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






 
                         [H.A.S.C. No. 113-110]

             THE DEPARTMENT OF DEFENSE'S READINESS POSTURE

                               __________

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON READINESS

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             APRIL 10, 2014

                  
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                       SUBCOMMITTEE ON READINESS

                 ROBERT J. WITTMAN, Virginia, Chairman

ROB BISHOP, Utah                     MADELEINE Z. BORDALLO, Guam
VICKY HARTZLER, Missouri             JOE COURTNEY, Connecticut
AUSTIN SCOTT, Georgia                DAVID LOEBSACK, Iowa
KRISTI L. NOEM, South Dakota         COLLEEN W. HANABUSA, Hawaii
J. RANDY FORBES, Virginia            JACKIE SPEIER, California
FRANK A. LoBIONDO, New Jersey        RON BARBER, Arizona
MIKE ROGERS, Alabama                 CAROL SHEA-PORTER, New Hampshire
DOUG LAMBORN, Colorado               WILLIAM L. ENYART, Illinois
E. SCOTT RIGELL, Virginia            PETE P. GALLEGO, Texas
STEVEN M. PALAZZO, Mississippi
                 Jamie Lynch, Professional Staff Member
               Vickie Plunkett, Professional Staff Member
                         Nicholas Rodman, Clerk



















                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2014

                                                                   Page

Hearing:

Thursday, April 10, 2014, The Department of Defense's Readiness 
  Posture........................................................     1

Appendix:

Thursday, April 10, 2014.........................................    39
                              ----------                              

                        THURSDAY, APRIL 10, 2014
             THE DEPARTMENT OF DEFENSE'S READINESS POSTURE
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bordallo, Hon. Madeleine Z., a Delegate from Guam, Ranking 
  Member, Subcommittee on Readiness..............................     3
Wittman, Hon. Robert J., a Representative from Virginia, 
  Chairman, Subcommittee on Readiness............................     1

                               WITNESSES

Campbell, GEN John F., USA, Vice Chief of Staff, U.S. Army.......     4
Ferguson, ADM Mark, USN, Vice Chief of Naval Operations, U.S. 
  Navy...........................................................     6
Paxton, Gen John M., Jr., USMC, Assistant Commandant, U.S. Marine 
  Corps..........................................................     7
Spencer, Gen Larry O., USAF, Vice Chief of Staff, U.S. Air Force.     9

                                APPENDIX

Prepared Statements:

    Campbell, GEN John F.........................................    46
    Ferguson, ADM Mark...........................................    63
    Paxton, Gen John M., Jr......................................    73
    Spencer, Gen Larry O.........................................    93
    Wittman, Hon. Robert J.......................................    43

Documents Submitted for the Record:

    Statement of the American Legion.............................   107
    Transmittal letter for Section 347 report on European 
      Infrastructure Consolidation Initiative....................   110

Witness Responses to Questions Asked During the Hearing:

    Mr. Barber...................................................   113
    Mrs. Noem....................................................   113
    Mr. Palazzo..................................................   113

Questions Submitted by Members Post Hearing:

    Mr. Bishop...................................................   149
    Ms. Bordallo.................................................   142
    Mr. Wittman..................................................   117











             THE DEPARTMENT OF DEFENSE'S READINESS POSTURE

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                                 Subcommittee on Readiness,
                          Washington, DC, Thursday, April 10, 2014.
    The subcommittee met, pursuant to call, at 8:02 a.m., in 
room 2212, Rayburn House Office Building, Hon. Robert J. 
Wittman (chairman of the subcommittee) presiding.

 OPENING STATEMENT OF HON. ROBERT J. WITTMAN, A REPRESENTATIVE 
       FROM VIRGINIA, CHAIRMAN, SUBCOMMITTEE ON READINESS

    Mr. Wittman. Good morning. I am going to call to order the 
Subcommittee on Readiness of the House Armed Services 
Committee, and want to welcome our panelists this morning. And 
welcome all of our members for today's hearing focused on the 
Department of Defense's readiness posture.
    This morning we have with us General John Campbell, Vice 
Chief of Staff of the United States Army; Admiral Mark 
Ferguson, Vice Chief of Naval Operations of the United States 
Navy; General John Paxton, Assistant Commandant of the United 
States Marine Corps; General Larry Spencer, Vice Chief of 
Staff, United States Air Force.
    This hearing is critically important, as we try to 
understand and evaluate this year's budget request and proposed 
investment as the services seek to address gaps created by 
sequestration.
    Although we recognize that the Bipartisan Budget agreement 
provided some relief, sequestration is not going away and the 
problem it creates persists.
    The budget we have before us today obviously doesn't 
include or address the Overseas Contingency Operations [OCO] 
supplementary requirements, which have been so critical to 
sustaining our force in recent years.
    So we will be challenged to understand the full funding 
picture, but there is no doubt that there are a multitude of 
enduring, high-priority activities funded by that account. It 
is imperative that we find a way to mitigate the billions of 
dollars in funding for these essential and enduring activities 
from the OCO to the base budget as we ramp down operations in 
Afghanistan.
    My top priority is to ensure that no soldier, sailor, 
airman, or marine ever enters into a fair fight. All of us 
recognize the shortfalls and it is our duty and responsibility 
to ensure our men and women who serve have the necessary tools 
to dominate in any operational environment.
    As I look across the services at respective readiness 
posture, I want to highlight a few issues that I think are 
noteworthy.
    The Air Force flying-hours program cuts from last year have 
only restored approximately 50 percent of those pilots back to 
appropriate training levels.
    The facilities sustainment accounts represent only 65 
percent of the total requirement.
    The Navy proposes possible future reductions in force 
structure to include phased modernization of 11 Aegis cruisers 
and amphibious warships over the next few years, in addition to 
an out-years request to retire a carrier.
    The Marine Corps is establishing crisis response task 
forces in the Middle East and South America, but has not been 
given the $33.8 million in additional resources to properly 
resource them.
    The Army has identified approximately $1.73 billion in 
unfunded training needs.
    And not to be overlooked, shortfalls and backlogs in the 
depots persist for all the services for fiscal year 2015.
    I want to make one thing very clear from my perspective. I 
have taken the opportunity to travel on numerous occasions to 
visit with our men and women in uniform, both at home in 
training status and overseas while they are deployed in combat 
zones.
    I make the same two observations everywhere I visit, 
whether it is on the deck of an aircraft carrier or at a 
training range or on a FOB [Forward Operating Base]--we have 
the best and brightest the Nation has to offer, and these men 
and women are trained and ready. They have volunteered to do an 
inherently dangerous job and there is nothing safe about 
serving in the military. But these are well-trained 
professionals and they mitigate risks and they make it safe.
    My fear is that Congress and this Nation are taking these 
men and women's service and their safety for granted. They 
operate in a dangerous world doing dangerous and daring things. 
This danger is mitigated because they are trained, ready, and 
prepared to do their jobs.
    The threat of sequestration is not over. If sequestration 
persists, if we continue to hack away indiscriminately at our 
DOD [Department of Defense] budget, our readiness will erode to 
levels that will take decades to fix. We will lose our 
initiative and our edge in power projection, influence, and 
forward presence around the globe.
    We will create gaps that will be filled by adversaries and 
we will see more men and women die in training accidents and 
killed in combat because we did not properly resource their 
mission and we did not provide them with the best training and 
equipment to do their jobs.
    This is absolutely reprehensible and irresponsible.
    I look forward to hearing greater details about the fiscal 
year 2015 budget request, the status of readiness, and how 
existing gaps and shortfalls will be satisfied to ensure we 
have the most ready, capable, and proficient military in the 
world.
    I would now like to turn over to our ranking member, Ms. 
Madeleine Bordallo, for any remarks that she may have.
    [The prepared statement of Mr. Wittman can be found in the 
Appendix on page 43.]

STATEMENT OF HON. MADELEINE Z. BORDALLO, A DELEGATE FROM GUAM, 
           RANKING MEMBER, SUBCOMMITTEE ON READINESS

    Ms. Bordallo. Thank you very much, Mr. Chairman.
    And to each of our witnesses this morning, thank you for 
your testimony and for your service to our great Nation.
    And Admiral Ferguson, I understand that this will be your 
last testimony as the Vice Chief of Naval Operations and that 
you will be headed over to Europe soon. So thank you for your 
leadership and service to our great Navy.
    We hold this hearing at a critical point for the Department 
of Defense. By allowing sequestration to go into effect in 
2013, Congress--Congress created the largest single challenge 
and risk to the readiness of our military in many, many 
decades.
    We reduced that risk with passage of the Balanced Budget 
Agreement in December of 2013. But sequestration will return in 
a little over a year if we don't find a permanent solution.
    I hope that our witnesses can discuss how they balanced 
readiness and risk in the current budget submission before us 
for consideration. We know the Department has used the 
additional funds from the Balanced Budget Agreement to buy back 
readiness. But where do we assume risk now?
    And further, I hope our witnesses will discuss the 
challenges in future budgets if we do not find a permanent 
solution to sequestration. How will each of the services meet 
the Department's strategic objectives to have a flexible, 
agile, and deployable force should sequestration continue? How 
does the current budget find the right balance between meeting 
operational requirements, strategic guidance, and budget 
realities?
    And beyond the quarterly readiness reports to Congress, how 
do we truly measure the risk that is being taken in our 
budgets? The quarterly readiness reports give us a sense of 
readiness at a point in time. But how do we really quantify or 
qualify that risk?
    In particular, I hope that our witnesses can touch on 
training capacity and access to training in the Asia-Pacific 
region. One of the critical components of the rebalance to the 
Asia-Pacific region is ensuring that our military remains ready 
to deploy to support a variety of contingencies, as well as 
engaging in more training opportunities with partner nations.
    How is this reflected in the fiscal year 2015 budget, as 
well as in future budgets?
    And further, I hope General Campbell can discuss how this 
budget affects the readiness of the Army National Guard. I 
understand the operation and the maintenance account for the 
Army National Guard sees a decrease at $827 million in fiscal 
year 2015 from fiscal year 2014 levels.
    I understand this may be a result of savings from depot 
maintenance requirements for a smaller force. But I am 
concerned that there will be no national training center 
rotations in fiscal year 2015 for the National Guard.
    I hope that our witnesses can elaborate on this matter 
because I am concerned that this is an indication of greater 
challenges in ensuring the Guard is ready to deploy and support 
contingencies and operations abroad.
    I have been very supportive of the strategic guidance that 
requires a right-sized military force that is trained, that is 
equipped and ready to deploy to any variety of operational 
requirements and contingencies.
    I appreciate that the fiscal year 2015 budget request buys 
back a lot of readiness that was lost or deferred as a result 
of sequestration last fiscal year.
    However, if we do not find a permanent solution to 
sequestration, I fear that we risk the ability to meet not just 
immediate operational requirements, but that we will be unable 
to execute the DOD's strategic guidance.
    And this is simply unacceptable. We can fix the problem 
that Congress created.
    And I yield back.
    Mr. Wittman. Thank you, Ms. Bordallo.
    Gentlemen, again, thank you for joining us this morning. 
Thank you for your service to our Nation and we will begin with 
your testimony.
    And General Campbell, we will start with you.

 STATEMENT OF GEN JOHN F. CAMPBELL, USA, VICE CHIEF OF STAFF, 
                           U.S. ARMY

    General Campbell. Sir, thank you very much.
    Chairman Wittman, Ranking Member Bordallo, other 
distinguished members of the subcommittee, thank you very much 
for the opportunity to discuss the readiness of your United 
States Army.
    I appreciate your support and commitment to our soldiers, 
our Army civilians, our families, our wounded warriors, and our 
veterans.
    I would like to take a quick moment to send our regards to 
our brother-in-arms at Fort Hood, Texas. Our Nation's leaders 
attended a very emotional memorial ceremony yesterday and we 
continue to keep the families of the victims in our thoughts 
and prayers; so, thank you for that.
    Today, the Army remains globally engaged with more than 
66,000 soldiers deployed, including 32,000 in Afghanistan, and 
about 85,000 forward-stationed in over 150 different countries.
    While the restoration of some funding in fiscal year 2014 
helps the Army restore readiness, it is not sufficient to fully 
eliminate the void in core capabilities created over the past 
decade of counterinsurgency operations and made greater by 
sequestration.
    The current level of fiscal year 2015 funding will allow 
the Army to sustain readiness levels achieved in fiscal year 
2014, but will only generate minimum readiness required to meet 
the defense strategy.
    The anticipated sequestration reductions in fiscal year 
2016 and beyond will severely degrade manning, readiness, and 
modernization efforts and will not allow us to execute the 
strategic guidance.
    To really understand our current and future readiness, I 
need to quickly provide a little bit of context on what 
happened in fiscal year 2013.
    Due to fiscal year 2013 Budget Control Act spending caps, 
the Army canceled seven combat training rotations and 
significantly reduced home station training, negatively 
impacting readiness and leader development. These lost 
opportunities only added to the gap created between 2004 and 
2011 as the Army focused exclusively on counterinsurgency.
    In the event of a crisis, we will deploy these units at a 
significantly lower readiness level. They will accomplish their 
mission; but, sir, as you said, probably with higher 
casualties.
    Further results of sequestration fiscal year 2013 include 
the deferment of approximately $716 million worth of equipment 
reset in fiscal year 2014 and also fiscal year 2015.
    The Army was also forced to cut routine maintenance for 
non-deployed units, thereby creating an additional $73.5 
million in deferred cost that carried over to fiscal year 2014.
    We have lost some of our most skilled civilians, many in 
highly technical fields, as a result of a 6-week furlough that 
cut their pay by 20 percent and 2 years of frozen salaries and 
performance-based salaries.
    In order to preserve funding for readiness and 
modernization, the Army is in the process of an accelerated 
drawdown to 490,000 in the Active Component, 350,000 in the 
Army National Guard, and 202,000 in the U.S. Army Reserve by 
the end of fiscal year 2015.
    By the end of fiscal year 2017, we will further decrease 
end strength to 450,000 in the Active, 335,000 in the Army 
National Guard, and 195,000 in the U.S. Army Reserve Component.
    Seventy percent of these cuts will come from the Active 
Army and the reductions will reverse the force mix ratio going 
from 51 percent Active and 49 percent Reserve Component mix in 
fiscal year 2012 to a 46 percent Active, 54 percent Reserve 
Component in fiscal year 2017. So, we will have more reliance 
on our National Guard and our Reserve.
    In conjunction with this rapid drawdown, the Army is 
reorganizing the brigade combat teams and restructuring our 
aviation formations to achieve a leaner, more efficient force 
that balances operational capability and flexibility.
    As we continue to draw down and restructure over the next 3 
to 4 years, the Army will have readiness and modernization 
deficiencies.
    Fiscal realities have caused us to implement tiered 
readiness as a bridging strategy. Under tiered readiness, only 
20 percent of the total operational force will conduct 
collective training to a level necessary to meet our strategic 
requirements.
    And we have accepted risks to the readiness of multi-
functional and theater support brigades, as well as in our home 
station training, installation readiness and infrastructure.
    Base operation support levels remain under-resourced and 
must be a future priority as additional funds become available.
    This year and next are critical to deciding the fate of 
what is the greatest Army in the world. Cuts implemented under 
the Budget Control Act and sequestration have significantly 
impaired our readiness.
    Further, I am concerned about the impact of Army base funds 
in fiscal year 2015 if the Overseas Contingency or OCO, sir, as 
you talked about, is not acted upon by the start of the fiscal 
year.
    Absent approval of OCO funding, we would be required to 
support OCO-funded missions with base funds, which would 
immediately begin degrading readiness across the total Army.
    Ultimately, the Army is about people. And as we downsize, 
we are committed to taking care of those who have sacrificed so 
much for our Nation over the past 12-plus years of war.
    Assisting our transitioning veterans, our wounded warriors, 
our Gold Star families will remain a top priority and we must 
protect the programs that support their needs.
    I thank you again for your steadfast and generous support 
of the outstanding men and women of your United States Army.
    Please accept my written testimony for the record, and I am 
honored to sit here with my fellow Vices.
    Mark, thank you for your service here; too bad we will not 
do another testimony together.
    But I look forward to the questions from the subcommittee. 
Thank you very much.
    [The prepared statement of General Campbell can be found in 
the Appendix on page 46.]
    Mr. Wittman. General Campbell, thank you very much.
    Admiral Ferguson.

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

    Admiral Ferguson. Chairman Wittman, Ranking Member 
Bordallo, and distinguished members of the committee, good 
morning. Thank you for the opportunity to testify before you 
today.
    As we conclude over a decade of conflict and extended 
stability operations, your naval forces remain on watch around 
the globe.
    Forward presence is our mandate. Our forward deployed 
forces are where it matters, when it matters--thanks in good 
measure to your support.
    Since we testified last year, America's naval forces helped 
shape events and provided immediate options to the President 
during times of crisis around the globe.
    Our global presence reassures our allies and partners, 
deters aggression, and provides a ready response to 
humanitarian crises. It confronts piracy and supports 
counterterrorism operations from the sea.
    The Bipartisan Budget Act has improved our forward 
operations and readiness over fiscal year 2013.
    Through the remainder of this fiscal year, we are restoring 
fleet training, maintenance and operations and we will recover 
a substantial portion of our ship maintenance backlog.
    Our fiscal year 2015 Navy budget request with Overseas 
Contingency Operations or OCO funding will provide the 
resources necessary to train, maintain, and operate our planned 
fleet structure.
    Our request with OCO will also sustain required levels of 
readiness to support the adjudicated Global Force Management 
Allocation Plan for naval forces. To remain a balanced and 
ready force across the Future Years Defense Plan, this budget 
proposes slowing cost growth in compensation and benefits, 
maintaining the option to refuel or inactivate one aircraft 
carrier and a carrier air wing.
    The budget also proposes, as the chairman mentioned, 
inducting 11 guided-missile cruisers and three dock landing 
ships into a phased modernization period.
    This phased modernization approach, while fiscally driven, 
will reduce force structure risk in the 2030s and beyond by 
extending the service life of these ships.
    In recognition of reduced funding levels from our PB14 
submission, our request also reflects a reduction of nearly 80 
aircraft and 3,500 weapons when compared to last year.
    We have endeavored to reset in stride across a decade of 
high-tempo operations. The Navy will require approximately 5 
years beyond the end of Operation Enduring Freedom to complete 
the reset of the force. This period and the length of it 
reflects unique ship depot maintenance demands which are 
limited by operational schedules and the capacity of our depot 
infrastructure. Our budget request also proposes lower 
investment in our shore infrastructure. We are mindful that 
this backlog will compound over time and must eventually be 
addressed.
    Accordingly, we will continue to aggressively pursue 
opportunities such as reprogramming or realignment of funds in 
the year of execution to modernize and sustain our shore 
facilities. As we look to the future, a return to sequestration 
spending levels in fiscal year 2016 and beyond will lead us to 
a Navy that would be insufficient in size and capability to 
meet the needs of the country. Under that scenario, additional 
force structure reductions would be required to fund adequate 
readiness of the remaining force. Under sequestration, further 
reductions in procurement, in maintenance, training, and 
operations would be required and damage to the industrial base 
would likely be severe.
    Despite these challenges, we are fortunate to continue to 
enjoy the highest quality force in our history. These 
outstanding men and women who serve our Nation at sea make us 
the finest Navy in the world. And on behalf of all our Active, 
Reserve, and civilian sailors, I wish to express my 
appreciation for your efforts and your continued support of 
them and their families. Thank you very much.
    [The prepared statement of Admiral Ferguson can be found in 
the Appendix on page 63.]
    Mr. Wittman. Admiral Ferguson, thank you very much. And now 
we will go to General Paxton.

     STATEMENT OF GEN JOHN M. PAXTON, JR., USMC, ASSISTANT 
                 COMMANDANT, U.S. MARINE CORPS

    General Paxton. Good morning, Chairman Wittman. Thank you 
Ranking Member Bordallo and distinguished members of the 
committee. I appreciate the opportunity to report on the 
readiness of your United States Marines Corps.
    Today, as always, your Marine Corps is committed to 
remaining our Nation's force in readiness, a force that is 
truly capable of responding to crisis anywhere around the globe 
at a moment's notice. As we gather here this morning, almost 
37,000 marines are forward deployed or stationed around the 
world, promoting peace, protecting our Nation's interests and 
securing our defense. There are more than 6,000 Marines in 
Afghanistan who continue to make a huge difference to our 
Nation and our allies in the world. All of your marines who are 
forward remain well-trained, well-equipped, well-led, and at 
the highest state of readiness.
    Our readiness was proven last year, as your Marine Corps 
displayed its agility and responsiveness in saving lives in the 
aftermath of the super typhoon that struck the Philippines in 
November and then shortly thereafter with the rescue of 
American citizens in South Sudan over Christmas. Both of these 
indicate the reality and the necessity of maintaining a combat-
ready force that is capable of handling today's crisis today. 
Such an investment is essential to maintaining our Nation's 
security and our prosperity into the future.
    We fully appreciate that our readiness today and the 
ability to maintain it in the future are directly related to 
the fiscal realities that face our Nation and particularly the 
Department of Defense budget. As our Nation continues to face 
fiscal uncertainty, we are making the necessary choices to 
protect our near-term readiness and to place your United States 
Marine Corps on the best trajectory to meet future defense 
requirements.
    I look forward to elaborating on examples of the choices 
that we have made and how they impact our training proficiency, 
our equipment maintenance, and our unit readiness, to name a 
few.
    As we navigate the current fiscal environment, we will 
strive to maintain balance across what we call our five pillars 
of readiness. Number one is to recruit and retain the high-
quality people. Number two is to maintain a high state of unit 
readiness. Number three is to maintain combatant commanders--to 
meet, rather, combatant commanders' requirements for our 
marines. Number four is to ensure that we maintain appropriate 
infrastructure investments. And number five is to keep an eye 
towards the future by investing in the capabilities that we 
will need to meet tomorrow's challenges.
    As we begin this hearing, I would like to highlight a few 
points from my written statement. First, with regards to high-
quality people. United States Marine Corps continues to achieve 
100 percent of its officer and enlisted recruiting goals for 
both the Active and the Reserve Component while exceeding DOD 
quality standards. Marine Corps remains committed to 
attracting, mentoring, and retaining the most talented men and 
women who bring diverse backgrounds, cultures, and skills into 
the service of our Nation.
    Second, United States Marine Corps has and always will 
source our best-trained, most ready forces to meet combatant 
commander demand requirements. In doing so, the Marine Corps 
has accepted risks to both personnel manning and to equipment 
readiness in our non-deployed units in order to fully support 
forces who are forward deployed and those who are next to 
deploy.
    We have taxed our home station units as the billpayers to 
ensure that marines in Afghanistan and our Marine Expeditionary 
Units have everything that they need. As a result, as we sit 
here this morning, slightly more than 50 percent of our non-
deployed forces are experiencing some degree of degraded 
readiness in their ability to execute what we consider to be 
core missions.
    Third, we continue to foster a rich heritage and a strong 
partnership with our naval counterparts. As we look to the 
future, we all realize that sea-based and forward-deployed 
naval forces provide day-to-day engagement, crisis response, 
and assured access to the global commons.
    A critical component in building, training, and maintaining 
an expeditionary forward presence is the availability and 
readiness of amphibious ships. This is why we ask for a 
continued congressional support for the Navy and for our naval 
shipbuilding and surface-to-ship connector programs in order to 
maintain an adequate fleet that is modern and combat-ready, and 
particularly on the amphibious ships. Doing so enables 
continuous naval expeditionary presence and projects power 
across the globe whenever and wherever our Nation needs it.
    I thank each of you for the opportunity this morning, for 
your faithfulness, and I request that the written testimony be 
accepted for the record. Thank you very much. I look forward to 
your questions.
    [The prepared statement of General Paxton can be found in 
the Appendix on page 73.]
    Mr. Wittman. Thank you, General Paxton. Without objection.
    We will now go to General Spencer.

