's budget?
    Secretary Hagel. Well, first, that is why, one of the 
reasons I directed the strategic priorities and management 
review, to ask those kind of questions of our Chiefs and of our 
combatant commanders and other leaders in the Defense 
Department. What are those options? That is first. But, if you 
just look at the numbers, $550 billion over 10 years versus 
$150 billion over 10 years, I know what side I will on that if 
I am looking for resources for our Department.
    The other part of that is the President's $150 billion in 
savings through Department of Defense comes mostly at the back 
end of that 10 years.
    Mr. Andrews. So there will be time to transition into 
those----
    Secretary Hagel. That is exactly right. It gives us time, 
as the General noted in his comments, time, flexibility, and 
certainty.
    Mr. Andrews. I do not mean this as a rhetorical question. I 
mean it as a real question, that my assumption is we will have 
significantly fewer troops in Afghanistan on September 30th of 
2014 than we will on September 30th of 2013. Is that right?
    Secretary Hagel. Yes, we are continuing to draw down and--
--
    Mr. Andrews. Then why is the OCO account, the overseas 
account, the request, $87.2 billion for the present fiscal year 
and $88.5 for the 2014 fiscal year? If we are having that size 
drawdown, why is that not reflected in the reduction in an OCO 
request?
    Secretary Hagel. Well, first, it is a placeholder. As I 
said in my testimony, we have not sent the OCO budget up yet. 
We will be doing that shortly. So the $88 billion that you 
refer to is placeholder in the budget, knowing that we will be 
coming back with something probably in that range, I don't 
know. Mr. Hale may want to----
    Mr. Andrews. But why wouldn't it be lower if the number of 
troops is significantly lower?
    Secretary Hagel. Well, because we have to now bring them 
out in large numbers. That means equipment. We have got 
billions of dollars of equipment in Afghanistan that we have to 
get out. It is very dangerous. We have only got two ways out, 
other than fly everything out. That is prohibitive. We are 
flying things out now. You know the southern route is down 
through Pakistan, out through Karachi port. You know what is 
happening in Pakistan.
    Mr. Andrews. We do
    Secretary Hagel. Up through the north, bad roads, 
variables, different countries. So that expense of just getting 
our troops out on a timely basis and the materiel that goes 
with it is costing us a lot of money.
    Mr. Andrews. Thank you.
    And thank you, Mr. Chairman
    The Chairman. Also we have been chewing up equipment for 10 
years. There is no reset, which we are going to have to be 
facing.
    Mr. Wilson.
    Mr. Wilson. Thank you, Mr. Chairman.
    And thank you all for being here today.
    Secretary Hagel, I was happy to join with nearly 50 of my 
colleagues, bipartisan, a unique situation of bipartisan 
concern, and that is in regards to the Department of Defense 
creating a Distinguished Warfare Medal, DWM, which we 
appreciate, to recognize extraordinary service of our 
personnel. But unfortunately there is an issue of precedence in 
that the DWM was placed above the Bronze Star and Purple Heart 
in order of precedence. Have you made a determination of how to 
address this? And this is a great concern to veterans and 
military families.
    Secretary Hagel. Congressman, thank you. It is a concern to 
me. It is a concern to any veteran, anybody in the military. 
But to just get straight to the answer to your question, you 
know I asked the Chiefs and the Secretaries to go back and take 
another look. I will make a decision on this early next week 
and I will make that announcement on where I think we should go 
next on this.
    Mr. Wilson. As a fellow veteran, I appreciate you looking 
into that, and it is important.
    Additionally, in regard to the military healthcare system, 
there is a proposal to increase TRICARE fees again, in light of 
the fact that in the defense health programs there has been, in 
the last two years, a surplus of $500 million to $709 million, 
and so that there has been a surplus. Additionally, it has been 
claimed that the healthcare costs are eating the budget alive, 
when in fact it is an increase of less than 1 percent in fiscal 
year 2013 and fiscal year 2014, and then there has actually 
been a decrease of $650 million in private sector costs.
    And my concern is that we know this is a great program, 
TRICARE, people are very satisfied, military families 
appreciate this benefit. Commitments have been made to our 
veterans and to military families. Why would we be increasing 
the fees when in fact the program is working well?
    Secretary Hagel. Thank you. The program is working well, 
and as I noted in my testimony, and Mr. Hale is obviously quite 
conversant on this, but we have seen those costs go down, and I 
mentioned this in my testimony, but as more and more people 
come onto that system and more demand and the sustainability, 
which we have to look at, how are we going to continue to 
commit and pay for those and fulfill those commitments, as we 
have analyzed this in some detail, we think it would be wise, 
and these are not significant increases, by the way, but be 
wise to propose these increases in fees.
    Now, recognizing this is the beginning of debate, this is 
the beginning, as it should be, laid out and let's look at 
everything on it, on this issue. But these are not significant 
increases. We are looking at the long-term sustainability. It 
is a good program, it has worked, and that is not an issue. But 
the issue of the affordability of the program, I don't know, 
let me ask, if you want, the Comptroller to add.
    Secretary Hale. May I just briefly. Mr. Wilson, there is 
about a billion dollars of savings associated with TRICARE fees 
and the copays in the fiscal 2014 budget. If we don't do it, we 
will have to take that out of readiness or modernization. I 
think it was the strong feeling of the Secretary and the Joint 
Chiefs that the balance should be----
    Voice. Mr. Chairman, could he speak more in the microphone, 
please?
    Secretary Hale. I am sorry. We save about a billion dollars 
from the TRICARE fees and copays. If we don't do that, we will 
have to take that money out of readiness or modernization, and 
I think it is the strong feeling of the Secretary and the 
Chiefs and the Chairman that the right thing to do is a 
balanced approach to meeting our defense needs with some modest 
increases in fees.
    Mr. Wilson. But the experience is very clear that there are 
not increases of any significant amount, less than 1 percent. 
And, Mr. Secretary, the fee increases have been, I am not sure 
what the new ones are, were an increase of 365 percent. And so 
it was significant to the persons who are in the program.
    And I hope we look at the experience because I know it was 
not projected that the healthcare costs would go down. That was 
a pleasant surprise. And so I would rather that we look at it, 
the pleasant surprise, and be positive. And I just hope that 
you all look at that. The fee increases do impact military 
families. Thank you, and I appreciate your time.
    The Chairman. Thank you.
    Mrs. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    And Mr. Secretary, I look forward to working with you. And 
General Dempsey and Secretary Hale, thank you for being with us 
as well.
    Secretary Hale, I understand that the Department of Defense 
has directed the services to restart tuition assistance to 
service members as of April 9th, obviously of this year, and I 
certainly support the tuition assistance, very, very much 
support education for our troops' continuing education, and yet 
I understand that this is really going to put some pressure on 
our services to try and go along with this essentially because 
it means, in many cases, they have spent some of those dollars, 
so they are going to have to look for other areas in which to 
backfill, essentially, those dollars as well. And so I wonder 
if you could comment on that, number one, is that correct?
    And also, I think it is a lesson for all of us because we 
certainly, I think, go on record supporting a change when it 
comes about. Certainly when we look at the budgets, often the 
Pentagon requests one thing and we come back and do something 
different. You understand that, certainly, Mr. Secretary. How 
are we doing with that right now and is this not a problem for 
the services because they have to find the dollars in order to 
fund not just an unlimited amount of tuition assistance going 
forward from this point?
    Secretary Hagel. Congresswoman, thank you. Let me respond, 
and then I am going to ask the Chairman for a specific response 
because you noted in your question some of the services are 
struggling with this more than others, and that is right.
    First, we are going to follow, we are following the 
directive of the NDAA and what the appropriations bill 
instructed us to do. You are correct that prior to that we had 
to make some tough choices, each of the services, on where they 
were going to prioritize their funds. As I noted in my opening 
comments, readiness, protecting the warfighter, where our most 
important assignments are. Obviously, when you are at war in a 
nation, those are priorities, and other priorities. So we had 
to balance those priorities with those resources. And so the 
services were in a tough spot on this. Each service, as you 
know, has a little different standard on this.
    Mrs. Davis. Right.
    Secretary Hagel. So, we are going to fulfill that 
commitment, but let me now ask the Chairman because he will 
talk now more directly----
    Mrs. Davis. I think it is important to know where those 
dollars are coming from for each of the services.
    General Dempsey. Yeah, thanks, Congresswoman. It actually 
goes back to actually what Congressman Wilson talked about. You 
know, I find myself often in the difficult position of standing 
in front of soldiers and sailors, airmen, marines, and their 
families and explaining why, as we look to absorb cuts of 
whatever magnitude, we have to include all of the various 
factors of this giant enterprise in order to keep the force in 
balance. So some 1 individual, 2, 10, 25, 25,000 might be on my 
blog complaining about the fact that we have had to suspend 
tuition assistance or, you know, revise the program. But the 
answer is, unless we look across the board at all the levers we 
have to pull, whether it is infrastructure, healthcare, paid 
compensation, tuition assistance, we will have an 
extraordinarily well compensated force that will be sitting at 
Fort Hood, Texas, or at Camp Lejeune unable to train and 
therefore we will be putting them at risk. I tell the young men 
and women, you know, if this is an inconvenience to you, what 
would really be dangerous to you is if we don't keep this thing 
in equilibrium. We have got to look at everything.
    Mrs. Davis. Yeah. I think my concern is whether or not we 
are actually cutting into that, whether we are cutting into 
readiness by virtue of having an unlimited stream of money in 
order to do this, something that we all would support but 
nevertheless in this situation----
    General Dempsey. Sure. The answer is yes, but it is not 
uniquely because of tuition assistance. Frankly, tuition 
assistance was about $200 million for the rest of this fiscal 
year, which may sound like an inconsequential amount of money 
in the context of a $525 billion budget. The problem is that is 
probably three or four brigade training exercises at Fort 
Irwin, California.
    Mrs. Davis. Okay. Mr. Hale, did you want to comment on that 
at all? Because I am----
    Secretary Hale. No, I think the Secretary and Chairman said 
it right. We are complying with the law, what we felt was the 
intent of the law on the appropriations bill, and it is causing 
some difficult decisions.
    Mrs. Davis. All right. Thank you. Thank you all.
    The Chairman. Thank you.
    Mr. Bishop.
    Mr. Bishop. Thank you, Mr. Chairman. After Congressman 
Forbes' question, as one of the extremists in this body, Mr. 
Secretary, I would like to welcome you here, and it is good to 
have you finally on the correct side of Capitol Hill.
    I have got about five questions. I am going to get them all 
through come hell or high water. So the first one deals with a 
request that was in your budget. It appears that in the Air 
Force budget, that roughly $1.4 million is put in there to 
conduct an environmental impact study regarding the ICBM 
[inter-continental ballistic missile] missile wing. I 
understand this was inserted in the budget proposal by your 
office and not by that of Air Force leadership. So I guess 
three questions dealing with it. Is that a correct statement? 
Number two, what is the object of this EIS [Environmental 
Impact Statement] effort? And number three, if it is to 
eventually close down an ICBM wing or squadron, which one is 
being studied for potential closure?
    Secretary Hagel. Well, I just asked the Comptroller, first 
of all, Congressman, if it is a correct statement and what that 
was about. I am going to ask him to answer the question because 
it is correct.
    Mr. Bishop. Okay.
    Secretary Hagel. And what he just reminded me of is a 
missile wing is a component of the larger context here. So let 
me ask Mr. Hale to respond.
    Secretary Hale. I honestly don't remember who put it in. I 
will find out for you.
    [The information referred to can be found in the Appendix 
on page 107.]
    Secretary Hale. We are studying all three wings, 
environmental impact statement on all three of them.
    Mr. Bishop. And what is the purpose for that EIS effort?
    Secretary Hale. It is part of the all missions and all 
activities are on the table. We need to understand what the 
environmental impacts would be of any decisions that we make 
with regard to ICBMs.
    Mr. Bishop. And you are dealing with all ICBM wings and 
squadrons?
    Secretary Hale. Correct.
    Mr. Bishop. All right. Let me ask the second phase of the 
questions, and it goes to the FAA's [Federal Aviation 
Administration] action recently. The FAA closed a number of 
contract towers around the country far in excess of what they 
needed to meet their sequestration goal. A few of those 
contract towers, though, are very near to Air Force bases. I 
have one at Ogden-Hinckley Air Force, which is less than three 
miles from Hill. Congressman Fleming has one at Barksdale, same 
situation.
    So I guess the two questions I have is, number one, did FAA 
contact the Defense Department in any way to coordinate what 
they were doing when they made this decision to close these 
towers down? And since it also--go ahead and answer that one if 
you want to.
    Secretary Hagel. It is a quick answer. I don't know.
    Mr. Bishop. All right. If you could find out, I would be 
appreciative.
    Secretary Hagel. We will find out and get back to you. So 
thank you.
    Mr. Bishop. It is just that in past, for example, when NASA 
[National Aeronautics and Space Administration] decided to 
change their program constellation, it had a negative impact on 
what it cost the military to do missile defense and there had 
been no coordination between those two agencies. They had not 
talked. So I don't know if there is--I would like to know if 
there has been any contact.
    But since these areas now overlap as far as the airspace, 
to go to Hill, you have to go over the Ogden airport airspace, 
potential of collision, potential of pilot safety, potential of 
impact on mission readiness or training, testing activity. Do 
you consider this to be a problem in these few situations, and 
if so, what are you doing about it?
    Secretary Hagel. Well, I understand exactly your point, and 
for the reasons you mentioned, and I, as I said, will find out 
and get better acquainted with it. It seems to me, based on 
what you said, it could be a potential problem. So beyond that 
I just would have to find out enough information, starting with 
your questions, did they contact us, what did we say, what are 
the vulnerabilities, and I will get back to you.
    [The information referred to can be found in the Appendix 
on page 107.]
    Mr. Bishop. So on both that, this is potential and not a 
whole lot of towers and bases are in--but there are a couple of 
which I know, there may be a few others. That, as well as the 
efforts for the EIS statement purpose, I would appreciate that 
kind of return.
    And I will give you back a minute. This is one of the few 
times I haven't used it all.
    Secretary Hagel. I just mentioned----
    Mr. Bishop. I have just used it all.
    Secretary Hagel. Congressman, thank you for your comments 
welcoming me on the right side of the Capitol. I actually 
started a career after Vietnam on this side of the Capitol in 
1971 as chief of staff to a Congressman.
    Mr. Bishop. So, why did you go over to the dark side?
    Secretary Hagel. I am still going to confession.
    Thank you.
    Mr. Bishop. Thank you.
    The Chairman. You have time, you could ask a question about 
why we don't do an environmental impact on the result of 
somebody hitting us with a missile?
    Mr. Langevin.
    Mr. Langevin. Thank you, Mr. Chairman.
    Secretary Hagel and Chairman Dempsey and Secretary Hale, I 
want to thank you all for appearing today and for your 
testimony. And in particular, Secretary Hagel, I want to 
congratulate you on your confirmation. I certainly look forward 
to working with you as we navigate some very challenging times.
    I would like to try to get in two questions, one primarily 
on cyber and the other one on directed energy. Let me start, 
first of all, with Secretary Hagel. In your first formal policy 
address at the National Defense University on April 3, 2013, 
you asserted that the cyber threat that our Nation faces today 
is a security challenge with potential adversaries seeking the 
ability to strike at America's security, energy, and economic 
and critical infrastructure.
    As you may know, I spend quite a bit of time on this. It is 
a particular interest of mine, dealing with cyberspace and how 
we better protect the Nation in cyberspace. Looking at the 
fiscal year 2014 budget, are we resourcing adequately in order 
to operate within the cyber domain and ensure our natural 
interests in cyberspace are protected? And does the Department 
require additional authorities in order to educate, attract, 
and retain the very best cyber operators?
    Secretary Hagel. Congressman, thank you, and I appreciate 
your comments.
    Cyber is one of the areas that we have actually proposed 
increases in the budget, so I think that begins with some 
understanding, at least on our side, of the threats and 
responsibilities we have in this domain, and I think they are 
going to continue to multiply. I do know of your longstanding 
involvement in this area, and I look forward to working with 
you.
    We continue to enhance our role in this effort, DOD's. As 
you know, we are not the only agency that has some 
responsibility here. The Department of Homeland Security has a 
lot of authority, as you know, on this. We are working very 
closely on interagency groups as we connect better, and we need 
more of that connection on lines of authority, definitions of 
responsibility.
    As you know, our two primary resources at NSA [National 
Security Agency] and Cyber Command are both critical components 
of our security enterprise. We spend a lot of time on this and 
we are going to continue to spend a lot of time on it. It is I 
think overall as a big a threat to this country, cyber attacks, 
as any one threat.
    Mr. Langevin. Thank you. Let me also turn to the issue of 
directed energy, and if we have time, maybe I will come to some 
other cyber. But first of all, I want to congratulate the Navy, 
just recently very successful test of a laser, shipboard laser 
shot down a drone. I see this directed energy as a game-
changing technology, both for standoff as well as for ship 
defense, operating the littorals, if necessary, ballistic 
missile defense.
    About a year and a half ago, the Center for Strategic and 
Budgetary Assessment came out with a report that said that 
directed energy is maturing at a faster pace than what many had 
realized. Can you tell me where the Department stands right now 
on getting this stuff out of the labs and where practicable 
deploying this type of technology?
    Secretary Hagel. Yes. As you have noted, we have a high 
priority on this, and you have just recited a couple of 
examples. We have a platform ship that is involved in some of 
this testing right now. So we will continue to be very focused, 
very engaged, and we will assure the prioritization of the 
resources we need to continue to carry it out.
    Mr. Langevin. And let me also, maybe expanding on it a 
little bit, touching on a couple of operational aspects of 
anti-access and area denial environments, such battlespace 
limitations are likely to place a premium again on particular 
assets, technologies and competencies, particularly in the 
Asia-Pacific region where there is a significant proliferation 
of submarines, advanced tactical fighters and ballistic 
missiles, as well as many electronic warfare challenges.
    General Dempsey, perhaps can you speak to how the 
Department is resourcing, training, and investing in research 
and development in order to meet those challenges, particularly 
with regards to directed energy, undersea warfare, and advanced 
tactics, technique and procedures?
    The Chairman. General.
    General Dempsey. Yes, sir.
    The Chairman. The gentleman's time has expired. I would ask 
if you could please handle that one for the record.
    [The information referred to can be found in the Appendix 
beginning on page 114.]
    The Chairman. Mr. Turner.
    Mr. Turner. Secretary Hagel, General Dempsey, thank you for 
being here. I greatly appreciate your dedication, and we really 
appreciate this dialogue today. I want to start by thanking 
both of you for your dedication on the issue of sexual assault 
in the military. General Dempsey, you have had exemplary 
dedication to this issue, and we appreciate your voice as we 
have looked to both try to change the culture of the military 
and look at the rules and regulations that need change.
    Secretary Hagel, thank you for your position on addressing 
Article 60 after we had the incident of General Franklin 
overturning a conviction of sexual assault.
    My co-chair of the Sexual Assault Prevention Caucus, Niki 
Tsongas, and myself recently received a presentation from the 
Air Force, and we appreciate their dedication on this issue.
    We look forward to working with you on the language for 
that because there are a number of considerations, which I know 
you referenced in your letter. We have some additional issues 
that we think that should be addressed. So my co-chair, Niki 
Tsongas, and I will be working with both of you on that as we 
proceed to the NDAA.
    On sequestration, I wanted to relate that General 
Wolfenbarger, the commander of Wright-Patterson Air Force Base, 
related her concern that so many times in our discussion of the 
effects of sequestration we miss the personal effects that this 
is having on the workforce, both our men and women in uniform 
and our civilian workforce. In my community, Wright-Patterson 
Air Force Base, 13,000 people are facing furloughs, which, you 
know, those are the people who get up every day to protect our 
national security. So I want you to please pass on that Members 
of Congress are very concerned about the personal effects of 
people who have kids in college, vacations that are going to be 
postponed, other expenses, and real life hardships that this is 
going to result in.
    I have a question for Secretary Hagel and a question for 
General Dempsey. My first to Secretary Hagel is about our 
ability to maintain responding to two conflicts, and my 
question to General Dempsey will be about missile defense and 
our ability to do look-shoot-look as we look to Iran.
    Secretary Hagel, Secretary Panetta, just as he was about 
ready to leave, was at the 2012 Munich Security Conference and 
made this statement: ``We will ensure that we can quickly 
confront and defeat aggression from any adversary any time, any 
place. It is essential that we have the capability to deal with 
more than one adversary at a time, and I believe we have shaped 
a force that will give us that capability.''
    We have, coming up in NATO, a joint training exercise that 
is currently scheduled in Poland. That is obviously very 
important to Members of Congress because we know how sensitive 
our relationship is with Poland, as the administration has 
walked away from its commitment to missile defense. We are 
going to be watching and certainly hoping that this has the 
full support of the Department of Defense that this joint 
exercise in NATO and Poland take place.
    But my concern is, obviously, our ability, as we look at 
sequestration and defense cuts, to give our allies the 
assurance that we can do two conflicts. With the tilt to the 
Pacific, NATO is obviously nervous. And I would like, Mr. 
Secretary, your comments on that.
    And then, General Dempsey, General Kehler has said of his 
concern of our ability to do look-shoot-look: I think we are 
well behind the ball as we look to North Korea and the missile 
defense presence that we should have there. As we look to the 
rise of Iran, this committee has placed in the last NDAA 
language for an East Coast site that would augment our missiles 
in Alaska and give us that shoot-look-shoot. I would like your 
thoughts, General Dempsey, on the--you know, we look at 
Commander Jacoby, and he said, you know, an East Coast site 
would give us that increased battlespace--on your thoughts on 
the shoot-look-shoot doctrine and opportunity.
    Secretary Hagel.
    Secretary Hagel. Thank you, Congressman. On NATO and those 
exercises, and our complete full support of our continued 
alliance and relationships, absolutely we are committed and 
will stay committed to those exercises, to our allies, to the 
entire framework, the objective, the purpose of NATO. I don't 
know if you are aware, but last 4 years I have been chairman of 
the Atlantic Council, and I have given many speeches on this 
specific issue all over the country, all over the world. The 
critical relationship that we have with NATO, I don't believe 
there certainly not a collective security arrangement in the 
world like it, hasn't been. But it is bigger than just a 
security arrangement. It is the one anchor that secures 
interests based on human rights, based on the same values of 
each of the 28 members, and that is a pretty significant 
starting point. And it can't fix every problem and it shouldn't 
be expected to. But to maintain and to build and strengthen 
that alliance is absolutely critical to our interest, and it 
will certainly be reflected and is reflected in current and 
forward relationships.
    On your comment about walking away from the relationship 
with the Poland missile defense issue, let me just comment on 
that. We talked to the Poles and our NATO allies about the 
decisions we made on the ground-based initiative, and I think 
you know and we are continuing to stay committed, they know 
this, the President said this, to that relationship on the 
European Phased Adaptive Approach. One through three, we are 
looking at four for a lot of reasons. There is some of that 
phase four that we think is too expensive and probably doesn't 
do the job. We are looking at that. The Poles are in compliance 
with that, with us, they agree. We are not taking anything out 
of there. We are continuing to fulfill the commitments in 
Poland with the Poles, as well as to NATO. So I just wanted to 
give you my take on that, Congressman.
    The Chairman. If you have anything further on that, if you 
can take it for the record.
    Mr. Turner. If you could let me provide for the record your 
responses on the East Coast site, because you know that, 
obviously, since you have taken out phase four, which was the 
only portion that would protect the----