 STATEMENT OF GEN LARRY O. SPENCER, USAF, VICE CHIEF OF STAFF, 
                         U.S. AIR FORCE

    General Spencer. Chairman Wittman, Ranking Member Bordallo, 
and distinguished members of the subcommittee, thank you for 
the opportunity to share the Air Force's current readiness 
posture. Readiness is critical for your Air Force, especially 
as the time and place of our next crisis are never certain and 
rarely what we expect.
    The Air Force's range, speed, and agility enable us to 
quickly respond in hours, not days, to national missions, a 
national security threat, or a humanitarian event from home to 
anywhere on the globe. The cornerstone of our success depends 
on airmen who are exploiting and mastering emerging 
technologies not only in warfare, but also in space and 
cyberspace, giving us the ability to project global military 
power on a scale our adversaries cannot match. However, decades 
of sustained combat operations have stressed our force and 
decreased our readiness to unacceptable levels.
    We are finding it increasingly difficult to maintain our 
advantage when it comes to effectively operate in contested 
environments and against adversaries with access to increasing 
levels of advanced warfighting technology. We will continue to 
maintain our ability to respond to today's requirements, but we 
must also regain and further maintain our ability to operate in 
the most demanding threat environments, but we need your help 
and support to get there.
    The Air Force defines readiness as having the right number 
of airmen, with the right equipment, trained to the right skill 
level, and with the right amount of support, force structure, 
weapons, and supplies to successfully accomplish what the 
Nation asks us to do. A good readiness plan depends on an 
optimum level of health in all of these areas, but 
sequestration has slashed our budget by billions of dollars, 
forcing us to make the difficult decision to cut force 
structure in order to help preserve our near-term readiness.
    In order to maintain our readiness health, we had to look 
beyond flying hours and exercises. We took a close look at the 
preservation of modernization efforts to help us maintain our 
technological edge. This includes preferred munitions; live, 
virtual, constructive environments that can replicate the 
threats we may face; and installation support that allow us to 
literally fight and power project from our bases.
    Additionally, weapon sustainment health is also critical to 
our readiness plan. As many of you with logistic centers and 
depots in your districts know, you witness firsthand how these 
centers contribute to the sustainment and readiness of all of 
our aircraft and equipment. Said another way, while adequate 
flying-hour funding ensures the aircraft on our ramps are ready 
to fly, weapon system sustainment readiness funding ensures we 
have the adequate numbers of aircrafts on our ramps to fly in 
our missions and to complete our flying goals.
    Because every aircraft and every piece of equipment counts, 
we are driven to seek the most efficient and effective way to 
ensure we are ready to sustain the warfighter in any 
environment. Investments in Air Force capabilities and 
readiness are essential if we are to maintain our agility and 
flexibility. Where we struggle is with last year's 
sequestration trigger that placed the Air Force readiness 
posture at an unacceptable level of risk that we are still 
working to recover from.
    The loss of time and experience flying, maintaining, 
supporting, and integrating those aircraft equated to a loss of 
critical readiness for our airmen across the entire force. Our 
highly sophisticated and capable force cannot be reconstituted 
overnight, if our readiness is allowed to atrophy. This is why 
we desperately need your help to de-trigger sequestration going 
forward. The Air Force appreciates the temporary relief that 
the Bipartisan Budget Act provides and it puts us on a gradual 
path to recovery. But our analysis indicated it will not fix 
readiness during the FYDP [Future Years Defense Program].
    Because our readiness is heavily influenced by ongoing 
operations, we need to ensure we can meet these requirements 
while also training for the full spectrum of potential 
conflict.
    As demonstrated after the conclusion of every major combat 
operation in recent history, there will continue to be high 
demand for Air Force capabilities even as we begin our drawdown 
from Afghanistan.
    If we are not able to train for scenarios across the full 
range of military operations against a backdrop of increasingly 
contested air, space, and sovereign environments around the 
world, we face unacceptable risk to mission accomplishment and 
to our joint forces.
    Mr. Chairman and committee members, today's Air Force 
provides America an indispensable hedge against the challenges 
of an uncertain future. Properly trained and equipped, your Air 
Force can set the conditions for success in any conflict, in 
any region of the world, whenever we are called upon.
    Sequestration and the demands of sustained combat have 
decreased our readiness, but with your help we can execute our 
plan to slowly fix this. Thank you for your time this morning 
and I look forward to your questions.
    [The prepared statement of General Spencer can be found in 
the Appendix on page 93.]
    Mr. Wittman. Thank you very much, General Spencer.
    I would ask now for unanimous consent to include into the 
record a statement from the American Legion to the Subcommittee 
on Readiness. Is there objection?
    Without objection, so ordered.
    [The information referred to can be found in the Appendix 
on page 107.]
    Mr. Wittman. Gentlemen, thanks again for your testimony. I 
am going to defer my questions until the end to give our 
members a chance to ask their questions. So I will now go to 
Ranking Member Bordallo.
    Ms. Bordallo. Thank you, Mr. Chairman.
    I would like to address each of the witnesses, but if you 
could make it brief, to describe the risk associated with this 
year's readiness budget, as well as the risk you foresee in 
future years if sequestration is not eliminated. What happens 
if sequestration returns in 2016? If you could be specific.
    And I will begin with General Campbell.
    General Campbell. Thank you, ma'am.
    As in the read testimony as I talked very briefly in the 
opening, as General Odierno, as Secretary McHugh through all 
their testimonies have said, sequestration would impact your 
Army in that we would not be able to do the Defense Strategic 
Guidance if we go with full sequestration.
    Right now we are on a path to go from 570,000 in your 
Active Component in 2010 to 490,000. We were going to do that 
in fiscal year 2017. Sequestration is forcing us to do that 
earlier in fiscal year 2015. Then we are on a path to go from 
490 to 450,000 in your Active.
    We have been--at 490 we are at moderate risk to get all the 
tasks accomplished that you expect us to do and to finish 
strategic guidance. At 450, our Chief, our Secretary have 
testified that we are at significant risk at 450.
    Below 450, moving down to potentially 420, that number is 
out there based on trying to keep things in balance, we would 
not be able to accomplish what is required in the Defense 
Strategic Guidance. That is plain and simple.
    Ms. Bordallo. Thank you.
    Admiral.
    Admiral Ferguson. First of all, let me talk about the size 
of the Navy. It would be smaller.
    We would procure one less submarine, three fewer destroyers 
of the Arleigh Burke class, four fewer support ships, one less 
afloat forward staging base, and so you would see immediate 
decrease in force structure.
    We would see that our investment in weapons and capability 
against a high-end adversary would be degraded because we could 
not procure those systems across the future.
    We would see less surge capability in the force that we 
could surge to meet national requirements.
    Our infrastructure, we would defer additional investments. 
It would degrade over time. And we would see less investment in 
spare parts, in maintenance, and in capability.
    We would be a smaller, less capable Navy, and unable to 
meet the tenets of the Defense Strategic Guidance.
    Ms. Bordallo. Thank you.
    General Paxton.
    General Paxton. Thank you, ma'am.
    When we moved into OIF [Operation Iraqi Freedom] and OEF 
[Operation Enduring Freedom], through the great support of 
Congress, the Marine Corps expanded to 202,000; we knew that 
that would be unsustainable and probably not needed for the 
Nation in the aftermath of the conflict.
    The optimal size for the Marine Corps would be 186,800. 
Under sequestration, in order to give you a balanced and 
forward and ready force, we can support 175,000. So that is a 
significant decrease in the number of uniformed personnel in 
the Marine Corps, first and foremost.
    Second, that force would be ready and forward and balanced, 
but we would be mortgaging the readiness of the next-to-deploy 
units in order to keep that unit forward and ready.
    And then the third piece, ma'am, is that with those forward 
units would be moving at a 1:2 dep-to-dwell instead of the 
optimal 1:3.
    So due to sequestration, we would have a smaller force, we 
would be mortgaging future readiness and the readiness of our 
bench strength, and then we would be turning forces over more 
frequently.
    Ms. Bordallo. Thank you.
    And General Spencer.
    General Spencer. Congresswoman, just briefly, just to make 
sure we get this in context, based on sequestration last year 
we were in the hole, readinesswise. We had to stand down 13 
combat-coded fighters and bombers. And we are now trying to 
climb out of that hole.
    With sequestration, specifically for the Air Force, we 
would divest 80 more aircraft. To be more specific, we right 
now struggle to meet 60 percent of the COCOM [combatant 
command] requirements for ISR [intelligence, surveillance, and 
reconnaissance]. We would have to reduce those by 10 additional 
combat air patrols.
    We would divest the entire KC-10 fleet. We would divest the 
entire Block-40 Global Hawk fleet. We would take further cuts 
to our readiness in terms of depot support, weapons systems 
sustainment support.
    So we would be a smaller Air Force. We would--as was 
mentioned before, under sequestration we could not meet the 
current defense strategic ops.
    Ms. Bordallo. I wish to thank all of you. It is a gloomy 
picture, I must admit.
    General Campbell, can you elaborate on what is driving the 
$827 million reduction in the National Guard O&M [Operations 
and Maintenance] account? And can you elaborate on the 
rationale behind why the Army National Guard will have no 
planned national training center rotations in fiscal year 2015?
    I truly am concerned that this is evidence of relegating 
the Guard to strategic reserve status and not maintaining their 
operational capabilities.
    General Campbell. Thank you, ma'am.
    Well, first off, as I think everybody knows, you have asked 
your Army to cut $75 billion in the next 5 years--$75 billion. 
So we have got to balance. So what the Chief and the Secretary 
are trying to do is make sure we have the best total Army.
    I have gone into combat with our National Guard, our U.S. 
Army Reserve, and our Active in Iraq and Afghanistan. They have 
all served us very well.
    But as we move forward we have to get smaller, as all of 
the other Vices have said. But what you expect us to do is to 
balance that. And as we do that, we have to take out end 
strength.
    Your Army is about people. So we have to take out end 
strength; we have to take out force structure. We can't take 
out that end strength fast enough based on the uncertainty of 
sequestration.
    The $827 million you talked about, the O&M, is based on the 
sequestration, as you talked about.
    On the CTC [combat training center] rotations, right now if 
we get the additional monies that we have asked for in the 
Opportunity, Growth, and Security Initiative, $7.5 billion of 
that, we plan to have two National Guard rotations at the 
combat training centers in fiscal year 2015. So we are planning 
for two, but that is dependent upon these additional monies 
that will help in the short-term readiness piece.
    Brigade combat teams. We are going in the Active force from 
45 in 2010 to 32. But that is only going at 490,000. As we go 
to 450, we are probably going to have to take out more brigade 
combat teams. On the order of maybe four on the Active side.
    Now brigade combat teams only make up 30 percent of the 
total force, but they are sort of the pacing item--carriers for 
the Navy, fighter squadrons for the Air Force, is brigade 
combat teams for your Army.
    On the National Guard we have 28. We continue to have 28. 
But if we go down to 335, we are probably going to have to take 
out two of those National Guard brigade combat teams.
    We will continue to work this very hard with our National 
Guard, with our U.S. Army Reserve. As I talked about earlier, 
we are going to have more reliance on our National Guard and 
our Army Reserve based on 56 or 46/54 percentage as we move to 
the future. But we have to have it in balance.
    Our Chief and our Secretary have testified over and over 
that we cannot go back to a strategic reserve for our National 
Guard. They are better manned, equipped, trained, and led than 
they ever have been. We have got to maintain that.
    But we can't maintain that as an operational reserve if we 
keep all of the end strength, if we keep all of the force 
structure, and we have no readiness in our National Guard. So 
we have to balance that and we will continue to work that very 
hard.
    Ms. Bordallo. Thank you very much, General.
    I have one final question, Mr. Chairman. This is for 
General Spencer. As we refocus on the Asia-Pacific region, I am 
wondering if the Air Force is looking seriously at its 
rotational presence in the Asia-Pacific region and its cost and 
impact to the O&M accounts.
    Have we seriously looked at the cost-benefit of how we do 
rotational presence and whether innovative ways of keeping a 
permanent presence of some assets in the region would make more 
budget sense?
    General Spencer. Yes, Congresswoman, we have thought about 
that. And it is a balance, obviously.
    So if we had a sequester, as an example, and we look at 
additional reductions to O&M, money that we would already--our 
readiness account, if you will, money that we would use for 
tankers to drag fighters across their rotations or other--or 
parts, and that sort of thing, we clearly have looked at the 
balance between keeping--the cost of keeping forces back home 
and pulling them across the--you know, such a long distance or 
forward stationing them.
    So we have got some analysis that we are working on, as we 
speak, to try to look at that balance, if we take that sort of 
cut, exactly how would we adjust to make sure we maintain our 
presence forward.
    Ms. Bordallo. Thank you very much.
    And I yield back, Mr. Chairman.
    Mr. Wittman. Thank you, Ms. Bordallo.
    I will now go to Mr. Palazzo.
    Mr. Palazzo. Thank you, Mr. Chairman.
    Good morning, gentlemen. Thank you for your service. And 
thank you for being here so early in the morning.
    General Spencer, I know you--excuse me--you probably share 
my appreciation for the Keesler Air Force Base, given the fact 
that they were named the best Air Force base in the nation in 
2013.
    I had the opportunity a few weeks ago to speak with 
Secretary James and General Welsh and to invite them personally 
down to Keesler to see firsthand the fine facilities, the 
airmen, and our south Mississippi community, so I want to 
extend that invitation to you.
    And, of course, I always extend it to my colleagues, as 
well, and anyone who would like to come see Keesler Air Force 
Base.
    The latest Air Force budget proposal contains the third 
plan in 3 years to try to move the C-130J planes from Keesler 
Air Force Base. I fought to kill the first two, previous 
proposals, and I am going to continue to ask the hard questions 
for this third proposal. Because, quite frankly, this move 
doesn't make any sense. It doesn't make sense from a cost 
perspective and it doesn't make sense from a readiness 
perspective.
    The latest proposal to send these planes and these airmen 
to Little Rock seems like it would cost $27 million, just to 
move this unit.
    That doesn't even take into account the $58 million in 
construction investment that has been completed at Keesler in 
recent years in order to accommodate these planes.
    And then there is also the cost of retraining personnel for 
work on a completely different plane, and that also takes time.
    So in past hearings, I focused on the questionable costs of 
moving these planes, but I want to focus today on the readiness 
factor. And so, my question to you, General Spencer, from a 
readiness perspective, how much time and use of these planes 
does the Air Force stand to lose if this move goes forward?
    General Spencer. Well, obviously, we wouldn't--well, let me 
back up a second. I think you have heard before that we--and 
when we look at every one of our weapons systems, as we looked 
at these reductions.
    And we did an analysis on each one and bounced those 
against campaign plans to see where we could take less risk.
    Our C-130 fleet overall is in excess of the requirement. 
And so, what we decided to do, then, is sit down with the 
Active Duty, Guard, and Reserve and look at the entire C-130 
fleet, and look at where they are located and try to figure out 
where is the best place for them to be, based on the mission 
that we have, and allow us to also draw down C-130s.
    And so, based on that sort of chessboard, if you will, 
there was a holistic plan----
    Mr. Palazzo. General, not to interrupt, because I might--
want to ask a question of General Paxton, how does this affect 
readiness? I mean, we have a unit that has been in combat, 
broke some serious awards over there.
    And from our perspective, we are hearing that it may take 
12 to 24 months just to train up this unit, to get it to a 
state of readiness. And if we want to get it to the state of 
readiness that this unit already has, it could possibly take 
another 12 to 24 months.
    General Spencer. No, I----
    Mr. Palazzo. Is----
    General Spencer. No, I do not agree that it would take 12 
to 24 months.
    Mr. Palazzo. Well, will you provide me some----
    General Spencer. Yes, sir.
    Mr. Palazzo [continuing]. Justification for that? I would 
appreciate that.
    General Spencer. Yes, sir. Yes, sir.
    [The information referred to can be found in the Appendix 
on page 113.]
    Mr. Palazzo. Thank you, sir.
    General Paxton, my second question is for you.
    A few weeks ago General Amos testified before our committee 
that the Marine Corps needs more amphibious ships. In fact, CNO 
[Chief of Naval Operations] Greenert said we should use 50 
ships. We got retired generals and admirals out there saying we 
have got to have more of these ships as well.
    So we have got a need. The Navy says it is 38 ships. Under 
fiscal constraints, they can make do with 33. Right now, we 
have only got 28 ships, and we could drop as low as 22 in the 
next 10 years.
    We are not anywhere close to the 38, and certainly not 
anywhere near the 50. And so, I just want to know, how--I mean, 
I understand how important these ships are to have survivable 
amphibious lift, like the LPD. It is important to our Marines 
and our Navy personnel.
    And we have got to provide our service members with the 
capabilities they need.
    So my question is, does the Navy-Marine Corps team require 
more amphibious lift? What can we do to ensure that the Marine 
Corps requirements are being met, that our homeland is 
protected, and that we can get our troops to and from where 
they need to be?
    And how would increased amphibious lift capabilities 
provide flexibility to our services as the world becomes a much 
more dangerous place and not safer?
    General Paxton. Thank you, Congressman Palazzo.
    And I believe the Navy and Marine Corps team are pretty 
close on this, and we have been fairly consistent.
    And if I could just add maybe a fine point to the numbers 
there. The most pressing set of circumstances for the Navy-
Marine team is the steady-state demand requirement. And both 
Admiral Greenert and General Amos have been on record to say 
that given the studies, that somewhere between 48 and 54 is the 
optimal amphibious lift capacity that we need.
    The 38 has to do with getting amphibious lift and getting 
our forcible entry element into the current--the two major 
theater war plans. So we have accepted, the Navy-Marine team 
years ago accepted 33 as a fiscally constrained goal.
    We are below that right now. We have 31 that are 
commissioned and on the waterfront. And then, when you account 
for those that are in and out of maintenance, that is the loss.
    So to your specific question, sir, absolutely. We could use 
and we would like to have more ships.
    The challenge is, the Navy and the Marine Corps both have 
maintenance requirements and capital investment requirements, 
so there is a higher class sub and other things like that. So 
the challenge for us is to get that balance within the current 
top line.
    In order to get more amphibious ships, we know that we need 
to just increase the top line for the entire Navy-Marine team, 
so that the Navy isn't forced to go into these really tough 
decisions between a carrier, a submarine, and an amphib ship.
    But we need more amphibious ships, sir.
    Mr. Palazzo. Thank you, General.
    General Paxton. Thank you, sir.
    Mr. Palazzo. My time is expired. Thank you.
    Mr. Wittman. Thank you, Mr. Palazzo.
    We will now go to Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    And thank you to all the witnesses for your testimony this 
morning.
    Admiral Ferguson, in your testimony you indicated that the 
fiscal year 2015 budget request will provide the maintenance 
funding necessary to maintain, train, and operate the proposed 
operational fleet.
    Again, that is subject to getting the OCO sort of 
supplement to hit the number you need, is that correct?
    Admiral Ferguson. That is correct, Congressman.
    Mr. Courtney. And approximately how much is that number?
    Admiral Ferguson. Well, our OCO requirements are broken 
into three pieces. The first is what we look at as the support 
operations, that the combatant commanders. That is about $3.3 
billion.
    The second piece is reset, as we try to recover some of the 
backlog of maintenance. That is about another $2.2 billion, 
$2.4 billion, or so.
    And then the last piece is about another $2 billion, which 
is the enduring, things of maintenance, another piece.
    So it is approximately $7 billion to $8 billion for us.
    Mr. Courtney. Well, that is helpful in terms of, you know, 
focusing in it for us, so that we can make sure we keep an eye 
on it through the process here this year.
    You know, I was pleased to see on page 1 of your testimony 
that you listed as, in terms of one of the priorities for the 
Navy is to sustain a relevant industrial base. I mean I think 
sometimes, you know, the readiness discussion doesn't focus on 
that enough.
    And, again, I appreciate that.
    You know, since we have sort of stabilized 2014 and 
hopefully, you know, we have got, I think, actually some 
overlap in terms of the two sides for the 2015 budget that we 
are going to be voting on later today that will protect the 
priority that you described.
    I guess in terms of the industrial base, I think that 
Admiral Kevin McCoy once described a goal of the Navy in terms 
of sort of viewing the shipyards as sort of one shipyard, that 
it makes no sense to be laying off a nuclear welder in one 
shipyard at the same time there is a backlog of work in another 
shipyard where they need nuclear welders.
    And I guess, again, given the fact that we have retained--
you know, we have achieved some stability, I mean, do you sort 
of see that still as sort of a basic goal, in terms of 
protecting the industrial base?
    Admiral Ferguson. Well, as a capital intensive service, as 
you know, I mean, we rely heavily on both the innovation in the 
industrial base, the development of new systems, and the repair 
capability.
    All our naval shipyards are at capacity right now in 
working, and they have a backlog in work that will carry them 
through the next 5 years.
    So, our industrial base, we are extraordinarily reliant on 
each of them to provide that both technical expertise you 
referred to as well as the capacity and innovation.
    So we do treat them and look at it as a holistic piece as 
we go forward.
    Mr. Courtney. Right. I think that is the right approach. I 
think General Campbell described sort of the damage that was 
done to the workforce with sequestration and furloughs is that, 
you know, when you--when people have to leave, you know, they 
have still got to feed their family. And sometimes, even, you 
know, when things get restored, they don't come back, because 
they have found something somewhere else to feed their family.
    And, again, that one shipyard approach, in terms of 
protecting the industrial base I think is really the balanced 
way to make sure that, you know, once we are out of the woods 
here with sequestration--I am an optimist; I think we are going 
to get there--you know, that we have got people who are ready 
to do the work.
    So, thank you for your testimony and your service and good 
luck with your next endeavor.
    And I yield back, Mr. Chairman.
    Mr. Wittman. Thank you, Mr. Courtney.
    I want to now go to Mr. Scott.
    Mr. Scott. General Spencer, you were at Robins Air Force 
Base from 1980 to 1982, I see.
    And I have the privilege of representing that area; would 
like to represent you--invite you back, I should say, and join 
you at the base and give you an opportunity to meet some of the 
men and women that are there today.
    One of the concerns that I have as we have gone through 
these talks has been the proposal of arbitrary cuts to the 
civilian workforce.
    I personally think we broke faith with them with the 
furloughs and the other things, and I think that they are a 
vital role in national defense. And if we don't have our 
civilian workforce providing the weapon systems that we need 
and making sure that they are maintained and we end up having 
to put more uniformed personnel in those positions.
    So, my question for you is if these arbitrary cuts to the 
civilian workforce that have been proposed were put in place, 
what would the impact on readiness be for the Air Force?
    General Spencer. Yes, thank you for the question. Because 
quite frankly, we haven't treated our civilian workforce very 
well.
    We had a sequestration which forced us to carry thousands 
of vacancies. We then had to do a government shutdown; we 
actually had to furlough civilian employees.
    And so, one of the misconceptions I think there is--and I 
can just speak for the Air Force--is that, you know, we have 
civilian employees that are sort of doing administrative work.
    And whereas we do--I mean, and that is important work, as 
well--we have 180,000--roughly 180,000 civilians in the Air 
Force, 5,000 of them work in the National Capital Region; the 
other civilians are out in depots, turning wrenches every day.
    And in the case of our air training--Air Education and 
Training Command as an example, the entire maintenance of the 
airplanes that we have to train our pilots are maintained by 
civil service employees.
    So if you cut--are doing across-the-board arbitrary 
reduction to civilians in the Air Force, it is--the impact on 
readiness is going to be devastating. We can't make it up.
    You can't cut civilians off a flight line or in a depot 
that are fixing airplanes and expect the work to be done. You 
just--it just won't happen.
    Mr. Scott. Well, thank you for your comments and thank you 
for your service.
    Gentlemen, if any of the rest of you would like to comment 
on the proposed cuts to--just arbitrary cuts to the entire 
civilian workforce, I would appreciate your opinion.
    Admiral Ferguson. Congressman, from the Navy's perspective, 
we are in a similar position to the Air Force--less than 15 
percent of our civilians are in the National Capital Region.
    And the rest are in, you know, over 30,000 in naval 
shipyards; we have, you know, thousands in our aviation depots.
    And just like the Air Force, they provide the readiness; 
they work on our aircraft and systems--they repair them; they 
train; they care for our families and our children in our 
daycare centers.
    I mean, they are indispensable to what we do and to execute 
the mission every day.
    General Campbell. Sir, same thing with the Army. At the 
height, probably fiscal year 2010, we had 285,000 Department of 
Army civilians. Today, we are about 250,000.
    As the Army end strength continues to go down, there will 
be a proportional cut to our civilians, as well.
    I agree with General Spencer--fiscal year 2013 was a very, 
very tough year for our civilians. We need to do better in the 
future.
    We have to give them some certainty or we will continue to 
lose the best and brightest. We will have a hard time 
recruiting the best and brightest that will stay with us.
    It is a total force with Army civilians--Army military, as 
well.
    General Paxton. And Congressman, for the record, I would 
concur with my mates here.
    And then in particular, we have less than 5 percent of our 
civilian workforce who are here inside the National Capital 
Region and they are essential to what we do at our depots and 
all around the Marine Corps. So, I concur with my mates, sir.
    Mr. Scott. Thank you, General. I have a cousin, actually, 
that works at your depot in Albany.
    So, thank you for your service. And with that, I will yield 
the remainder of my time.
    Mr. Wittman. Thank you, Mr. Scott.
    We will now go to Mr. Barber.
    Mr. Barber. Thank you, Mr. Chairman.
    And thanks to all the witnesses for being here today and 
for your long and patriotic service to our country.
    What you said this morning and what we have heard at 
previous hearings worries me deeply, as I know it does my 
colleagues, and you, of course, as well. There are very serious 
threats to our national security in the path we are on.
    In terms of the cuts that we are talking about and future 
cuts that might come, we are putting our country in a very 
dangerous position in the world, not only in protecting this 
nation, but in protecting and standing up with our allies and 
abiding by our treaty obligations.
    General Spencer, I would like to direct a question to you. 
It is an issue that I am very concerned about and I think it 
seriously threatens our readiness.
    As you know, General, last year, our Congress approved the 
National Defense Authorization Act [NDAA].
    And in there, there was a provision that said the A-10 
Thunderbolt would not be divested--or not--you wouldn't take 
action to divest it during calendar year 2014.
    It specifically said no preparatory actions for future 
divestment within calendar year 2014.
    And it has been since reported, General, that the Air Force 
may not have allotted any flight hours for the A-10 weapon 
school, may have canceled A-10 modernization and ended the 
normal sustainment process for fiscal year 2015, which begins 
October 1st.
    This, in my opinion, General, would clearly demonstrate a 
complete disregard for congressional intent within the NDAA.
    General, how and when will the Air Force rectify this 
violation and ensure that the A-10 continues to fly as we said 
it should?
    Congress intended that the Air Force would keep the A-10 
flying--not only because it is an important aircraft, but also 
because it is critical to the defense and protection and 
support of our troops on the ground.
    I recently returned from Afghanistan where I heard that 
story over and over again--how important it is to their 
protection. So, General, please tell me, when will we see this 
violation rectified?
    General Spencer. All right, thank you, sir, for the 
question, Congressman. First of all, we are not going to 
violate the law.
    And the airplane is funded through fiscal year 2014, so I 
am not sure where those reports came from; but we understand 
the NDAA.
    The flying hours are there for the airplane, so we are not 
going to violate the law in terms of funding.
    If you will allow me, based on the second part of your 
question, you won't find anybody in the Army or the Air Force 
say the A-10s are not a good airplane. It is a good airplane.
    But it is an airplane; it is not a mission. And we are 
talking about a mission here, which is CAS [close air support], 
and we have--as you have heard before, we have multiple 
aircraft that can perform that mission.
    So, we are not walking away from the mission at all. Again, 
when--as you have heard, when we take--when we lose $8 billion 
to $10 billion a year, we have to stop doing something. We have 
to cut something.
    And so, as I mentioned before, we looked at--across our 
entire portfolio. We balanced all of our weapon systems against 
the COCOM demands and the war plans and the campaign plans that 
we have and we took risk across every area, not just in CAS; 
but we took risk in every area.
    We have got--you know, I heard someone once say that close 
air support is a game changer. I don't--I think it is, but we 
have a lot of game changers.
    Air superiority is a game changer so no one can drop bombs 
on our folks; command and control is a game changer; ISR is a 
game changer.
    So, if we had the money, we wouldn't have cut the A-10. But 
again, we try to focus on the mission, not necessarily the 
platform.
    Mr. Barber. I do want to speak to that issue momentarily. 
But I would like to ask you, General, to look into these 
allegations and these reports that the Air Force is in 
violation of our provision in the NDAA--and let us have an 
answer in writing as soon as possible.
    General Spencer. Yes, sir.
    [Mr. Barber received a classified briefing in response.]
    Mr. Barber. Let me then follow up on what you were saying, 
actually, a moment ago. Senator Graham recently asked General 
Welch if the Air Force would keep flying the A-10 if Congress 
could find the money to sustain the mission over the next 5 
years. And I would like to pose the same question to you, sir. 
If we found the money, would the Air Force keep flying the A-10 
if the money was not an issue?
    General Spencer. Well, if money wasn't an issue overall, of 
course we would. But if you are asking me that if you gave us 
money back, is the A-10 our first priority, the answer is no.
    I mean, as an example, we are having to reduce our AWACS 
[Airborne Warning and Control System] fleet by seven airplanes 
just to take the money to upgrade the remaining airplanes. That 
would be a higher priority than the A-10.
    But if you are saying Congress gave us the money and said, 
``Fund the A-10,'' of course, we would.
    Mr. Barber. My time is up. But I just want to leave you 
with one question for the record, sir; and that is could you 
get us the analysis that led you to the decision that the A-10 
should be divested--the monetary analysis and the combat 
mission analysis?
    General Spencer. Yes, sir. I will get that for you.
    [The information referred to can be found in the Appendix 
on page 113.]
    Mr. Barber. Thank you for your time, sir.
    Mr. Wittman. Thank you, Mr. Barber.
    We will now go to Mrs. Noem.
    Mrs. Noem. Thank you.
    General Spencer, I wanted to visit with you a little bit 
about Ellsworth Air Force Base----
    General Spencer. Sure.
    Mrs. Noem. Which is in South Dakota. It is home to roughly 
half the B-1 bomber fleet.
    And last year at this time, they were grounded due to 
sequester. So, is it safe to assume that that will not be a 
situation that could happen in the near future?
    General Spencer. Well, we certainly hope not. I mean, keep 
in mind, when we had sequester last year, it hit us in the 
middle of the year.
    And so, we were faced with--we already had our budget. We 
had 6 months to make up a year's worth of cut.
    And so, we had no--I mean, we were going to--you know, we 
couldn't go anti-deficient. And so, we had to just stop--you 
know, stop hiring, stand down airplanes. So short of something 
like that, we certainly hope not.
    Mrs. Noem. Okay. So where are we at in the process of 
getting these squadrons back to the Tier 1 combat readiness 
status?
    General Spencer. Yes, ma'am. That is a continuous process 
every day. You know, obviously, some systems are able to bounce 
back faster than others. But again, keep in mind that what we 
are talking about here is that we put pilots down and so they 
start to lose their certification over time. We had maintenance 
folks who work on these airplanes, same thing.
    And so, as we spin them back up, it is not like a pilot can 
go jump in an airplane and say, okay, I had a couple of months 
off, now it is time to fly. I mean, you know, they have 
training in refueling. They have training on ranges on dropping 
bombs, you know, that sort of across-the-board full-spectrum 
training to meet any threat from a high-end threat to sort of a 
coin fight. We expect our pilots and crews to be able to 
respond across that full spectrum.
    So we are in the process of doing that now. That is why we 
are so worried about sequestration going forward because as we 
have--we had sort of a temporary break with 2014 and 2015, and 
we are starting to recover. And oh, by the way, it is not just 
the pilots and the flying, it is the ranges that they fly on, 
it is buying the proper emitters that have our pilots fly 
against the realistic threats that they are going to see. It is 
red-flag exercises out in Nellis. I mean, it is the whole 
readiness package, if you will, that we are trying to get back 
up to speed.
    Mrs. Noem. So can you give me some perspective on where we 
are in that process or, you know, do we have a timeframe for 
when we get back to Tier 1?
    General Spencer. Yes, you know, we estimated initially 
about a year or so. About 50 percent of those are getting 
pretty close, but about 50 percent of them are not.
    Mrs. Noem. Okay.
    General Spencer. But again we are slowly climbing out of 
that hole, but which is what scares us so much about 2016, if 
we go back to sequestration.
    Mrs. Noem. Okay. So I wanted to ask you one more thing 
about--my understanding of the fiscal year 2015 funds is that 
it does fund flying hours at capacity. In the case of the B-1s, 
though, 3 of the 36 combat-coded aircraft are not fully 
staffed. They don't have the same crew ratio or flying hours 
programmed against them, as other combat-coded aircraft. And so 
what is the reason for the difference on those particular 
aircraft and would you still consider this funded at capacity?
    General Spencer. Yes, ma'am. Thank you for the question 
because, without going classified, it is one thing to fund the 
flying hours that we can execute. You know, again, it is not 
just about flying hours. First of all the depots and the 
maintenance folks have to have the airplanes ready to go. And 
so, of those airplanes that we are able to get on the flight 
line, we have fully funded the hours that they can execute.
    But that is only a part of readiness. I mean, when we look 
at readiness, it involves personnel, as you mentioned, the crew 
members, having the right training personnel, having the number 
of personnel. So, no, clearly, our readiness posture is not 
what we would like to to be right now, again, without getting 
classified.
    Mrs. Noem. Well, can you speak to, on those three aircraft 
what the readiness level would be?
    General Spencer. No, those three, ma'am, if I could I would 
like to get back to you on those, if I could?
    Mrs. Noem. Okay. Let's do that. And with that, I yield 
back, Mr. Chairman.
    [The information referred to can be found in the Appendix 
on page 113.]
    Mr. Wittman. Thank you, Mrs. Noem. And now we will go to 
Mr. Enyart.
    Mr. Enyart. Thank you, Mr. Chairman. General Spencer, it is 
certainly a delight to see a fellow Saluki before me today. And 
I was glad Mr. Scott asked you to come down to Robins Air Force 
Base. Since you were stationed in Scott, I would like you to 
come to Scott Air Force Base.
    General Spencer. Sure. I would be happy to.
    Mr. Enyart. And while you are there, we will go down to 
Carbondale and we will visit a few old haunts that you and I 
might have crossed paths in back in the late 1970s.
    General Spencer. Yes, definitely.
    Mr. Enyart. General Campbell, before I came to this 
hearing, I had the Army Aviation Caucus breakfast with one of 
your predecessors, General Jack Keane. And General Keane, I 
thought, had some very interesting remarks for us.
    And General Keane this morning said that, in our Army, 
aviation is fully integrated into the Army, unlike in other 
nations. And in other nations, aviation tends to come in from 
the outside. And it is his opinion that that is one of the 
reasons that Army Aviation does such a great job and does such 
a great job with all of its missions, whether it is close air 
support or a utility lift or intel, or whatever. Would you 
agree with General Keane's assessment on that?
    General Campbell. Sir, absolutely, we have the best 
aviation in the world today. And as we move forward, we have 
got to make some very, very tough decisions. The ARI [Aviation 
Restructuring Initiative], as you know, makes some of those 
very tough decisions. But I think at the end if we go with ARI, 
we will continue to have the very best aviation in the world. 
And it is integrated down to the lowest levels.
    I commanded the 101st Airborne Division, the largest 
aviation, two combat aviation brigades with that division, 
taking them to combat. So I understand the importance of that 
integration from the air to the ground. But he is absolutely 
right.
    Mr. Enyart. And I agree with you. I think that is very, 
very important. And I was glad to hear your remarks about the 
importance of the Army National Guard and the importance of the 
Army Reserve, as we move forward in changes in our defense 
posture. And so I would assume from your remarks that you would 
agree that the Army National Guard, the Army Reserve 
essentially serves as the shock absorber, if you will, for when 
we need to rapidly increase the size of our Army.
    General Campbell. Yes, sir. That is one term I have heard 
used. Bottom line, we have to have a total force. We have to 
have Active, Guard, and Reserve. If we have to balance that, 
and as we have to make some very tough decisions based on the 
budget, we want to continue to have a National Guard as manned, 
equipped, trained and led, the very best. We don't want to go 
back to a strategic reserve. To have an operational reserve, 
there is probably going to be some small proportional cuts in 
their end strength and force structure, so we can keep 
readiness so they can continue to be an operation reserve.
    Mr. Enyart. And I agree with you, General. I think that is 
absolutely the right policy as we move forward. And having 
served when it was the strategic reserve and later having 
served when it was such an important part of our overall combat 
force, I agree entirely with you.
    And that is why I am so very, very concerned about the 
Army's proposal with Army Aviation, to strip AH-64 Apaches out 
of the Army and National Guard. You need to train as you fight. 
We all agree to that, and that is why the Army National Guard 
needs those and they need to be in that shock absorber for the 
American military.
    But I have another question for you. General Keane 
indicated this morning that--and of course, he has been very 
active, he has remained as an adviser to General Petraeus, when 
Petraeus would come in in Afghanistan. And so, he has not just 
been out of the loop for the last 10 years.
    But he indicated that we fought, Iraq and Afghanistan, we 
fought two wars. We didn't fight them contemporaneously. We 
fought them sequentially. And he said that we fought them 
sequentially, and that was when we had an Army of 570,000 
Active soldiers. We fought them sequentially because we could 
not fight two wars at the same time.
    And he made a very interesting remark, and I don't want to 
misquote him, but he said something about we were fighting 
against guys who were armed with AK-47s and RPGs [rocket-
propelled grenades] and we couldn't fight two wars at the same 
time. We couldn't beat them. Now of course, Iraq was a little 
different story than Afghanistan, in terms of their armaments.
    But we spent trillions of dollars on our defense. We spend 
hundreds of billion of dollars on our military. And what is it 
that we are doing wrong that we can't defeat folks with RPGs 
and AK-47s when we have the finest military in the world that 
we spend hundreds of billions of dollars on.
    So that is a thought I would like you to take back and 
think about. We need to think a little out of the box. And I 
think we need to look much more at strategic agility and some 
other concepts, because we don't seem to be getting the job 
done, even though we have spent a nation's fortune on it. I 
yield back.
    Mr. Wittman. Thank you, Mr. Enyart. We will now to go Mr. 
Rigell.
    Mr. Rigell. Thank you, Mr. Chairman. And I thank all who 
are here this morning, generals and admiral.
    Admiral Ferguson, my question is directed to you. Part of 
our essential role of oversight on House Armed Services and 
specifically within the Readiness Subcommittee, you know, I 
have reviewed carefully the SRM [Sustainment, Restoration, and 
Modernization] document, the bullet points that are laid forth 
on that particular aspect of the budget. And the priorities 
that are set, I really have a question about that, specifically 
as it relates to how much the Navy is directing toward energy 
and really alternative energy and energy goals.
    I have gone at this with a good man I respect greatly, 
Secretary Mabus. We have talked about this extensively. And as 
I see what is actually here before us, that only 70 percent of 
the SRM account is being really funded. Yet, over a hundred 
million dollars or over 7 percent of the budget is being 
directed toward the energy goals.
    And so I would like to hear from you what the rationale is 
on that and I will give it careful consideration. But I 
approach this as a skeptic just because of my own experience. 
And I think the priorities are not in the right order at this 
time. But I certainly want to afford you the opportunity to 
walk us through that.
    Admiral Ferguson. Great, thank you, Congressman.
    I will start in the broader sense, is that as we started to 
balance this budget presentation, like the other services, we 
faced a reduction. In our terms it was about $31 billion across 
the FYDP.
    And so the missions haven't changed the demand for 
presence, and so as we started to prioritize, we prioritized 
presence forward, we prioritized keeping the forces--those 
operational forces ready to be sustained and generate forward 
force. And we started to take risk in our procurement accounts, 
in the size of the force structure of the Navy, and in our 
shore infrastructure.
    As you look at the SRM account, we focused at the 70 
percent level in our investments for the DOD model. And we look 
to the year of execution, as funds become available, to either 
reprogram or to cover them.
    We would like to invest more because we realize that is a 
deferred maintenance backlog that is going to accumulate over 
time.
    We invested in this budget in the key safety and 
operational factors, in barracks. There is no demolition 
included in this budget, for example, which we would like to 
demo some old facilities. But the very key safety issues and 
operational issues that support the force went into this shore 
infrastructure.
    With respect to energy, the investments that we have in 
there and those projects, one, they provide a return on 
investments for energy efficiency for our bases. They show 
future savings that will accrue to the service. They support 
issues of Federal compliance that we have to meet. And 
fundamentally, they improve our infrastructure. We are looking 
at our naval shipyards. We are looking at other places in the 
electric grid where we have to do improvements.
    So we try to balance in this broader context those projects 
that would show a return on energy because it is a strategic 
imperative for us to get more efficient in the future.
    Mr. Rigell. I appreciate your response. From my own 
experience in commercial buildings and other things, I do know 
that perhaps as an older building, an older HVAC [heating, 
ventilation, and air conditioning] system or something is 
replaced, the efficiency is much greater.
    That said, the more that we have dug into this and as we 
give careful examination to it, I remain holding this view that 
we have placed a disproportionate amount of emphasis on this 
over some of the things that I think would help our service 
members more directly.
    And I would ask again that there be a consideration of 
moving some of those funds over from energy into those aspects 
of modernization and the SRM account that would have a more 
direct and immediate impact.
    And I thank you for your service and all of those who are 
serving and are with us today.
    And I yield back the remainder of my time.
    Mr. Wittman. Thank you, Mr. Rigell.
    We will now go to Ms. Shea-Porter.
    Ms. Shea-Porter. Thank you. And thank you, gentlemen, for 
being here.
    And I just wanted to state for the record that I think 
Congress has put all of you in a very, very difficult position 
and that we simply cannot have it both ways.
    We can't expect the military to stay strong and properly 
fund our programs, especially those in our districts that we 
know how important and critical they are, and still do these 
cuts.
    So you do have my sympathy and it is a message I think that 
this committee has tried repeatedly to share with other Members 
of Congress. So I just wanted to be on the record for that.
    Now I read your statements, but my question is, were these 
written before Crimea? Is this written before we saw the 
Russians fairly aggressive on borders now?
    What does this mean to readiness now? Does this mean any 
pivot, any change? Do you foresee extra requirements and needs?
    I didn't hear anything addressed on that and I know this 
has been a topic that had me concerned and other members as 
well concerned about do we have to pivot back a little bit? 
Should we continue closing down the bases in Europe? Have we 
moved too quickly?
    So if you could look ahead a little bit and tell me what 
you think we need to do and are you comfortable with where we 
are and what we are doing right now. And I am going to ask each 
one of you. Thank you.
    General Campbell. Thank you, ma'am.
    My statement was written after the Crimea piece. But as you 
say, a month and a half ago if you thought we were going to 
talk about Russia in Crimea, we would have been saying, 
``What?''
    And I think what it goes to is what the chairman said up 
front--is that we live in a very volatile, very complex, and 
probably more dangerous world than we have ever lived in 
before. And so we have to take that into consideration. I think 
all the service chiefs have been up front in voicing this.
    And as we do this, we continue to come down and we continue 
to come down at a time when your Nation is still at war in 
Afghanistan. So all these factors make that very tough.
    What you asked all your services to do is maintain a 
balance, provide the very best capabilities that we can at the 
budget that you give us. And I think we take a look at all the 
different scenarios, we run simulations, we run models, and 
then we owe our Congress in terms of risk where we are at and 
what we can and cannot do.
    And I think Crimea is just another example of how dangerous 
our world is, and that if we continue to go down too fast, we 
will not be able to respond accordingly to different nations in 
the world here.
    So it does concern us. I think there is a whole bunch of 
policy things that we probably will not get into on that part 
of it. But we are very cognizant.
    Your Army has to be able to go all over the world. And so 
there is a rebalance to the Pacific. We think we have been able 
to do that. But we are also maintaining forces in Afghanistan 
and CENTCOM [U.S. Central Command] and all the combatant 
commands.
    As one of the other Vices said, it is kind of funny here--
as we continue to draw down, the demand for your services, I 
know for the Army, the requirement and demands continue to 
grow. So it is going in the opposite direction.
    Ms. Shea-Porter. What about the bases in your----
    General Campbell. Ma'am, we are looking--OSD [Office of the 
Secretary of Defense] is running a European infrastructure 
consolidation review with all of the services. The Vices are 
part of that senior review group, as we take a look at that.
    I think as you know, we came from four brigade combat teams 
down to two. The mitigation effort for that is to have a NATO 
[North Atlantic Treaty Organization] response force. We have a 
brigade that will rotate and do exercises with our NATO 
partners. We will continue to look at that very hard.
    But again, we are going to have to cut additional brigade 
combat teams as we go forward. And my fear is that if we say we 
are going to cut that someplace in CONUS [continental United 
States] the United States, a Member of Congress will say, ``You 
can't do it in my State.'' So go to Europe.
    Well, if you go to Europe, we have certain NATO obligations 
and treaties that we must fulfill. And I think we are probably 
on the cutting edge with right now being where we are bare 
bones. And I think General Breedlove as EUCOM [U.S. European 
Command] commander said that, as well.
    So we will continue to look at that very hard. We have to 
make sure we don't have excess and all the services are looking 
very hard on where we can consolidate in Europe and continue to 
be more efficient, give us the biggest bang for the buck.
    But when I joined the Army, we were probably over 300,000 
in Europe. We are down to about 28,000 Army in Europe today.
    Ms. Shea-Porter. Great concern. Thank you.
    Admiral Ferguson. Congresswoman, my statement was written 
concurrently or after. And I would say that, from the Navy 
perspective, we are improving our presence in Europe. I have a 
keen interest in that, since that is where I am going next.
    And so we are bringing online and finishing an Aegis 
missile site that is going to be based in Romania. We are 
stationing four of our advanced guided-missile destroyers in 
Rota, Spain. And providing missile defense coverage for Europe 
and be available there.
    So we are seeing demand for naval forces just like the Army 
not relenting in Europe. And so, as you think about the 
readiness piece, the point I would ask you to think about is, 
is from the naval perspective, we are investing in the forces 
forward and pushing them forward.
    And they are a force multiplier for us because one ship in 
Rota, Spain, is equivalent to three in the United States that 
rotate.
    So they are there. But that surge force, the non-deployed 
readiness, is where we have to watch very carefully that we 
have forces that can surge forward in times of a crisis.
    With respect to the basing structure, the Navy downsized 
its basing structure over the last 10 to 15 years, getting out 
of London, many of the northern European bases. We feel very 
confident that the structure we have--Rota, Spain, Sigonella, 
Naples, Souda Bay, use of Augusta Bay--that the structure there 
is very supportive, looking both south toward Africa and those 
challenges, as well into Europe. So we feel very confident in 
our base structure. And again, confident that we have sustained 
the presence and are building it over time in Europe.