    [The information referred to can be found in the Appendix 
on page 107.]
    The Chairman. The gentleman's time has expired.
    Mr. Turner. That could be important.
    The Chairman. Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    First off, I want to thank the Secretary and the Department 
for putting in the budget request an investment at NAS [Naval 
Air Station] Whidbey Island for the P-8A hangar and hangar 
modernization as we are moving P-8As there to replace the P3s.
    The second point I would want to make is that as we are 
looking at the budget, near term and long term, something that 
tends to be a feast or famine proposition is the investment we 
make in electronic warfare. And if history is a guide, we are 
headed into famine on electronic warfare, and I hope that we 
can break that cycle in the near term and long term.
    But to a few questions here for the Secretary. The 
President has made clear that securing and removing vulnerable 
fissile material worldwide is a top priority. I know 
Representative Sanchez asked a related question. But the DOD in 
a memorandum of understanding with NNSA agreed to transfer 
dollars over to NNSA over several years to support nuclear 
weapons programs, and these funds are not available to support 
nonproliferation programs and securing and removing vulnerable 
fissile material.
    So why is that the case? We have one priority, it has been 
clear from the President, and DOD signed an MOU [Memorandum of 
Understanding] with NNSA to do something the opposite.
    Secretary Hagel. As I addressed part of that question 
previously, as you noted----
    Mr. Larsen. Right.
    Secretary Hagel [continuing]. Our specific responsibility, 
DOD's, with nuclear weapons is deterrence. The nonproliferation 
piece, as you know, has always resided in other agencies, 
specifically State. Now, we are part of that, we cooperate with 
that, START [Strategic Arms Reduction Treaty] treaty issues and 
so on. We participate in that, but we don't have responsibility 
for that.
    As we are looking at all these relationships, and in 
particular the agency relationship you are talking about, it is 
not in the budget because that is not our budget line 
responsibility.
    Mr. Larsen. I guess I would just note that--and we are 
looking at nonproliferation and nuclear weapons--that we not 
revert to stovepiping how we approach those issues when it 
comes to nonproliferation writ large, which includes our 
nuclear weapons program, but also includes investment in actual 
specific nonproliferation programs. And I would just caution us 
not to revert to stovepipes like we used to have many years 
before I got here.
    Secretary Hagel. Well, thank you. The Comptroller wanted to 
also add something.
    Mr. Larsen. If he can be very quick.
    Secretary Hale. I will. This is a national program, as you 
said. We don't have primary funding responsibility. We do 
provide some funding through the Cooperative Threat Reduction 
Agency, which would be about $500 million. Some of that goes 
for nuclear nonproliferation in support of other agency 
efforts.
    Mr. Larsen. Okay. Second question is, last year we had your 
predecessor, Mr. Panetta, and General Shinseki here for the 
first time ever to testify jointly on DOD and VA [Department of 
Veterans Affairs] cooperation. Have you made a commitment yet 
that you are going to continue the efforts that Mr. Panetta put 
forward to continue that cooperation with the VA, especially 
when it comes to electronic healthcare records and the transfer 
of those records and tracking these folks from the time they 
enter your service to the time they get to the VA and well 
beyond?
    Secretary Hagel. Yes, we are committed to continue to work 
with the VA. I just spoke with Secretary Shinseki yesterday. We 
have met a couple of times since I have been at DOD. We have 
talked many times on the phone, at a number of meetings. We 
have the responsibility in DOD. We produce the veterans. And we 
are not near where we should be. But yes, absolutely, we will 
stay committed and we will work as a partner and do everything 
we can to fulfill a seamless network.
    Mr. Larsen. Good. We need a seamless network, and I think 
the Department really needs to be sure that the folks working 
underneath you are stepping up to that commitment as well.
    Secretary Hagel. One of the first things I did when I got 
over there was to get into this. I was deputy administrator of 
the Veterans Administration in 1981 and 1982. Had a little 
something to do with getting their system on track.
    Mr. Larsen. I have got to launch one more question at you.
    Secretary Hagel. Okay, go ahead.
    Mr. Larsen. Are you in favor of closing Gitmo [Guantanamo]? 
And do you believe that you have any authority to transfer any 
detainee for any reason, whether that is judicial, medical, or 
military?
    Secretary Hagel. Well, I support the President's position 
on Gitmo. The reality is that we have responsibility for Gitmo 
now. There are 166 prisoners there now. That is where we are. 
So, as Secretary of Defense, I have to assure the security of 
that facility and all of the responsibilities that go with that 
detention facility, including the people that we have down 
there. And so that is my responsibility.
    Mr. Larsen. Just for the record, the answer to the second 
question, if he believes he has any authority to transfer for 
any reason, judicial, medical, or military?
    [The information referred to can be found in the Appendix 
on page 107.]
    Mr. Larsen. Thank you, Mr. Chairman.
    The Chairman. We will hear now, Mr. Kline, we will turn to 
you, and then at the end of your questioning we will take a 5-
minute recess. Mr. Kline.
    Mr. Kline. Thank you, Mr. Chairman.
    Thank you gentlemen for being here. I have got a question 
that is a little bit off of the budget and so I don't want to 
be guilty of ambushing any of you with this, but I just want to 
talk for just a minute and then ask a question about the 
Medical Evaluation Board backlog. And I don't know if this is 
something that you are on top of, and so of course I will be 
happy to take the answer for the record.
    But we have just got an awful problem out there that is 
affecting our soldiers. The Minnesota National Guard, for 
example, now has 168 of these Medical Evaluation Board cases 
pending. The National Guard Bureau Surgeon's Office reports 
5,269 open cases, and the average adjudication time--the 
average adjudication time for Minnesota cases is currently 4\1/
2\ years from the date of injury, and that is about the 
national average. It is an awful situation. And for the Reserve 
Component, for the Guard these soldiers have to travel to a 
base where there is an Active Duty surgeon, doctor, medical 
doctor, that can make the determination. It is a blow to 
morale, it is incredible that we have allowed this system to 
deteriorate in this way.
    And so my question is, what are you doing about it, and 
what can we do to help if you need legislation? And again I 
will be happy to take it for the record, but I don't want to 
let it slip by. It is something that we have to address. And I 
am astonished that it could have gotten to this point where you 
have these soldiers who are being almost literally jerked 
around as they have to travel sometimes halfway across the 
country to go and be evaluated and then come back and then have 
to turn around and go back again and take years to get the 
question answered. And this affects, of course, their ability 
to be retained, and it is an important part of the process.
    On another subject, because we are in an awful budget 
pinch, which we have talked about and we have seen the 
President's budget and your comments about it, I wonder if you, 
that the OSD [Office of the Secretary of Defense] or the Joint 
Chiefs, so either one of you have taken a serious look at the 
possibility of consolidating any part or all of the 16 DOD 
agencies or looked at the possibility of combining combatant 
commands like NORTHCOM [Northern Command], SOUTHCOM [Southern 
Command], EUCOM [European Command], AFRICOM [Africa Command]. 
These commands, I understand, were important. We created 
AFRICOM at a time of a lot of money and a lot of troops, the 
bizarre position of not even having a headquarters in Africa. 
And these headquarters take not only four-star generals, but 
then the appropriate number of lesser generals and SESes 
[Senior Executive Service] and staff, and then everybody has to 
have their own intelligence center. And it just seems to me 
that now is the time to look at that, and I would be interested 
in any thoughts that either of you have about that possibility.
    Secretary Hagel. Congressman, thank you. On your first 
question, that is intolerable, that is unacceptable. I was not 
aware of the specifics that you mentioned. I will become aware 
of them, we will get back to you, we will give you a complete 
answer and what we are doing about it.
    [The information referred to can be found in the Appendix 
beginning on page 116.]
    Mr. Kline. Thank you.
    Secretary Hagel. So on the second question, I am not aware 
of any serious consideration of consolidation of commands or 
any of those structures. Now, I am going to ask General Dempsey 
to respond.
    But I would say that as we get deeper into the strategic 
priorities and management review, I don't know whether your 
specific questions would be addressed exactly the way you 
addressed them, merging some of the combatant commands, and 
nine combatant commands we have now. But certainly pieces of 
those will be reviewed in this review.
    So, let me now not use any more of your time with me on 
this because the Chairman will have a better answer.
    General Dempsey. We are looking at the fourth estate, which 
is the defense support agencies, and we are also looking at the 
combatant commands, and not only them but the component 
commands that reside under them. We are looking at the 
architecture in its entirety.
    Mr. Kline. Thank you. And we would, of course, appreciate 
you sharing how you are doing on that with the committee as we 
go forward. I just think now is the time to do it. And so I 
appreciate the answer from both of you.
    And, Mr. Chairman, I yield back.
    The Chairman. Thank you.
    And, Mr. Secretary, when you respond to the gentleman, 
could you also give that to the committee? Because I think all 
of us are having that same problem in our districts. It would 
be good for us to see that.
    Secretary Hagel. I will.
    The Chairman. The committee will now stand in recess. We 
will reconvene at 12:15.
    [Recess.]
    The Chairman. The committee will come to order.
    Ms. Bordallo.
    Ms. Bordallo. Thank you very much, Mr. Secretary. And I 
would like to welcome Secretary Hagel, General Dempsey, and, of 
course, Under Secretary Hale.
    Gentlemen, in the 11 years that I have been in Congress, I 
have always wanted Guam to be better known. But I certainly 
didn't think it would be under these circumstances. And, Mr. 
Secretary, I want to thank you for your leadership and 
proactive approach with respect to the current North Korean 
threats, and your willingness to reposition a THAAD [Terminal 
High-Altitude Air Defense] missile defense system on Guam is 
certainly very reassuring news to my constituents and to the 
military on Guam.
    I also appreciate the Department's continued commitment of 
significant funding for the realignment of Marines from Okinawa 
to Guam. We have made some positive progress this past year, 
and I think the fiscal year 2014 budget builds off this 
progress.
    Mr. Secretary, I read in your statement that the fiscal 
year 2014 budget protects or increases key investments in 
missile defense at a cost of $9.2 billion. One aspect of this 
missile defense is to protect against ballistic missile 
threats, and the Department is procuring additional THAAD 
interceptors and Patriot missiles.
    Now, the EIS for the Guam realignment called for a 
permanent THAAD and Patriot missile defense system on Guam. 
Given the unpredictability of the various actors in our region, 
can we expect the recently deployed THAAD to remain on Guam 
permanently, which would be consistent with the EIS?
    Secretary Hagel. Congresswoman, thank you. And I appreciate 
very much your comments. I am going to make a brief comment in 
response and then ask General Dempsey to be more specific.
    You ended your statement with the observation, which is 
correct, of the uncertainty and the unpredictability in your 
part of the world right now, and that is what we have to factor 
in, in all our decisions as we prioritize where are the 
threats, where are they coming from, where they may continue to 
come from. So our decisions on THAAD, on all our platforms, are 
always evaluated on that basis, and it specifically addresses 
your area in Guam.
    Now, with that, let me ask General Dempsey to be more 
specific to answer your question.
    Ms. Bordallo. Thank you.
    General Dempsey. When we deployed THAAD we did so with the 
idea that we would review the decision in about 90 days, and 
that is because we only have one right now. We have another one 
in training and another one that will come on the year after 
that. And it would be prudent for us to wait to decide whether 
to leave it there permanently until we see how the rest of the 
world evolves in terms of ballistic missile threats. Right now 
Guam is protected from the sea by an Aegis system.
    So our commitment to you is we are not going to leave Guam 
unprotected. This particular capability may or may not stay 
there permanently.
    Ms. Bordallo. Well, General and Secretary, I would 
respectfully request that we have something there permanently.
    My second question is, as the ranking member of HASC [House 
Armed Services Committee] Readiness Subcommittee, the 
reductions already made to military forces and those requested 
of DOD in the coming years simply do not draw a parallel to the 
current threats facing our Nation. So, Mr. Secretary, I would 
like you to describe your level of confidence in the readiness 
of our force and your ability to meet existing commitments in 
the next 5 years. How will you know when we have reached a 
readiness crisis and how will you know that the force is not 
ready? What are the triggers or the metrics that make such a 
situation evident?
    Secretary Hagel. Thank you. First, as you know so well, 
readiness is our first priority. And I will begin with some of 
the conversation we have had this morning on the whole point 
behind the Strategic Choices and Management Review that I 
directed about a month and a half ago, which Deputy Secretary 
Carter and General Dempsey are leading, because it focuses 
right on that key question of readiness and when and how and 
when will we not know and when will we know and all the 
components of that.
    That is why we are doing this. That is why we are looking 
at everything, factoring in every budget reality, what may 
happen, what may not happen. But that is the essence of what we 
do in our main responsibility, having the capability to be 
ready, to respond, take initiative, agile, flexible, competent, 
capable, with a force structure, and everything else has to 
support that.
    Ms. Bordallo. Thank you.
    The Chairman. Thank you.
    Mr. Chairman, could I ask one further small question?
    The Chairman. No. The gentlelady's time has expired.
    Mr. Rogers.
    Mr. Rogers. Thank you, Mr. Chairman.
    And thank you gentlemen for your service to our country and 
for your attendance today.
    Mr. Secretary, I represent the Anniston Army Depot in 
Alabama. Several thousand employees have dedicated their 
careers to supporting our warfighters and they have served side 
by side with them here at home and in theater. The Department 
sent furlough notices across the entire civilian workforce. My 
question is, when it comes to the Anniston Army Depot and 
similar maintenance facilities like it that are funded through 
the Defense Working Capital Fund, which is fully funded and in 
fact has carryover work through into next year, why are they 
being issued furlough notices?
    Secretary Hagel. Congressman, thank you. I don't believe we 
have sent any furlough notices out.
    Secretary Hale. We have notified the Congress of the 
possibility of furloughs on February 20th, but we have not sent 
out individual notices of proposed furloughs to employees. We 
have said we may have to, but it is still being considered.
    Mr. Rogers. Would that ``may have to'' include 
installations that are funded by the Defense Capital Fund that 
is fully funded for this fiscal year?
    Secretary Hagel. Well, we are going to have to exempt some 
civilians for safety, security, the areas that are of highest 
priority. As to your specific question----
    Secretary Hale. Yes, it could. I mean, we haven't made a 
final decision. And the reason is, although you say they are 
fully funded, frankly, we are having terrible cash problems in 
all of our depots right now because of the reduction in 
workload, which is understandable given what is happening to 
the budgets that pay for them. So we have not made a final 
decision, but it could include some of the depot workers.
    Mr. Rogers. Under what basis, since the money is there, it 
has already been paid? I mean, they literally have carryover 
work well into the end of next year that is funded.
    Secretary Hale. Well, as I said, the working capital funds 
have to break even on a cash basis by law, we can't go below 
zero, and we have a cash crisis in virtually every one of our 
depots because the workload is being drawn down in many of 
them. So again I want to restate we have not made a final 
decision either way. But I can't sit here and tell you no 
chance there would be any furloughs of depot workers.
    Mr. Rogers. If in fact it does happen, I would really love 
to have a much more detailed conversation with you about how 
that could arise. But thank you.
    Mr. Secretary----
    Secretary Hagel. Excuse me, Congressman, if I may, to get 
to your point, your request, yes, we will. We obviously, if we 
have to do that and make any of these tough choices on 
furloughs, which as you know we have been talking about, 
hopefully we won't have to or at least minimize it. As you 
know, we have moved from 21 to 14 and maybe we can get better, 
maybe we can't. But we would let the Congress know of our 
actions.
    Mr. Rogers. Thank you. Mr. Secretary, your predecessor, 
Secretary Panetta, stated in here that he believed that the 
treaty route, with confirmation by the Senate, was the only 
appropriate way to undertake nuclear reductions with another 
state. Do you concur with that observation and that position?
    Secretary Hagel. Well, generally, that has been the route 
that we have taken. I mean it has been Soviet Union, Russia. 
And for the reasons treaties are important, I have always 
supported.
    Mr. Rogers. Well, there was an attempt under the Bush 
administration to try to outside the parameters of a treaty, as 
you know, you were in the Senate at the time.
    Secretary Hagel. Yes.
    Mr. Rogers. That was criticized soundly then for trying to 
get around the Senate and that it would not be verifiable. So I 
hope that you still feel as you did when you were a Senator 
that the Senate should have to ratify any nuclear arms 
reduction agreements.
    Secretary Hagel. Well, I think all those treaties are 
important, that route, that process, if for no other reason 
than what you just noted. It brings the American people into 
it, it brings the Congress that represents the American people 
into that process. Now, there may well be, as we get into 
complicated pieces here down the road, some variables to, well, 
can we do something better this way than a treaty? I don't 
know. But you look at all the options, you look at all the ways 
to accomplish the purpose and the end mean. But overall I have 
not changed my opinion as I sit here from where I was in the 
Senate.
    Mr. Rogers. Thank you.
    General Dempsey, do you believe that such an agreement 
would be verifiable outside the parameters of a treaty if 
confirmed by the Senate?
    General Dempsey. That is obviously a policy decision. What 
I have said as the military adviser is that any further 
reductions should be done as part of a negotiation and not 
unilaterally.
    Mr. Rogers. Thank you both and all of you for your service 
again.
    I yield back, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman. Thank you to the 
witnesses for your thoughtful testimony and endurance this 
morning.
    I want to ask Secretary Hagel a question about Afghanistan, 
but before I do I just want to run through a couple quick 
points as long as I have got you here. Number one, Secretary 
Panetta did, I think, make auditability of the Pentagon a 
priority, which a number of us, with Mr. Hale's assistance, 
have been pushing for on this committee, and I hope again that 
you will continue that effort. As we are dealing with budget 
issues, we have to see what we are doing, and waste and 
duplication, it is there, we know it, auditability will help 
that cause. And I did get your letter, and I want to thank you, 
that expressed your commitment to that.
    Secondly, on export controls, the Department did move 
forward about a few weeks ago to try and simplify the system of 
export controls for our defense manufacturing industrial base 
who are going to be, again, under a lot of pressure. You know, 
things like valves and helicopter parts and engine parts which 
have been restricted because of ancient, outdated regulations 
needs to be changed. And, again, good progress recently, and, 
again, I hope under your leadership that effort will continue.
    The last point is, is that the budget document tries to 
frame BRAC in the context of the Budget Control Act; 2021 is 
the timeframe of the Budget Control Act. As someone who has 
spent 7 years on the Readiness Subcommittee dealing with the 
2005 budget BRAC, which is not going to generate a penny of net 
savings for 13 years, no prior BRAC has been able to do that in 
less than 6 years, frankly, that is just a case that doesn't 
work. There may be other reasons why people want BRAC, but 
doing it in the context of the Budget Control Act, frankly, for 
a lot of us who have spent a lot of time on this issue, that 
just doesn't work.
    But my real question this morning is, again, you made your 
visit to Afghanistan, and I compliment you on the elegant 
response when you were asked about the situation there and 
described it as complicated. You know, I would just say, as 
someone whose district, we lost a Marine captain from Madison, 
Connecticut, whose funeral was a few weeks ago, who was the 
victim of so-called friendly fire, again 2014 we all get it, 
that is sort of the end date, but are you going to be coming to 
us with sort of your own thoughts now that you have had some 
opportunity to digest the situation over there about, between 
now and then, what is the pace? Is there, again, going to be 
sort of more feedback to us in terms of what your thoughts are 
on this conflict, which really should be our number one 
priority on this committee with 66,000 troops in harm's way.
    Secretary Hagel. Thank you. And thank you for your first 
two comments, and we will continue to work together on those.
    On your question regarding Afghanistan, first, you are 
exactly right, it is our first priority. We are at war, we have 
66,000 Americans there, and we have been there 12 years, and 
there is no higher priority. And we will continue to do 
everything to support that mission and make that the highest 
priority.
    As to your larger universe of thoughts on my thoughts 
regarding drawdown times and so on, when I was in the Senate I 
went to Afghanistan many times. Matter of fact, was in the 
first congressional delegation that landed there--I think it 
was 1 o'clock in the morning--under [unintelligible] in January 
of 2012--or, I am sorry, 2002. And doesn't mean I am an expert 
on it, but been back many times since. I support the current 
process, drawdown time. How we are doing it responsibly, I 
think it is critically important we do this responsibly. One of 
the first, maybe the first question I guess this morning was 
about Afghanistan from the chairman, about the Bilateral 
Security Agreement, and that is the centerpiece of how we 
continue to unwind and transition.
    I think that is the correct course. There are a lot of 
things that have to happen and be put in place, BSA being one 
of them. We have to be mindful of all the dynamics, Pakistan, 
so on. I will always be available to you on any basis for any 
question, whether you want to call me or have a one-on-one 
privately on this or my thoughts to any member of this 
committee.
    But just suffice to say, I think we are on the right 
course. We are doing it the right way. It is not done yet, a 
lot of problems. Question was asked about the OCO budget, how 
come we are not drawing that down because we are drawing our 
guys out. A lot of expenses yet remain, a lot of uncertainties, 
you know that.
    Every day I get a report, start the morning on Afghanistan. 
General Dunford was in 2 days ago. We spent 2 hours with him. 
As you know, the Chairman was just there last week. So there is 
no higher priority in the focus of DOD than getting this right, 
getting our people out safely, and doing what we have got to 
do.
    You mentioned the green-on-blue attacks, those kinds of 
things, huge problems. We are going to have to continue to deal 
with those. We have got NATO partners in there, ISAF 
[International Security Assistance Force] partners in there. 
Then the bigger question which came up here today is what kind 
of residual force do we leave behind. Define, train, assist, 
and advise, the President has said that will be our role. I 
think that is correct. But still a lot of pieces out there. So 
I am available to you or anyone else at any time to give you my 
thoughts. Thank you.
    Mr. Courtney. Thank you Mr. Secretary.
    The Chairman. Thank you very much.
    Mr. Franks.
    Mr. Franks. Well, thank you, Mr. Chairman.
    Thank you gentlemen for being here.
    Mr. Secretary, thank you for your presence here today, sir.
    During the March 15th press conference on missile defense, 
Dr. Jim Miller stated and related to North Korea that, quote, 
at that time, the threat was uncertain, right, we didn't know 
that we would see today what we are now, close quote. In other 
words, it sounds a little like that we were waiting on the 
North Koreans to succeed in developing missiles to attack the 
United States before we would need to improve our own missile 
defenses. And I just have to ask the hard question: Is this 
going to be the posture of the Obama administration in dealing 
with the evolving Iranian ICBM program? Do we need to wait for 
success by the Iranians before we deploy an additional 
capability or are we going to try to anticipate the evolving 
threats and be ready to meet them before they are deployed?
    Secretary Hagel. Congressman thank you.
    Let me begin with this. You know what this administration's 
policy is on Iran. The President has been very clear about 
that, preventing Iran from developing a nuclear weapon.
    Mr. Franks. I don't think the Iranians are as clear on it 
as the President would like for them to be.
    Secretary Hagel. Well, there are a lot of things that we 
would like the Iranians to be clearer on. But I think the 
President has been very clear on this. Our allies have been 
clear on this. We have, as you know, many channels working on 
this, diplomatic, P5+1 [United Nations Security Council plus 
Germany], which has met recently. The most significant 
international sanctions against a country, certainly, I think 
in our lifetime, U.N. supported.
    So we are working all the dynamics on this. Our force 
structure in the Arabian Sea, our capabilities, our military 
options, contingencies. So, no, we can't control internally 
what decisions are made, what they do. We are trying to have 
some influence over the Iranian leadership's decisions. Whether 
that will have an effect, the right outcome, the right effect, 
I don't know.