    Ms. Shea-Porter. Thank you.
    General Paxton. Thank you, Congresswoman.
    And as I mentioned in--to your first question, statements 
were written concurrent, so we were aware of what was going on 
in Crimea and Ukraine and influences the way we do--prepare for 
the testimony, ma'am.
    One of the five pillars that I mentioned by which the 
Marine Corps measures readiness is our ability to meet 
combatant commander requirements.
    So to anticipate what EUCOM or SACEUR [Supreme Allied 
Commander Europe] could need over there and how any of the 
force services I think would respond is always foremost on our 
list. Because as we are fond of saying, the enemy always gets a 
vote here.
    To Congressman Palazzo's question earlier, though, I mean, 
our amphibious ship capability and our MEUs [Marine 
Expeditionary Units], our expeditionary units, we used to have 
a fairly heel-to-toe and substantive footprint in the 
Mediterranean that we could move up into the Black Sea if we 
needed, or as Admiral Ferguson noted, could shift down to the 
littorals in the North African continent.
    But most of that MEU now is part of the theater reserve for 
the CENTCOM AOR [area of responsibility] and they move through 
the Red Sea and then are disaggregated and used by that 
geographic combatant commander.
    So, we only get access to that amphibious capability either 
on the way in or on the way out from the CENTCOM AOR.
    So, to have additional shipping, to not be in a 1:2 dwell 
and to be able to put naval forces--Navy and Marine--in the 
Mediterranean that could respond would certainly be a benefit, 
I know, that General Breedlove and the folks over there.
    And as with the other Vices here, we watch the European 
infrastructure--and that is an ongoing requirement that we have 
at OSD to make sure we get that right; that when we establish 
what the fiscal limits are on the floor is that we have 
sufficient basing capability and it is flexible enough that we 
can expand from there.
    So, thank you, ma'am.
    Ms. Shea-Porter. Thank you.
    General Spencer. Congresswoman, I also prepared my 
statement concurrently with the recent events.
    But, you know, I generally sleep pretty good at night. But 
the--you touched on something that does keep me up at night, 
and that is that we are prepared to respond to anything across 
any spectrum of conflict that may arise.
    And none of us have been very good at predicting what is 
going to happen next. I don't think anyone could have predicted 
9/11--that we would be in Afghanistan.
    And the type of conflict we have been in over the last 
decade, you know, is sort of low-end, if you will, in terms of 
conflict. None of us like any conflict.
    And I worry sometimes that we have been lulled into that 
is--you know, that is the way it is always going to be until 
things like this happen and so, you know, and if you look at--
this is why we are all so afraid of sequestration.
    Because if you look at our budgets over the last century--
if you look at World War II, you know, we went up in spending; 
the threat came down, we came down.
    Korean War, Vietnam, Cold War--they all had something in 
common. We built up, the threat went down, we came down.
    We are coming down now in funding and the threat is not 
coming down. And it is more dangerous. And that bothers me. 
That keeps me up at night.
    Ms. Shea-Porter. Thank you.
    I yield back. Thank you for allowing me to ask that.
    Mr. Wittman. Sure. Thank you, Ms. Shea-Porter.
    Gentlemen, I want to ask an overarching question. I have 
read all your statements; they do a very good job about 
expressing where the challenges are looking at what is needed 
to sustain.
    But I think there are three levels of concern here about 
readiness. Current states of readiness, the resources necessary 
for that readiness--and they occur at three different levels.
    One is where are we in a state of readiness now; where 
would we be if OCO dollars were to disappear; and where would 
we be in the face of sequestration?
    And I am going to ask you for your assessment--where we are 
now, where you would be if OCO were to disappear, where you 
would be if the sequester were to go into place.
    And what would the risk entailed in those three scenarios 
look like? And I would like for you to be very, very specific 
about what that risk would look like.
    And General Campbell, I will begin with you in getting your 
appraisal about those three elements and then where we would be 
risk-wise with our Nation's military.
    General Campbell. Sir, thanks for the question. As you 
know, for all of us, this is about prioritization. And if 
everything is a priority, then nothing is a priority. So, we 
really look hard at that.
    And then our senior leadership always makes decisions in 
terms of risk--risk to force and risk to mission. And we have 
to take all that into consideration.
    And the uncertainty of the budget has caused us to be all 
over the map on the risk piece. And so, that is what keeps me 
up at night--is the uncertainty of not knowing as--along with 
what Larry said on the world that we live in today; we have to 
prioritize that.
    So, I talked about tiered readiness. I talked about 
progressive readiness--and progressive readiness is really what 
we were able to do when we had a predictable budget and we were 
growing.
    And so, in Iraq and Afghanistan, progressive was an Army 
Force Generation model that had brigade combat teams--all the 
enablers have what they need at a certain points in time; they 
continue to get ready, then they deploy.
    We don't have that luxury now. So, we have to prioritize.
    And on tiered readiness, what we do is we make sure that 
the deployers--so, everybody going to Afghanistan, you are 
going to have what you need. If you are in Korea and forward 
deployed, you are going to have what you need. If you are in 
the Global Response Force, you are going to have what you need.
    But everybody else, based on that, their readiness is going 
to continue to drop. And therefore, if we have other 
contingencies that we have to respond to, ma'am, as you talked 
about, it is going to take more time and more resources.
    If we don't have that time, you are still going to expect 
us to deploy these soldiers and they are going to go at more 
risk.
    So, today, what I would tell you is that all of our forces 
going to Afghanistan, we are providing them the right 
resources; all in the Global Response Force, the right 
resources; forward deployed like in Korea, the right resources.
    We are building up our short-term readiness based on what 
you have given us for 2014 and 2015. But again, as everybody 
stated, we went down in a hole in 2013. That is going to take 
some time.
    But I feel much better today than where I was 2 or 3 months 
ago, because we are building it up.
    With the additional monies, we will fund our combat 
training centers. We will be able to get more brigades through; 
we will have much higher readiness
    But if sequestration comes, that drops back off, and then 
we will only be able to focus on a smaller number; and again, 
it will probably be those forward deployed--it will be those in 
a Global Response Force.
    If OCO goes away, what I would tell you--OCO funds 
everything in Afghanistan for us. But it also funds a lot more 
that we have been accustomed to. And we are now trying to 
figure out what we can do if we don't have that OCO.
    So, Operation Spartan Shield for CENTCOM--many of those 
forces, forward deployed Patriots--those type of things; the 
missile defense--that is all covered in OCO right now. And if 
we had to bring that back into our base budget, that means we 
are going to have to cut more things. So, we have to look very 
hard.
    The issue with OCO is we go year to year. And so, there is 
no predictability. But your Army is working very hard on how we 
can work through the OCO piece.
    As you know, in 2013 with sequestration, because of the 
issues with OCO, we had to figure out how we could pay the war-
fight. And we had to take money out of our base budget to pay 
for the war-fight because of the issues that we had with OCO.
    And people think, as we come down, that our OCO requirement 
is going to go down. It is the opposite. As you come out and 
all that equipment we have to bring out, our OCO--and go back 
and look at Iraq and people go back and look at how much OCO we 
spent in the last 6 months and the first 6 months after coming 
out of Iraq; it was much higher.
    So, you know, when we look at it--``ah, you don't need 
OCO''--that is absolutely wrong. We have been very consistent 
on OCO for reset.
    So, in the future, if we don't have OCO to reset the 
equipment that we need for any of these contingencies, that 
risk would drive up even higher.
    Mr. Wittman. Thank you, General Campbell.
    Admiral Ferguson.
    Admiral Ferguson. I will echo that all of us are in the 
difficult prioritization business. So, our current state of 
readiness today.
    We are meeting about 44 percent of the combatant commander 
demand for naval forces. So, that means that we are funding two 
carrier strike groups, two amphibious ready groups, about 13 
submarines--you know, some number, approximately 10, of missile 
defense ships.
    But it is a supply-based model in a sense that the 
readiness dollars that we are given--we ensure those forces are 
fully trained, ready, confident to meet the demands.
    And we take risk in the surge and we take risk in what is 
available in non-deployed forces. We have a backlog in aviation 
depot maintenance; we have a backlog in ship depot maintenance. 
With the money you have given us under the BBA, we are working 
through that to get through it.
    As you talk about sequestration, I gave Ranking Member 
Bordallo a list of the procurement things.
    But there are some other force structure things that would 
happen. We would have to decommission the carrier and the air 
wing. We could not afford it--it is a $7 billion bill to us 
across the next 5 years.
    We would have to put six additional guided-missile 
destroyers into phased modernization plan, take them out of 
service; we would reduce aircraft procurement, as well. And so, 
you know, we would have to draw down those accounts with 
greater backlogs and maintenance.
    So, the law--the sequestration piece, as I articulated, is 
a smaller Navy. And we now start to not meet--we won't be able 
to meet the strategy because of the force demands.
    And there is a mismatch between what the combatant 
commanders are asking for versus what we will be able to 
provide.
    On OCO, as I mentioned, it is about $7-$8 billion a year. 
It funds the CENTCOM operations that we are having, and AFRICOM 
[U.S. Africa Command]; it funds all the [Operation] Enduring 
Freedom for us. As I said, about $2.2 billion is reset--so, 
that is a maintenance backlog that would just accumulate--and 
accumulates every year in a growing way and compounds.
    And then the last piece is there is some enduring--it is 
about $2 billion that we would have to migrate over time into 
the base budget. But we would lose that, as well.
    We would have to go into the other accounts to cover that 
bill at $7-$8 billion a year procurement, research and 
development.
    We start to mortgage our future to trade--to meet the 
demands of the present and have less surge to answer what the 
Nation's call is. That is the summary for us.
    Mr. Wittman. Thank you, Admiral Ferguson.
    General Paxton.
    General Paxton. Thank you, Chairman Wittman.
    Sir, within the Marine dollar, if you will, we spend 
roughly 63 cents of that dollar on our manpower accounts to get 
the right people, to properly train them, to put them in the 
right units, to make sure they are at the right position, ready 
to deploy.
    The next 27 cents on that dollar is the actual operations 
and maintenance cost to get them around the world and do what 
our Nation needs them to do.
    Right now, it is that last 10 cents on the dollar that is 
split between our facilities sustainment, restoration, 
modernization, and our overall modernization accounts.
    So, as both General Campbell and Admiral Ferguson said, we 
are actually--we are mortgaging our future.
    There is a cost to the All-Volunteer Force. We are 
incredibly proud of it. It is the best Army, best Navy, best 
Air Force, best Marine Corps our Nation has had in many, many 
years, and has served us very, very well, our soldiers, 
sailors, airmen, and marines, in conflict the last 12 years.
    But there is a cost to the All-Volunteer Force. So the OCO 
money is what is actually so important to all the services for 
the actual execution of the missions and then the reset 
afterwards.
    As General Campbell said, we have the same challenge in the 
Marine Corps. Fortunately, we have reset about 79 percent of 
our equipment coming out of Afghanistan. A year ago, when I was 
before the committee, it was $3.2 billion and almost 3 years to 
finish the reset. That is down to about $1.3 billion now and 
only about 21 percent still left over there.
    But that is not an insignificant amount of equipment that 
we need to train on and it is not an insignificant amount of 
money. So the OCO is very, very important to us.
    And the risk in the future, sir, as General Spencer said 
earlier, with each time that we don't have the equipment we 
need, it is not properly reset, it is not in the maintenance 
pipeline, then we still have the squadrons that need to fly and 
the pilots are ready to fly, but there is less forward aircraft 
for them to do that.
    And we get this death spiral. And they don't get the night-
vision ops they need, they don't get the feet dry ops they need 
on the big deck carrier, and the bounces. And it takes us 
longer and longer to be ready.
    So the risk for our force and to the Nation is actually the 
risk to the mission in that we would probably be slower to 
respond to the fight, get in there, do exactly what we need 
with the first round, but our bench won't be as deep and 
unfortunately we will probably see more casualties.
    Thank you, sir.
    Mr. Wittman. Thank you, General Paxton.
    General Spencer.
    General Spencer. Mr. Chairman, a similar story to my 
colleagues here. Currently our readiness is not where we need 
it to be.
    You know, the current war that we are in, the combination 
of sequestration, standing down airplanes last year, has put us 
in a position we don't want to be in.
    And it--some might say, well, you are over flying in a war, 
you are getting ready. No, some of the challenges that the 
Congresswoman mentioned, they are--our pilots and our crews are 
not training for the--have not been training. So we are not 
where we need to be today.
    If OCO disappears, then that risk goes up because--for 
several reasons. One is, we need to reset once we come out of 
Afghanistan. So we need to bring airplanes back, get them into 
depot. We need to bring equipment back, get the equipment 
repaired.
    And we also need to make sure that our folks get back and 
get trained.
    In addition to that, so reset is just a piece of that. The 
other half of that is we have enduring bases that we have been 
told are going to remain.
    So bases that are over there, that are in the theater right 
now, that are being paid for by OCO, that are costing us $2 
billion a year, we would have to drag that money into the base 
budget, and it is going to come right out of readiness account 
because we can't take it from anyplace else.
    And then--so you are talking about level of pain all the 
way down to sequestration. So it is a--again, that is what we 
all talk about.
    As I mentioned to you I think the other day, or maybe it 
was yesterday, we--this is not--we don't get a Super Bowl and 
get to lose and come back. I mean, we have to win. And so we 
want to make sure that when we go, it is not a fair fight, we 
win and we come back. That is what the American people expect.
    That is why we are so worried about this.
    Mr. Wittman. Very good.
    General Spencer, can you give us your assessment of what 
increased risk would be for the Air Force? And what is the 
manifestation of that?
    General Spencer. Well, if--as you look at our current--if 
we go into sequestration as an example, and it has been said, 
we will not be able to--and I am not sure--folks may not 
understand the impact of this, the current Defense Strategic 
Guidance that we have, we cannot do it. So we just won't have 
the capacity to respond to what we say we can respond to today.
    And so, now would we go? Absolutely we would. We would go 
with everything we had. But you are talking about now a longer 
conflict. You are talking about more lives lost. You are 
talking about something the American people don't expect from 
us.
    Mr. Wittman. Right.
    General Spencer. So it is serious. It is deadly serious.
    Mr. Wittman. Very good. Thank you, General Spencer.
    I want to go back to General Campbell. You had mentioned a 
little bit earlier your assessment of what increased risk would 
look like for the Army under these different scenarios.
    Can you give us a little additional elaboration on that?
    General Campbell. Sir, again, the Army is all about people. 
We don't have the big platforms but it is people. So for our 
money, about 48 percent of that goes to the people. And the 
risk is as we continue to downsize that piece, we can't bring 
the people down quick enough to keep in balance and that is 
what we need to do.
    We don't want to have a hollow Army like we had after 
Vietnam. To do that, you have to balance your modernization, 
your end strength, your force structure, and your readiness. 
And we continue to try to do that.
    Again, the uncertainty is the greatest piece that inhibits 
us from having the opportunity to do that. I am also worried 
about the risk that we have for the All-Volunteer Force that 
General Paxton talked about. You know, we have the greatest 
services because we have had this All-Volunteer Army for the 
last 40-plus years.
    But they are watching now what Congress is doing, what we 
are doing. Are we taking away their pay? Are we taking away 
compensation? Do we not value their service?
    I would disagree with Mr. Enyart where he talked about--he 
didn't say lose, but I got the impression he said we were 
losing. If we try to tell our soldiers in the last two wars 
that we are losing, that is absolutely wrong.
    If you go to Iraq, if you have been there, we set the 
government up for success. Now that has changed since we left. 
We are doing the same thing in Afghanistan. And so our men and 
women of all the services, I think, have done incredible for 
the wars.
    But I worry about if we will be able to maintain the best 
talent, as we go forward. If they know that we are not going to 
be able to take care of them, if they know that we are not 
going to have the money to provide them the best training, the 
moms and dads won't have their children come in the service.
    My son enlisted in the Army. He is on his second tour in 
Afghanistan today. He comes back and says, ``Hey, Dad, you 
generals, you have to get it right. We have to have what we 
need.'' He definitely understands what he is doing over there 
is making a difference in the lives of many Afghan people and 
that big part of the region.
    And my fear is that we will not continue to bring in the 
best and brightest that our Nation has to offer.
    We have less than one-half of one percent serve this 
country. Several years ago, probably 3 out of 10 young men and 
women could serve in any of the services, would qualify. That 
number is probably about 22.5 percent today based on medical 
issues, criminal issues, obesity, on and on.
    So that is something we got to look--we are looking at the 
50-meter targets. We better start looking at these 300-meter 
targets to enable us to keep the best men and women coming into 
all of our services. That is the risk.
    Mr. Wittman. Thank you, General Campbell.
    Admiral Ferguson, I would like you to elaborate a little 
bit, too, on what increased risk would be in terms of how the 
Navy envisions that?
    Admiral Ferguson. Under sequestration?
    Mr. Wittman. Yes.
    Admiral Ferguson. Okay.
    Mr. Wittman. Yes.
    Admiral Ferguson. As I mentioned earlier, we would be a 
smaller Navy. We would have less capability against the high-
end adversary. And pacing that high-end adversary in terms of 
our ability to project power into certain environments around 
the world.
    Second, less capacity. In the sense that as a smaller 
force, we would have less to surge to a second operation if we 
are engaged in a first one around the globe.
    With a smaller force under sequestration, we would have 
great pressure from the combatant commanders to deploy for 
prolonged periods of time, turn around the forces quicker. You 
wear out the equipment at a faster pace.
    But the concern, to echo General Campbell, is a concern 
about the people. We are predominantly a career force. And we 
rely on a very high caliber of young men and women that come 
into the service with great technical skills and scores and a 
great commitment to serve.
    They are extraordinary. And we rely on them. And you know, 
we have to be concerned about the retention of that force as a 
career force in the future.
    And to me, that is the institutional risk that if they look 
around and they see that they don't have the spare parts to do 
their job, they are not getting trained, they are--I spent some 
time with a group of aviation commanding officers out at North 
Island. And I try to visit the force before I testify. And 
their number-one issue, the young pilots', was the flight time 
so they can gain the skills and experience to serve.
    And they were frustrated that they were lacking parts, that 
they were lacking airplanes with flight hours, or the flight 
time in order to develop their own professional skills and 
serve.
    And I think we have to be extraordinarily mindful of the 
fact that they look to their future to be proficient and great 
leaders in their field.
    And if they don't see the investment of the parts, the 
training, and in their future, we are at risk of losing them. 
And to me, that is the institutional risk that we face.
    Mr. Wittman. Let me ask you to expand a little bit on that. 
I think it is spot-on about the institutional risk and the 
retention issues that come from that.
    Tell me what does it mean, though, in terms of the lives of 
our sailors as they go to sea, as they go into aircraft, or if 
we put them in situations where they don't have as much 
training or they don't have the full skill set when we put them 
into those situations in a combat situation.
    Give me your perspective on that, if you would?
    Admiral Ferguson. Yes. I would tell you that, and I think I 
speak for all of us, we consider it a sacred trust that we 
don't send untrained people into combat. We have to give them 
the very best.
    And so, when we make these trades, we will ensure that the 
forces we have are ready. But those that are not on that cyclic 
deployment, that are sitting back at shore station, are the 
next to go, they will see this degradation under sequestration.
    And to me, that is where the elements of retention loss may 
start to grow.
    And so, you know, we will always invest in them, but it 
will be a smaller force; they will have less behind it. And, 
you know, as I think ahead about the strategic challenges in 
the future, the 3 to 5 years, it will be upon balancing this 
demand and the retention and the risk.
    Because when you get into a retention crisis, those of us 
that lived through it in previous years, it is awful tough to 
pull out of it, once it starts.
    Mr. Wittman. If we get into a demand scenario where you 
have, obviously, that ready force that is ready to go, but the 
demand signal surpasses that and then you have to go to those 
units that don't have that elevated tier of readiness, give me 
a perspective on what it means there.
    I mean, I look at it from this perspective: We either have 
two choices. We either say we are not going to send them, which 
in many instances is not a choice, or if we send them, at 
increased risk to them and few of them coming back from the 
battlefield under that scenario.
    I wanted to get your perspective on that.
    Admiral Ferguson. Well, certainly I think in sequestration, 
there are two risks. The first risk is that because we haven't 
made investments in our future capability, there is not enough 
force structure, that they are at a disadvantage in facing a 
high-end adversary.
    That is--and then, it is very easy to do the modeling, 
after that, and you have to adjust the war plans or adjust the 
execution of your mission or you accept higher risk with loss 
of assets and the accompanying casualties.
    You know, we would certainly apply every level of effort to 
avoid that, but that is--you know, as you project out, under a 
sustained period of sequestration with a smaller Navy, against 
a high-end adversary, I think that is a risk that you have to 
be very careful of.
    Mr. Wittman. Very good.
    Gentlemen, thank you. I appreciate what you have laid out 
for us with the challenges going forward. I appreciate, too, 
every one of you saying that in these scenarios increased risk 
means a lot of different things to the Nation, but at the end 
of the day, it is about the brave men and women that volunteer 
to put themselves into harm's way, and that that increased risk 
does mean for them potentially, if we don't get this right, 
higher casualties, issues with sustainment of the force.
    All those things I think are very, very compelling about 
why Congress needs to do its job to address this issue and make 
sure that things are properly resourced.
    We understand the challenges with this Nation's budget. We 
understand the deficit and the debt. Those things are very 
important, too. But we also understand our constitutional 
responsibility under Article I, Section 8, and that is 
something that I think all of us here need to remind ourselves 
of that, every day.
    And we appreciate each of you for your leadership. Please 
thank your soldiers, your sailors, your marines, and your 
airmen for their service to our country.
    And please pass on to them, too, the thanks of this 
committee and this Congress to their families, who also 
sacrifice in keeping this Nation safe.
    Gentlemen, thank you again.
    If there are any--no other questions?
    Ms. Bordallo. I do.
    Mr. Wittman. You do? Yes?
    Ms. Bordallo. Thank you, Mr. Chairman. I would just like to 
make a few personal comments.
    After hearing from the vice chiefs this morning from all 
the services, I think this indeed presents a grim picture.
    And I just returned with the chairman from a very 
interesting trip to Afghanistan and different places in Africa. 
And I was amazed at the morale of our service men there. In 
spite of the harsh conditions that they are undergoing, they 
seem to be pleased with what they are doing and happy to go 
helping with the training of the soldiers in these different 
countries.
    And it would be a shame, as you said, you know, to continue 
to cut the budgets and find that they do not have the equipment 
and so forth. And I think it will bring down recruitment, 
definitely.
    So I just want to say that we were just so astounded with 
the friendliness and the performance of our men and women in 
service in all these different areas.
    And I just hope that Congress can rectify what has happened 
with the decrease in the budgets. And that is the--and I praise 
you for continuing to try to work out things as much as you 
have to, to cut the funding from every program under your 
supervision.
    And, again, I want to thank you for your testifying this 
morning. And, as I said, I hope we can rectify some of these 
problems.
    Thank you.
    Mr. Wittman. Very good. Thank you, Ms. Bordallo.
    If there are no other comments, the committee is adjourned.
    [Whereupon, at 9:45 a.m., the subcommittee was adjourned.]