    But again, I think the President's position on this is 
right and has been right, and we will continue to go forward on 
that basis.
    Mr. Franks. Mr. Secretary, I guess my concern, as you know, 
I appreciate the commitment to sanctions and those things, I 
believe they are right and good. But to rely upon them without 
the backup of clarity that the Iranians would understand I 
believe is a mistake. We have sanctioned North Korea 
practically into starvation for nearly 50 years, and we find 
ourselves exactly in the place that we are today. So I am 
hoping that, you know, my hope was that somehow we could 
catalyze a commitment on the part of all of us to be ready for 
whatever they decide to do, and that is my main concern.
    General Dempsey, I would maybe ask you a question now. We 
see senior lawmakers in South Korea openly calling for South 
Korea to consider developing its own nuclear weapons 
deterrence. A recent poll shows that two-thirds of the South 
Korean public supports such a move. Similarly, we have seen 
calls by South Korean officials to redeploy U.S. nuclear 
tactical weapons to South Korea as a clear demonstration of the 
United States extended deterrent commitment.
    So I guess I would like to ask you, with that in mind, what 
actions do you think that we should be taking to strengthen our 
nuclear assurances to South Korea? Do you feel that redeploying 
U.S. tactical weapons, nuclear weapons to South Korea to 
strengthen our assurances is the best way? Or do you think it 
would be preferable for South Korea to do as they would like to 
do, to develop their own nuclear weapons capability?
    General Dempsey. Well, we are not encouraging any of our 
allies to develop. We have been very clear about our extended 
deterrence and assurance. And I think some of the actions we 
took in the last week or so with B-52s and B-2s were a clear 
demonstration of that.
    Secondly, we have been working with the South Koreans on 
revising their national missile guidelines to give them a 
ballistic missile capability to be able to range further than 
they had been able to range previously.
    So I think we are in about the right place, at least 
military to military, the public proclamations notwithstanding.
    Mr. Franks. But are you able to address the issue of U.S. 
nuclear tactical weapons in South Korea?
    General Dempsey. No, we do not advocate the return of 
tactical nuclear weapons to the peninsula.
    Mr. Franks. Mr. Chairman, thank you very much.
    And again, thank you gentlemen.
    The Chairman. Thank you.
    Mr. Loebsack.
    Mr. Loebsack. Thank you, Mr. Chairman.
    Thanks to both of you for your service, and Mr. Hale as 
well. Appreciate the opportunity to ask a couple questions on 
the readiness front, if I may. I do appreciate everything that 
our industrial organic base provides. I think we all understand 
how important that is, especially, obviously, when it comes to 
our arsenals, our depots, our ammunition plants, et cetera. And 
thinking about going forward in the event that we have another 
contingency, we have to be ready. There is no doubt about it. 
And that industrial organic base is going to be very, very 
important, as it's shown to be the case with these last two 
conflicts.
    Now, I think that to preserve our readiness, we have got to 
make sure that that industrial base stays warm during peacetime 
as well, and I think we can all agree on that. Mr. Secretary, 
you have indicated that reductions in the civilian workforce 
would be based on analysis designed to preserve essential 
skills and capabilities. We have to be able to do that at those 
arsenals, those depots, whatever the case may be. Can you 
specify how that analysis, any actions proposed by the 
Department would, in fact, preserve those capabilities found 
within that organic industrial base and ensure that we maintain 
that highly skilled workforce, something that is absolutely 
essential? Can you elaborate on that a little bit?
    Secretary Hagel. Congressman, thank you.
    First, I agree, and I think the entire leadership of DOD 
agrees with your emphasis on how critical it is to preserve 
that industrial organic base. So there is no issue there. Now, 
how do we do it in light of the kind of budget realities we are 
facing? Well, that is all part of the prioritization of 
balancing, as the General noted two or three times this 
morning. How do you balance all this and keep that readiness, 
but also preserving--in the Chairman's comments he got into 
this, this morning in his statement--preserve the ability for 
the longer term, for the future. And if you erode that base, 
then you are going to have a huge problem.
    One of the things that I have noted and the Chairman has, 
the chiefs have said that we are consuming our readiness at the 
cost of the longer term as we allow that base, if that happens, 
to erode. So we are going to do everything we can to preserve 
that base because it is critical to our future capabilities.
    Mr. Loebsack. And if we have a conflict down the road and 
we have let that base erode, it is going to be more costly in 
the end to get it back up and running again. And so we need to 
keep that in mind throughout as we are making these decisions, 
and I appreciate that.
    One other question I have about the Reserve Components, 
National Guard and Reserve. I appreciate your response earlier, 
Secretary Hagel, but I would like to turn to General Dempsey 
and maybe drill down just a little bit more deeply if we could. 
We all understand how important the Guard has been, the Guard 
and Reserve, in these two conflicts, the Title 10 missions that 
they have been on. We also understand how important they are 
for domestic responses to tornadoes, earthquakes, all the rest. 
If you could, General, just talk a little bit more about the 
coming years and how you see Active Duty versus Reserve 
Components that balance how we are going to maintain that 
balance, and, in particular, to keep those Reserve folks there 
in the event, because I assume we are going to still look at 
them as an operational force. How does that play out moving 
forward?
    General Dempsey. Hopefully, it won't be Active versus 
Reserve Component. We have actually read that book and some of 
us have that T-shirt.
    Mr. Loebsack. We had a bit of a concern about that with 
respect to Air National Guard.
    General Dempsey. Right. No, I know.
    Mr. Loebsack. Keep that in mind
    General Dempsey. I keep it in mind. I absolutely have it in 
mind. And so the idea here is we take a look at the total 
force, and I really do believe in the total force, and we 
determine which capabilities have to be immediately available 
and those need to be in the Active Component, and the ones that 
can wait for some period of time, we migrate those elsewhere.
    We have got the Chiefs and General Grass, the Chief of the 
National Guard Bureau, we have a Reserve representative on the 
Joint Staff. And as we go forward we will figure out how to 
have the right balance of capabilities. But make no mistake 
about it, if we go to full sequestration and maybe even 
something less, all of the components will be affected. But the 
commitment we have made is that we will go after this answer as 
a total force.
    Mr. Loebsack. Thank you.
    Just one last point I would like to make. I do want to 
associate myself with Congressman Wilson and his concerns about 
the benefits. I know we have to make tough decisions and there 
are going to be tradeoffs we have to make, we are going to have 
limited budgets, there is no doubt. But at the same time these 
are folks, as we all know, who volunteered, and we have to make 
sure we treat them, I think, with the dignity and the respect 
they deserve. So thank you very much.
    The Chairman. Thank you.
    Mr. Shuster.
    Mr. Shuster. Thank you, Mr. Chairman.
    And thank all of you for being here today. My question 
deals specifically with MEADS [Medium Extended Air Defense 
System], Mr. Secretary. During your confirmation process you 
assured your former Senate colleagues that you would uphold the 
NDAA prohibition on funding MEADS. What has changed that and 
why have you moved forward with it?
    Secretary Hagel. Well, what has changed is the 
appropriations bill that was passed a few weeks ago that put 
the money back in the budget to fulfill that last year 
commitment. According to our Office of General Counsel, and I 
asked for legal advice on this, they have told me that we are 
obligated to finish that contract as a result of that 
appropriations directive with the money, and that is what has 
changed.
    Mr. Shuster. Well, I respectfully think you need to get 
some new lawyers, because I believe it is pretty clear in the 
NDAA we said the final only obligation in 2012, and then in the 
language we have used, it is a prohibition on the use of funds 
for MEADS.
    In addition to that, it is foolish for us to be spending 
almost $400 million on a system that nobody is going to 
procure, nobody is going to buy. And in the times we face today 
with North Korea rattling their saber, in this case rattling 
their missiles, we ought to be focusing on missile defense. And 
I see that the President's budget cut over $500 million in 
missile defense. I mean, this to me is just foolish to be 
spending $400 million on a system that just is never going to 
be deployed.
    Secretary Hagel. I am not here to defend MEADS, but I would 
respond this way, aside from what I have already said about our 
legal counsel advising me that we are obligated to make that 
last payment. Two other points.
    Mr. Shuster. They say you are obligated under what law?
    Secretary Hagel. Under appropriations.
    Mr. Shuster. And again, this committee, the committee and 
the Senate Armed Services Committee, we write the laws, the 
appropriators just cut checks. So the law is pretty clear.
    Secretary Hagel. Thank you. But that was the advice I got 
from counsel. We went into it at some detail, and that was the 
decision I made. There are a couple other facets to this to 
respond to you. And again, I am not here to defend that system. 
That was all in place long before I got here.
    There would be, if we didn't fulfill that commitment, there 
would be litigation costs and there would be penalty costs 
which might have actually gone more than what we are going to 
do to fulfill our obligations to our partners, Italy and 
Germany, on that. Actually, there are some things that came out 
of that as I have asked a lot of questions about this, because 
I have gotten hit and will get hit again with questions on it 
and should be. What did we learn from this? Is any of this 
applicable for us to go forward? And I am told by our missile 
people there are a lot of things that we can use. Now, I know 
that doesn't satisfy with your question and concern.
    Mr. Shuster. Not only doesn't satisfy, but the fact that 
there is a 2005 memorandum of understanding that clearly states 
the responsibilities of the participants will be subject to the 
availability of funds appropriated for such purposes. And 
again, we passed a law that prohibits that, so it seems to me 
that your lawyers are wrong again.
    And as far as the components of interest, the MSE [Missile 
Segment Enhancement] interceptor is something we want, we are 
already integrating it into the Patriot missile system. And the 
other thing that we want, the 360-degree radar is under a stop 
work order because of the funding of the Germans and the 
Italians.
    So, again, the American people, the taxpayers are paying 
for something that is never going to be deployed while we have 
reaped, we have harvested the technology, the main technology 
that we wanted on the system. So again, we are going down a 
path here.
    And we have got North Korea, everybody is seeing the news, 
who knows what that crazy guy is going to do? But we have to 
make sure we are beefing up our missile system, and the 
President's budget cuts it by, I believe, $550 million. This is 
irresponsible. And again, you as the Secretary, I think you 
need to go back, I think you need to talk to your lawyers, 
because I think there is probably grounds here to sue the 
Department of Defense, and now we are going to get into 
litigation. And I think you have a responsibility to the 
American people first and foremost and get another crew of 
attorneys in there to make sure they understand the law.
    Secretary Hagel. I will ask them a question again. Thank 
you.
    Mr. Shuster. I yield back my time.
    The Chairman. Ms. Tsongas.
    Ms. Tsongas. Thank you, Mr. Chairman.
    I would like to return to the issue raised by Mr. Turner, 
the issue of sexual assault in the military. And I, like Mr. 
Turner, commend you, Secretary Hagel, for recognizing the need 
to reform Article 60 of the Uniform Code of Military Justice, 
especially so soon after coming into this position, and for 
your proposal to eliminate the ability of a convening authority 
to change findings after a court-martial. I think we were all 
shocked by the recent decision by a military convening 
authority, a general who had this authority under the Uniform 
Code as it currently stands, to throw out a jury verdict in a 
sexual assault case. And I appreciate your commitment to 
solving this problem.
    I would also like to thank you, General Dempsey, for all 
your efforts to prevent sexual assault in the military. I know 
we all appreciated very much your visit to the Hill last year 
to announce changes to the way the military handles sexual 
assault, and I admire the willingness you expressed in your 
written testimony today to explore new options and new ideas to 
confront this scourge.
    To give you a sense, we all know the numbers, but to give 
you a sense of the enormity of the issue, last year I attended, 
it was a gathering of women and men who had been assaulted 
while serving in the military. It was here in Washington under 
the umbrella of a service organization that has really worked 
on this issue. And I walked into a ballroom full of people who 
had been assaulted while serving in the military. It made the 
issue very real.
    And many members of this committee, we have been working on 
it for years, those who are more new to it, those who have been 
here over the many years and obviously we have had the support 
of our chairman, of Ranking Member Smith. So as a result, we 
have put a lot of tools in the toolbox for the services to 
begin to really to give you just more tools, to finally come to 
a better place than you certainly are today.
    Last year's defense authorization included language that 
created an independent review panel to review and assess the 
systems used to investigate, prosecute, and adjudicate crimes 
involving sexual assault and the related judicial proceedings. 
I know you mentioned it, Secretary Hagel, in your written 
testimony. But how will you go about the process of appointing 
people to this panel so that we have a group that is really 
willing to be bold and thoughtfully examine both military 
culture and the Uniform Code of Military Justice so that we can 
get a better handle on stopping these crimes?
    Secretary Hagel. Congresswoman, thank you. And thank you 
for your leadership over the years as well other members of 
this committee. I am well aware of what you have done and 
continue to do, and we thank you, and I look forward to 
continuing to work with you. We have a lot more to do, as we 
all know.
    On the sexual assault panel question, I am currently 
reviewing a list of names that had been brought forward from my 
office. That list started to accumulate actually before I 
arrived at the Pentagon. It has come from different services, 
the General Counsel's Office, all the components of DOD, to 
reflect individuals who understand this issue, are aware of 
this issue, have something to contribute if they were part of 
this panel. I am currently reviewing those names, and I think, 
according to the law, the Secretary has five designates on that 
panel. I think four come from the Congress, if I recall. So, I 
will make a decision on those panel members shortly and will be 
letting the Congress know about that decision.
    Ms. Tsongas. Well, I would encourage you to get a diversity 
of opinions, those who can take a clear-eyed look at the 
services and what they are doing and not simply those who--they 
are remarkable institutions. These crimes do such great harm to 
all the wonderful work that the services seek to do in 
protecting our country. But I think you can stand up to the 
harsh scrutiny of those from the outside as well and move ahead 
in a way that really does make a difference in the long run.
    I did a recent screening of ``The Invisible War'' back in 
Massachusetts and people are scandalized at what they are 
learning, and it just doesn't serve you well. So I encourage 
you to be very bold in the group that you suggest and bring 
forward.
    Secretary Hagel. Well, I will tell you that that group will 
be diverse, and that is the whole point of a panel like this, 
and that is why I am taking time personally going through it.
    Ms. Tsongas. Thank you. I look forward to working with you.
    Secretary Hagel. Thank you.
    The Chairman. Thank you.
    Mr. Conaway.
    Mr. Conaway. Thank you, Mr. Chairman.
    Secretary Hagel, welcome to your new responsibility. Mr. 
Hale would be disappointed if I didn't at least talk to you a 
little bit about auditing and the auditable financial 
statements of the Department of Defense. Your predecessor did a 
great job of creating the forward momentum to get this job 
done. The risk, of course, is change in leadership and now with 
sequester and all the other challenges that are out there, this 
issue might be one of those that could slip to a back burner. 
And I just appreciate your letter that you sent me the other 
day, but on the record here that you are as committed as 
Secretary Panetta was in getting this heavy lift done.
    Secretary Hagel. I am just as committed as Secretary 
Panetta. I am not near as smart as Secretary Panetta on these 
things. He had a long history of these kinds of matters, 
starting in this institution, as you all know, some of you 
served with him, on budget issues and actuarials and statements 
that actually made sense. So, yes, I will pick up where he left 
off. I already am. The Comptroller and I have had many 
discussions about this, as well as others in the institutions. 
Everybody is committed to get this done, and everyone is 
exactly where Secretary Panetta was and where we will continue 
to be.
    Mr. Conaway. Well, thank you, Secretary. I appreciate that. 
That is music to my ears. And I know you have some hard 
decisions ahead as you try to allocate resources across an 
awful lot of competing issues, but this is one that I 
appreciate your personal support. And I want to publicly 
acknowledge Bob Hale's yeoman-like work that he has done on 
this issue for years. It is kind of like Sisyphus, he keeps 
pushing this ball up and it keeps falling back on him, but he 
has done great work.
    Let me turn to Syria a little bit. It has been reported 
last month in the open press that Syria used chemical weapons 
or that chemical weapons were used. The President has stated 
over and over that that is one of his red lines about if that 
is the case. If a red line is crossed and we have to enact the 
plans, and I am assuming that General Dempsey and his team have 
put in place to do whatever it is we need to do, the question 
comes, how do we pay for that?
    And I think the chairman has sent the White House a letter 
recently asking that if we do something like that in these 
times of budgetary issues, that that ought to be a supplemental 
or a separate appropriations to do that rather than ask you to 
take that out of hide. Can you give us some thoughts on that?
    Secretary Hagel. Thank you. And I will let the Chairman 
respond specifically. But let's start with the question of how 
do you pay for it if we do something, and what we have to do 
and what we would do. Yes, I think it is pretty clear that a 
supplemental would be required. And, again, I am going to leave 
the specifics of that to the Chairman.
    Second, yes, we are preparing, have prepared, continue to 
prepare contingency plans, options for the President, all 
options on all situations, as to Syria using chemical weapons. 
As you know, the U.N. has empanelled a body to go in, but that 
is not moving forward very quickly, go in and investigate, take 
a look. What we have said publicly and what we believe, the 
United States, is that we have not detected use of chemical 
weapons. We stay very close to that. Obviously, if that line is 
crossed, then we have got a different situation. Then you get 
into the next set of dimensions to this if chemical weapons 
fall in the wrong hands.
    It is a very unstable, unclear situation in Syria, a lot of 
bad elements in play there. So this is a serious and 
complicated problem that we all have. The borders around there, 
the refugees. So this has to be handled pretty carefully. And I 
think the way we are proceeding here is responsibly. But the 
bottom line is that we may have to take some different action 
if that is required.
    Let me stop there, not to use up your time, ask General 
Dempsey for his thoughts.
    General Dempsey. I will just reaffirm what the Secretary 
said. It would take a supplemental.
    Mr. Conaway. Thank you, gentlemen. I yield back.
    The Chairman. Thank you.
    Ms. Hanabusa.
    Ms. Hanabusa. Thank you, Mr. Chair.
    Thank you for being here. This hearing is about basically 
the 2014 Department of Defense request for the budget. My 
problem is that as soon as we mention budget and what is the 
premises that we have in it, I am stuck. And let me explain to 
you why.
    First of all, the assumption is that the sequester will be 
repealed, and that is what your budget is based on. That is one 
thing. You know, I mean, we assumed that sequester would be 
repealed before we went into this continuing resolution cycle, 
and it didn't, and we know what the consequences of that has 
been.
    The second part of it is that the Budget Control Act of 
2011 also has the second component, which is the caps on 
spending. And that brings us back to a discussion we have had 
many times in this committee which is what does that $487 
billion that we have been promised, what does that represent?
    And, Mr. Secretary, in your speech before the National 
Defense University, you called it a reduction, you said it 
reduced the Department's planned spending by $487 billion. That 
sort of sounds to me like the caps of the Budget Control Act. 
It is like, you know, we are going to hold down our spending. 
And then, also, as part of this proposal, is $150 billion worth 
of savings.
    My problem is I need to understand how all of these 
interact with each other, because if the assumption, the 
fundamental assumption is we must get rid of sequestration, we 
all will have colleagues who would want to know how are we 
going to pay for the $1.2 trillion in terms of defense? And I 
understand the first 2 years of that was basically a 50 percent 
burden by the defense, the President comes up with a proposal 
of $1.8 trillion, of which defense is going to comprise $150 
billion. But in order for us to get all there we are building 
this on a whole series of assumptions.
    So if you can start by first telling me what is the $487 
billion? Do you intend for that to be applied to the caps? Or 
do you intend for that to be part of sequestration 
satisfaction? So where does that go? And after that, then why, 
if we are doing all this, why do we still need to talk about 
the ``B'' word, which no one likes, which is of course BRAC? 
Mr. Secretary.
    Secretary Hagel. Well, that is probably 3 or 4 hours' 
worth. But let me try it this way because you asked all the 
right questions and so on. Let me start with your first 
question: assumption that sequestration would not occur. That 
is the whole point again of why I directed a Strategic Choices 
and Management Review, because, as you know, you noted it, in 
Budget Control Act 2011, that is law. And so, we are looking at 
that possibility, as the months tick off, the real possibility 
that is what we are going to have to live with. So that is part 
of the review. So we are not assuming anything. That is why we 
have undertaken a review, partly.
    Second, why then if that is the case did you come up with 
the budget you did? Well, as you know, the House, Senate 
resolutions are essentially the same numbers for defense. So it 
is not that the President is out there somewhere in the ether; 
it is consistent with the resolution that the House and Senate 
passed.
    Probably more fundamental, as the Chairman and Mr. Hale 
know so very well, it takes a long time to build a budget. You 
can't build a budget of a $600 billion enterprise in a month or 
two. You have got all the pieces here that have to play into 
everything. So that is a component here that sometimes gets 
overlooked.
    So we are looking at everything. We are not assuming 
anything. Matter of fact, one of the points that I make in the 
review and I said in the speech I gave over at NDU is that we 
need to challenge every past assumption. I used that 
terminology for the obvious reasons. The $487 billion referred 
to, I don't have my speech in front of me, but what I think 
what that was referring to, what I was referring to is what DOD 
has already started to absorb over a 10-year period as a result 
of a previous agreement between Congress and the President. 
That is what I was referring to.
    Now, if I have not further complicated it. Thank you.
    Ms. Hanabusa. Thank you.
    I will yield back.
    The Chairman. Thank you.
    Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman.
    Thank you all for being here and for your contributions.
    Secretary Hagel, I would like to ask you a question first. 
On March 15th, when you announced that we would be able to have 
additional interceptors, you were standing next to Admiral 
Winnefeld, the Vice Chairman of the Joint Chiefs of Staff, and 
he said, and I am quoting from the transcript: We believe that 
KN-08, the North Korean missile, probably does have the range 
to reach the United States. And would you agree with that 
statement?
    Secretary Hagel. I don't recall him making. I wasn't 
there--I don't know if I was there or not. I am not sure if he 
was referring to Hawaii, which is part of the United States, as 
we know. So I don't know if that is what he was referring to. 
Certainly, as I said, there are things we don't know. So I will 
ask him if he was, and I will ask the Chairman.
    General Dempsey. Let me help a little bit here. You recall 
the Taepodong-2, which launched the satellite, the North Korean 
satellite into space. That had a third stage. And it is that 
third stage that was kind of the breakthrough for the North 
Koreans. And I think what Admiral Winnefeld was saying is that 
now that they have that third stage technology apparently under 
control, it could very well migrate to the KN-08.
    Mr. Lamborn. Okay. Thank you. And, General Dempsey, I would 
like to ask you my next question. The Defense Intelligence 
Agency [DIA] did a study that was finished last month. Now, 
while the contents of the study are classified, the conclusions 
and certain statements are not classified. And quoting from the 
unclassified portion which I believe has not yet been made 
public, they say quote, ``DIA assesses with moderate confidence 
the North currently has nuclear weapons capable of delivery by 
ballistic missiles, however the reliability will be low.''
    General, would you agree with that assessment by DIA?
    General Dempsey. You know, Congressman, with the number of 
caveats you put on the front end of this, I can't touch that 
one because I am not sure now. It hasn't been released. Some of 
it is classified, some of it is unclassified. Let me take that 
one for the record.
    [The information referred to is classified and retained in 
the committee files.]
    Mr. Lamborn. Okay. Let me repeat. Maybe I caught you a 
little bit off guard here because you have had so many 