      
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                            A P P E N D I X

                             April 10, 2014
     
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             April 10, 2014

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                   DOCUMENTS SUBMITTED FOR THE RECORD

                             April 10, 2014

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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             April 10, 2014

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             RESPONSE TO QUESTION SUBMITTED BY MR. PALAZZO

    General Spencer. Due to the experience and training of the flight 
crews and maintainers at Little Rock Air Force Base, we expect they 
could be at full operational capability much sooner than the usual 12 
to 24 months needed for other units that do not have Little Rock's 
level of experience. This move will not affect readiness. The Fiscal 
Year 2015 President's Budget (FY15 PB) request reduces the C-130 fleet 
from 358 (FY14) to 318 aircraft (FY15), then increasing to 328 (FY19) 
with C-130J procurement. This number is still above the tactical 
airlift operational requirement.   [See page 15.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. BARBER
    General Spencer. The Air Force provided the operational analysis 
briefing, with focus on the A-10 divestment decision, to Congressman 
Barber on May 9, 2014.   [See page 21.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MRS. NOEM
    General Spencer. In the Fiscal Year 2012 President's Budget, the 
Air Force requested authority to retire three combat coded B-1 
aircraft, but this was reversed in the National Defense Authorization 
Act for Fiscal Year 2012 (FY12 NDAA). The FY12 NDAA actions did not 
provide funding for these aircraft and the Air Force topline did not 
permit funding. The Air Force maintains the aircraft as combat coded, 
but in backup aircraft inventory (BAI) status, which earns no manpower 
or flying hours. We maintain their ability to meet Defense Planning 
Guidance, meaning we are funding sustainment and modification to keep 
the airframes relevant. In order to operate these B-1s daily as a 
primary aircraft, it would require $58 million per year--$26 million 
for active duty officers and enlisted personnel and $32 million for 
flying hours.   [See page 22.]
?

      
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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                             April 10, 2014

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                   QUESTIONS SUBMITTED BY MR. WITTMAN