questions today, and I understand this is a lengthy process. 
But they concluded, and this is public, this is unclassified, 
so I can make it public, DIA assesses with moderate confidence 
the North currently has nuclear weapons capable of delivery by 
ballistic missiles; however, the reliability will be low.
    General Dempsey. And your question is do I agree with the 
DIA's assessment?
    Mr. Lamborn. Yes.
    General Dempsey. Well, I haven't seen it and you said it is 
not publicly released, so I choose not to comment on it.
    Mr. Lamborn. Okay. Okay. Then let me ask my third question. 
Secretary Hagel, if we didn't have sequestration limiting the 
funds that the DOD has to operate with, would you prefer, would 
you require, would you order that we do have two carriers, two 
aircraft carriers present in the Arabian Gulf. As you know, we 
are down to one because of funding issues.
    Secretary Hagel. I would advise the President on that 
specific issue as I do on others, based on the advice I would 
get from the Chairman and the combatant commander in that area, 
the CENTCOM [Central Command] commander, as to what they think 
we need in order to fulfill the strategic interests and our 
capabilities of readiness to be prepared for all contingencies.
    Mr. Lamborn. Do you believe that having only one aircraft 
carrier instead of two is a limiting factor in our ability to 
project force and act as a deterrent in that part of the world?
    Secretary Hagel. No, I do not. I don't think it limits our 
ability to do that. And I base that on the conversations I have 
had with the Chairman and the Vice Chairman and others.
    Mr. Lamborn. Okay. Lastly, in the short time that I have, 
it has been told to me--admittedly by anonymous sources within 
parts of the DOD--that some of the civilian furloughs were not 
required in their initial plans for funding, but they were told 
to revise those plans and to come up with civilian furloughs. 
Is there any truth to that kind of statement?
    Secretary Hagel. Congressman, I don't know. I have not 
heard that, but let me ask the Comptroller. Thank you.
    Secretary Hale. I am not aware of that specific direction. 
We have not made decisions on furloughs. We are trying to look 
at a policy that minimizes adverse effects on our mission. That 
is the key goal.
    Within that and to the extent it doesn't violate it, we 
would like to see consistency and fairness. Because we are 
going to have to jump into this pool, we would like to jump 
together. But no final decisions have been made on furloughs.
    The Chairman. The gentleman's time expired.
    Ms. Duckworth.
    Ms. Duckworth. Thank you, Mr. Chairman.
    Mr. Secretary, I am very pleased to hear of your commitment 
to maintaining the National Guard and Reserve forces as an 
operational force. As someone who spent the first half of my 
military career as a Strategic Reserve and then the second half 
as part of the operational force, I applaud your commitment to 
that.
    My question actually has to do with the acquisition process 
that DOD undergoes. I also sit on the Oversight and Government 
Reform Committee, and over the last 3 months that I have been 
in Congress I have heard a lot of testimony about issues with 
DOD acquisition processes, with the F-35 process. The 
concurrent acquisition process has actually been called by a 
former Under Secretary of Defense for Acquisition, has been 
termed acquisition malpractice.
    We are moving on towards sixth-generation aircraft someday. 
I see also that we are planning only to select one contractor 
for the engineering and manufacturing phase for the Ground 
Combat Vehicle program instead of two, and while that cuts 
costs initially, in the long run it places that entire project 
in the hands of a single contractor.
    I also see in the budget that you have submitted that we 
are boosting the Littoral Combat Ship procurement to about $3.2 
billion, even though naval commanders have said that it is not 
a sufficiently--let me see here--does not have sufficient 
offensive capability.
    Can you talk a little bit in the light of sequestration and 
the current budget constraints what you are going to be looking 
at in terms of the defense acquisition process to see if there 
are not some cost savings there?
    Secretary Hagel. Thank you, Congresswoman, I appreciate 
your comments. Yes, there are savings that need to be found and 
will be found. Stepping back just for a moment, then I will get 
to some of the specific projects, as you know, starting with 
the current Deputy Secretary of Defense Ash Carter when he was 
the Under Secretary for Acquisitions, he worked very hard to 
put in place a whole new accountable acquisition system. 
Imperfect. I mean, the dollars here are immense. The projects 
are immense. The lead times, you know all the complications. It 
is no excuse.
    But many factors were starting to play out at the same 
time: auditable financial statements and holding contractors 
more accountable, taking a more realistic look at the kind of 
acquisitions that we started with, based on what. You mentioned 
the F-35 was a good example of that. We started with an 
interesting theory, but we weren't ready to start that program. 
And now, after many years of pain and billions and billions of 
dollars, we actually, I think, have it on track. I just met 
with the project director of the F-35 yesterday for an hour and 
a half to see where we are. Those costs are coming down per 
copy. There is some good news here.
    The GAO [Government Accountability Office] report that just 
recently came out, which you have probably seen with your other 
committee assignment, was actually pretty complimentary to our 
acquisition systems. Imperfect. Need more to do. Will do more. 
But it is a big area. As I said in my opening statement, 
acquisitions, procurement, research, development, all that 
together is a third of our budget. It is a huge sum of money. 
The complications of lead time and what do we need and do we 
really need this and all those questions.
    So let me stop there and see if our Comptroller has 
anything that he specifically, within the time we have got, 
wants to add to this. Thank you.
    Secretary Hale. Well, just briefly, Congresswoman, on the 
F-35, we have rephased it significantly over the last several 
years to try to reduce some of the concurrency. I think we may 
have had this discussion before the HOGR [House Oversight and 
Government Reform Committee]. Some concurrency is right. It is 
a hard judgment as to how much, but we don't want to string 
them out over an inordinately long period.
    Ground Combat Vehicle, tough call, but we believe that the 
savings that we achieved were worth it because they allowed us 
to reinvest substantial funds in existing Ground Combat 
Vehicles for the Army. We put much of that money back in and we 
felt that produced a quick payoff. But I understand the 
tradeoff that you are saying. And I think we are committed to 
the Littoral Combat Ship, believe it is an important part of 
the Navy and will be for many years.
    Ms. Duckworth. Are you going to continue the concurrent 
acquisition process for future weapon systems such as the 
sixth-generation fighter aircraft?
    Secretary Hale. There will probably be some concurrency in 
almost any major project, but I think we have learned our 
lesson that we need to look at that very carefully and really 
minimize it, recognizing that if you don't do the testing 
first, you have to backfit the planes, and it is very 
expensive, or the weapons, very expensive.
    Ms. Duckworth. Thank you. I am out of time, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Wittman.
    Mr. Wittman. Thank you, Mr. Chairman.
    Secretary Hagel, General Dempsey, Mr. Hale, thank you all 
so much for joining us today. Mr. Hale, it was great to be with 
you there for the commissioning of the Arlington just this past 
weekend.
    Secretary Hagel, I want to begin with you and focus on your 
comments about BRAC. We know going back to the 2005 BRAC that 
we won't enjoy savings from that until 2018. It was $35 billion 
to implement that. In your opening statement, you talked about 
$2.8 billion in the cost of the proposed BRAC that is in the 
President's budget. I wanted to get your perspective on whether 
you believe that in this time of uncertainty, especially facing 
the sequester, facing our drawdown in end strength, determining 
where we need to be strategically as a nation, and then where 
we are from budget constraints, is this really the right time 
to do a BRAC? Especially based on the recent history of the 
cost of BRAC and the time to accrue savings. In the face of 
budget constraints, is this the right time to pursue a BRAC?
    Secretary Hagel. Congressman, thank you. Well, it is the 
right question, and that question was not only asked but 
discussed for hours. I am going to give you the answer to it. I 
wasn't part of that decision, but I support it. I supported 
BRAC when I was in the Senate. But I will give you my overall 
take on it, then I am going to ask Mr. Hale to address 
specifically the savings issue, when do we start seeing savings 
and how much and is the squeeze worth the juice part of your 
question, I think.
    First on the rationale of BRAC, and then, as you say, at 
this time. I think it is important that we look at everything. 
If in fact we are drawing down our force structure 100,000 and 
making all the other strategic decisions that have been made 
with the Congress' involvement on this, and I know there are 
disagreements on specifics, so on, but that is where we are 
going for obvious reasons, then it seems to me, just 
legitimately, logically, that we are going to have to look at 
overhead. Why do you need the bases? Can you consolidate some 
of those bases? What are the strategic priorities? How do you 
implement those priorities? I don't know how you can come at it 
any other way without some kind of review, kind of a top to 
bottom.
    I understand the politics of this. I understand, as I said 
in my opening comments, it is very imperfect. You all sitting 
here know that, I know it. And still I think it is an important 
time to do it, I think it is worthwhile to do, and I think 
there are savings that you get out of it.
    If no other reason, it is important to get some sense of 
our leaders. They have to have some sense of what that 
inventory is. Do we even need that inventory?
    We, over the last 12 years, we have layered commands on 
commands on commands and weapon systems because we essentially 
have had, over a 10-year period, pretty much an uninterrupted 
flood of moneys going to DOD, for the reasons everybody 
understands and accepted and supported. This is a different 
time, so we are going to have to do some things differently and 
still protect the interest of our country.
    So let me take the rest of the time, if it is okay, 
Congressman, ask Mr. Hale to respond to the specific numbers.
    Secretary Hale. Let me try to answer your question on BRAC 
2005. Yes, we spent $35 billion, an enormous sum of money. We 
will save about $4 billion a year when it is fully in place, 
and it is close to that point now. We won't break even because 
of that huge sum till about 2018.
    We don't intend BRAC 2015 to repeat BRAC 2005. BRAC 2005 
built a lot of new facilities. It was partially in response to 
9/11. And we are just not going to do that again. This is going 
to be a more classic realignment and closure round. It usually 
takes 4 or 5 years to break even, maybe 6 at the most. We would 
expect $1 billion to $2 billion of savings when we get there.
    If we don't start now and get going, some successor 
Secretary of Defense--I don't want to limit your tenure, Mr. 
Secretary--but some successor is going to need those moneys and 
they won't be there. As you heard the Secretary say, we are 
saving $12 billion a year from past BRAC grounds, and those 
will go on as long as we don't reopen those bases.
    So I think we have to do it, even though times are tough. 
And we have figured in the money, we have added the upfront 
costs to this Future Years Defense Plan. We believe we need to 
move forward with BRAC 2015.
    Mr. Wittman. Very good.
    Mr. Secretary, I wanted to finish with this. In your effort 
to initiate the Strategic Choices and Management Review in 
order to avoid, as you say, unacceptable risk that have been 
caused by the sequester cuts and are you willing to accept a 
fundamental change in our military. I understand the concept of 
that, but after three rounds of budget cuts, in my mind you can 
only avoid unacceptable risk by two ways, either restoring 
resources or reducing missions, and otherwise, the radical 
reform is likely going to result in more risk.
    So help this committee understand this. What kind of 
fundamental change do you have in mind and can you name one 
reform that has been tried or previously proven to be unwise?
    Secretary Hagel. Well, the quick answer is----
    The Chairman. Gentleman's time has expired. If you could 
please take that one for the record, Mr. Secretary.
    Secretary Hagel. I will. Thank you.
    [The information referred to can be found in the Appendix 
on page 107.]
    The Chairman. We are running up hard against the votes here 
now.
    Mr. Enyart.
    Mr. Enyart. Thank you, Mr. Chairman.
    Mr. Secretary, as a former enlisted guy, I would like to 
congratulate you on your selection as Secretary of Defense. I 
think bringing an enlisted man to rise to the ranks of 
Secretary of Defense brings a great perspective that is 
probably needed in that position.
    General Dempsey, I believe I heard you say that post-2014 
in Afghanistan we are looking at a force of 8,000 to 12,000 
folks. What percentage of those approximately will be U.S. 
forces?
    General Dempsey. Yeah, Congressman, I did say that NATO's 
declaration was that range of 8,000 to 12,000. And historically 
it has been two-thirds, one-third. I say historically because 
we haven't had that negotiation with NATO.
    Mr. Enyart. And now also I believe you answered the 
question about why the cost for OCO is not going down when the 
size of the force is coming down substantially, and you 
indicated that that cost, that it was due to the cost of 
repatriating the forces and particularly repatriating 
equipment.
    Now, it is my understanding the cost to buy new Humvees, 
give or take $120,000. The cost to rebuild one is give or take 
$130,000. What considerations have been given to not 
repatriating that equipment but rather either transition it to 
the Afghans or destroying it in place? And what is your 
analysis of the cost factors there?
    General Dempsey. Yeah. Just to clear up on why isn't OCO 
coming down. In some cases the cost is up, you know, fuel 
costs, wherever it happens to be, reset and reconstitution.
    But to your point, there is a very deliberate process for 
taking a look at all kinds of equipment and materiel in 
Afghanistan and making a determination on whether to transition 
it, sell it to regional partners, bring it back, or destroy it, 
and that project is generally overseen by the Deputy Secretary 
of Defense.
    Mr. Enyart. Mr. Secretary, from what I have heard today, 
this morning, in testimony, we talked about the ends of your 
Department, the ends being the protection of this Nation. We 
have the ways and the means. Is there a serious mismatch 
between our ends and our ways and our means? Are we seeing 
that? And if there is, what is your analysis of what we need to 
do to align those ends, ways, and means?
    Secretary Hagel. Well, Congressman, thank you, and thank 
you for your earlier comments about the enlisted.
    I think you really, in that question, defined the purpose 
of the review, because it really does come down to your 
question, is there a mismatch, is there a disconnect? The 
expectations of what are our ends, is that somehow distorted 
right from the beginning, the way we are going to provide 
resources and the means and so on? And that is very much the 
intent, aside from the budget issues and be prepared and 
prioritize resources, whether it is a $50 billion hit each year 
or it is going to be $8 billion or $10 billion, but it really 
gets to ways, ends, and means.
    And that would be the answer I would give the Congressman 
here before you on what do I expect to come out of this review. 
I don't know what we are going to see coming out of this 
review. I didn't ask for the review because I had the answers. 
I asked for the review because I didn't have the answers. I 
don't know what the answers are going to be here.
    But I do know enough about this business or any business 
that you can't continue what we are doing with less resources 
in an uncertain world and less flexibility and less time. There 
is no equation that you can show me how that is going to work. 
So that is why I say I think your question is really the 
centerpiece of the whole point. We will be having further 
discussions, obviously, with this committee on what that review 
shows and what decisions we'll make, what policy, strategic 
decisions we need to bring to the President.
    The Chairman. Thank you. Gentleman's time has expired.
    The vote has started. It looks we are not going to finish 
everyone, so what I will do is call next is Mr. Coffman and 
then Mr. Gallego, and I am going to have to ask the rest of 
you, if you will please submit your questions for the record.
    And Mr. Secretary, General, if you could please respond 
accordingly, I would appreciate it.
    Mr. Coffman.
    Mr. Coffman. Thank you, Mr. Chairman.
    Mr. Secretary, General Dempsey, Mr. Hale, thank you all so 
much for being here today, and thanks so much for your service 
to our country.
    I support your call for a BRAC or Base Realignment and 
Closure Commission if in fact we have restructured our forces 
and we can exact some efficiencies, some cost efficiencies from 
closing bases we no longer need. However, what I would like is 
a commitment to look at overseas bases, which are not a part of 
the Base Realignment and Closure Commission process where we 
only look at bases within the United States, out of fairness.
    I think we can accomplish a lot of our goals, whether it is 
our 28,000 troops in South Korea or 79,000 troops still in 
Europe, through joint military exercises, through rotational 
forces, as opposed to overseas permanent military bases. And 
so, Mr. Secretary, I wonder if you might be able to address 
that.
    Secretary Hagel. Well, thank you, and I agree with you. We 
are currently undertaking a review and have been on that very 
issue, our bases overseas. Overhead, do we need them, can we 
consolidate them, everything you said, we are doing, and that 
is exactly right.
    To your point about allies and how we bring value to those 
relationships so we don't have to carry that kind of overhead, 
you are exactly right and that is what we are doing. I 
mentioned some of this in my speech at NDU. I mentioned a 
couple of these things in my opening statement this morning. 
But long before I got there, Gates was talking about, Panetta 
was talking about, General Dempsey has been talking about 
agility, flexibility, capability, and it must factor in our 
relationships with our allies. That is why I responded the way 
I did to the NATO question this morning, and what we are doing 
with the French in Mali, what we are doing with our other 
allies around the globe, trying to build--help them build 
capacity for themselves so that we have some partners with some 
capability.
    Mr. Coffman. Thank you. I know you talked about 
compensation for our personnel, and what I would like is a 
consideration with a greater emphasis, having had a military 
career where I deployed five times overseas, four times with a 
ground combat unit--ground combat units and then one time as a 
civil affairs officer, that it seems that--I don't think there 
is enough emphasis in terms of compensation for our deployed 
forces versus our forces who are in CONUS [continental United 
States]. Certainly doing a great job, but I think in terms of 
things like hazardous duty pay and things like that, maybe we 
ought to look at increasing those as opposed to simply the 
across-the-board type of increases that we do.
    General Dempsey, I wonder if you might be able to address 
that.
    General Dempsey. Yeah, if I could, Congressman, I'd also 
like to comment, since I have the mike open, on the issue of 
forward presence rotational deployments and what we call surge 
capability back in the homeland. We need to balance that out. I 
mean, I don't think you would ever suggest we shouldn't have 
some forces forward present, because they have an incredibly 
stabilizing effect. And so we don't want to become sanctuary 
America. We have to be out and about. The question is how much 
forward present, how much rotational.
    To your point about compensation, we are looking at every 
possible aspect of compensation. You are talking about special 
pays for those in this case. Could be special pays for doctors 
or aviators. We are looking at the entire spectrum of 
compensation issues.
    Mr. Coffman. Certainly for those that are forward deployed, 
particularly in Afghanistan today.
    Let me just mention one last point, and that is that, 
again, along the cost side in terms of maybe taking a look at 
slowing down the promotion system. We have this up and out 
process today, but with tension as high as it is, I am 
concerned that we are forcing out people that are good 
performers and have a lot of experience. And I think we ought 
to take a look at slowing down that promotion system and 
allowing people to have more time in their particular 
respective grades as opposed to the system that we have now 
that I think is fairly rapid in its advancement. If either one 
of you could answer that.
    General Dempsey. Yeah, if I could, because I spent some 
time as the Chief of Staff of the Army, as you know.
    We allowed promotion rates to be artificially accelerated 
because we were trying to grow the Army so fast. We grew it by 
60,000 over about a 3- or 4-year period. Promotion rates for 
lieutenant colonel and major, 95 and 90 percent, much higher 
than you would want them to be as a profession. And so we are 
ratcheting those back as well as changing retention and control 
points, but what you just suggested is competing with the 
reality that we have got to reduce the size of the force by 
100,000. So I will take your points to heart as I always do, 
but there are some competing narratives that we have got to 
reconcile.
    Mr. Coffman. Thank you, Mr. Chairman. I yield back.
    The Chairman. Mr. Gallego.
    Mr. Gallego. Thank you, Mr. Chairman.
    Secretary Hagel, General Dempsey, thank you so much for 
your service, both past and present. For my purposes here 
today, I would like to discuss not only the budget, but, to be 
blunt, whether as a country we can continue to meet our global 
objectives in this fairly challenging fiscal environment.
    And to the credit of the senior military and civilian 
leaders of the Department of Defense, there has been a lot of 
efforts, fairly meaningful efforts to reduce unnecessary 
overhead and administrative costs and those kinds of things 
over the last few years, including the end effects of 
sequestration, which I view as kind of a mindless policy. I am 
very happy to say that I wasn't here when that was enacted. I 
don't believe anybody can be supportive of allowing the 
sequester to continue and at the same time be pro-national 
defense. I mean, they are not congruent in my mind.
    I am honored to work on behalf of the military 
installations like Laughlin Air Force Base in Del Rio or 
Lackland and Joint Base San Antonio, Fort Bliss. Laughlin is 
one of our Nation's premier pilot training programs, and Fort 
Bliss certainly plays a key role in readiness, and Lackland as 
well.
    I want, however, at this point, to talk to you, some of the 
questions have been tinged with partisanship, which in national 
defense to me is always a little disheartening, but I want to 
talk, Secretary Hagel, you have seen more than probably anybody 
on this dais in the course of your life, and what I want to 
talk about is finding a better way to ensure that we take care 
of America's core national security interests, because you 
understand more than most, I think, that these are our kids, 
these are our sons and daughters and our brothers and our 
sisters.
    And so we have lost a few folks over the course of the last 
few years doing things that some of us would question. I mean, 
trying to essentially not necessarily ingratiate, that is 
perhaps not the right word to use, but to convince people about 
our sincerity or our efforts, and many times that hasn't worked 
so well. And how do you balance that? Because for me, I want to 
make sure that we have a clearly defined mission objective so 
that we understand at the end of the day that our first and 
foremost--you know, I mean, I wouldn't sleep. My little boy is 
8, and I wouldn't sleep. So how do we make sure that our 
parents and brothers and sisters are getting as much sleep as 
possible?
    Secretary Hagel. Congressman, thank you. I wish I was wise 
enough to give you a really good answer. I am not. But I would 
respond this way. Every generation is faced with a set of 
challenges and threats. No generation has escaped that. It is 
always how you respond to those threats.
    Each of us who has the great privilege of serving in some 
capacity, as you do, as everyone on this committee, as the 
three of us do at this table, have an immense responsibility 
not to fail your 8-year-old. And I think you start there. We 
will make mistakes in policy. It will be raggedy, imperfect. 
But I have always believed that as you look at all of this, and 
much of the discussion this morning is about my testimony, the 
Chairman's testimony, it was about our people. You take care of 
your people. That always has to come first.
    As I noted in my last sentence of my statement this 
morning, every policy must be worthy of the service and 
sacrifices of our men and women and their families that we ask 
to make these great sacrifices. For me, that is the starting 
point. And I am not the only one. Certainly General Dempsey has 
put a lifetime into this. I doubt if he ever sent a young 
person anywhere without asking that fundamental question to 
himself.
    So that is where you start, then you work outward on what 
is relevant, what is real, what is doable. And sometimes we 
don't prioritize and discipline ourselves as much as we should 
or ask the tough questions. And I think, you know, history is 
going to replay the last 12 years, and I am not going to get 
into that. I will let history deal with that. But not just 
mistakes, because everybody makes mistakes, but how carefully 
did we think through all those things?
    The consequences we are living with today, what General 
Shinseki is dealing with at the VA and our country and they are 
going to continue, are the consequences of decisions that were 
made 10 years ago and 8 years ago. So there are consequences to 
actions and consequences to non-actions.
    So, you know all these things, and I just say that because 
it is I think sometimes lost in the overall rush to find a 
quick answer and decision and we live in an immediate world 
where everything is a situation room, everything is just an 
emergency, give me an answer, give me an answer. And I realize 
the world that we live in is different today, too, than 50 
years ago. General Eisenhower had some luxury of having a 
little time. And that takes nothing away from General 
Eisenhower who I thought was one of the greatest leaders in the 
history of our country.
    It is not a good answer, but that is the only answer I can 
give you.
    Mr. Gallego. Thank you.
    Secretary Hagel. Thank you.
    The Chairman. Thank you very much. Gentleman's time has 
expired.
    Mr. Secretary Hagel, General Dempsey, Secretary Hale, thank 
you very much for your patience and for your willingness to 
share of your time here with us today. I think it has been 
very, very productive. This committee stands adjourned.
    [Whereupon, at 1:40 p.m., the committee was adjourned.]


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                            A P P E N D I X

                             April 11, 2013

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             April 11, 2013

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                   DOCUMENTS SUBMITTED FOR THE RECORD

                             April 11, 2013

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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             April 11, 2013

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             RESPONSES TO QUESTIONS SUBMITTED BY MR. BISHOP

    Secretary Hagel. Please refer to my attached written response, 
dated April 29, 2013. [See page 29.]
    [The written response can be found in the Appendix on page 99.]
    Secretary Hagel. Please refer to my attached written response, 
dated April 29, 2013. [See page 30.]
    [The written response can be found in the Appendix on page 99.]
                                 ______
                                 
             RESPONSES TO QUESTIONS SUBMITTED BY MR. LARSEN
    Secretary Hagel. Yes, I believe I have the authority to transfer 
detainees to locations outside the United States.
    However, my authorities with respect to Guantanamo detainees 
preclude transfers to the United States. And, in the absence of a court 
order, I am required by the National Defense Authorization Act (NDAA) 
for Fiscal Year (FY) 2013 to make certain certifications before a 
detainee may be transferred out of our detention facilities at 
Guantanamo Bay, Cuba, to foreign countries or other foreign entities.
    Moreover, with respect to transfers of detainees from the Detention 
Facility at Parwan, Afghanistan, I am required by the NDAA for FY 2013 
to submit to the appropriate congressional committees notice in writing 
of the proposed transfer of any individual detained pursuant to the 
Authorization for Use of Military Force (Public Law 107-40; 50 U.S.C. 
1541 note) who is a national of a country other than the United States 
or Afghanistan from detention at the Detention Facility at Parwan, 
Afghanistan, to the custody of the Government of Afghanistan or of any 
other country. [See page 36.]
                                 ______
                                 
             RESPONSES TO QUESTIONS SUBMITTED BY MR. TURNER
    Secretary Hagel. Please refer to my attached written response, 
dated April 28, 2013. [See page 34.]
    [The written response can be found in the Appendix on page 101.]
                                 ______
                                 
            RESPONSES TO QUESTIONS SUBMITTED BY MR. WITTMAN
    Secretary Hagel. The Department is currently in the process of 
conducting a strategic choices and management review (SCMR), which will 
examine the choices that underlie our defense strategy, posture, and 
investments, identify the opportunities to more efficiently and 
effectively structure the department, and develop options to deal with 
the wide range of future budgetary circumstances. It will be informed 
by the strategy that was put forth by the President a year ago, and we 
will keep strategy in mind at every step of this review. The results of 
this review are expected to provide the Department with a holistic set 
of strategic choices to preserve and adapt the defense strategy--to 
include possible adjustments to military personnel levels--if 
sequestration is not de-triggered. [See page 56.]
?

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


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                             April 11, 2013

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

      
                   QUESTIONS SUBMITTED BY MR. MCKEON

    Mr. McKeon. During your testimony, you stated:
    ``As to the nonproliferation question in the budget, as you know, 
DOD does not have responsibility for funding nonproliferation programs. 
Our responsibility is funding and maintaining, securing the stockpile--
the nuclear stockpile. And we'll continue to--to do that. The 
nonproliferation programs, which we work with State on, specifically, 
also Energy, but--and we participate in that process, but the funding 
doesn't come from DOD.''
    Could you please clarify this statement? How do you define 
nonproliferation and do you consider the DOD-funded Cooperative Threat 
Reduction program to be a nonproliferation program? If not, then what 
is the purpose and object of the CTR program and what will the $528 
million FY14 request for CTR be used for?
    Secretary Hagel. I answered the question in the context of the 
Department of Defense and the National Nuclear Security Administration 
(NNSA's) budgets, and how the respective funding for each differs in 
terms of the nuclear stockpile (over which we have a shared 
responsibility) and NNSA's nonproliferation programs. DOD does support 
a number of important nonproliferation-related efforts. In particular, 
DOD's Cooperative Threat Reduction (CTR) program, implemented by the 
Defense Threat Reduction Agency, is an example of DOD-funded 
nonproliferation work. DOD's CTR program plays a critical role in 
preventing and reducing weapons of mass destruction threats, 
complementing and supporting the President's nonproliferation agenda. 
The Nunn-Lugar programs, of which CTR is a part, recently celebrated 20 
years of successful efforts, securing or destroying as appropriate, 
biological and chemical weapons and production capabilities, strategic 
delivery systems and weapons usable fissile material.
    Mr. McKeon. The budget materials that the committee received this 
year states that ``There will be a rebalance of force structure and 
investments toward the Asia-Pacific and Middle East regions while 
sustaining key alliances and partnerships in other regions.'' Does this 
suggest that more forces and investment will be flowing to the Middle 
East. Is this a change to last year's defense strategy, which sought to 
re-balance to the Asia-Pacific theater while maintaining a presence in 
the Middle East.
    Secretary Hagel. There is no change in strategy. The Department 
continues to use the 2012 Defense Strategic Guidance (DSG) as its 
foundation for prioritizing DOD activities, missions, and presence. The 
DSG provides that DOD will rebalance toward the Asia-Pacific region 
while continuing to place a premium on U.S. and Allied military 
presence in--and in support of--partner nations in and around the 
Middle East. DOD will sustain a presence in the Middle East that is 
capable of responding to contingencies, deterring aggression, and 
countering violent extremist threats. The budget materials offered to 
the Committee are consistent with this guidance.
    Mr. McKeon. Is it accurate that the QDR is on hold until the 
strategic choices and management review is complete? How is the review 
going to impact the QDR? I understand your cost assessment team rather 
than your policy and strategy shop is leading the strategic choices and 
management review--can you explain why? Please explain why this is not 
a recipe for a budget driven QDR.
    Secretary Hagel. The QDR is being preceded by a 60-day Strategic 
Choices and Management Review. As I have stated, the 2012 Defense 
Strategic Guidance is the review's point of departure, ensuring a 
strategy-driven foundation for examining a range of potential budgetary 
scenarios. The review is led by the Deputy Secretary of Defense working 
with the Chairman of the Joint Chiefs of Staff. Because the purpose of 
the review is the development of potential budgetary scenarios and 
options for cost-savings, I directed the head of our cost assessment 
team to organize the effort. That being said, there is an integration 
group that convenes daily, including participants from the Office of 
the Under Secretary of Defense for Policy, the Joint Staff, and my 
personal staff, to oversee the review. I anticipate that the review 
will identify areas where the constrained fiscal environment could 
place stress on the Department's ability to execute the defense 
strategy. The results of the Strategic Choices and Management Review 
will then be examined in more depth during the QDR.
    Mr. McKeon. When do you expect to begin work on the QDR? Consistent 
with section 113 of Title 10 USC, Congress has made its appointments to 
the National Defense Panel, while the Department has not. When will you 
make your appointments to the National Defense Panel?
    Secretary Hagel. The QDR will begin soon after the completion of 
the Strategic Choices and Management Review, which will be provided for 
my review in early June. The QDR will be completed in time to deliver 
the QDR report to Congress in February 2014. I will appoint National 
Defense Panel co-chairs prior to the start of the QDR.
    Mr. McKeon. You recently stated that North Korea is ``skating very 
close to a dangerous line.'' What is that line? And what would be the 
implications for North Korea if they crossed that line?
    Secretary Hagel. My April 10 statement referred to North Korea's 
increasingly belligerent rhetoric and actions over the last several 
months, including its launch of a ballistic missile in December 2012, 
its third nuclear test in February 2013, North Korea's declaration in 
March 2013 that the 1953 Armistice Agreement was invalid, its threat to 
launch a preemptive nuclear strike against the United States and South 
Korea, and its pledge to restart its Yongbyon nuclear complex.
    I do not want to speculate about a U.S. response to hypothetical 
scenarios. The bottom line is that the United States is prepared to and 
capable of defending the homeland and our Allies against the North 
Korean nuclear, other weapons of mass destruction, and missile threat. 
The United States takes North Korean provocations very seriously, and I 
can assure you that there would be grave consequences for the regime if 
it took actions that threatened the security of the United States or 
our Allies.
    Mr. McKeon. Is it your assessment that the French had to conduct 
the operation in Mali due to the gains that Al Qaeda was making in the 
country?
    If so, had the French not stepped up to conduct this operation in 
Mali, would the U.S. have conducted the operation? If not, why?
    Secretary Hagel. The French intervened in Mali in response to a 
Malian request for assistance and because the French feared--as they 
put it--that ``the whole of Mali will fall into their (terrorist 
elements) hands, threatening all of Africa, and even Europe.'' We also 
recognized that al-Qa'ida in the Lands of the Islamic Maghreb (AQIM) 
was expanding its freedom of movement. We increased efforts with 
neighboring countries to contain the threat within Mali, and began 
providing support to the African-led International Assistance Mission 
in Mali (AFISMA). As AQIM forces moved south and the French responded, 
we made a policy decision to support the French efforts to counter this 
shared threat.
    Mr. McKeon. Is it correct that the Department has a $53 billion 
shortfall for FY13--$41B for the sequester, $10B for OCO, and $2B from 
fuel?
    Given this shortfall, have you or anyone in DOD asked OMB and the 
White House to submit to Congress a FY13 supplemental to make up the 
shortfall? Absent a supplemental request, how do you plan to make up 
the shortfall?
    Secretary Hagel. Yes, that is the approximate amount of the total 
funding shortfall the Department faces this fiscal year. The Department 
will prepare a reprogramming action that will address much of the OCO 
shortfall. Reduced consumption and potential mitigation of fuel prices 
for the remainder of the fiscal year may reduce some of the fuel bill. 
However, the Department has no way to mitigate the impact of sequester 
other than reducing spending across all the programs, projects, and 
activities that are impacted by the sequestration.
    In the current fiscal climate it is highly unlikely that a 
supplemental budget request will be favorably acted on. Therefore, the 
Department is not making any plans to submit a supplemental budget 
request.
    The Department highlighted the impact of sequestration. The 
Department is taking a wide range of actions to slow operating 
spending. These include travel and conference limits; civilian hiring 
freezes; layoffs of temporary/term employees; cutbacks in facility 
maintenance; reductions in base operating support expenses and reduced 
service support contracts. Civilian furloughs are unavoidable. 
Equipment maintenance inductions have been deferred to include ship 
availabilities. Multiple training events across all the Military 
Departments were cancelled. Flying hours and steaming days were 
reduced. Virtually every acquisition program will have to manage with 
fewer funds, resulting in selected reductions in procurement quantities 
and delayed research and development efforts. The Department is still 
assessing the impact to specific programs.
    As the military leadership has articulated, we are eating into 
readiness, not sustaining readiness. The real impact will be felt in 
the months and years ahead. There are no easy solutions to our dilemma 
other than taking action to de-trigger sequestration
    Mr. McKeon. Earlier this year we received a letter from senior 
military leadership, known as the 28-Star letter, warning of a 
readiness crisis. Your budget does not appear to request funds to fix 
the damage to our readiness caused by sequester. Please explain how 
this budget request addresses the readiness crisis? Are there any 
shortfalls?
    General Dempsey. The FY 2014 President's Budget (PB14) does not 
include funds to restore lost readiness caused by sequester because we 
do not yet know the full impact or the cost of recovery from the 
readiness shortfalls we are experiencing this fiscal year. PB14 does, 
however, fund initiatives that seek to return to full-spectrum training 
and preparation for missions beyond current operations in Afghanistan. 
The Department continues its work to understand and quantify readiness 
activities as we seek to maximize our preparedness for real-world 
missions.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MS. SANCHEZ
    Ms. Sanchez. I am very appreciative of the Department's strong 
support of biomedical research, which has led to many advances in 
medical care for our wounded warriors as well as many medical 
interventions that are in the pipeline. It is of note that many of 
these new diagnostics and treatments have the added benefit of helping 
all American citizens. I have noted with interest that the Department 
has sponsored a very important conference--the Military Health System 
Research Symposium (MHSRS)--which provides an opportunity for all the 
services to identify and share advances as well as identifying critical 
research needs. The real time sharing of important medical research 
information and the exchange of ideas fosters the development and rapid 
advancement of medical innovations. It is an important forum in which 
problems are identified and possible solutions developed. Many 
successful medical treatments and innovative research programs have 
been initiated as a resulted. It also provides a forum where academic 
and industry collaborators, at their own expense, can assist with 
developing solutions. I am concerned that some other conferences have 
been cancelled this year, but would like to recommend the continuation 
of the MHSRS. This conference provides a unique opportunity for a great 
deal of information to be exchanged and discussed between all 
interested parties in a very short period of time--which expedites the 
delivery of these new medical interventions to our wounded warriors. 
While I support cost saving measures, the department needs to be 
mindful that this conference has many additional benefits--not the 
least of which is to preclude duplication of efforts, thus saving both 
time and money. The benefit ultimately saves lives.
    Secretary Hagel. I appreciate your endorsement of this symposium. 
The Department finds the interchange to be very productive. In light of 
fiscal constraints, DOD is looking at other formats to conduct the 
conference, e.g. virtually, to curtail total costs while maximizing 
participation. I recognize the value of on-site attendance, but look to 
include other means of exchange that will hold down travel costs while 
maximizing participation.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. FORBES
    Mr. Forbes. As part of the final conference report on the National 
Defense Authorization Act (H.R. 4310), members of the House and Senate 
chose to include Section 533, protecting the conscience rights of 
service members and chaplains, and directing the Secretary of Defense 
to issue regulations implementing the protections afforded by this 
section. Since the bill was signed into law on January 2, 2013, what 
steps have you taken to implement section 533 and when will the final 
regulations be issued?
    Secretary Hagel. The Department of Defense places a high value on 
the rights of military personnel and their families to observe the 
tenets of their religions wherever they may be stationed around the 
world.
    Long-standing policy maintains that chaplains have the freedom to 
preach and conduct religious worship according to the dictates of their 
religions. Consistent with the Department's long-standing policy of 
religious freedom, the DOD is in the process of revising two Department 
of Defense Instructions (DODI's) to implement section 533 of the 
National Defense Authorization Act for Fiscal Year 2013.
    These revised instructions will fully support Service members' 
rights to practice their religions and receive religious accommodations 
as appropriate, as well as affirm Chaplains' rights to practice their 
faiths without fear of reprisal and without having to perform services 
which are inconsistent with their religious beliefs, and those of the 
religious organizations with which they are affiliated.
    The Undersecretary of Defense for Personnel and Readiness September 
30, 2011 memorandum to the Secretaries of the Military Departments and 
Chiefs of the Military Services supports section 533, through guidance 
that affirms Chaplains' rights to refuse participation in events that 
would be in variance with tenants of his or her religion or personal 
beliefs.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. MILLER
    Mr. Miller. Section 2814 of the FY13 NDAA, as signed by the 
President, requires the DOD to report on the recent Air Force Materiel 
Command reorganization. Can you provide an update to the status of this 
report? Can you tell me who in OSD has the lead for this report and 
whether OSD has directed the Air Force to provide input to assist with 
preparation of the report? If the Air Force has been so directed to 
support, what organizations are involved and what is their roles?
    Secretary Hagel. The Assistant Secretary of Defense for Research 
and Engineering (ASD(R&E)) has the responsibility for the report 
required by section 2814 of the FY13 NDAA on the Air Force Material 
Command reorganization. The Department intends to send the completed 
report by September 30, 2013. The ASD(R&E) asked the Secretary of the 
Air Force for Acquisition (SAF/AQ) for input on the reorganization, and 
how it is proceeding. This input will be sent to ASD(R&E), who will 
then complete the report, in coordination and consultation with the 
Assistant Secretary of Defense (Acquisition), and other key OSD 
offices.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MR. LANGEVIN
    Mr. Langevin. Secretary Hagel, Given the shortage of qualified 
cyber personnel in both the military and civilian domains, in your 
view, is DOD doing enough to ensure that such personnel are properly 
positioned within the Department? Are we diluting our cyber operators 
too much by spreading them out to the various commands, or are we 
striking the proper balance with regards to the integration of cyber 
capabilities into our force structures?
    Secretary Hagel. I believe that DOD is moving expeditiously to 
address the growing threats faced in cyberspace. As part of its efforts 
to develop cyberspace operations capabilities, the Department provides 
cyber capabilities where they are most needed. DOD must ensure that 
defense networks are more secure and have the capability to continue 
operating in degraded information environments. The Department also 
needs to provide strong support to combatant commanders. Finally, DOD 
needs to have both the capabilities and capacity to defend the United 
States against significant threats in cyberspace. In light of these 
priorities, DOD is building teams comprising more than 6,000 highly 
skilled military and civilian personnel to support national and 
Combatant Command specific missions, focusing on the most critical 
threats and requirements first. As DOD's cyber force structure is 
built, civilian and military personnel will continuously assess 
implementation to ensure that the Department is maximizing operational 
effectiveness and striking a reasonable balance across the priority 
missions.
    Mr. Langevin. General Dempsey, I'd like to touch on a couple 
operational aspects to anti-access area denial environments. Such 
battlespace limitations are likely to place a premium on particular 
assets, technologies, and competencies, particularly in the Asia-
Pacific region where there is a significant proliferation of 
submarines, advanced tactical fighters, and ballistic missiles, as well 
as many electronic warfare challenges. Can you speak to how the 
Department is resourcing, training, and investing in research and 
development in order to meet those challenges, particularly with 
regards to directed energy, undersea warfare, and advanced tactics, 
techniques, and procedures?
    General Dempsey. There are many ongoing efforts that are addressing 
these issues: Sustaining Global Leadership: Priorities for 21st Century 
Defense, clearly established the 10 primary missions of the Joint 
Force. The ability to project power despite Anti-Access/Area Denial 
(A2/AD) challenges is one of the 10 and when that particular mission is 
accomplished, it serves as a key enabler to accomplishing the other 
nine primary missions. The guidance directs the implementation of the 
Joint Operational Access Concept (JOAC). The concept describes how the 
joint force will operate to overcome the challenges you describe. The 
concept identifies 30 capabilities required to implement the concept. 
The JCS also identified three supporting concepts including: A multi 
Service Air-Sea Battle concept, which is being implemented, a concept 
for Entry Operations which is nearing completion and a concept for 
sustained joint land operation that will be developed. Holistically 
these concepts will ensure the development of capabilities to include 
training, materiel, leadership development and the advanced tactics, 
techniques and procedures to ensure the Joint force can operate in an 
A2/AD environment. Many combatant command and Service Title 10 training 
events are planned between FY14-18 to exercise countering the A2/AD 
threat. The Department has re-aligned training funds in FY14 to United 
States Pacific Command (USPACOM) in order to support the President's 
National Strategy of an Asia-Pacific rebalance. Three USPACOM exercises 
include objectives specifically focused on countering A2/AD threats.
    As for advances in directed energy capabilities, there is great 
potential for using directed energy for both kinetic and non-kinetic 
purposes to include advanced laser rangefinders and designators, use 
against sensors that are sensitive to light, uses to protect friendly 
equipment, facilities, and personnel, and to retain friendly use of the 
electromagnetic spectrum. Services are exploring the feasibility of 
directed energy weapons.
    Mr. Langevin. General, given how sensitive many aspects of cyber 
operations are, in your view, are we doing enough to ensure we are able 
to share information and operate jointly with our allies, particularly 
in the Asia-Pacific region, at least to the level of establishing a 
common operating picture both in the traditional domains and in 
cyberspace?
    General Dempsey. There are several information sharing, Common 
Operating Picture (COP) and cyber space efforts underway to ensure 
sufficient focus on these important issues.
    First, we are working very hard to improve interoperability and 
share information with our allies. Recent achievements include 
significantly improved email capability to share Secret releasable 
information with our regional FVEY partners (Australia and New 
Zealand). We also established the capability for Australians to access 
US web-based Secret-Releasable information and connected US and 
Australian secure voice telephone networks. These same web and voice 
capabilities will be available for New Zealand within six months. 
Secondly, to improve security of classified and unclassified 
information sharing we are working with our partners to cross certify 
national public key security systems. Using Public Key ``Smart Card'' 
technology to access networks and resources ensures our data exchanges 
are attributable. The first step in this area was made on 9 May 2013 
when the Department of Defense Chief Information Officer signed an 
unclassified public key cross certification agreement with her 
Australian counterpart.
    Additionally, beyond our regional FVEY allies, we are also 
developing processes and procedures that will better enable information 
sharing with any potential mission partner. This Mission Partner 
Environment (MPE) capability framework allows mission partners to plan, 
prepare, and execute operations in the same security domain supporting 
the Commander's intent for unity of effort.
    I agree that we need a Common Operating Picture (COP) in the 
traditional domains. The Global Command and Control System--Joint 
(GCCS-J) is DOD's primary fielded COP capability to the combatant 
commands, Services, Defense Agencies, and the Joint Staff. Pending 
GCCS-J enhancements will improve the cross domain sharing of COP data 
with mission partners enabling more effective joint operations.
    Lastly, DOD has a validated requirement for cyber situational 
awareness (SA) and is currently conducting an Evaluation of 
Alternatives that serves as the first phase to inform the allocation of 
the DOD's new and existing investments in achieving cyber situational 
awareness capabilities that will become part of our fielded GCCS J COP 
capability.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. TURNER
    Mr. Turner. The Joint IED Defeat Organization (JIEDDO) was 
established 7 years ago and has since been provided billions of dollars 
in funding to develop counter-IED capabilities for the warfighter. 
However, GAO has identified several significant internal control 
weaknesses and a lack of comprehensive visibility over all of DOD's 
counter-IED efforts external to JIEDDO, and that these issues have 
persisted for many years despite several reports and recommendations to 
address these problems. GAO cited, among other things, a lack of 
sustained management attention and senior DOD leadership as causes for 
these continued problems. It has also been argued by some that JIEDDO 
may not have all the authority it needs to effectively lead and oversee 
all of DOD's joint and military service counter-IED activities.
    What will JIEDDO's mission and organization be in the future beyond 
2014? Will JIEDDO stay a separate entity as it is currently, or will it 
be integrated into other existing organizations and processes?
    General Dempsey. JIEDDO is a joint entity and a jointly manned 
activity of the Department of Defense (DOD) operating under the 
direction of the Deputy Secretary of Defense. The future of JIEDDO's 
mission and organization are being discussed as part of a broader 
effort to determine the Department's long term approach to providing 
quick reaction capabilities. The Joint Staff is an active participant 
in these ongoing discussions to ensure alignment to current and 
developing strategic guidance and fiscal realities, while at the same 
time maintaining the requisite focus on the enduring threat that IEDs 
present. The options currently under consideration range from 
maintaining an organization with functions and responsibilities similar 
to those currently performed by JIEDDO to a distribution of those 
functions and responsibilities to other DOD organizations with related 
competencies. It is premature to speculate on what JIEDDO's mission and 
organization will be beyond 2014 until deliberations conclude and a 
recommendation is made to the Secretary.
                                 ______
                                 