    Mr. Wittman. What level of unit readiness does the President's 
Budget Request assume? If funded at the budget request level, how long 
until we regain sufficient full spectrum readiness?
    General Campbell. The President's Budget (PB) balances risk from 
low core readiness (due to the Army's commitment to counterinsurgency 
operations since 2001) with re-structuring and end-strength drawdown in 
order to build decisive action readiness across the full spectrum of 
conflict.
    Additionally, the combined effects from the Budget Control Act 
(BCA), previous shortfalls to Overseas Contingency Operations funding 
(OCO), and the impacts from emergent and undocumented demand for Army 
forces by combatant commanders has impacted and delayed this 
transition. For example, the BCA forced the cancellation of seven 
combat training center rotations in FY13, while all but select Army 
units were forced to reduce training to the squad and platoon levels.
    Given these other variables and funding at the PB levels, the Army 
will not regain the appropriate balance across modernization, 
procurement, readiness, and manpower accounts until FY 2019 and will 
regain sufficient full spectrum readiness across the total force by FY 
2023.
    Mr. Wittman. Much of the $26 billion Opportunity, Growth, and 
Security Initiative (OGSI) Fund is aimed at mitigating short-term 
readiness shortfalls. If funded at the budget request levels, what 
additional readiness shortfalls are present within the Army? Can we 
expect the OGSI to mitigate all or most of these? What is the impact or 
risk if OGSI is not funded?
    General Campbell. The combined effects of sustained operational 
demand for Army forces and budget reductions have resulted in a decline 
in unit readiness across the Total Army. In order to build decisive 
action capabilities in Fiscal Year (FY) 2015, the Army has prioritized 
funds to train forces in the Army Contingency Force (ACF); however, due 
to top line funding decreases, the Army has accepted risk in the 
readiness of multifunctional and theater support brigades as well as in 
home station training, facilities, and equipment sustainment and 
modernization programs.
    The Army's 7.5 billion dollar share of the Opportunity, Growth, and 
Security Initiative (OGSI) is currently programmed in our base budget 
submission to accelerate training readiness (2.0 billion dollars), 
enhance installation readiness (2.4 billion dollars) and continue 
equipment modernization (3.1 billion dollars). While this infusion 
would not eliminate all risk, the OGSI provides the necessary resources 
to mitigate several areas of concern left uncovered at the budget 
request level to include: expansion of progressive operational training 
beyond the ACF to meet Combatant Commander demands and improve Army 
National Guard and US Army Reserve readiness levels; increasing 
installation sustainment and base operation support levels to 90% of 
requirements across the Total Army; and accelerating equipment 
modernization to ensure we maintain the technological advantage over 
any potential adversary.
    The current level of funding programmed for FY15 only generates the 
bare minimum level of readiness required to meet the Defense Strategy. 
The budget caps in FY16 and beyond further hinder our ability to shape 
the Army for the future while simultaneously and severely degrading 
Army readiness and modernization efforts. Our objective is to preclude 
hollowness in our force as we continue to draw down and restructure the 
Army by achieving balance between readiness, end strength and 
modernization. The OGSI is an essential tool in this process.
    Mr. Wittman. The Army in particular has faced cuts in force 
structure (depth/capacity) and deferred much needed modernization 
(capability). How would this dual degradation in depth and capability 
impact the ability to respond to a major contingency? How would you 
characterize the risk associated with the Army's current state? Is 
today's Army today sufficient to meet OPLAN and CONPLAN requirements?
    General Campbell. If allowed to continue, the Budget Control Act 
spending caps can result in an Army end-strength of 920,000 in FY19. At 
this force level, the Army would not have the appropriate depth/
capacity or capability to successfully conduct all components of the 
Defense Strategic Guidance (DSG), under terms acceptable to the United 
States. With a total Army end-strength of 920,000, it is likely that 
U.S. forces would be unable to sustain conflict long enough to 
mobilize, train, and deploy additional formations. Further, the Army 
would be unable to respond quickly or decisively enough to ensure an 
outcome consistent with American goals and objectives; any outcome that 
is achieved would come at a much higher cost in terms of blood, 
treasure, and time.
    I would characterize the risk associated with the Army's current 
state as moderate. Although the Army presently has the force structure 
to meet DSG requirements, it lacks the readiness to ensure success 
under terms acceptable to the nation.
    Mr. Wittman. Budget materials cite the creation of, and the 
provision of, resources to support the training of an Army Contingency 
Force (ACF) consisting of infantry, armor, and Stryker BCTs, an 
aviation task force, and associated enabling units. How large will the 
ACF be in terms of BCTs? If the Army is uncertain, how is there 
confidence that the budget request is adequate to support the training 
and operational requirements of the ACF?
    General Campbell. The amount of Army units dedicated to the Army 
Contingency Force (ACF) is certain. However, the amount of contingency 
forces remains classified. The ACF was designed to provide combatant 
commanders with the most ready contingency force possible given 
constraints from global demand for rotational forces and reduced 
funding due to the Budget Control Act (BCA) and other resourcing 
shortfalls. The amount of forces designated to be in the ACF has grown, 
and is expected to continue growing, as both funding is restored and 
operational commitments lessen or change.
    Today, there are three variables impacting the training and 
operational requirements of the ACF. First and foremost, funding is 
required to adequately build readiness and train units to a level of 
proficiency that is necessary to maintain an appropriate contingency 
readiness posture within Army units. Without adequate funding, the Army 
will be unable to build readiness to man, equip, sustain, and train 
units during this vital transition period from counterinsurgency to 
decisive action operations. Second, predictable and sustainable demand 
for forces from the combatant commanders is needed to adequately plan 
and balance resources for current operations against the need to build 
a contingency force. Recent emergent and undocumented demand for Army 
forces, while not un-expected, further impacts the ability of the Army 
to re-build contingency readiness. Finally, the combined effects of the 
accelerated drawdown to 490,000 active component Soldiers and BCT re-
organization by the end of FY15 have impacted the readiness of ACF 
units. These effects include impacts to Soldier and equipment 
availability and unit training proficiency.
    The ACF was designed as a bridging strategy to maintain a 
contingency capability for crisis response until the Army can re-build 
a sustainable readiness posture across the Total Army.
    Mr. Wittman. What level of unit readiness does the President's 
Budget Request assume? If funded at the budget request level, how long 
until we regain sufficient full spectrum readiness?
    General Campbell. The President's Budget (PB) balances risk from 
low core readiness (due to the Army's commitment to counterinsurgency 
operations since 2001) with re-structuring and end-strength drawdown in 
order to build decisive action readiness across the full spectrum of 
conflict.
    Additionally, the combined effects from the Budget Control Act 
(BCA), previous shortfalls to Overseas Contingency Operations funding 
(OCO), and the impacts from emergent and undocumented demand for Army 
forces by combatant commanders has impacted and delayed this 
transition. For example, the BCA forced the cancellation of seven 
combat training center rotations in FY13, while all but select Army 
units were forced to reduce training to the squad and platoon levels.
    Given these other variables and funding at the PB levels, the Army 
will not regain the appropriate balance across modernization, 
procurement, readiness, and manpower accounts until FY 2019 and will 
regain sufficient full spectrum readiness across the total force by FY 
2023.
    Mr. Wittman. Much of the $26 billion Opportunity, Growth, and 
Security Initiative (OGSI) Fund is aimed at mitigating short-term 
readiness shortfalls. If funded at the budget request levels, what 
additional readiness shortfalls are present within the Services? Can we 
expect the OGSI to mitigate all or most of these? What is the impact or 
risk if OGSI is not funded?
    General Campbell. The combined effects of sustained operational 
demand for Army forces and budget reductions have resulted in a decline 
in unit readiness across the Total Army. In order to build decisive 
action capabilities in Fiscal Year (FY) 2015, the Army has prioritized 
funds to train forces in the Army Contingency Force (ACF); however, due 
to top line funding decreases, the Army has accepted risk in the 
readiness of multifunctional and theater support brigades as well as in 
home station training, facilities, and equipment sustainment and 
modernization programs.
    The Army's 7.5 billion dollar share of the Opportunity, Growth, and 
Security Initiative (OGSI) is currently programmed in our base budget 
submission to accelerate training readiness (2.0 billion dollars), 
enhance installation readiness (2.4 billion dollars) and continue 
equipment modernization (3.1 billion dollars). While this infusion 
would not eliminate all risk, the OGSI provides the necessary resources 
to mitigate several areas of concern left uncovered at the budget 
request level to include: expansion of progressive operational training 
beyond the ACF to meet Combatant Commander demands and improve Army 
National Guard and US Army Reserve readiness levels; increasing 
installation sustainment and base operation support levels to 90% of 
requirements across the Total Army; and accelerating equipment 
modernization to ensure we maintain the technological advantage over 
any potential adversary.
    The current level of funding programmed for FY15 only generates the 
bare minimum level of readiness required to meet the Defense Strategy. 
The budget caps in FY16 and beyond further hinder our ability to shape 
the Army for the future while simultaneously and severely degrading 
Army readiness and modernization efforts. Our objective is to preclude 
hollowness in our force as we continue to draw down and restructure the 
Army by achieving balance between readiness, end strength and 
modernization. The OGSI is an essential tool in this process.
    Mr. Wittman. Which readiness accounts are you most concerned about? 
What can we do to help? If provided with extra budgetary authority, 
what would you seek to do?
    General Campbell. For FY15, the priority Army readiness accounts 
include Operation and Maintenance funding for all components in Land 
Forces (Sub Activity Groups 111-116) that are vital to executing the 
collective training required for units to build readiness to deploy. 
Additional funding would support restoring training readiness for Non-
Contingency Force units, Multi-Functional Brigades, and other enabler 
units throughout the Total Force. Any additional remaining funding 
would support critical Skill Progression (Enlisted) and Additional 
Skill Identifier training, as well as technical and war-fighting skills 
training and Reserve Component Training Pay and Allowances for Schools. 
This would enable Soldiers to complete Initial Skill Acquisition/
Specialized Military Occupational Specialty training and Leader 
Development training. Additionally, the Army's investment programs for 
Combat Training Center Support, Non-System Training Devices, Close 
Combat Tactical Trainer, Aviation Combined Arms Tactical Trainer and 
Gaming Technology in support of Army Training, remain vital to the 
modernization and life cycle management of current Training Support 
Systems, and would benefit from additional funding as well.
    Mr. Wittman. Can you articulate the impact of cancelled training 
that occurred over the last two years as a result of sequestration?
    General Campbell. Sequestration caused the Army to cancel seven 
Combat Training Center rotations in FY13 and two rotations early in 
FY14. This directly delayed the Army's ability to return to Decisive 
Action proficiency in support of Unified Land Operations and denied 
essential leader development training for a large cohort of leaders; 
specifically, 270 company commanders, 180 field grade officers and 54 
Battalion commanders missed this critical developmental experience. 
Sequestration also forced the Army to reduce funding for all units to 
individual/crew/squad level in FY13, which created a significant 
reduction in unit readiness that requires extensive time to regenerate. 
The Bipartisan Budget Act has provided some relief to begin rebuilding 
readiness in FY14 and FY15, but that readiness is again in jeopardy in 
FY16 when the Budget Control Act spending caps exert more downward 
pressure on funding.
    Mr. Wittman. How dependent are you on OCO for day-to-day 
operations? How will the dependence change after the majority of, or 
possibly all, combat troops are out of Afghanistan?
    General Campbell. The Army is critically dependent on OCO to 
support the day-to-day war fighting demands of Operation Enduring 
Freedom (OEF). After the departure of all U.S. troops from Afghanistan, 
the Army must continue to satisfy Combatant Commanders' operational 
demands, such as Operation Spartan Shield, Integrated Air and Missile 
Defense, and other overseas missions. Current U.S. National Security 
Policy dictates a sizeable U.S. troop presence in key regions to 
support U.S. vital interests and those of our allies. Many of these 
requirements are paid for from OCO. Furthermore, the Army needs OCO 
funding for three years after the last piece of equipment returns from 
Afghanistan so that it can fully execute the equipment Reset program.
    Mr. Wittman. Please describe the enduring, non-Afghanistan-related 
requirements your service funds through OCO. How would you address 
those requirements in the absence of OCO?
    General Campbell. Some overseas operations, including Operation 
Spartan Shield in the Persian Gulf, are primarily supported with OCO 
funding in FY14. Many of these forces support operations in 
Afghanistan, but may remain in Central Command the theater following 
the end of the conflict to support any other efforts. Without OCO, 
these requirements would still need support and would demand tough 
decisions in the base budget that would impact readiness, sustainment, 
and investment accounts. The end of OCO funding would increase demand 
for base budget resources, impacting operations world-wide, including: 
Resolute Support, Operation Spartan Shield, Horn of Africa, and the 
Philippines. These overseas presence missions are critical for security 
and maintaining relationships with our Allies.
    The eventual end of OCO funding with no corresponding increase to 
the Army's base budget would lead to reduced readiness due to 
shortfalls in programs such as Depot Maintenance and Reset. The Army 
will require Reset funding for three years after the last piece of 
equipment leaves Afghanistan. The Army will require over $9 billion in 
Reset funding through FY18. Training previously funded with OCO for 
readiness will need to be part of the base budget when the OCO-funded 
Deployment Offset stops. Increasing pressure on static or declining 
toplines will impair our ability to sustain training readiness and to 
restore infrastructure and equipping readiness in future years.
    The Army has used OCO funding for these critical requirements and 
will require funding in the future to pay these bills. The Army's Base 
Budget topline will need to increase to capture these enduring 
requirements.
    Mr. Wittman. Please describe your service's efforts to migrate 
enduring requirements into the base budget. How challenging has 
sequestration made that task? What is most at-risk?
    General Campbell. The Army is in the process of updating the 
validation of enduring Operation Enduring Freedom (OEF) and other 
requirements that need to be brought into the base budget. Fiscal 
uncertainty and funding under sequestration compels prioritization and 
trade-offs between funding current operations, training to build 
readiness, and modernization. Over the long term, if the Army is not 
provided adequate base funding for enduring OCO requirements, it will 
significantly degrade combat readiness.
    Mr. Wittman. Although you may not be able to discuss specifics 
until the FY15 OCO budget is officially released, how confident are you 
in the adequacy of this year's OCO budget request? How much of your 
services' operations, maintenance, and training requirements are met by 
the base budget?
    General Campbell. The Army is confident that if the pending FY15 
OCO budget request is enacted it will adequately support warfighting 
requirements.
    The FY15 Army base budget funds 19 Combat Training Center exercises 
that will validate Brigade Combat Team readiness for units designated 
to achieve a high level of readiness. All other units will achieve 
lesser training readiness at battalion or lower levels. The ARNG and 
USAR are funded to achieve Individual/Crew/Squad levels of readiness. 
The budget request funds depot maintenance to less than 50% of the 
requirement, reflecting risk taken to meet Army priorities, but still 
supporting critical requirements and core capabilities in aviation, 
communications and electronics systems, embedded software systems, 
general purpose items, and combat and tactical power. Facility 
sustainment is funded at less than 65% across all compos, with the 
Active Force funded at 62%.
    Mr. Wittman. How would your overall readiness be affected by the 
elimination of OCO? What training would be curtailed? What 
infrastructure would be affected? How would ability to maintain 
equipment and fully staff units be affected?
    General Campbell. Terminating Overseas Contingency Operations (OCO) 
funding too early would have very serious consequences on the Army's 
ability to rebuild and sustain readiness. Many of the Army's enabling 
capabilities are funded in OCO to include such activities as commercial 
satellite airtime, enduring portions of the Criminal Investigation 
Command's (CID) Deployable Forensics Labs, contract MEDEVAC, and 
Contractor Logistics Support. The Army is still reliant on OCO funding 
to support portions of forward deployed unit costs, such as those 
involved in Operation Spartan Shield and the on-going Integrated Air 
and Missile Defense (IAMD) mission in the Persian Gulf, as well as 
significant network operations costs. There are enduring capabilities 
such as comprehensive Soldier and family fitness activities that 
engender resilience throughout the force. Elimination of OCO funding 
would force the Army to find offsets within base funding to support 
these actions.
    From a readiness perspective, the training of next deploying units 
is funded via OCO. This training is non-negotiable. If OCO is 
prematurely ended, the Army must accept additional risk by curtailing 
or eliminating decisive action training for non Army Contingency Force 
(ACF) units, and potentially even reducing training for units in the 
ACF as well, to offset the bill. Equipment maintenance would also 
suffer as the Army would focus all maintenance on the next deploying 
and deployed forces creating additional risk in our other formations 
and creating a backlog of reset and other depot maintenance activities 
that eventually must be cleared.
    While the elimination of OCO funding would not directly impact Army 
infrastructure accounts, these accounts would most likely suffer 
indirectly as a result of the need to reduce base accounts in order to 
offset critical activities formerly supported by OCO. This would result 
in reduced construction of new projects as well as an overall 
degradation of facilities with authorized repairs only addressing base 
life, health and safety concerns.
    In addition, if Congress does not provide at least 3 years of OCO 
funding for Reset, some of the Army's most modern and capable equipment 
that was used in Afghanistan will not be Reset, thereby negatively 
impacting equipment serviceability and availability. Reset funding is 
critical to reversing the effects of combat stress on equipment and has 
been instrumental in sustaining readiness at over 90% for ground and 
75% for aviation systems. Resetting the remaining equipment in 
Afghanistan will improve Total Army Readiness of equipment on-hand from 
approximately 88 percent to 92 percent. Reset funding must be spread 
over a three-year period to align with available Industrial Base 
capacity and flow of equipment retrograde. These factors include: the 
volume of equipment currently undergoing Reset; the pace of equipment 
retrograde from theater; the available capacity within the industrial 
base; and the repair cycle times of major systems. For example, due to 
the previously mentioned factors, the Army cannot immediately and 
simultaneously Reset all of our returning AH-64 Apaches. Each AH-64 
Apache takes approximately 27 months to Reset, our longest repair cycle 
time.
    Finally, without the 2.5 billion dollars in FY15 OCO for the non-
enduring above 490,000 end strength, the Army would have to take 
drastic personnel actions, such as halting all Permanent Change of 
Station moves, jeopardizing re-organization and unit readiness. The 
Army would cut contracts for service and support resulting in unit 
manning issues due to borrowed military manpower offsets and a 
corresponding skills mismatch as a result of the cuts. The impact to 
our civilian workforce would be particularly painful and would include 
hiring freezes, continuing the talent drain among our workforce of 
continued presence and readiness support.
    Mr. Wittman. In light of the civilian personnel hiring freezes and 
furloughs in FY2014, what impacts, if any, were there on the shipyards 
and aviation depots? How were they mitigated or what risk was assumed? 
What is the civilian personnel hiring plan for the shipyards in FY15?
    General Campbell. Although the Army does not own any shipyards, the 
Corpus Christi Army Depot (CCAD) provides aviation depot maintenance 
capability through the overhaul, repair, modification, retrofitting, 
testing and modernization of helicopters and associated components for 
government agencies and U.S. allies. The FY13 and FY14 furloughs and 
hiring freeze negatively impacted CCAD productivity, workforce 
availability, and capability. During FY13, CCAD experienced a 40% 
increase in workforce resignations over historical norms. The loss of 
employees resulted in production delays, increased repair cycle times, 
and a loss of revenue. The Army was able to mitigate risk in these 
areas by prioritizing critical requirements for production, making 
adjustments to production lines where required, and revising production 
schedules to meet customer requirements. The CCAD Depot Commander 
conducted multiple town hall meetings and training to ensure the 
workforce was apprised of workload and operational changes. 
Additionally, the commander developed a training plan to address 
critical skills lost during this time for its depot employees.
    Due to the decrease in aviation maintenance workloads, CCAD has 
sufficient manpower and does not plan to hire additional personnel in 
FY15.
    Mr. Wittman. How will each of your services achieve the 
headquarters reductions ordered by Secretary Hagel and at the same time 
ensure critical functional capabilities are not lost? What is your 
strategic human capital plan?
    General Campbell. In response to the Secretary of Defense's 
guidance, Army senior leaders conducted reviews to consolidate and 
reorganize organizations, programs, and functions across several focus 
areas--readiness; institutional and operational headquarters 
reductions; operational force structure; installations services and 
investments; the acquisition workforce; Army cyber; and command, 
control, communications and intelligence. As a result of this effort, 
the Army will achieve greater efficiency across our core institutional 
processes, consolidate functions within the acquisition workforce, and 
reduce headquarters overhead by up to 25 percent.
    In regard to specific headquarters reductions, authorizations 
associated with critical functional capabilities will be retained. Less 
critical, but still necessary functions such as administrative or 
technical support positions, will be prioritized. While critical 
functions will still be executed, risks to less critical functions will 
be evaluated with commands to determine where and how those functions 
should best be executed, such as transfer to other commands, 
automation, or reducing expectations. Where reductions cannot be 
achieved through efficiencies, the balance will occur by eliminating 
authorized, non-critical positions that have not been filled due to 
previous hiring freezes and attrition. Finally, backlogs of lower 
priority administrative or technical actions will be monitored and 
mitigated to avoid potential disruptions to higher priority functions.
    Mr. Wittman. Can you address the impact of the furlough on the 
military and civilian workforces? Have you seen spikes in post-furlough 
separations or retirements? Do you anticipate another furlough will be 
required?
    General Campbell. Furloughs degraded medical services to Soldiers, 
civilians, Veterans, retirees, and family members; delayed maintenance 
services; slowed contracting; and decremented nearly every support 
function at every installation.
    There was a negative impact on morale coming on the heels of three 
years of frozen pay and performance-based bonuses. Some of our best and 
brightest employees left to seek employment in the private sector. 
Since the furlough, we have seen an increase over previous years in the 
number of separations and retirements. Given the negative effects of a 
furlough on the workforce, the Army is not planning nor are we 
anticipating another one.
    Mr. Wittman. How did the Secretary's mandatory 20% headquarters 
cuts impact readiness accounts, if at all?
    General Campbell. The Army foresees no direct impact on the 
readiness of operational forces as a result of the Secretary of 
Defense's mandatory 20% headquarters cuts.
    Mr. Wittman. Considering the significant variability associated 
with the budget and the resulting force structure, why does the 
Department feel that it is an appropriate time to request an additional 
BRAC round?
    General Campbell. Army force structure and end-strength are 
declining alongside our available funding. We must carefully balance 
end-strength, modernization, and readiness. The Army cannot afford to 
retain force structure at the expense of readiness. Now is the 
appropriate time to request BRAC because the money is gone. If we do 
not shed excess overhead, hundreds of millions of dollars will be 
wasted each year in maintaining underutilized buildings and 
infrastructure. Without BRAC authorization, the Army will be 
constrained in closing or realigning any installations to reduce 
overhead. This ``empty space tax'' on our warfighters will result in 
cuts to capabilities elsewhere in the budget.
    The Army has conducted some facility capacity analyses to support 
an end-strength of 490,000 Active Component Soldiers. Preliminary 
results indicate the Army will have about 15-20% excess capacity at its 
installations (over 160 Million Square Feet) by 2019. The average 
excess capacity is about 18 percent. Force structure cuts will only 
increase the amount of excess capacity. At roughly $3 per square foot 
for sustainment, the ``empty space'' or ``under-utilization tax'' on 
our budget rapidly compounds.
    Distributing a smaller budget over the same number of installations 
and facilities will result in rapid decline in the condition of Army 
facilities. Multiple years of empty and unoccupied facilities retained 
by the Army will transform an asset that could otherwise be repurposed 
to host another mission realigned from another installation or disposed 
of to benefit the local community, into a liability requiring 
demolition.
    Mr. Wittman. Please provide an update as to when the Department is 
expected to complete the European Infrastructure Consolidation 
Initiative as required by Section 347 of the National Defense 
Authorization Act for Fiscal Year 2012. Why does the Department feel it 
is appropriate to request an additional round of BRAC prior to 
completing the assessment of infrastructure in Europe?
    General Campbell. The Office of the Secretary of Defense (OSD) 
transmitted the report required by section 347 of the FY12 NDAA to 
Congress on April 16, 2013. Subsequently, OSD provided an initial 
briefing on the European Infrastructure Consolidation Initiative on 
March 13, 2014, per H.Rpt. 113-102 (pg. 321), and projected that it 
could provide the Congress the results of the European Infrastructure 
Consolidation (EIC) assessment by the end of June, 2014.
    The Army has downsized force structure and footprint in both Europe 
and Asia for many years in the post-Cold War era. Since 2006, Army end-
strength in Europe has declined 45 percent, and we are on track to 
shrink the supporting infrastructure, overhead, and operating budgets 
by over 50 percent. Similarly, in Korea, the Army decreased the number 
of Soldiers by about a third (10,000 Soldiers) and is on pace to shrink 
acreage and site footprint by about half.
    The Department feels it is appropriate to request an additional 
round of BRAC prior to the EIC completion because changes in the 
European force structure have predominately been inactivation of units 
in Europe. The Army's first two Brigade Combat Team (BCT) inactivation 
decisions were announced in February 2012 and were made in Europe--the 
170th BCT at Baumholder, Germany, and the 172nd BCT at Grafenwoehr, 
Germany. The 170th BCT was inactivated in FY 2013 and the 172nd was 
inactivated in early FY 2014. Since these forces are not returning to 
the U.S., there is no opportunity to utilize domestic excess 
infrastructure to support restationing.
    Current Army Capacity Analysis reflects 10 to 15 percent excess 
capacity in Europe versus an average of 18 percent in the United States 
(domestic). Force structure cuts will only increase the amount of 
excess capacity as we reduce the Active Component force structure below 
490,000. At roughly $3 per square foot for sustainment, the ``empty-
space'' or ``underutilized tax'' on the Army budge rapidly compounds. 
This ``tax'' will directly impact critical Army readiness, training and 
modernization requirements.
    Mr. Wittman. Has the Secretary of Defense assessed whether excess 
infrastructure exists in the Department? What empirical support can the 
Department provide to support a request for additional BRAC rounds?
    General Campbell. The Army has conducted facility capacity analyses 
to support an end-strength of 490,000 Active Component Soldiers. 
Preliminary results indicate the Army will have about 15-20% excess 
capacity at its installations by 2019. The average excess capacity is 
about 18 percent.
    At roughly $3 per square foot for sustainment, the ``empty space 
tax'' on our budget rapidly compounds. Paying nearly $500M a year to 
maintain over 160 million square feet of excess or under-utilized 
facilities on our books will result in cuts to capabilities elsewhere 
in the budget.
    Further Army end-strength and force structure cuts will only 
increase the amount of excess capacity.
    Mr. Wittman. What readiness challenges does the Navy face if 
sequestration persists beyond FY2015?
    Admiral Ferguson. A return to sequestration spending levels in FY16 
and beyond will lead us to a Navy that would be insufficient in size 
and capability to conduct the missions of the 2012 Defense Strategic 
Guidance (DSG). Under that scenario, additional force structure 
adjustments, to include the inactivation of one nuclear aircraft 
carrier and one carrier air wing, would be required to fund adequate 
readiness of the remaining force. This would result in a smaller and 
less capable Navy with insufficient capability and capacity to execute 
at least four of the ten primary DSG mission areas: Counter Terrorism 