                    QUESTIONS SUBMITTED BY MR. KLINE
    Mr. Kline. Does the Office of the Secretary of Defense recognize 
that there are inefficiencies in the Medical Evaluation Board system 
which are causing extreme hardship for Reserve Component soldiers? If 
so, what immediate and long term actions are being taken to correct the 
growing number of Medical Evaluation Board cases?
    Secretary Hagel. The Department is not aware of specific 
inefficiencies in the Medical Evaluation Board phase of the Integrated 
Disability Evaluation System (IDES) which are causing extreme hardship 
for Reserve Component soldiers. However, we are constantly looking for 
ways to make this process more efficient and less burdensome to the 
Service members. For example, effective March 2012, the Department 
provided Service members with the option to undergo interview and 
examination at a Veterans Health Administration location closest to 
home. This eliminates the need for Service members to travel long 
distances to a Military Treatment Facility.
    Through efforts like this, there has been a 26% reduction in 
processing timeliness for Reserve Component cases through the 140-day 
Medical Evaluation Board phase (174 to 128 days) over the last 6 
months.
    Mr. Kline. What actions are being taken to establish a singular, 
transparent system that adjudicates service members cases fairly and 
quickly?
    Secretary Hagel. In 2007, DOD and VA integrated the disability 
evaluation processes for seriously ill and injured Service members to 
establish, within the confines of existing law, a singular, 
transparent, faster, and fair process.
      DOD and VA eliminated redundant disability ratings, which 
simplified, accelerated, and increased the consistency of disability 
determinations between the Departments.
      DOD and VA provide Service members their disability 
ratings and anticipated disability compensation prior to separation 
from military service so that they are better prepared to make 
decisions about their future.
      Since implementing the integrated the disability 
evaluation process, DOD and VA decreased the time from referral for 
disability evaluation to VA benefits receipt by 30% (540 days to 376 
days).
      In the past six months, DOD and VA reduced the time for 
the medical evaluation portion of the integrated disability evaluation 
process by 39% from 132 days to 80 days, and the Departments are now 
meeting the 100-day goal. The time required to complete physical 
evaluation boards also decreased by 25%, from 133 to 100 days, and is 
currently meeting the 120-day goal. The Department of Defense is 
committed to improving the overall process and has taken the following 
actions to further improve the Integrated Disability Evaluation System 
(IDES).
      DOD increased IDES staff levels by 127% (676 personnel) 
to improve case processing timeliness and customer service.
      DOD authorized the Services to use PhD psychologists (in 
addition to psychiatrists) to adjudicate behavioral health cases, and 
reduced the requirement for Informal Physical Evaluation Board 
membership from 3 to 2 to increase their capacity to process cases.
      The Army improved its Medical Evaluation Board timeliness 
by 74% (reduced from 117 to 31 days against 100-day goal) at select 
locations by segmenting Soldiers into cohorts of simpler versus complex 
cases.
      The Military Departments are identifying and expediting 
back-logged cases and giving priority to clearing oldest cases first 
and are committed to clearing their back-logs by December 2013.
    Mr. Kline. The 2004 initiative regarding Integrated Electronic 
Health Records between Department of Defense and Veterans Affairs 
medical entities was abandoned in February 2013, apparently due to 
technological obstacles. An integrated record, shared between the two 
agencies, would have greatly helped transparency of the Medical 
Evaluation Board process, especially as the Integrated Disability 
Evaluation System (IDES) is fully implemented. The Veterans Affairs and 
Department of Defense have apparently opted for a more affordable 
solution to link the separate record systems using existing programs. 
When will this be complete?
    Secretary Hagel. I would like to dispel any belief that DOD and VA 
are moving away from a joint, seamless electronic health record (EHR). 
Our goal remains to seamlessly integrate DOD and VA electronic health 
record data, and while the strategy used to accomplish this goal has 
changed; the end goal remains the same. Therefore, we are implementing 
actions to accelerate availability of seamless information by 
developing a core set of iEHR data interoperability capabilities, such 
as allowing VA and DOD patients to download their medical records (what 
we call our Blue Button Initiative); expanding the use of the graphical 
user interface to seven additional sites and its expansion of two DOD 
sites; and improving the integrated electronic health record data 
before the end of this year, by standardizing health care data.
    Mr. Kline. Is there a difference in the average adjudication time 
between an Active Component soldier versus Reserve Component soldier 
through the Medical Evaluation Board/Physical Evaluation Board process? 
If there is a difference in time, why is there such a disparity?
    Secretary Hagel. Yes, there are slight differences. The Medical 
Evaluation Board (MEB) phase goal for Active Component Service members 
is 100 days, while Reserve Component Service members is 140 days. The 
DOD/VA allocates an additional 40 days for Reserve Component Service 
members to gather medical and Veterans records required for processing.
    Between November 2012 and April 2013 leading indicators show that 
MEB timeliness for Active Component cases improved 33% to an average of 
80 days. MEB timeliness for Reserve Component cases improved 26% to an 
average of 128 days. The Department is now meeting its goals for 
timeliness of MEBs for both Active and Reserve Component cases.
    The Physical Evaluation Board (PEB) phase goal for both Active and 
Reserve Component cases is 120 days. Between November 2012 and April 
2013 leading indicators show that PEB timeliness for the Active 
Component cases improved 17% to an average of 101 days, while Reserve 
Component cases remained steady at an average of 158 days. During this 
period, the number of Reserve Component cases at the PEB increased by 
65% (2,017 to 3,322). The Military Departments are increasing their 
capacity to adjudicate Reserve Component cases to meet the higher 
demand.
    Mr. Kline. Can the Department of Defense task Reserve Components to 
place clinical professionals on orders to augment existing Military 
Treatment Facility staff in order to relieve the backlog?
    Secretary Hagel. Yes, the Department can request Reserve 
augmentation. However, DOD does not believe it is necessary to augment 
military treatment facility staff with Reserve Component clinical 
professionals at this time. Because Medical Evaluation Boards (MEBs) 
are conducted at Military Treatment Facilities, a review of leading 
indicators show that MEB timeliness significantly improved for all 
Military Departments. Between November 2012 and April 2013, the number 
of Reserve Component cases in the MEB phase decreased 12%. During the 
same period DOD and VA improved timeliness 26%, shortening the MEB 
phase from 174 days to 128 days, which meets the 140-day Reserve 
Components MEB phase goal.
    Mr. Kline. What is the current backlog at the Military Treatment 
Facilities for Reserve Component and Active Component cases?
    Secretary Hagel. In April 2013, there were 9,185 Active Component 
cases and 2,672 Reserve Component cases in the Integrated Disability 
Evaluation System (IDES) that are exceeding timeliness standards.
    Mr. Kline. There appears to be great variance in communication 
models from Physical Evaluation Board Liaison Officer (PEBLO) to PEBLO, 
even among PEBLOs from the same Military Treatment Facility. Are the 
communication expectations for PEBLOs standardized?
    Secretary Hagel. Yes. DOD instruction 1332.38, ``Physical 
Disability Evaluation,'' sets standard communication requirements for 
PEBLOs, including the timeliness for counseling of service members upon 
their referral for disability evaluation (10 days) and the topics that 
must be communicated. Each year the Military Departments submit a 
report to DOD certifying their PEBLOs are trained and adhering to DOD 
policies. The Department recognizes the need for continuous learning 
and improvement and began a bottom-up re-build of the Disability 
Evaluation System (DES) training standards and objectives. DOD will 
provide these improved training standards and objectives to the 
Military Departments no later than June 30, 2013. Additionally, DOD is 
revising disability quality assurance requirements to measure PEBLO 
communication/practices.
    Mr. Kline. Do you need legislative authority from Congress to 
address and correct deficiencies in the Medical Evaluation Board 
process?
    Secretary Hagel. No. I appreciate the Congress' interest in this 
issue but the Department does not need any legislative assistance with 
the Medical Evaluation Board process at this time.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MS. BORDALLO
    Ms. Bordallo. The FY 13 NDAA under section 2832 requires the 
Department of Defense to meet 4 requirements in order to fully spend 
Government of Japan funds that have been received and are currently 
sitting unobligated in the U.S. Treasury. This is a matter of great 
concern to our community. What steps is the Department of Defense 
taking to meet these 4 requirements?
    Secretary Hagel. The Department of Defense will ensure that 
Congress is provided regular updates on the status of realignment 
planning, as well as on expenditures of any related funds. Within the 
next few weeks, the Department plans to provide a comprehensive 
response to Congress detailing DOD efforts to meet the requirements of 
section 2832. This response will be in the form of a letter from the 
Deputy Secretary to the leadership of this Committee and others. It 
will include details of the specific steps being taken to meet the 
requirements of Section 2832.
    Ms. Bordallo. It is important to ensure that as we draw down in 
Afghanistan that we posture our nation to ensure freedom of access and 
economic prosperity in the Asia-Pacific region. I read with interest 
the fact that you have ordered a Strategic Choices and Management 
Review that will challenge all previous assumptions and strategy, 
including those made in the 2011 Defense Strategic Guidance. The Asia-
Pacific region is the world's most militarized region with 7 of the 10 
largest militaries and multiple nations with declared nuclear arms. 
Instability in this region will have a direct and immediate effect for 
our nation. I wish to emphasize to you today the need for continued 
focus on the Asia-Pacific region. Mr. Secretary, can I get your 
commitment once again that as you and the Department look into the 
future, you will keep the Asia-Pacific Region at the center of your 
focus?
    Secretary Hagel. The 2012 Defense Strategic Guidance stated that 
the Department ``will of necessity rebalance toward the Asia-Pacific 
region,'' and that strategy remains in effect today. The United States 
will maintain its security presence and engagement in the Asia-Pacific. 
Specifically, defense spending and programs will continue to support 
key priorities. At the same time, reviewing strategies and underlying 
assumptions, as the Department is doing in the Strategic Choices and 
Management Review, is always a prudent measure to ensure American 
security.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. ROGERS
    Mr. Rogers. A senior Russian researcher, Sergei Rogov, recently 
claimed that the Aegis Ashore platforms we have chosen to deploy in 
Romania and Poland are a violation of the INF treaty because the VLS 
canisters could launch the Tomahawk Land Attack Missile, the TLAM 
cruise missile. Can you state whether you agree with that statement? Do 
these deployments violate the INF treaty?
    Secretary Hagel. The land-based Standard Missile-3 (SM-3) system, 
sometimes referred to as Aegis Ashore, will be developed, tested, and 
deployed in a manner that is fully consistent with U.S. obligations 
under the Intermediate-Range Nuclear Forces (INF) Treaty. Specifically, 
the land-based SM-3 will be developed and tested solely to intercept 
and counter objects not located on the surface of the Earth. Under 
paragraph 3 of Article VII of the INF Treaty, such a missile is 
specifically exempted from the limitations of the Treaty. The launcher 
for the land-based SM-3 will be fully consistent with the INF Treaty. 
The launcher will not be capable of launching the Tomahawk cruise 
missile or any missile prohibited under the INF Treaty.
    Mr. Rogers. Why is the INF treaty of enduring value to the security 
of the United States and its NATO allies?
    Secretary Hagel. The INF Treaty remains a foundational pillar of 
strategic stability for the Euro-Atlantic region, and one that is in 
the interests of the United States, the Russian Federation, and NATO 
Allies. Reintroduction of intermediate- and shorter-range missiles into 
the arsenals of the Parties would be a destabilizing element in the 
geostrategic relationship between the United States and the Russian 
Federation.
    Mr. Rogers. During his recent appearance before this committee, 
NORTHCOM Commander Jacoby testified that, ``What a third site gives me, 
whether it's on the East Coast or an alternate location, would be 
increased battle space. That means, increased opportunity for me to 
engage threats from either Iran or North Korea.'' (emphasis added)
    Do you agree with the Commander of NORTHCOM? Does a third site 
provide more ``battle space'' for the defense of the homeland?
    Secretary Hagel. Yes, a third Ground-Based Interceptor (GBI) site 
would provide increased ``battle space'' for some homeland defense 
scenarios. Generally speaking, more battle space increases decision 
time to determine the appropriate actions to be taken. A key question 
is whether the benefits associated with more battle space are worth the 
cost of a third site (approximately $3 billion for an East Coast 
missile field). Although there is no current requirement for a third 
site, the Department is in the early stages of identifying at least 3 
candidate locations for a third GBI site as directed by the Fiscal Year 
2013 National Defense Authorization Act. At least 2 of the possible 
sites must be on the East Coast. The Department will also conduct 
environmental impact statements in compliance with the National 
Environmental Policy Act for the possible sites as directed, and 
consider the benefits of such a site in comparison to the costs.
    Mr. Rogers. General Kehler, commander of U.S. Strategic Command, 
testified before the Senate Armed Services Committee last month that, 
``I am confident that we can defend against a limited attack from Iran, 
although we are not in the most optimum posture to do that today . . . 
it doesn't provide total defense today.'' What he was referring to was 
what the National Research Council described in its 2012 report as the 
basis of an East Coast missile defense site, ``to provide the battle 
space necessary for shoot-look-shoot of the entire country.''
    Do you agree that the East Coast of the United States is not 
presently defended from Iran with a shoot-look-shoot missile defense? 
What is the plan today to provide that capability now that Phase IV of 
the EPAA has been terminated?
    Secretary Hagel. The United States is currently defended from any 
intercontinental range ballistic missile that Iran may acquire in the 
foreseeable future. The Department is continuing the development of the 
technologies and capabilities that could allow for improvements to the 
shot doctrine in the future, and remains focused on pursuing the most 
cost-effective means to improve missile defense within the current 
resource-constrained environment.
    Mr. Rogers. Mr. Secretary, the decision to terminate the Precision 
Tracking Space System (PTSS) and the SM-3 IIB missile frees up $4 
billion over the Future Years Defense Program. We are told the March 
15th strategy will cost $1 billion. Is the remaining $3 billion coming 
out of the missile defense budget? As you know, that budget has been 
cut each every year the President has been in office and is $6 billion 
dollars below the Bush Future Years Defense Program.
    Secretary Hagel. Of the $4 billion, the Department added $2 billion 
back into the Missile Defense Agency budget across the Future Years 
Defense Program, and used the remaining $2 billion for other Department 
priorities.
    Mr. Rogers. In your nomination hearing to be Secretary, you 
distanced yourself from the recommendation of the Global Zero report, 
which you had previously signed, and endorsed the maintenance and 
modernization of the TRIAD of nuclear delivery systems. Do you continue 
to support the nuclear TRIAD of submarines and missiles, ICBMs and 
bombers with gravity bombs and cruise missiles?
    Secretary Hagel. Yes. I believe that retaining the Triad, 
consistent with the Nuclear Posture Review's conclusions, remains the 
right decision at the present time. I believe that the Triad's mix of 
intercontinental ballistic missiles, submarine-launched ballistic 
missiles, and nuclear-capable heavy bombers continues to support U.S. 
national security interests.
    Mr. Rogers. When can the Congress expect to receive the plan called 
for by the FY12 NDAA concerning the force structure of the U.S. nuclear 
force under the New START treaty? How much funding is required in FY14 
for force structure reductions to implement the treaty?
    Secretary Hagel. The FY14 President's Budget request for Fiscal 
Year 2014 maintains the current force structure (14 ballistic missile 
submarines, 450 intercontinental ballistic missiles, and 98 heavy 
bombers). A decision on reductions in U.S. forces to meet the New START 
Treaty limits is expected to be finalized before Fiscal Year 2015 
begins. This approach provides the maximum flexibility to tailor our 
force structure to meet deterrence requirements while still enabling us 
to meet the Treaty's deadline in February 2018. In the meantime, the 
Department will continue necessary planning activities to implement the 
reductions, to remove from New START accountability previously retired 
systems, and support the full verification and inspection regime 
allowed under the Treaty.
    Mr. Rogers. The Guardian newspaper reported on Tuesday that the 
father of Pakistan's nuclear bomb, A.Q. Khan, admitted to traveling to 
North Korea repeatedly over several years. It is reported these trips 
involved him ``handing over nuclear secrets in exchange for missile 
technology.'' How has this and other cooperation, including Iranian, 
Chinese and Russian, enhanced North Korea's nuclear program?
    Secretary Hagel. North Korea's links with the black market of 
illicit nuclear trafficking and the related exchange of nuclear-related 
expertise, technologies, components or material extends well beyond its 
dealings with A.Q. Khan. North Korea's nuclear program is supported by 
North Korean efforts across the globe. I am equally concerned about the 
potential proliferation by North Korea of weapons of mass destruction, 
ballistic missiles, and related materials. The dynamic structures of 
proliferation networks are challenging, but DOD is actively working 
with international and interagency partners to address this challenge.
    Mr. Rogers. The March 2013 data declaration shows that for the 
third year since entry-into-force of the New START treaty, the Russian 
Federation is already below the deployed warhead and deployed delivery 
vehicle limits of that treaty. Thus, is it correct that only the United 
States must reduce those deployed systems to comply with the treaty?
    Secretary Hagel. Under the New START Treaty, each Party retains the 
right to determine for itself the structure and composition of its 
strategic forces within the Treaty's overall limits. Although the 
Russian Federation is below the deployed warhead and deployed delivery 
vehicle limits as of March 1, 2013, it remains above the limit of 
deployed and non-deployed launchers of intercontinental ballistic 
missiles and submarine-launched ballistic missiles, and both deployed 
and non-deployed heavy bombers. Under the terms of the New START 
Treaty, each Party has until February 5, 2018, to meet the Treaty's 
overall limits.
    Mr. Rogers. Chairman Turner wrote to you in early March to ask you 
whether Russia was acting consistently with its arms control 
obligations to the U.S. At the time, you wrote that the final report of 
the annual ``Adherence to and Compliance with Arms Control, 
Nonproliferation, and Disarmament Agreements and Commitments'' report 
was ``in final coordination and forthcoming but has not yet reached 
[your] desk for review.'' Have you now reviewed this report? Can you 
now answer the question?
    General Dempsey. The report, which is submitted by the Secretary of 
State on behalf of the President, is in final coordination. I 
respectfully defer to that forthcoming official assessment.
    Mr. Rogers. When can the Congress expect to receive the plan called 
for by the FY12 NDAA concerning the force structure of the U.S. nuclear 
force under the New START treaty? How much funding is required in FY14 
for force structure reductions to implement the treaty?
    General Dempsey. The FY14 President's Budget maintains the current 
force structure (14 SSBNs, 450 ICBMs, and 98 nuclear-capable heavy 
bombers). A decision on reductions in U.S. forces to meet the New START 
Treaty limits is expected to be finalized before FY15 begins. This 
approach provides flexibility to tailor our force structure to meet 
deterrence requirements while still enabling us to comply with the 
treaty central limits by February 2018.
    Mr. Rogers. The March 2013 data declaration shows that for the 
third year since entry-into-force of the New START treaty, the Russian 
Federation is already below the deployed warhead and deployed delivery 
vehicle limits of that treaty. Thus, is it correct that only the United 
States must reduce those deployed systems to comply with the treaty?
    General Dempsey. New START was created with a view to maintain 
flexibility by allowing each Party to determine for itself how to 
structure its strategic nuclear forces within the aggregate limits of 
the Treaty. The United States and Russia have the freedom to determine 
how to meet the three central limits of the New START Treaty by 
February 5, 2018, which is the end of the treaty's seven-year reduction 
period. As indicated by the March 2013 biannual data exchange, the 
United States still maintains more strategic offensive arms than Russia 
in every category of declared aggregate data. Yes, it is correct that 
only the United States must reduce its deployed systems to comply with 
the treaty. Although the Russian Federation is below the deployed 
warhead and deployed delivery vehicle limits, it still is above the 
limit of deployed and non-deployed launchers of ICBMs and SLBMs, and 
deployed and non-deployed heavy bombers.
    Mr. Rogers. General Kehler, commander of U.S. Strategic Command, 
testified before the Senate Armed Services Committee last month that, 
``I am confident that we can defend against a limited attack from Iran, 
although we are not in the most optimum posture to do that today . . . 
it doesn't provide total defense today.'' What he was referring to was 
what the National Research Council described in its 2012 report as the 
basis of an East Coast missile defense site, ``to provide the battle 
space necessary for shoot-look-shoot of the entire country.''
    Do you agree that the East Coast of the United States is not 
presently defended from Iran with a shoot-look-shoot missile defense? 
What is the plan today to provide that capability now that Phase IV of 
the EPAA has been terminated?
    General Dempsey. We continue to look for ways to improve our 
missile defense of the East Coast. As required by Section 227 of the 
National Defense Authorization Act (NDAA) for Fiscal Year 2013, the 
Department of Defense will evaluate at least three locations, including 
conducting environmental impact assessments, for a potential additional 
Ground-Based Interceptor (GBI) site in the United States. At least two 
of these sites will be on the East Coast. The Administration has not 
decided to proceed with an additional site, but if that decision were 
made in the future, conducting an environmental impact assessment for 
each potential site in advance would shorten the timeline for 
construction.
    Our homeland missile defense system today provides coverage for the 
United States against possible North Korean and Iranian long-range 
ballistic missiles. The Department recognizes the additional benefit of 
improving the efficiency of shot doctrine in order to better manage our 
limited inventory of GBIs in the face of an increasing threat. A 
``shoot-look-shoot'' capability would potentially allow the United 
States to fire fewer interceptors per incoming missile. The Department 
is continuing the development of the technologies and capabilities that 
could allow for modifications to the shot doctrine in the future, and 
we remain focused on pursuing the most cost effective means to improve 
missile defense within the current resource constrained environment.
    Mr. Rogers. During his recent appearance before this committee, 
NORTHCOM Commander Jacoby testified that, ``What a third site gives me, 
whether it's on the East Coast or an alternate location, would be 
increased battle space. That means, increased opportunity for me to 
engage threats from either Iran or North Korea.'' (emphasis added)
    Do you agree with the Commander of NORTHCOM? Does a third site 
provide more ``battle space'' for the defense of the homeland?
    General Dempsey. Every military commander will tell you that more 
``battle space'' is better than less. It expands the commander's 
available options and increases the decision space to allow more time 
to determine the appropriate actions to be taken. The Department is in 
the early stages of identifying candidate locations for Environmental 
Impact Studies (EIS) for a third Ground Based Interceptor (GBI) site as 
directed in the Fiscal Year 2013 National Defense Authorization Act. At 
least two of the possible sites must be on the East Coast. The EIS 
would be part of the process to evaluate the value and effectiveness of 
a potential third interceptor site to the overall U.S. homeland 
defense.
    Mr. Rogers. The Guardian newspaper reported on Tuesday that the 
father of Pakistan's nuclear bomb, A.Q. Khan, admitted to traveling to 
North Korea repeatedly over several years. It is reported these trips 
involved him ``handing over nuclear secrets in exchange for missile 
technology.'' How has this and other cooperation, including Iranian, 
Chinese and Russian, enhanced North Korea's nuclear program?
    General Dempsey. [The information referred to is classified and 
retained in the committee files.]
    Mr. Rogers. General Dempsey, on the matter of verifiability, 
STRATCOM Commander Kehler recently responded to a letter from me 
stating that he has no reason to disagree with the position of the 
Perry-Schlesinger Commission and former Assistant Secretary of State 
Rademaker that Russia is not in compliance with the Presidential 
Nuclear Initiatives. Do you agree with them? Are the Russians in 
compliance with the PNIs?
    General Dempsey. Every military commander will tell you that more 
``battle space'' is better than less. It expands the commander's 
available options and increases the decision space to allow more time 
to determine the appropriate actions to be taken. The Department is in 
the early stages of identifying candidate locations for Environmental 
Impact Studies (EIS) for a third Ground Based Interceptor (GBI) site as 
directed in the Fiscal Year 2013 National Defense Authorization Act. At 
least two of the possible sites must be on the East Coast. The EIS will 
be part of the process to evaluate the value and effectiveness of a 
potential third interceptor site to the overall U.S. homeland defense.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. JOHNSON
    Mr. Johnson. Mr. Secretary, the inability of the Defense Department 
and Veterans Administration to share the medical records of active and 
veteran service members has become a national embarrassment. Millions 
of dollars have been spent over the last decade with no meaningful 
results. The National Defense Authorization Act of 2008 established the 
Interagency Program Office to act as the single point of accountability 
for both departments to develop and implement coordinated electronic 
health record systems and capabilities.
    I understand that, in the last couple of weeks, the IPO conducted a 
series of tests on integrating representative health data between the 
two systems in use. Have you been briefed on the results of those tests 
and the progress they demonstrated in identifying the best solution?
    Secretary Hagel. I have not yet been briefed significantly on the 
ongoing Integrated Electronic Health Record (iEHR) Increment 0 testing 
that is underway. I understand this is very early testing is intended 
to assess the proposed single sign-on and context management 
capabilities only. Lessons learned from this testing will be 
incorporated into follow-on efforts.
    Mr. Johnson. Given the pending requests for potentially hundreds of 
millions of dollars of Military Construction for Guantanamo, for only 
166 people and for a facility that we want to close, at what point does 
the funding begin to fail the common sense test?
    Secretary Hagel. The Department is currently in the process of 
assessing whether to repair or to replace certain facilities that have 
exceeded their anticipated service life (in some cases by many years). 
DOD will abide by its obligations to keep the Congress informed, 
consistent with current military construction authorities. The projects 
being considered would replace deteriorating structures, consolidate 
facilities, gain efficiencies by reducing detainee movements, and 
provide quality of life improvements for service members supporting the 
Joint Task Force mission.
    Mr. Johnson. Are you in favor of closing the detention facility at 
Guantanamo Bay?
    Secretary Hagel. The President's goal is to cease detention 
operations at the detention facilities at Naval Station Guantanamo Bay, 
Cuba. I fully support that goal.
    Mr. Johnson. Are you aware of the human rights violations ongoing 
in Bahrain and what more can the United States do, particularly given 
the 5th Fleet, to help protect the people there and ensure stability, 
which surely is in both of our national interests?
    Secretary Hagel. Yes, I am aware of the human rights violations 
that occurred in Bahrain. I share your concerns regarding the stability 
of Bahrain's government and the challenges the Kingdom faces in 
addressing internal unrest. However, I am optimistic that the Bahrain 
government is making some progress due to the restart of the National 
Dialogue and the King's appointment of the Crown Prince as the Deputy 
Prime Minister. I am also certain that Saudi Arabia, Kuwait, and the 
United Arab Emirates (UAE) will continue to play a productive role in 
encouraging the dialogue to move forward.
    The presence of U.S. Naval Forces Central Command (the Fifth Fleet) 
in Bahrain increases the ability of the U.S. Government to influence 
the Government of Bahrain's behavior regarding human rights by 
providing a means to reinforce U.S. concerns directly with the Bahraini 
political, military, and security leadership. In addition, the Bahrain 
Independent Commission of Inquiry, in its report issued in November 
2011, indicated that the Bahrain Defense Forces--with which the United 
States has a relationship--were not implicated in any of the human 
rights abuses that were described in the report.
    Mr. Johnson. Do you believe you have the legal authority to 
transfer a sick detainee to the continental United States?
    Secretary Hagel. No. There are a number of legal provisions that 
restrict the Department of Defense (DOD) from transferring detainees 
from Guantanamo to the United States. Section 1027 of the National 
Defense Authorization Act for Fiscal Year 2013 (FY 2013 NDAA) prohibits 
the use of FY 2013 funds ``to transfer, release, or assist in the 
transfer or release'' any detainee currently held at Guantanamo ``to or 
within the United States, its territories, or possessions.'' Section 
8109 of the DOD Appropriations Act for FY 2013 contains a nearly 
identical provision. These provisions do not contain exceptions.
    Mr. Johnson. Are you aware of the human rights violations ongoing 
in Bahrain and what more can the United States do, particularly given 
the 5th Fleet, to help protect the people there and ensure stability, 
which surely is in both of our national interests?
    General Dempsey. Yes, I am aware of the human rights violations 
that occurred in Bahrain. I share your concerns regarding the stability 
of Bahrain's government and the challenges the Kingdom faces in 
addressing internal unrest. However, I am optimistic that the Bahrain 
Government is making significant progress, due largely to the start of 
the National Dialogue and the King's appointment of the Crown Prince as 
the Deputy Prime Minister. I am also certain that Saudi Arabia, Kuwait, 
and UAE will continue to play a productive role in encouraging the 
dialogue to move forward.
    The presence of U.S. Naval Forces Central Command (the Fifth Fleet) 
in Bahrain increases the ability of the U.S. Government to influence 
the Government of Bahrain's behavior regarding human rights by 
providing a means to interact directly with the Bahraini political, 
military, and security leadership to reinforce U.S. efforts in this 
regard. In addition, the Bahrain Independent Commission of Inquiry, in 
its report issued in November 2011, indicated that the Bahrain Defense 
Forces--with which we have a relationship--were not implicated in any 
of the human rights abuses that were described in the report.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. BARBER
    Mr. Barber. Secretary Hagel, thank you for your time today, your 
service to our country, and your candid testimony. I know you agree, 
that maintaining our commitments to our allies is a paramount endeavor. 
As we re-balance defense and diplomatic funding to the Asia-Pacific 
region, it is important that we continue to send a strong message of 
support to our allies in other regions. Israel is an important ally and 
friend to the United States. In order to ensure regional stability and 
the protection of Israel from harm, a robust, multi-layered air defense 
system must be in place. The Iron Dome system has proven successful in 
defending Israel from the onslaught of rockets and missiles targeting 
Israeli civilians. However, more can be done. I believe we must 
continue to work to support Israel in this mission and provide them 
with the additional resources necessary to speed up the production of 
these batteries. As the United States continues our long and proud 
commitment of standing by our allies, what more can be done to support 
Israel and our other allies in the Middle East? And would you agree 
that standing up another line of production for the Iron Dome missile 
system would help Israel meet its defense goals?
    Secretary Hagel. As the President and I have said many times, the 
United States' commitment to Israel's security is unshakeable. Both 
American and Israeli officials agree that the defense relationship 
between the United States and Israel has never been stronger, and we 
are in constant contact with Israel to understand its defense 
requirements and ensure that it is able to defend itself in this 
changing security environment.
    As a testament to this, the President requested unprecedented 
levels of support for Israel, even in the midst of a tough fiscal 
climate. This year the U.S. provided Israel with $3.1 billion in 
Foreign Military Financing (FMF), and the Department has worked with 
Congress to provide significant additional funding for Iron Dome and 
other cooperative missile and rocket defense programs. To date, DOD 
transferred approximately $275 million for Iron Dome ($205 million in 
Fiscal Year 2011, and $70 million in Fiscal Year 2012), and will soon 
transfer nearly $200 million in additional Fiscal Year 2013 funding for 
Iron Dome. The extent of this funding was determined through close 
consultations with the Israelis to ensure that their Iron Dome funding 
requirements are met, and funding levels will continue to be determined 
in coordination with Israel and based upon its security needs. These 
discussions include the consideration of current and future production 
needs.
    Mr. Barber. Secretary Hagel, first let me say I applaud your 
initiatives to reform the Department's acquisition process. I think we 
all agree the acquisition process is overly complex leading to 
unnecessary inefficiencies. Second, I appreciate your focus on 
maintaining critical capabilities in lieu of new acquisitions. In a 
fiscally constrained environment, it makes sense to maximize our 
previous investments and be good stewards of the tax payers' money. For 
example, the budget mentioned maintaining the C-130 for airlift 
capability rather than procuring a new, more expensive airplane. The 
budget also noted the Department will retain F-15 and F-16 fighter 
aircraft. While we greatly anticipate the continued procurement and 
fielding of the F-35, the fact remains that the Air Force currently 
lacks the necessary fleet of F-35s to replace the A-10. Yet, also 
within the budget, the Department continues with its plans to either 
shift to the Air Force Reserve, or retire, the A-10. In my district, we 
have Davis-Monthan Air Force Base that is home to the 354th Fighter 
Squadron, a squadron of A-10s. They just returned from Afghanistan this 
week. Wouldn't you agree that these pilots, and the A-10s that they 
fly, provide a critical close air support role not readily filled by 
another airframe? What measures is the Department undertaking to ensure 
sufficient numbers of A-10s are kept mission ready and able to support 
our forward forces and combatant commanders?
    Secretary Hagel. The A-10 Thunderbolt II has served the country 
very well for the past 30 years. Through two wars in Iraq, and for the 
last 12 years in Afghanistan, the A-10 has been operated by all of the 
components--the Active Duty, Guard, and Reserve--and has been a 
significant battlefield force multiplier. The A-10 continues to undergo 
a series of airframe structural changes to ensure viability, has 
completed precision engagement (integration of data links with a 
cockpit/avionics suite upgrade), carries advanced targeting pods, and 
employs the latest in guided weapons. The Air Force will continue to 
invest in the A-10 for the foreseeable future, while still planning for 
the F-35 replacement process to fulfill future close air support (CAS) 
needs. We continue to train A-10 pilots and our budget ensures that the 
requisite number of A-10s necessary to support Combatant Commander 
requirements are available. Until we have sufficient numbers of F-35s, 
the Air Force intends to keep the A-10 viable and combat-ready.
    In short, the Air Force is ensuring A-10 availability, reliability, 
and maintainability with procurement of enhanced wing assemblies, 
scheduled structural inspections, replacement of aging fuselage 
longerons, and operational equipment upgrades. Combined, these efforts 
extend the A-10 service life to 14,000 hours. The A-10 will be kept 
operationally viable through software suite development that enhances 
the capabilities of its targeting pods and weapons upgrades. The Air 
Force is equipping the A-10 with a Helmet Mounted Cueing System to 
satisfy an Air Force Central Command (AFCENT) urgent operational need. 
These efforts will ensure our A-10s are kept at a mission ready status 
and are able to support our forward forces and Combatant Commanders. As 
the Air Force reallocates aircraft across the Total Force, the A-10 
will continue to provide CAS as it has for the last 30 years, 
regardless of component ownership.
    Mr. Barber. Secretary Hagel, I wanted to ask a question about 
TRICARE and our beneficiaries in the Philippines. For years, the 
Department of Defense has said there has been a problem of fraud by 
providers to TRICARE Management Activity in that country. TMA has 
implemented a number of policies that has had the result of reducing 
access to care, yet failing to combat fraud. At this time, TMA is four 
months into a new demonstration project, and a constituent of mine has 
kept me well informed on how it is proceeding. Mr. Secretary, I must 
say I am dismayed to report that the demonstration program has seen 
many flaws and I am quite concerned that beneficiaries are being 
limited to a number of providers, for example, one authorized hospital 
in a city larger than New York City. Many have seen their fees doubled 
or have had to pay up front for office visits. What is the Department's 
response to this situation? Can you please provide me a detailed report 
on the implementation of TMA's demonstration program since January 
2013, how much fraud DOD has found in TMA's work with Philippine 
providers, and how this new demonstration program is combating this 
fraud? Thank you for your timely consideration to these questions.
    Secretary Hagel. (1) Providers have a choice to participate as 
approved providers, which may result in an insufficient mix of primary 
and specialty providers. The TRICARE Management Activity approved 
specialty waivers in designated demonstration areas for beneficiaries 
to receive inpatient services at hospitals that are approved providers 
for outpatient services only. As of May 2013, there are seven 
institutional providers and 122 professional providers delivering 
health care in designated demonstration areas for Phase I. 
Beneficiaries can still seek care from certified providers, 
professional and institutional, outside designated demonstration areas. 
TRICARE reimburses health care costs based on the lesser of billed 
charges or the Philippine fee schedule located online at: http://
www.tricare.mil/CMAC/ProcedurePricing/SearchResults.aspx.
    To participate in the TRICARE Department of Defense Philippine 
Demonstration Project, providers agreed to bill at the lesser of the 
billed charges or the Philippine Foreign Fee Schedule. Approved 
providers have agreed to collect only the appropriate deductible and 
cost-shares from TRICARE Standard under the Demonstration Project. 
According to TRICARE policy, beneficiaries who use TRICARE Standard, 
whether they reside overseas or in the United States may be required to 
pay their deductible and cost-shares up front when receiving medical 
services.
    (2) In response to your request for a detailed report on the 
implementation of TMA's demonstration program, I have enclosed a 
document outlining the Philippine Demonstration Project.
    [The document can be found in the Appendix on page 102.]
    (3) In 2008, the Department's aggressive action resulted in 
seventeen individuals convicted of defrauding the TRICARE program of 
more than $100 million. The Department's health care antifraud 
initiatives have resulted in a cost avoidance of approximately $255 
million from 2006 through the end of fiscal year 2011.
    (4) To combat fraud under the Demonstration Project, the 
establishment of an approved provider network allows the Tricare 
Overseas Program (TOP) contractor to screen out providers under 
prepayment review because of the providers' historical fraudulent 
claims activity before they become approved demonstration providers for 
TRICARE. Approved providers must comply with the on-site verification, 
certification, and credentialing requirements. The TOP contractor 
provides one-to-one education to approved providers to ensure the 
approved providers understand how to submit accurate claims. To date, 
there have been no identified fraudulent billing activities under the 
demonstration project.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. CARSON
    Mr. Carson. Secretary Hagel, recently over 1,000 National Guard 
service members from Indiana had their deployments cancelled at the 
last minute under the auspices cost savings. This sort of off-ramping 
can be difficult on service members and their families--especially when 
it comes to employment, housing and higher education. I am interested 
in hearing more about what goes into these decisions, both generally 
and in the Indiana case, especially in light of the fact that National 
Guard units can be less expensive than active units in some cases. Can 
you describe your considerations and how, under sequestration, the 
Department justifies making these types of changes?
    Secretary Hagel. The Army made the decision to off-ramp in the case 
of the Indiana National Guard units to save money. Mobilization of 
these units was estimated to cost the Army $88M as opposed to using 
available active duty units that would not require these additional 
costs.
    The Service decision to alter the Indiana National Guard Units 
deployment is in accordance with current Department policies. In cases 
where deployment changes occur, the Services have policies in place to 
mitigate hardships on individual service members. The diligent efforts 
of Indiana Army National Guard Leadership and State Organizations, in 
conjunction with National Guard Bureau, the Department of the Army, and 
the Office of the Secretary of Defense, mitigated numerous hardship 
issues. These efforts include the re-missioning of interested Soldiers 
via the Army's Worldwide Individual Augmentation System, resume 
preparation courses, available Employment Support of the Guard and 
Reserve (ESGR) employment mediation services, employment counseling 
sessions, and a job fair hosted by the Indiana National Guard.
    Additionally, off-ramped Indiana Guardsmen were afforded the 
opportunity to extend their health care coverage through enrollment in 
Tri-Care Reserve Select health insurance. Finally, the deadline to 
apply for Free Application for Federal Student Aid (FAFSA) was extended 
so that all affected Indiana Guardsmen were able to re-enroll in higher 
education programs.
    The Reserve Component remains a full partner in the Total Force and 
will be employed along the full spectrum of required operations from 
the strategic reserve for the Nation, and in an operational capacity as 
an integral part of our operational Total Force as the Department 
shapes its military forces to implement the new defense strategy and 
respond to the challenges of a new era.
    Mr. Carson. The President's budget has laid out several steps to 
protect the industrial base, but as we all know the threat does not 
just rest on prime and major subcontractors. The threat is most 
pronounced with our small business suppliers, many of which have a 
small number of defense contracts and may not survive cutbacks or 
cancellations. If sequestration continues unimpeded, what is your 
assessment of its impact on our supplier base? What steps is DOD taking 
to minimize this impact? And what costs, if any, do you believe we will 
incur in the wake of sequestration to rebuild our base of small 
business suppliers?
    Secretary Hagel. The amount of actual dollars obligated to small 
businesses in FY 2013 is less than previous years at this point in 
time--and will remain so for the rest of the fiscal year as a 
consequence of the delayed implementation of sequestration--but our 
improved achievement as a percentage of total obligations has thus far 
helped to mitigate the impact to small businesses. Still, the fact 
remains that reduced spending will result in reduced awards to small 
and large businesses alike. Small businesses are much less capable of 
absorbing these cuts than large businesses.
    Although sequestration potentially impacts every contract, it will 
not impact every contract or business equally. The cuts will have a 
significant impact on service contracts--an area where the competitive 
advantage gained through aggressive pricing, lower overhead, and 
increased innovation has traditionally allowed small businesses to 
excel.
    Additionally, 60 to 70 percent of our contracted defense dollars 
are typically subcontracted, and many of our subcontractors are small 
businesses. The Department recognizes that small businesses do not have 
the capital structures and liquidity necessary to survive severe 
reductions in revenues, and that they rely on the prime contractors to 
pay them what they are owed in a timely manner, which could become more 
difficult during sequestration. For example, the Department has already 
been forced to suspend our program for making accelerated payments to 
prime contractors, which was intended to encourage the timely payment 
of their small business subcontractors. However, we have been working 
toward improving our monitoring of prime contractors' compliance with 
their approved small business subcontracting plans and will reemphasize 
that sequestration has not affected their obligation to provide the 
maximum practicable opportunity to small businesses.
    An additional source of impact on small business due to 
sequestration is the reduction in critical activities, such as 
outreach, match-making, and workforce training, that directly influence 
small business participation and procurement opportunities. Budget 
constraints have already caused the Office of Small Business Programs 
to postpone its planned Small Business Training Week, during which our 
DOD small business professionals have traditionally met in a central 
location to receive annual training. These direct and indirect factors 
could combine to cause a disproportionate impact on small businesses.
    The DOD Component Acquisition Executives and I closely monitor all 
aspects of small business performance, including impacts due to 
sequestration. We have taken several steps to mitigate the impact of 
sequestration on small businesses, including emphasis on increasing 
small business participation in specific services portfolios and in 
procurements under the simplified acquisition threshold. As far as 
calculating the actual costs of rebuilding our base of small business 
suppliers, any such estimates would be premature at this time as there 
is no way to accurately predict how long sequestration will last or the 
extent to which it will adversely affect the small business community. 
Primary responsibility for the health of most small business firms in 
the supply chain rests with our first- and second-tier suppliers, who 
in turn rely on market forces to ensure that critical suppliers remain 
in business. The Department has taken an active role in working with 
private industry through our Sector-by-Sector-Tier-by-Tier Evaluation 
Program to monitor the health of our overall supply chain.
    We will continue to monitor the impact of sequestration closely 
and, when appropriate, take mitigating actions as quickly as possible.
    Mr. Carson. What is your assessment of our military and diplomatic 
partnerships with Pakistan? Do you believe that they have improved at 
all since tensions arose following the raid on Osama bin Laden's 
compound? And how do you believe our relationship will change when we 
withdraw the last of our troops from Afghanistan--presumably leaving 
many Al Qaeda and other enemy combatants in the border regions between 
Afghanistan and Pakistan?
    Secretary Hagel. The May 2011 raid on Osama bin Ladin's compound 
and its aftermath underscored and accelerated tensions between the 
United States and Pakistan. The cross-border incident at Salala in 
November 2011, and Pakistan's subsequent decision to close the Ground 
Lines of Communication (GLOC) to U.S. and NATO/International Security 
Assistance Force (ISAF) cargo, marked a low point in the U.S.-Pakistan 
bilateral relationship.
    Since Pakistan re-opened the GLOC in July 2012, the United States 
and Pakistan returned to previous levels of cooperation, in part by 
refocusing the bilateral relationship on core counter-terrorism issues 
and stability and security interests. The Department works closely with 
Pakistan to rebalance our bilateral defense relationship and refocus it 
on a narrow set of security objectives.
    Pakistan has worked closely with the Department in bilateral 
defense meetings resulting in both sides endorsing this shift. The 
United States agreed to pursue a security relationship that prioritizes 
support for core capabilities: precision strike; air mobility and 
combat search and rescue; survivability and counter IED; battlefield 
communications; night vision; border security; and counter-narcotics 
and maritime security. Security assistance that supports these core 
capabilities--along with Coalition Support Fund reimbursements for 
Pakistan's counterterrorism/counterinsurgency operations that support 
Operation Enduring Freedom--advances U.S. interests by increasing 
Pakistani capacity to conduct operations against militant and terrorist 
networks in the Afghanistan/Pakistan border region.
    More broadly, these engagements and security and security-related 
assistance activities occur against a backdrop of increased Pakistani 
cooperation with the U.S., including the ground lines of communication 
(GLOC) opening, positive signs of support for Afghan reconciliation, 
trilateral border cooperation with Afghanistan, and ongoing 
counterterrorism operations. I believe that U.S. force reductions in 
Afghanistan will magnify the importance of Pakistani support for these 
efforts--underscoring the importance of sustaining our security- and 
security-related assistance for Pakistan.
    Mr. Carson. General Dempsey, recently over 1,000 National Guard 
service members from Indiana had their deployments cancelled at the 
last minute under the auspices cost savings. This sort of off-ramping 
can be difficult on service members and their families--especially when 
it comes to employment, housing and higher education. I am interested 
in hearing more about what goes into these decisions, both generally 
and in the Indiana case, especially in light of the fact that National 
Guard units can be less expensive than active units in some cases. Can 
you describe your considerations and how, under sequestration, the 
Department justifies making these types of changes?
    General Dempsey. On 20 March 2013, Headquarters Army published 
Execution Order (EXORD) 104-13 affecting the programed sourcing 
solution for support to Multinational Force and Observers (MFO) Sinai 
and Joint Task Force Horn of Africa (JTF HOA). This order changed the 
sourced forces from the 76th Infantry Brigade Combat Team, Indiana Army 
National Guard, to active component Army forces. This change was 
necessary due to budgetary constraints.
    Forces affected consisted of 570 soldiers scheduled to deploy on 16 
May 2013 supporting JTF HOA and 459 soldiers scheduled to deploy on 18 
July 2013 supporting MFO Sinai.
    All those involved in making these decisions understand the 
difficulties experienced by our Guardsmen and Reservists when scheduled 
deployments are off-ramped. In this case, the National Guard Bureau, 
Department of the Army and Army Forces Command diligently worked to 
publish an amended de-mobilization order on 28 March 2103 moving the 
planned off-ramp date to 21 April 2013. This adjustment was meant to 
give our Guardsmen sufficient time to reverse any plans they had made 
relating to the deployment.
    In addressing the larger issue of how these decisions are made, it 
is true that reserve component forces can cost less than active 
component forces. The Indiana situation is an example of when this is 
not the case. Because the Army had uncommitted active component forces 
that could accomplish the same missions, utilizing a National Guard 
solution actually becomes an added expense. We would now be paying for 
maintaining the uncommitted active forces and the mobilized Army 
National Guard forces.
    Mr. Carson. What is your assessment of our military and diplomatic 
partnerships with Pakistan? Do you believe that they have improved at 
all since tensions arose following the raid on Osama bin Laden's 
compound? And how do you believe our relationship will change when we 
withdraw the last of our troops from Afghanistan--presumably leaving 
many Al Qaeda and other enemy combatants in the border regions between 
Afghanistan and Pakistan?
    General Dempsey. As stated in my testimony, we are gradually 
rebuilding our relationship with Pakistan from its low point following 
the trying events of 2011. While we are unlikely to return to the 
aspirational strategic partnership we envisioned in 2010, Pakistan has 
taken a number of positive steps in the past year towards forging a 
more modest and sustainable relationship, most notably the signing of a 
tripartite border document with Afghanistan to standardize border 
operations. As we reduce our footprint in Afghanistan, we need to be 
mindful of Pakistan's concern that our drawdown will require close 
coordination with all regional partners to ensure the region remains 
stable. We must acknowledge that a secure and stable Pakistan is in our 
national interests and essential to the stability of the region as a 
whole. The threat from militant groups in the tribal border regions and 
other volatile areas is unlikely to diminish as ISAF forces withdraw, 
it is important that our security assistance programs reflect our 
commitment to support Afghanistan and Pakistan in this fight.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. NUGENT
    Mr. Nugent. General Dempsey, you warned this Congress and the 
President of the effect sequestration would have on readiness. What 
would a budget request look like that really did reset all your 
equipment, procure the replacement assets you require, and reinstate a 
training schedule that maintains the level of readiness our troops 
deserve? What can you say to assure me, my wife, and all Blue Star 
parents, that the Pentagon's budget recommendation will provide our 
sons and daughters with all the equipment they need to fight and win 
wars--and then safely return home?
    General Dempsey. We do not yet know the cost of fixing the 
readiness of the force following the sequester cuts to training in this 
fiscal year; therefore, these costs were not included in the FY 2014 
President's Budget (PB14). PB14 does, however, fund initiatives that 
seek to return to full-spectrum training and preparation for missions 
beyond current operations in Afghanistan. The Department continues its 
work to understand and quantify readiness activities as we seek to 
maximize our preparedness for real-world missions.
                                 ______
                                 