and Irregular Warfare, Deter and Defeat Aggression, Project Power 
Despite Anti-Access/Area Denial Challenges, and Provide a Stabilizing 
Presence. Continuing to address this challenge on an annual basis 
without a realistic Future Years Defense Plan planning horizon sub-
optimizes decision-making, reduces future ability to provide ready 
surge forces, delays the introduction of new capabilities and upgrades, 
risks long-term gaps in the professional development of our personnel, 
and ultimately increases cost.
    Mr. Wittman. What would be the impacts to the Navy's readiness if 
we maintained our current force structure with the current funding 
levels?
    Admiral Ferguson. Navy's budget assumes phased modernization of 11 
CG and 3 LSD class ships and defers funding for refueling of CVN73 
pending a path ahead for long term funding to support 11 carriers and 
10 carrier air wings. If forced to retain existing force structure at 
current funding levels, this will leave us with a force less ready now 
and in the future. We will not have sufficient funding to fully 
maintain our ships--a burden which will fall hardest on our surface 
combatants and amphibious ships--and these platforms will not reach 
their expected service lives. We will be forced to reduce training for 
units not required for an immediate deployment, reducing Navy 
contingency response capacity and impacting the professional 
development of a generation of future leaders. Navy would also be 
forced to look at reducing recapitalization and modernization, 
increasing the risk of falling behind potential adversaries in terms of 
capability and relevance.
    We must remain a balanced and ready force. The FY15 President's 
Budget provides the right balance between capability, capacity and 
readiness for the level of funding directed by the Bipartisan Budget 
Act and fiscal guidance. If forced to retain force structure and 
overhead, we increase risk not only to readiness and our ability to 
implement the defense strategy, but also to a forces ability to respond 
effectively to future challenges.
    Mr. Wittman. Please describe your plan to lay up the 11 cruisers: 
For how long? At what cost? What are the anticipated savings? How can 
you ensure they will be returned to active service in future years in 
light of the persisting budget fiscal challenges? What is the 
alternative if Congress does not approve the layup plan?
    Admiral Ferguson. The Navy's budget must include sufficient 
readiness, capability and manpower to complement the force structure 
capacity of ships and aircraft. This balance must be maintained to 
ensure each unit will be effective, no matter what the overall size and 
capacity of the Fleet. To preserve this balance and modernize cruisers 
while avoiding a permanent loss of force structure and requisite ``ship 
years,'' our FY15 Navy budget request proposes to induct 11 Ticonderoga 
Class cruisers (CG) into a phased modernization period starting in FY 
2015.
    Only fiscal constraints compel us to take this course of action; CG 
global presence is an enduring need. The ships will be inducted into 
phased modernization and timed to align with the retirements of CGs 
such that the modernized ships will replace one-for-one the retiring 
ships when they finish modernization. This innovative plan permits us 
to reapply the CG manpower to other manning shortfalls while 
simultaneously avoiding the operating costs for these ships while they 
undergo maintenance and modernization.
    The plan to modernize and retain the CGs adds 137 operational 
``ship years'' to the Battle Force and it extends the presence of the 
Ticonderoga class in the Battle Force to 58 years. It avoids 
approximately $2.2 billion in operating and maintenance costs across 
the Future Years Defense Plan (FYDP). In addition, it precludes Navy 
from having to increase our overall end strength by about 3,400 people 
(approximately $1.6 billion over the FYDP), which would otherwise be 
required to fill critical shortfalls in our training pipelines and 
fleet manning.
    The ships undergoing phased modernization will be brought back into 
active service to replace, on a hull-for-hull basis, the retiring ships 
(CG 52-62) as those ships reach the end of their service life in the 
2020's. In general terms, this will mean that phased maintenance 
periods will vary between four and 11 years for each cruiser. The cost 
per ship will vary based on individual hull material condition of the 
ship and previously completed modernization. The range is approximately 
$350-$600M per ship which includes induction, sustainment, 
modernization, and maintenance costs. Initially, Navy will leverage the 
Ship's Modernization, Operations and Sustainment Fund (SMOSF) for those 
ships specifically named in the FY14 National Defense Authorization Act 
(CGs 63-66, 68-69, 73). Navy has an enduring requirement for 11 
cruisers to fulfill the Air Defense Commander role. There is no 
replacement cruiser, thus Navy will have to return these ships to 
active service. In order to provide additional assurance that the CGs 
will return to active service in future years in light of the 
persisting budget fiscal challenges, the Navy has built a transparent 
plan which includes direct Congressional monitoring of funding and work 
accomplishment.
    If Congress does not approve the phased modernization plan or 
provide the funding to retain the force structure, the Navy's only 
remaining alternative would be to pursue decommissioning the ships. 
This will result in a permanent loss of force structure.
    Mr. Wittman. If the cruisers are laid up, how will the Navy meet 
the COCOM force presence requirements? And, what risk does the Navy 
assume in doing so?
    Admiral Ferguson. The Navy will maintain 11 of its most capable Air 
Defense Commander CGs and increasing number of DDGs to meet the 
adjudicated Global Force Management Allocation Plan. Under the 
Optimized Fleet Response Plan, surface combatant deployment lengths 
will increase to eight months, providing increased presence to mitigate 
the effects of CG modernization.
    Our FY15 budget request supports meeting the President's strategic 
guidance. Eleven Cruisers is the minimum number of purpose-built Air 
Defense Commander platforms necessary to support the 10 deploying 
Carrier Strike Groups. A reduction from 22 to 11 adds acceptable risk 
to the Navy's multi-mission air warfare capacity, strike flexibility, 
and redundancy.
    Mr. Wittman. Please describe the benefits of the Optimized Fleet 
Response Plan (OFRP). Under OFRP, what ability do you have to surge 
assets in response to unanticipated COCOM demand and requirements? And, 
what risk do you assume?
    Admiral Ferguson. OFRP is a supply-based system designed to meet 
the adjudicated Global Force Management Allocation Plan (GFMAP) 
requirements while safeguarding time to conduct maintenance on our 
capital intensive force, providing adequate time to train, and 
developing some degree of schedule predictability for our Sailors and 
their families.
    OFRP delivers a standard eight month deployment in a 36 month CSG 
operational cycle that yields comparable levels of global presence and 
increases the total operational availability (21 months) of the units. 
This assumes funding is provided for post-deployment readiness 
sustainment as reflected in the budget request. This improves the 
return on investment for maintenance and initial training and increases 
surge capacity when fully implemented.
    To further enhance readiness, Navy is also improving the alignment 
of our manning processes with the OFRP cycle. This force generation 
model also allows us to train all units to a single, high deployment 
certification standard and sustains alignment of units within the 
strike group, improving continuity of command.
    With time to reset the force and funding at the level of the 
President's budget, Navy will rebuild surge capacity across the FYDP to 
have ready forces available to support execution of the Combatant 
Commanders' Operational Plans as well as other lesser contingency 
operations. Actual employment of surge is not included in the budget. 
Contingency operations or other ``Requests for Forces'' should, 
whenever possible, use forces already deployed. Units surging from 
homeport should be limited to those that can complete the operation 
within their scheduled period of operational availability and within 
operational tempo guidelines to avoid impacting the maintenance and 
training cycle, or negatively impacting Sailors and their families. 
Within these guidelines, risk to scheduled global presence, platform 
service life and Sailor quality of service is mitigated. Risk to long 
term readiness increases with funding below PB levels, unfunded surge 
operations, surging units during maintenance or training phases, or 
exceeding operational tempo guidelines.
    Mr. Wittman. In the FY2015 budget request, there are known 
maintenance shortfalls that persist from FY2014--due to descoped ship 
maintenance availabilities, and 89% of required aircraft depot 
maintenance funding. What is your ability to relieve the backlog? Or, 
will shortfalls be expected to persist?
    Admiral Ferguson. The FY14 Appropriations Act (baseline and OCO) 
fully funded the ship maintenance requirement. The FY14 OCO 
appropriation also included $347M to reset the backlog of maintenance 
on surface ships with dry docking availabilities in FY14. The FY14 
reset request does not fully liquidate the surface ship maintenance 
backlog that developed over the past decade. Full liquidation of that 
backlog is expected to require $1.8B of reset funding and take through 
the end of the FYDP to complete.
    The ship maintenance account is highly dependent on supplemental 
funding. In PB15, OCO funds the reset requirement, 40% of the enduring 
surface ship maintenance requirement, and 14% of the enduring carrier 
and submarine maintenance requirement.
    The FY14 Appropriations Act funded all required aviation depot 
maintenance. Navy has mitigated a significant portion of the projected 
FY14 aviation depot maintenance backlog through aggressive inventory 
management efforts. However, there will be approximately $62M of 
aircraft and engines/modules backlogged at the end of FY14 that will 
need to be programmed for maintenance in FY15. This backlog would be 
inducted in the first quarter of FY15 ahead of any new work previously 
scheduled to begin in FY15. Given aviation depot maintenance baseline 
funding levels (80% of requirement), the projected result is $218M of 
aircraft and engines/modules backlog at the end of FY15 going into 
FY16. This backlog will be addressed through additional OCO requests.
    Mr. Wittman. What level of unit readiness does the President's 
Budget Request assume? If funded at the budget request level, how long 
until we regain sufficient full spectrum readiness?
    Admiral Ferguson. Navy builds the requirement for our readiness 
accounts to meet the expected presence levels in the adjudicated Global 
Force Management Allocation Plan. The certified models that are used to 
develop the requirement identify the funding required to maintain and 
train Navy forces to deploy at a readiness level of C2 or better and to 
meet all pre-deployment certification requirements.
    To fund these activities in the present fiscal environment, Navy is 
accepting risk in several areas, notably in shore infrastructure. This 
includes prioritizing the most critical military construction (MILCON) 
requirements, focusing sustainment funding on key operational 
facilities, and improving energy efficiency. Less critical MILCON and 
repairs are deferred, adding to an existing backlog resulting from 
prior year deferrals, and further exacerbating our shore readiness 
posture.
    While the forces we deploy are full spectrum ready, Navy continues 
to take risk in the readiness of non-deployed forces--reducing our 
total surge capacity and increasing the time required to provide those 
forces that can be made ready. A larger part of the total force is C3/
C4, and they have material or training deficiencies that prevent their 
rapid employment. Further, Navy is taking additional risk in 
modernization, slowing the introduction of improved capabilities to the 
Fleet. This increased risk is most likely to manifest if we are faced 
with a technologically advanced adversary.
    Mr. Wittman. Much of the $26 billion Opportunity, Growth, and 
Security Initiative (OGSI) Fund is aimed at mitigating short-term 
readiness shortfalls. If funded at the budget request levels, what 
additional readiness shortfalls are present within the Services? Can we 
expect the OGSI to mitigate all or most of these? What is the impact or 
risk if OGSI is not funded?
    Admiral Ferguson. One of our FY15 budget priorities was to focus on 
critical afloat and ashore readiness to ensure the force is adequately 
funded and ready. Our budget request (compared to a BCA revised caps 
level) improves our ability to respond to contingencies (surge 
capacity) by increasing the readiness of non-deployed forces. However, 
it increases risk to ashore readiness in FY15, compared to the FY14 
budget request, by reducing facilities sustainment, restoration, and 
modernization (FSRM) and military construction (MILCON) investments. 
This reduction adds to backlogs created by the deferrals in FY13 and 
FY14, exacerbating an existing readiness problem.
    The OGSI is a one-year FY15 initiative that requests funds for 
additional discretionary investments that can spur economic growth, 
promote opportunity, and strengthen national security. The FY15 base 
budget request provides the resources needed to gradually restore 
readiness and balance. However, it does not provide funds to accelerate 
readiness improvements in FY15. The OGSI provides the resources needed 
in FY15 to make faster progress by improving Navy facilities and adding 
additional resources for FSRM, accelerating the modernization of key 
weapons systems, and making faster progress toward restoring readiness 
lost under sequestration. Without OGSI funding, readiness can only be 
restored at a more gradual pace with the risks noted above.
    Mr. Wittman. Which readiness accounts are you most concerned about? 
What can we do to help? If provided with extra budgetary authority, 
what would you seek to do?
    Admiral Ferguson. A balance of adequate funding across all the 
readiness accounts is essential to sustaining the long term readiness 
of the Fleet. I am particularly concerned that we maintain the 
operations accounts (Flying Hour Program and Ship Operations) to 
support the safety and proficiency of our operators as well as the 
advanced combat capabilities of our strike groups and other deploying 
units. The Ship Maintenance and Aviation Depot Maintenance accounts are 
critical to the long term readiness of the force and ensure our 
platforms reach their expected service lives. We must also adequately 
fund the supporting enabler accounts (Aviation Support, Ship Support 
and Aviation Logistics) as well as the spares accounts if we expect to 
achieve the appropriate balance in our readiness accounts. While we can 
take short term risk in one account or another, continuing to do so 
will ultimately produce significant readiness impacts with long term 
consequences.
    In our effort to ensure our Fleet units operating forward have what 
they need, we have further reduced investments in our shore 
infrastructure. Although a justifiable short term strategy, this will 
also produce significant and expensive long term impacts if sustained. 
Investing 3.5% in our shipyard and depot infrastructure will not keep 
pace with need, and funding 70% of the Facilities Sustainment, 
Rehabilitation and Modernization requirement only meets emergency 
requirements and limited investment. While we have focused our shore 
investment in support of operational requirements to include piers and 
airfields, at this level of funding the long term health of the entire 
infrastructure is at risk.
    If additional funds were available above those already requested in 
the FY15 budget request, Navy would propose investments in the 
following areas:
      Fleet Maintenance: Additional depot maintenance activity 
to accelerate recovery from sequestration, improve operational 
availability of Fleet aircraft and meet the statutory requirement of 6% 
for capital investment in depot facilities.
      Afloat Readiness: Improve availability of Combat 
Logistics Force platforms, increase JHSV operations and increase 
funding for aviation logistics.
      Critical Spares: Improve sparing for aviation platforms 
to address reduced readiness, enhance safety and provide greater 
flexibility for training and operations.
      Shore Readiness: Reduce the level of risk in sustaining 
Navy shore infrastructure, including facility sustainment, restoration 
and modernization as well as increased funding for military 
construction.
      Modernization: Accelerate rate of delivery of key 
capabilities to the Fleet to ensure technological superiority over 
potential adversaries.
      Manpower/Training: Increase training support to achieve 
readiness levels and improve manpower management.
    While each of these potential investments are important, they are 
not of a higher priority than items already in the FY15 Navy budget 
submission.
    Mr. Wittman. Can you articulate the impact of cancelled training 
that occurred over the last two years as a result of sequestration?
    Admiral Ferguson. Sequestration broadly impacted Navy training in a 
number of areas. Our rotational deployment cycles and forward 
operations require us to preferentially fund primary pre-deployment 
training and overseas operations and training events in support of 
Combatant Commander named operations and theater engagement plans. 
Under sequestration, this prioritization had some critical readiness 
impacts, including:
      Unit level training/Operator Proficiency: Perhaps the 
most pervasive impact of sequestration is the lack of funds to fully 
support the training that ship and squadron commanding officers conduct 
outside of required training cycle events to improve unit readiness and 
develop the experience base of their junior officers and enlisted 
crewmembers. This has potential long term impacts on leadership and 
professional skills, safety and retention. We were forced to reduce 
some air wings to ``tactical hard deck''--a minimum safe-to-fly level 
of training, and reduce steaming days and flying hours across the board 
for non-deployed units. While the Navy Safety Center cannot yet draw a 
direct link to reduced readiness activity, the number of aviation Class 
A mishaps this year is up notably from our five year average.
      Deferred pre-deployment training: Additional contingency 
response capacity is generated by completing pre-deployment training of 
units. Under sequestration, Navy held units at lower levels of training 
until required to meet deployment timelines. Non-deployed units are 
therefore less ready to surge in the event of crises.
      Furlough readiness impacts: The large majority of the 
Navy civilian workforce is engaged in generating current and future 
readiness. Although our public shipyard direct workforce was exempt 
from furlough, the individuals supporting material procurement, 
engineering, contracting and other important enablers of their work 
were not. Our aviation depot workforce was furloughed along with 
training organizations and the acquisition workforce that procures and 
modernizes the future Navy. All of these damage readiness well beyond 
the actual number of days it is imposed, and when combined with lengthy 
hiring freezes in order to manage within a sequestered budget, it 
reduces readiness disproportionately to the cost it avoids.
    Mr. Wittman. How dependent are you on OCO for day-to-day 
operations? How will the dependence change after the majority of, or 
possibly all, combat troops are out of Afghanistan?
    Admiral Ferguson. The Navy's OCO funding can be split into four 
parts:
    1.  Increased operating tempo for flying and ship operations or 
operating forward. Navy funds the increased operating tempo required of 
our aircraft and ships in the Middle East through OCO as well as 
expeditionary units operating forward.
    2.  Afghanistan operations. Navy funds in-country operations for 
expeditionary units and air operations for Marine Corps aircraft.
    3.  Enduring requirements. Additionally, Navy funds some remaining 
enduring requirements through OCO, which include air and ship depot 
maintenance above 80 percent of the modeled requirement for ship 
operations to fully support operational requirements, base support 
operations for several locations in the Middle East, and operating 
support for expeditionary units.
    4.  Reset. Lastly, Navy funds the reset or repair of equipment, 
aircraft, and ships returning from theater. Reset of these items will 
take up to five or six years based on scheduling of maintenance 
activities.
    Once the Afghanistan operations end, the Navy will have three parts 
of their OCO funding requirements remaining. The enduring requirements 
combined with the increased flying and ship operations above baseline 
levels when deployed to the Middle East would result in a substantial 
amount of continued OCO dependence after the majority of combat troops 
leave Afghanistan. These activities currently require up to $4.0 
billion in OCO funding per year. Additionally, the Navy OCO reset 
requirements are currently estimated to total $2.2 billion over the 
next five to six years.
    Mr. Wittman. Please describe the enduring, non-Afghanistan-related 
requirements your service funds through OCO. How would you address 
those requirements in the absence of OCO?
    Admiral Ferguson. Navy has been working to transition OCO funded 
enduring activities to baseline over the last few years. However, we 
have only been partially successful in meeting that goal. At present, 
our baseline funding only includes about 80% of the enduring aviation 
and ship depot maintenance requirements--the remaining 20% are funded 
as part of the OCO request. Navy enduring requirements funded in OCO 
also include base support operations for several locations in the 
Middle East and operating support for expeditionary units. In addition 
to the operating costs imbedded in the Navy's OCO funding request, the 
Navy will also have a long-term need for reset funding in order to 
recover deferred maintenance and material condition for the ships and 
aircraft that have been operated over the last decade at rates higher 
than anticipated when they were procured.
    Specifically, without OCO funding, the enduring requirements 
necessary to meet the Navy's operational requirements, combined with 
the increased flying and ship operations above baseline levels when 
deployed to the Middle East, would represent a shortfall of between 
$2.5B and $4B annually. In addition, our reset requirement is estimated 
to be approximately $2.2B, which would need to be funded over the 
period from the cessation of hostilities in the Middle East to a point 
in time about 5 years after that happens.
    Navy has funded all enduring flying hour operations in baseline for 
several years. Increased operating tempo required of our aircraft and 
ships in the Middle East continue to be OCO funded. For the foreseeable 
future, the Combatant Command and Joint Staff expect continued 
increased flying and ship operations above baseline levels when 
deployed to the Middle East. The Navy continues to work with the Office 
of the Secretary of Defense to identify and plan for the possible 
transition of enduring requirements from OCO funding to the baseline. 
However, absent additional funding, the Navy would be forced to cut 
back on its expenditures in other critical areas or reduce the level of 
presence we can provide to the combatant commanders.
    Mr. Wittman. Please describe your service's efforts to migrate 
enduring requirements into the base budget. How challenging has 
sequestration made that task? What is most at-risk?
    Admiral Ferguson. Navy has been working to transition OCO funded 
enduring activities to baseline over the last few years. However, we 
have only been partially successful in meeting that goal. At present, 
our baseline funding only includes about 80% of the enduring aviation 
and ship depot maintenance requirements--the remaining 20% are funded 
as part of the OCO request. Navy enduring requirements funded in OCO 
also include base support operations for several locations in the 
Middle East and operating support for expeditionary units. In addition 
to the operating costs imbedded in the Navy's OCO funding request, the 
Navy will also have a long-term need for reset funding in order to 
recover deferred maintenance and material condition for the ships and 
aircraft that have been operated over the last decade at rates higher 
than anticipated when they were procured.
    Specifically, without OCO funding, the enduring requirements 
necessary to meet the Navy's operational requirements, combined with 
the increased flying and ship operations above baseline levels when 
deployed to the Middle East, would represent a shortfall of between 
$2.5B and $4B annually. In addition, our reset requirement is estimated 
to be approximately $2.2B, which would need to be funded over the 
period from the cessation of hostilities in the Middle East to a point 
in time about 5 years after that happens.
    Navy has funded all enduring flying hour operations in baseline for 
several years. Increased operating tempo required of our aircraft and 
ships in the Middle East continue to be OCO funded. For the foreseeable 
future, the Combatant Command and Joint Staff expect continued 
increased flying and ship operations above baseline levels when 
deployed to the Middle East. The Navy continues to work with the Office 
of the Secretary of Defense to identify and plan for the possible 
transition of enduring requirements from OCO funding to the baseline. 
However, absent additional funding, the Navy would be forced to cut 
back on its expenditures in other critical areas or reduce the level of 
presence we can provide to the combatant commanders. Sequestration 
would further drive our base down, pressurizing already difficult 
decisions and adding risk to our balance between force structure, 
modernization, and readiness.
    Mr. Wittman. Although you may not be able to discuss specifics 
until the FY15 OCO budget is officially released, how confident are you 
in the adequacy of this year's OCO budget request? How much of your 
services' operations, maintenance, and training requirements are met by 
the base budget?
    Admiral Ferguson. The Navy, in conjunction with the Office of the 
Under Secretary of Defense (Comptroller), is currently working on the 
FY15 OCO requirements to be included in the budget request.
    In FY14, the OCO budget included incremental costs to sustain 
operations, manpower, equipment and infrastructure repair, as well as 
equipment replacement. These costs included aviation and ship 
operations, combat support, base support, USMC operations and field 
logistics, mobilized reservists and other special pays. The FY13 
President's budget reflected the start of the transition out of 
Afghanistan, and this effort to transition to Afghan responsibility is 
continued in FY14. We continue this transition and anticipate 
requesting similar incremental costs in the FY15 OCO request.
    Our FY15 budget baseline funds enduring aviation and ship depot 
maintenance baseline requirements to 80%. Our baseline budget also 
funds ship operations to 45 days per quarter for deployed forces and 20 
days per quarter for non-deployed forces, and flying hour operations to 
a T-rating of 2.5 Navy/2.0 USMC. The Navy's FY15 baseline readiness 
funding meets the preponderance of Combatant Commander operating tempo 
requirements, properly sustaining and maintaining ships and aircraft, 
and sustaining the enduring flight hour readiness requirement for both 
Navy and Marine Corps.
    Navy will require OCO funding for some remaining enduring 
requirements. This includes aviation and ship depot maintenance above 
80 percent, ship operations to fully support operational requirements, 
base support operations for several locations in the Middle East, and 
operating support for expeditionary units. Without OCO funding, these 
enduring requirements, combined with the increased flying and ship 
operations above baseline levels when deployed to the Middle East, 
would result in the need for an additional $2.5 to $4.0 billion per 
year in baseline funding. Absent additional funding, the Navy would be 
forced to cut back on its expenditures in other critical areas or 
reduce the level of presence we can provide to the combatant 
commanders.
    Mr. Wittman. How would your overall readiness be affected by the 
elimination of OCO? What training would be curtailed? What 
infrastructure would be affected? How would ability to maintain 
equipment and fully staff units be affected?
    Admiral Ferguson. OCO funding, in addition to our base budget, 
continues to play a critical role in maintaining the capability, 
capacity, and readiness necessary for the Navy to support our Combatant 
Commanders, in addition to meeting the missions of the Defense 
Strategic Guidance. For over ten years, OCO funding has allowed the 
Navy to operate at a war-time operational tempo throughout the Middle 
East. As the land war draws down, Navy is uniquely challenged because 
our forces continue to serve and provide presence in the CENTCOM region 
as land-based forces depart. The demand for naval presence in this 
theater remains high and is likely to increase elsewhere as we 
rebalance to the Pacific.
    If the Navy remains at our current level of operations, it will not 
be sustainable within our base budget alone. OCO funding is also 
necessary to reset our ships and equipment after a decade of higher 
tempo wartime operations. The capital asset nature of our ships makes 
longer-term supplemental reset funding more critical to the Navy. In 
the current fiscal environment, any transition from OCO into base at 
the current base topline, or worse under sequestration levels, would 
drive our base down and pressurize already difficult decisions as we 
work to balance between force structure, modernization, and readiness. 
Without additional supplemental funding, this balance will suffer. For 
readiness specifically, we could be forced to delay maintenance 
activities for our ships and aircraft, reducing their operational 
availability and service life. Training could be reduced, preventing 
ships and aircraft from being ready and available for contingency 
operations.
    In FY14, the OCO budget included incremental costs to sustain 
operations, manpower, equipment and infrastructure repair, as well as 
equipment replacement. These costs include aviation and ship 
operations, combat support, base support, USMC operations and field 
logistics, mobilized reservists and other special pays. The FY13 
President's Budget reflected the start of the transition out of 
Afghanistan, and this effort to transition to Afghan responsibility is 
continued in FY14. We continue this transition and anticipate 
requesting similar incremental costs in the FY15 OCO request.
    Mr. Wittman. In light of the civilian personnel hiring freezes and 
furloughs in FY2014, what impacts, if any, were there on the shipyards 
and aviation depots? How were they mitigated or what risk was assumed? 
What is the civilian personnel hiring plan for the shipyards in FY15?
    Admiral Ferguson. The FY2013 hiring freeze and overtime funding 
restrictions created a capacity shortfall for naval shipyards resulting 
in deferral of approximately 75,000 man-days of planned work from 
FY2013 to FY2014. Navy mitigated the impact by lifting the hiring 
freeze in June 2013, commencing aggressive recruitment efforts, and 
exempting shipyards from civilian furloughs. Even with those efforts, 
the number of personnel at the end of FY2013 was about 200 below the 
budgeted end strength.
    Commander, Fleet Readiness Center (COMFRC) lost 12 working days on 
all production lines across the Fleet Readiness Centers. This issue was 
exacerbated by the FY2013 hiring freeze and resulted in COMFRC 
understaffing its FY2014 requirement by just under 600 Full Time 
Equivalent personnel. Additionally, the furlough resulted in 43 
aircraft and 289 engine repair delays and caused a net operating loss 
of approximately $8 million to this working capital funded 
organization.
    The following table provides information on the staffing 
requirements for FY 2015 for the four Naval Shipyards (Portsmouth Naval 
Shipyard (PNSY), Norfolk Naval Shipyard (NNSY), Puget Sound Naval 
Shipyard and Intermediate Maintenance Activity (PSNS & IMF), and Pearl 
Harbor Naval Shipyard & Intermediate Maintenance Facility (PHNSY & 
IMF)).