                 QUESTIONS SUBMITTED BY MR. BRIDENSTINE
    Mr. Bridenstine. My philosophy is that a strong America results in 
a safer world and that a weak America invites aggression.
    My specific concern is about missile defense. We have seen this 
administration cut $6 billion from missile defense over the last 4 
years. During the campaign we heard the President tell Russian 
President Medvedev the following:
    This is my last election. After my election I will have more 
flexibility.
    He was talking specifically about our missile defense capabilities. 
After the election, he has quickly moved to restructure the SM-3 Block 
2B missile interceptor program. This would have provided defense 
against a long-range missile aimed at our East Coast.
    Now we see his budget. It includes a $600 million cut to missile 
defense. It also includes significant cuts to Israel cooperative 
missile defense programs.
    We have established a pattern of behavior in this administration 
that favors cutting missile defense. Yet, North Korea is preparing a 
missile launch and Iran continues to develop missile capabilities. It's 
surprising that your budget request continues to cut missile defense 
since weakness is provocative.
    Secretary Hagel, is this weakness--the weakness of cutting missile 
defense in your budget request--part of the President's flexibility?
    Secretary Hagel. Russia was not a factor in the development of U.S. 
missile defense budget decisions. The United States is committed to 
continuing to develop and deploy missile defenses that are affordable 
and effective against projected threats, consistent with the Ballistic 
Missile Defense Review (BMDR). The President is on record as stating, 
and I agree, that the United States cannot accept limits on its missile 
defense systems. The President made clear the need to ensure that U.S. 
missile defense systems are capable of defeating the growing threat 
faced from North Korean and Iranian missiles. The budget also fully 
funds Israeli missile defense programs with $316 million requested for 
Israeli missile defense development and procurement programs in FY 14. 
This includes the Arrow, David's Sling, and Iron Dome systems and 
represents a 216 percent increase from last year's request.
    Mr. Bridenstine. Though you did not account for sequestration in 
your budget, what is your estimate of the total number of Active Duty, 
Reserve, and National Guard personnel that will have to be reduced if 
sequestration continues?
    Secretary Hagel. The Department is currently in the process of 
conducting a Strategic Choices and Management Review (SCMR), which will 
examine the choices that underlie defense strategy, posture, and 
investments, identify the opportunities to more efficiently and 
effectively structure the department, and develop options to deal with 
the wide range of future budgetary circumstances. The results of this 
review are expected to provide the Department with a holistic set of 
strategic choices to preserve and adapt the defense strategy--to 
include possible adjustments to military personnel levels--if 
sequestration is not de-triggered.
    Mr. Bridenstine. I am concerned about your request for a BRAC round 
in 2015 despite the President saying he's opposed to BRAC this past 
July. From my understanding, last year the Congress required the 
Department to complete an overseas basing assessment. Shouldn't this 
assessment be completed and delivered to Congress before we authorize a 
BRAC?
    Secretary Hagel. An independent assessment of the Department of 
Defense's overseas basing of military forces, as required by section 
347 of the National Defense Authorization Act for Fiscal Year 2012, was 
completed by the RAND Corporation on December 31, 2012. The Department 
delivered the assessment and Deputy Secretary of Defense's comments in 
response to the assessment to the Congressional Defense Committees on 
April 18, 2013. Generally speaking, it is beneficial to undertake 
reviews of overseas and domestic infrastructure in tandem, so each can 
inform the other.
    Furthermore, the President did not say that he is opposed to BRAC, 
but instead expressed a concern that the proposal at the time--a round 
in 2013--was too soon. The President's Budget requests a round in 2015, 
consistent with that premise.
    Mr. Bridenstine. I am concerned by the $600 million dollar cut to 
missile defense, particularly given that North Korea is due to test 
launch a missile any day now. Iran's ballistic missile development is 
just as troubling. Given the restructuring to SM-3 Block IIB, what is 
the plan for defending our homeland from long-range ballistic missile 
attack from Iran? Shouldn't we be re-investing the $600 million cut in 
upgrading our long-range defense systems given what's going on in North 
Korea?
    Secretary Hagel. Although the SM-3 IIB in Europe was planned to 
provide a capability against possible Iranian Intercontinental 
Ballistic Missiles (ICBMs), the SM-3 IIB was not going to be ready 
until 2022 at the earliest, as a result of Congressional reductions to 
the program and the effects of the Continuing Resolution. Given the 
growth of the North Korean ICBM threat and the potential for Iran to 
develop an ICBM, the Department requires a more responsive solution. 
Therefore, DOD opted to deploy the 14 additional GBIs in Alaska by 
Fiscal Year 2017 and to pursue the deployment of a second AN/TPY-2 
radar to Japan as the fastest, most cost-effective method of increasing 
U.S. homeland missile defense.
    Other steps are also underway. The Department plans to deploy an 
additional In-Flight Interceptor Communications System data terminal on 
the U.S. East Coast and upgrade the Early Warning Radars at Clear, 
Alaska, and Cape Cod, Massachusetts, by 2017. Additionally, DOD will 
accelerate the command and control system's development and 
discrimination software to handle larger numbers of incoming ballistic 
missiles. These improvements in sensor coverage, command and control, 
and interceptor reliability will have a significant impact on the 
expected performance of the GMD system. I am confident that these steps 
will allow the United States to maintain an advantageous position 
relative to the Iranian and North Korean ICBM threats.
    Mr. Bridenstine. Are you confident the $130 million requested for 
the Ground-based Midcourse Defense system is adequate to support 
additional Ground-based Interceptor (GBI) deployments in Alaska?
    Secretary Hagel. For FY 2014, the Missile Defense Agency requested 
a total of $135M in funding for the first year of a three year $224M 
Missile Field-1 Refurbishment and Repair Project at Fort Greely, 
Alaska. The request is based on funding required to construct a 
mechanical-electrical building, repair existing facilities and upgrade/
replace existing system support equipment. Work is planned to be 
completed on these activities in FY 2016, requiring $44M in FY 2015, 
and $45M in FY-2016.
    Mr. Bridenstine. I am concerned about the cut to Israeli 
cooperative missile defense programs. Please explain this large cut in 
funding, particularly in terms of Arrow and Short Range Ballistic 
Missile Defense. Iranian ballistic missile development is going strong. 
If that's the case, how can you justify such large cuts to our ally at 
this crucial time?
    Secretary Hagel. The United States continues to work with and 
support the Israeli Government to ensure it is able to protect its 
population against ballistic missile and rocket attacks. Accordingly, 
the President's Budget requests $220 million for Fiscal Year (FY) 2014 
and $176 million for FY 2015 to fulfill the Administration's commitment 
to provide a total of $677 million in procurement funds from FY 2012 
through FY 2015 to the Government of Israel to purchase additional Iron 
Dome short-range rocket defense systems. In addition, the President's 
Budget requests $96 million in FY 2014 for research, development, 
technology, and engineering funding for three U.S.-Israeli cooperative 
programs: the Arrow Weapon System, the David's Sling Weapon System, and 
the Arrow-3 Interceptor.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MRS. WALORSKI
    Mrs. Walorski. General Dempsey, last year 16 Adjutants General 
requested funding to modernize the aging HMMWV fleet. In response, the 
Appropriations Committee honored this request and provided $100M to 
begin a multi-year effort to field new model HMMWVs in Guard units 
across the country. $100M was even included in the DOD Appropriations 
bill and CR that was recently signed. However, the Army has indicated 
that they may use the money to recap existing HMMWVs instead. What are 
your plans relative to this issue, and what priority do you attach to 
it relative to your modernization programs?
    General Dempsey. I fully support the Army's plan to use $100 
million to continue the highly successful HMMWV recapitalization 
program at Red River Army Depot, while concurrently divesting excess 
HMMWVs rather than restarting HMMWV production for the Army National 
Guard (ARNG). Army HMMWV quantities currently on hand exceed both 
current and projected Light Tactical Vehicles quantity requirements. 
Given the current fiscal constraints, it is more cost effective to 
recapitalize existing equipment to meet near term readiness needs and 
Joint requirements rather than procuring new, unneeded assets.
    That said, we face an array of challenges and potential threats in 
a period of fiscal uncertainty. As such, our modernization efforts 
remain a top priority for equipping and sustaining a force that is 
globally responsive to meet the needs of Combatant Commanders and our 
Joint interagency partners.
    Mrs. Walorski. I recently visited NSWC Crane and witnessed the 
unique work they are doing to detect and defeat missile threats. 
General Dempsey, we are all waiting anxiously for what we understand is 
an imminent missile launch in North Korea. We don't know if that launch 
is a missile test or something more significant. My question is, once 
that missile is launched, given flight times to targets in the region, 
including Japan, South Korea and U.S. forces in Guam, how much time do 
our forces have to make a decision to shoot it down? Who has authority 
to make that decision today? Has a decision been made what we will do 
if a missile appears to be headed to Japan or Guam? Will you know at 
launch if it has a nuclear warhead on it?
    General Dempsey. The timeline for engagement of a North Korean 
missile targeting U.S. Forces in Guam, South Korea, or Japan, is 
measured in minutes. Therefore, the Secretary of Defense delegated 
engagement authority for regional threats to Commander, US Pacific 
Command and authorized him to further delegate as he deems necessary. 
Ballistic Missile Defense assets are postured in the region to engage 
the threat and will execute established procedures if a missile is 
projected to impact a defended area in Japan, South Korea or Guam. It 
is unlikely that we will know the type of warhead on a threat when it 
is launched.

                                  
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