                                          Naval Shipyard FY15 Controls
----------------------------------------------------------------------------------------------------------------
                                             PNSY               NNSY            PSNS & IMF        PHNSY & IMF
----------------------------------------------------------------------------------------------------------------
FY14 End Strength                     4,772              9,551              12,250             4,455
----------------------------------------------------------------------------------------------------------------
Hires                                 387                890                492                245
----------------------------------------------------------------------------------------------------------------
Attrition                             (225)              (690)              (700)              (270)
----------------------------------------------------------------------------------------------------------------
Planned FY15 End Strength             4,934              9,751              12,042             4,430
----------------------------------------------------------------------------------------------------------------


    Mr. Wittman. How will each of your services achieve the 
headquarters reductions ordered by Secretary Hagel and at the same time 
ensure critical functional capabilities are not lost? What is your 
strategic human capital plan?
    Admiral Ferguson. Our FY 2015 President's Budget request achieves 
savings through significant headquarters reductions, placing us on 
track to meet the 20% reduction by FY 2019 required by Secretary of 
Defense fiscal guidance. To protect the Navy's ability to rebalance to 
the Pacific and continue to execute on-going overseas contingency 
operations, less pressure is applied to fleet operational headquarters 
staffs and more on other staffs. Specifically, Fleet Forces Command, 
the U.S. Pacific Fleet, and Navy Component Command headquarters were 
allocated a 5% reduction. This decision required additional pressure to 
be placed on other staffs in the Navy to compensate for the protection 
of the fleets.
    The headquarters reductions are designed to streamline management 
through efficiencies and elimination of lower-priority activities, 
protecting critical functional capabilities. The reductions will be 
based on projected mission requirements and are consistent with 
legislative requirements including 10 USC 2463.
    Mr. Wittman. Can you address the impact of the furlough on the 
military and civilian workforces? Have you seen spikes in post-furlough 
separations or retirements? Do you anticipate another furlough will be 
required?
    Admiral Ferguson. We have seen the impact of furlough on our 
workforce in the following ways:
      Reduced readiness. Reduced Department of Navy's (DON) 
maintenance and sustainment capacity by losing 6 days of work for 
logisticians, comptrollers, engineers, contracting officers, and 
planners.
      Financial Hardship. The furlough created a significant 
financial hardship for the men and women dedicated to public service. 
The workforce lost 6 full days of pay, and corresponding leave 
retirement contributions in 2013.
      Morale of the Force. Internal surveys indicate a decrease 
in trust in the institution among the workforce and a perceived 
devaluation of the contribution of our Civilian Sailors to the DON 
mission. The furlough also dampened the enthusiasm of the workforce, as 
evidenced by a five-point drop in the Office of Personnel Management 
federal employee viewpoint survey and a decline in employee engagement.
    While there has been no increase in post-furlough separations or 
retirements among active duty members, the DON has seen an increase in 
civilians exploring the possibility of retirement through the 
retirement application process. To date, there has been no increase in 
post-furlough civilian separations or retirements from the Department 
of the Navy.
    We cannot rule out the possibility of additional furloughs should 
sequestration be required in FY16 and beyond.
    Mr. Wittman. How did the Secretary's mandatory 20% headquarters 
cuts impact readiness accounts, if at all?
    Admiral Ferguson. To enable the rebalance to the Pacific and 
continue to execute theater presence missions and on-going overseas 
contingency operations, Navy applied less pressure on operational 
warfighting headquarters and took the larger reductions in ashore 
overhead headquarters organizations. As a result, there is no expected 
direct impact to the major Fleet readiness accounts (Ship Operations, 
Flying Hour Program, Ship Maintenance or Aviation Depot Maintenance) 
from the 20% headquarters reduction. The specific funding lines that 
support ship and aircraft maintenance and operations were not affected 
by the 20% headquarters reduction.
    That said, there are some minor reductions to two support accounts 
(Ship Support and Air Support)--which total $1.45M across the FYDP 
which could cause second order affects to longer-term readiness. As an 
example, reductions in the Planning, Engineering and Design accounts 
could manifest in delays in executing contracts, less deck plate 
supervision for the work that is being done at ship depots and less 
personnel available to execute the quality control functions we have 
been doing in the past. The long-term impact of these issues would 
likely be more re-work required, cost overruns for slower 
identification of deficiencies and less efficient execution of work-
packages.
    Since all of the reductions are phased-in over the next 4 years, it 
is unlikely that these cuts will result in any immediate impacts. We 
will manage our way through these reductions and search for 
productivity improvements/efficiencies as well as identify lower-
priority, less critical tasks that can be cancelled or deferred to 
permit those remaining personnel to execute our most critical missions. 
If necessary, we will consider divesting less critical missions. Until 
the 2017-2018 timeframe, the cuts are limited and are planned such that 
we can evaluate long term impacts.
    Mr. Wittman. Considering the significant variability associated 
with the budget and the resulting force structure, why does the 
Department feel that it is an appropriate time to request an additional 
BRAC round?
    Admiral Ferguson. The last BRAC analysis the Department of the Navy 
performed was back in 2004. Since that assessment was completed, we 
have reduced force structure, the number of personnel in the Navy, and 
consolidated commands and staffs. Therefore, it is the appropriate time 
to review base structure, force laydown, and assess our capacity in 
order to reduce the costs of infrastructure sustainment.
    Mr. Wittman. Please provide an update as to when the Department is 
expected to complete the European Infrastructure Consolidation 
Initiative as required by Section 347 of the National Defense 
Authorization Act for Fiscal Year 2012. Why does the Department feel it 
is appropriate to request an additional round of BRAC prior to 
completing the assessment of infrastructure in Europe?
    Admiral Ferguson. The Department of Defense (DOD) is in the midst 
of a comprehensive review of its European infrastructure to create 
long-term savings by eliminating excess infrastructure, recapitalizing 
astutely to create excess for elimination, and leveraging announced 
force reductions. DOD is analyzing infrastructure relative to the 
requirements of the defined force structure, emphasizing military 
value, operational requirements, joint utilization, and obligations to 
our allies. DOD expects to complete its analysis in late spring and 
anticipates providing a classified report outlining the findings soon 
after.
    Even significant closures overseas, though, will not be sufficient 
to make the needed reductions in DOD's excess infrastructure. This 
underscores the need to conduct the same effort with respect to DOD's 
domestic infrastructure, in concert with the overseas review to 
maximize its comprehensiveness and creativity.
    Regarding the Section 347 report on the European Infrastructure 
Consolidation Initiative, then-Deputy Secretary of Defense Ashton 
Carter submitted the analysis on April 16, 2013 (transmittal letter 
attached).
    [The letter referred to can be found in the Appendix on page 110.]
    Mr. Wittman. Has the Secretary of Defense assessed whether excess 
infrastructure exists in the Department? What empirical support can the 
Department provide to support a request for additional BRAC rounds?
    Admiral Ferguson. The last BRAC analysis DOD performed was back in 
2004, and at that time the DOD reported an average of 24% excess 
capacity as compared to the metrics established by the 1989 baseline 
inventory.
    Since that assessment was completed, however, the capabilities of 
our weapons systems and platforms have advanced and our warfighting 
tactics have evolved, as has planning criteria for our infrastructure. 
Further, while the 2005 BRAC round included a number of closures within 
the DON, the Navy has not experienced the same level of force structure 
reductions as has the Army and Air Force. A new BRAC round would give 
us the opportunity and rigorous process to take a hard look at our 
infrastructure and force laydown to determine if the Navy has excess 
capacity today.
    Mr. Wittman. General Paxton, you've mentioned the effects of 
sequestration on Marine Corps Readiness both in its current state and 
into the future. We understand that the corps has done diligent work in 
redesigning a force structure around 175,000 marines, which is based on 
fiscal constraints. You and the Commandant have testified that the 
optimal force structure for the Marine Corps is 186,600 marines to meet 
all crisis response and steady-state requirements of the nation.
    Can you briefly discuss what the Marine Corps loses in regards to 
readiness with this reduced force structure?
    Can you also provide the committee with your assessment of what 
specific capabilities the Marine Corps stands to lose if the full 
implementation of the BCA continues beyond FY15?
    Lastly, can you provide the committee an assessment on the ability 
of the Marine Corps to regenerate capabilities/capacities lost due to 
sequestration if and when emergent threats arise or major combat 
operations are required.
    General Paxton. Under current levels of funding, the 175k force 
will be an extremely capable and ready force, optimized for steady 
state operations, but will assume risk in the execution of a Major 
Combat Operation (MCO) and will stress personnel tempo rates at the 1:2 
deployment-to-dwell ratio in the active component and a 1:4 ratio for 
the Reserves. The 175k force will not be sized to rotate in MCOs (i.e., 
the force will be ``all-in'' to meet the demands of an MCO at a 1:0 
unit deployment-to-dwell ratio). The 175k force is not the 186.8k force 
level the Marine Corps desires, but it is the best balanced force to 
meet the strategic and fiscal realities of the near future while 
simultaneously preserving the ability to rapidly grow in times of 
crisis. The 175k force will maintain an average of C2 readiness across 
all operational units, will restructure unit and institutional training 
for emerging security demands, will expand use of simulation and 
virtual training, and will rely on Navy investments in steaming days 
and flight hours which impacts readiness.
    The 175k force at full sequestration levels will be a high risk 
force. Funding for Marine Corps modernization will be reduced or 
depleted, funding for readiness will be reduced, funding for 
infrastructure will be reduced, and Marine Corps capability to deter 
and defeat aggression will be reduced. Specifically, full sequestration 
in the FY15-19 timeframe will result in reduction in funding for MDAPs, 
G/ATOR, and CAC2S, while JLTV will be delayed one year and may be 
forced to cancel. Modernization to the Marine Corps' most crucial 
capabilities--ACV and F-35B--will be preserved. Additional risk will be 
manifested over time as equipment and modernization yields less viably 
equipped Marines. Marine Corps bases and stations will, over time, see 
a diminished ability to provide the training ranges to keep Marines 
trained. Within 5-7 years the Marine Corps may be forced to make the 
choice between deploying a fully equipped Marine or a fully trained 
Marine. Although the Marine Corps will continue to serve the nation as 
America's Expeditionary Force in Readiness at whatever end-strength the 
nation is prepared to fund, full implementation of the BCA beyond FY15 
will negatively impact Marine Corps modernization, infrastructure, and 
readiness accounts, reducing Marine Corps capability to fulfill key DSG 
missions (Countering Terrorism & Irregular Warfare, Deterring & 
Defeating Aggression, Projecting Power Despite A2AD Challenges, and 
Providing a Stabilizing Presence).
    Although the 175k force is the current planned force, history shows 
the Marine Corps will not be held at 175k forever; end-strength 
fluctuations are natural and necessary. Rather than ignore this 
reality, it is best to plan for it and accept risk in the areas that 
can be reconstituted when needed. The Defense Strategic Guidance (DSG) 
refers to this concept as ``reversibility.'' The Ground Combat Element 
(GCE) is the element of the Marine Air Ground Task Force (MAGTF) that 
can most rapidly be reconstituted during times of crisis; it is the 
most reversible. The Air Combat Element is arguably the least 
reversible. Aircraft are considered long-lead items because of the 
length of time required to move from concept to reality. Additionally, 
aviation units require more senior personnel who take longer to 
develop. The 175k force reduces structure in areas that can be restored 
the most rapidly in times of crisis, thereby preserving reversibility.
    Mr. Wittman. Does the budget request for the Marine Corps fully 
fund current and planned crisis response capabilities? If not, why? 
What are your future plans for developing and growing crisis response 
elements? Where will future capabilities be based?
    General Paxton. Special Purpose Marine Air Ground Task Force-Crisis 
Response (SPMAGTF-CR), in support of USEUCOM/USAFRICOM, is an enduring 
capability for the Marine Corps and supports our priorities for forward 
presence, steady state operations and crisis response. It is funded in 
the President's Budget 2015 (PB-15) request. The Marine Corps' 
rebalance to the Pacific is also funded in PB-15. The rebalance 
provides forward presence, steady state operations, and crisis response 
capabilities to that region. A Marine Expeditionary Unit (MEU) presence 
in support of USCENTCOM and the 31st MEU in support of USPACOM are also 
funded. Lastly, Marine Security Augmentation Unit funding was submitted 
as part of PB-15.
    The Marine Corps requested funding in the USMC FY-15 Unfunded 
Priority List (UPL) submission for SPMAGTFs in support of USCENTCOM and 
USSOUTHCOM. These capabilities were not funded in the [baseline] 
budget, because they were in development at the time of submission. 
SPMAGTF-CENT is scheduled to deploy in the fall of this year and will 
be comprised of a Theater Security Cooperation (TSC) element in Jordan 
and a Security Force in Yemen. The Marine Corps and USCENTCOM are in 
the process of coordinating host nation support for the Crisis Response 
element and associated aviation assets. SPMAGTF-South is scheduled to 
deploy in May of 2015. Although it is not planned to have as robust a 
crisis response capability as the SPMAGTFs in USCENTCOM or USEUCOM/
USAFRICOM, it will have the ability to conduct TSC and support 
Humanitarian Assistance/Disaster Response missions. The Marine Corps 
and USSOUTHCOM are in the process of coordinating host nation support 
for elements of the SPMAGTF.
    Mr. Wittman. The budget request summary highlights support for the 
continuation Marine Unit Deployment Program (UDP) in FY15. How many 
deployments to you anticipate? With the updated strategic guidance, do 
you anticipate a UDP-type arrangement outside of Okinawa?
    General Paxton. The Unit Deployment Program consists of sustained 
presence of three reinforced infantry battalions that conduct six month 
deployments. This results in six deployments per year. One of these 
battalions will rotate to Darwin, Australia for a six month period each 
year as the Marine Rotational Force (Darwin).
    Mr. Wittman. What level of unit readiness does the President's 
Budget Request assume? If funded at the budget request level, how long 
until we regain sufficient full spectrum readiness?
    General Paxton. The FY15 budget preserves near-term readiness to 
support an increased forward presence in the Pacific, and crisis 
response capabilities, such as those demonstrated in the Philippines 
for humanitarian assistance and disaster response and later with the 
evacuation of American citizens from South Sudan. In partnership with 
the Navy, we utilize Amphibious Ready Groups (ARG) and Marine 
Expeditionary Units (MEU) that are forward deployed. Additionally, the 
budget resources the land-based Special Purpose Marine Air-Ground Task 
Force-Crisis Response (SPMAGTF-CR), located in Spain and Italy. 
SPMAGTF-CR is not intended to replace, but rather compliment the ARG-
MEU. The Navy-Marine Corps team is committed to forming capabilities 
that would provide other crisis response capabilities to U.S. Central 
and Southern Commands. The help of Congress is needed to secure these 
future capabilities.
    Full spectrum readiness depends on a budget that balances current 
unit readiness and long-term investments--balanced institutional 
readiness is essential to regaining full spectrum readiness. Currently, 
this balance is misaligned as resources that would have otherwise been 
applied to non-deployed units and investments accounts are re-
prioritized to deployed and next-to-deploy units to safeguard near-term 
operational unit level readiness. Tough choices have been made in these 
fiscally challenging times to protect this near term readiness. Whereas 
the President's budget protects near-term readiness, fully 
reconstituting the Corps after over a decade of war is at risk if 
funding is not available for equipment modernization and needed 
infrastructure essential for full spectrum readiness. Force level draw 
down savings are not expected to be realized until 2019, at which time 
the Corps would be on a path to balanced institutional readiness.
    Mr. Wittman. Much of the $26 billion Opportunity, Growth, and 
Security Initiative (OGSI) Fund is aimed at mitigating short-term 
readiness shortfalls. If funded at the budget request levels, what 
additional readiness shortfalls are present within the Services? Can we 
expect the OGSI to mitigate all or most of these? What is the impact or 
risk if OGSI is not funded?
    General Paxton. The Marine Corps prioritized near term readiness at 
the expense of infrastructure sustainment and equipment modernization. 
The programs requested via the OGSI will help mitigate the risk 
associated with those reductions.
    Mr. Wittman. Which readiness accounts are you most concerned about? 
What can we do to help? If provided with extra budgetary authority, 
what would you seek to do?
    General Paxton. The Marine Corps prioritized near term readiness at 
the expense of infrastructure sustainment and equipment modernization. 
If additional funds were available, the Marine Corps would request 
support of the OGSI/UPUL.
    Mr. Wittman. Can you articulate the impact of cancelled training 
that occurred over the last two years as a result of sequestration?
    General Paxton. No significant training was cancelled as a result 
of sequestration. The Marine Corps explicitly protected training and 
near-term unit readiness at the expense of equipment modernization and 
installation sustainment. The Marine Corps' concern is that in 
achieving short-term readiness goals to meet DOD guidance, in the long-
term it will reduce overall readiness across the Infrastructure 
Sustainment and Equipment Modernization pillars of institutional 
readiness. Funding cuts to these pillars, under sequestration, will not 
be sustainable due to their impacts on future readiness.
    Mr. Wittman. How dependent are you on OCO for day-to-day 
operations? How will the dependence change after the majority of, or 
possibly all, combat troops are out of Afghanistan?
    The majority of Marine Corps OCO funding supports the incremental 
costs of combat operations, equipment and infrastructure repair, 
equipment replacement, military pay for mobilized reservists, deployed 
pay and allowances, and end-strength above the baseline active duty 
force (182.7K in FY15). However, as the Marine Corps transitions from 
Operation Enduring Freedom in Afghanistan to steady state operations, 
including forward presence and crisis response, some of the activities 
currently funded via OCO will likely migrate to the baseline to support 
enduring missions and requirements. The Marine Corps currently 
estimates this amount to be between $200 and $450 million. This 
represents approximately 8 to 11 percent of our total FY 2014 OCO 
request of $4.0B.
    The $700 million realigned from baseline to OCO in FY 2014 by the 
Congress in the 2014 Omnibus Appropriations Act is also an enduring 
requirement, and is reflected in the FY15 budget as such.
    Mr. Wittman. Please describe the enduring, non-Afghanistan-related 
requirements your service funds through OCO. How would you address 
those requirements in the absence of OCO?
    General Paxton. The majority of Marine Corps OCO funding supports 
the incremental costs of combat operations, equipment and 
infrastructure repair, equipment replacement, military pay for 
mobilized reservists, deployed pay and allowances, and end-strength 
above the baseline active duty force (182.7K in FY15). However, as the 
Marine Corps transitions from Operation Enduring Freedom in Afghanistan 
to steady state operations, including forward presence and crisis 
response, some of the activities currently funded via OCO will likely 
migrate to the baseline to support enduring missions and requirements. 
The Marine Corps currently estimates this amount to be between $200 and 
$450 million. This represents approximately 8 to 11 percent of our 
total FY 2014 OCO request of $4.0B. Examples of enduring requirements 
include: CENTCOM operations and presence, redeployment of forces post 
OEF, intermediate and operational maintenance requirements, as 
equipment is deployed in support of non-OCO missions, commercial 
satellite bandwith, and information systems requirements.
    The Marine Corps has made modest gains in its efforts to fund 
enduring requirements in the baseline, but will face challenges to 
migrate the requirements identified above as sequestration has resulted 
in reduced top lines for all the Services. The ability to continue to 
fund missions with OCO has enabled the Marine Corps to limit further 
reductions in operation and maintenance and procurement accounts 
(infrastructure sustainment and equipment modernization) in order to 
support a ready and capable force.
    Mr. Wittman. Please describe your service's efforts to migrate 
enduring requirements into the base budget. How challenging has 
sequestration made that task? What is most at-risk?
    General Paxton. The Marine Corps has made modest gains in its 
efforts to fund enduring requirements in the baseline, but will face 
challenges to migrate the requirements identified above as 
sequestration has resulted in reduced top lines for all the Services. 
The ability to continue to fund missions with OCO has enabled the 
Marine Corps to limit further reductions in operation and maintenance 
and procurement accounts (infrastructure sustainment and equipment 
modernization) in order to support a ready and capable force.
    The majority of Marine Corps OCO funding supports the incremental 
costs of combat operations, equipment and infrastructure repair, 
equipment replacement, military pay for mobilized reservists, deployed 
pay and allowances, and end-strength above the baseline active duty 
force (182.7K in FY15). However, as the Marine Corps transitions from 
Operation Enduring Freedom in Afghanistan to steady state operations, 
including forward presence and crisis response, some of the activities 
currently funded via OCO will likely migrate to the baseline to support 
enduring missions and requirements. The Marine Corps currently 
estimates this amount to be between $200 and $450 million. This 
represents approximately 8 to 11 percent of our total FY 2014 OCO 
request of $4.0B.
    The $700 million realigned from baseline to OCO in FY 2014 by the 
Congress in the 2014 Omnibus Appropriations Act is also an enduring 
requirement, and is reflected in the FY15 budget as such.
    Mr. Wittman. Although you may not be able to discuss specifics 
until the FY15 OCO budget is officially released, how confident are you 
in the adequacy of this year's OCO budget request? How much of your 
services' operations, maintenance, and training requirements are met by 
the base budget?
    General Paxton. The majority of Marine Corps OCO funding supports 
the incremental costs of combat operations, equipment and 
infrastructure repair, equipment replacement, military pay for 
mobilized reservists, deployed pay and allowances, and end-strength 
above the baseline active duty force (182.7K in FY15). However, as the 
Marine Corps transitions from Operation Enduring Freedom in Afghanistan 
to steady state operations, including forward presence and crisis 
response, some of the activities currently funded via OCO will likely 
migrate to the baseline to support enduring missions and requirements. 
The Marine Corps currently estimates this amount to be between $200 and 
$450 million. This represents approximately 8 to 11 percent of our 
total FY 2014 OCO request of $4.0B.
    In FY2011, the Marine Corps requested $4.0B (5% of the DOD's $85.3B 
request). With continued support from Congress for our manpower, combat 
operations, pre-deployment training equipment repair and replacement, 
and our reset requirements, we believe we can maintain a ready and 
capable force albeit with some near term risks in our infrastructure 
sustainment and equipment modernization accounts.
    Mr. Wittman. How would your overall readiness be affected by the 
elimination of OCO? What training would be curtailed? What 
infrastructure would be affected? How would ability to maintain 
equipment and fully staff units be affected?
    General Paxton. In FY2011, the Marine Corps requested $4B (5% of 
the DOD's $85.3B request). With continued support from Congress for our 
manpower, combat operations, pre-deployment training equipment repair 
and replacement, and our reset requirements, we believe we can maintain 
a ready and capable force albeit with some near term risks in our 
infrastructure sustainment and equipment modernization accounts.
    Mr. Wittman. In light of the civilian personnel hiring freezes and 
furloughs in FY2014, what impacts, if any, were there on the shipyards 
and aviation depots? How were they mitigated or what risk was assumed? 
What is the civilian personnel hiring plan for the shipyards in FY15?
    General Paxton. The Marine Corps has no shipyards or aviation 
depots and, thus, defers to Navy on civilian furlough and pay freeze 
impacts on those entities.
    Mr. Wittman. How will each of your services achieve the 
headquarters reductions ordered by Secretary Hagel and at the same time 
ensure critical functional capabilities are not lost? What is your 
strategic human capital plan?
    General Paxton. The Marine Corps supports measures such as the 20% 
reduction to management headquarters which is designed to enhance 
efficiency and cost effectiveness of our workforce. Due to fiscal 
constraints, the Marine Corps had already established an Executive 
Steering Group to determine how to minimize stress and maintain faith 
with our civilian workforce in this austere environment. As a result, 
the Marine Corps phased the management headquarters reduction at 
approximately four percent per year beginning in FY 2015. In addition, 
since 2009, the Marine Corps has restrained growth by prioritizing 
civilian workforce requirements and realigned resources to retain an 
affordable and efficient workforce. Similarly, the Marine Corps has 
identified active duty military billets within headquarters 
organizations that will be eliminated to achieve the 20% reduction in 
management headquarters by 2019. Such billets, the Marine Corps feels 
are appropriate for reduction and will not negatively impact functional 
capabilities of headquarter elements.
    Mr. Wittman. Can you address the impact of the furlough on the 
military and civilian workforces? Have you seen spikes in post-furlough 
separations or retirements? Do you anticipate another furlough will be 
required?
    General Paxton. About 90% of our civilian Marines suffered 48 hours 
of administrative furlough between 8 July and 17 August 2013. Some 
suffered financially because of 6-days lost pay. The lapse in 
appropriations furlough during 1-4 October affected about 63% of our 
appropriated funded (APF) civilians and 26% of our non-appropriated 
funded (NAF).
    Over 60% of our civilian Marines are veterans; a great many are 
retired and former Marines. They come to work for the Marine Corps 
because they believe in and are committed to our mission. Through 
anecdotal evidence, we know that our civilians are frustrated with 
continued budgetary uncertainty, and the increasing publicity in media 
that portrays them as unproductive and overpaid is stressful and 
demoralizing.
    We have not seen any spikes in separations or retirements.
    The Marine Corps does not anticipate another furlough. Our civilian 
Marine appropriated-funded workforce is less than 5% of USMC total O&M 
budget. That represents a ``best value'' for the defense dollar, as the 
leanest of all services, with a ratio of one appropriated funded 
civilian to every ten active duty Marines. Frankly, sequestration 
actions break faith with our civilians, and will jeopardize the 
expertise and continuity necessary to support our military as 
commitment to federal service wanes.
    Mr. Wittman. How did the Secretary's mandatory 20% headquarters 
cuts impact readiness accounts, if at all?
    General Paxton. The Marine Corps supports measures such as the 20% 
reduction to management headquarters which is designed to enhance 
efficiency and cost effectiveness of our workforce. Due to fiscal 
constraints, the Marine Corps had already established an Executive 
Steering Group to determine how to minimize stress and maintain faith 
with our civilian workforce in this austere environment. As a result, 
the Marine Corps phased the management headquarters reduction at 
approximately four percent per year beginning in FY 2015. In addition, 
since 2009, the Marine Corps has restrained growth by prioritizing 
civilian workforce requirements and realigned resources to retain an 
affordable and efficient workforce. Similarly, the Marine Corps has 
identified active duty military billets within headquarters 
organizations that will be eliminated to achieve the 20% reduction in 
management headquarters by 2019. Such billets, the Marine Corps feels 
are appropriate for reduction and will not negatively impact functional 
capabilities of headquarter elements.
    Mr. Wittman. Considering the significant variability associated 
with the budget and the resulting force structure, why does the 
Department feel that it is an appropriate time to request an additional 
BRAC round?
    General Paxton. The last BRAC analysis the Department of the Navy 
(DON) performed was back in 2004, and at that time the Department 
reported having about 21% excess capacity as compared to the metrics 
established by the 1989 baseline inventory; the DOD average was 24%.
    Since that assessment was completed, however, the capabilities of 
our weapons systems and platforms have advanced and our warfighting 
tactics have evolved, as has planning criteria for our infrastructure. 
Further, while the 2005 BRAC round included a number of closures within 
the DON, the Marine Corps has not experienced the same level of force 
structure reductions as has the Army and Air Force. A new BRAC round 
would give us the opportunity and rigorous process to take a hard look 
at our infrastructure and force laydown to determine how much excess 
capacity the Marine Corps has today. However, the Marine Corps feels 
that it is appropriately aligned with its bases and infrastructure for 
its future force structure going forward.
    Mr. Wittman. Please provide an update as to when the Department is 
expected to complete the European Infrastructure Consolidation 
Initiative as required by Section 347 of the National Defense 
Authorization Act for Fiscal Year 2012. Why does the Department feel it 
is appropriate to request an additional round of BRAC prior to 
completing the assessment of infrastructure in Europe?
    General Paxton. The Department of Defense (DOD) is in the midst of 
a comprehensive review of its European infrastructure to create long-
term savings by eliminating excess infrastructure, recapitalizing 
astutely to create excess for elimination, and leveraging announced 
force reductions. DOD is analyzing infrastructure relative to the 
requirements of the defined force structure, emphasizing military 
value, operational requirements, joint utilization, and obligations to 
our allies. DOD expects to complete its analysis in late spring and 
anticipates providing a classified report outlining the findings soon 
after.
    Even significant closures overseas, though, will not be sufficient 
to make the needed reductions in DOD's excess infrastructure. This 
underscores the need to conduct the same effort with respect to DOD's 
domestic infrastructure, in concert with the overseas review to 
maximize its comprehensiveness and creativity.
    Regarding the Section 347 report on the European Infrastructure 
Consolidation Initiative, then-Deputy Secretary of Defense Ashton 
Carter submitted the analysis on April 16, 2013 (transmittal letter 
attached).
    [The letter referred to can be found in the Appendix on page 110.]
    Mr. Wittman. Has the Secretary of Defense assessed whether excess 
infrastructure exists in the Department? What empirical support can the 
Department provide to support a request for additional BRAC rounds?
    General Paxton. The last BRAC analysis the Department of the Navy 
(DON) performed was back in 2004, and at that time the Department 
reported having about 21% excess capacity as compared to the metrics 
established by the 1989 baseline inventory; the DOD average was 24%.
    Since that assessment was completed, however, the capabilities of 
our weapons systems and platforms have advanced and our warfighting 
tactics have evolved, as has planning criteria for our infrastructure. 
Further, while the 2005 BRAC round included a number of closures within 
the DON, the Marine Corps has not experienced the same level of force 
structure reductions as has the Army and Air Force. A new BRAC round 
would give us the opportunity and rigorous process to take a hard look 
at our infrastructure and force laydown to determine how much excess 
capacity the Marine Corps has today. However, the Marine Corps feels 
that it is appropriately aligned with its bases and infrastructure for 
its future force structure going forward.
    Mr. Wittman. Please describe the readiness challenges the Air Force 
faces if we revert to sequestration level funding after FY15.
    General Spencer. The Fiscal Year 2015 President's Budget funding 
levels are the minimum required to achieve Air Force readiness goals by 
2023. The reality of the Air Force budget is that without sufficient 
readiness funding, we assume greater risk across the full range of 
military operations required to support the defense strategy. Current 
fiscal constraints pose difficult choices between our strategy-based 
modernization/acquisition programs and the need to simultaneously 
address our near- and long-term full-spectrum readiness shortfalls. 
Without adequate readiness funding, the Air Force cannot maintain a 
ready force or even begin reversing our long downward readiness trend, 
which we are currently addressing in FY14-15 under the funding provided 
by the Bipartisan Budget Act.
    The return of Budget Control Act (BCA) funding levels would 
significantly impact our ability to adequately resource flying hours, 
weapons system sustainment, depot maintenance, training ranges, 
preferred munitions, and large-force exercises. If BCA funding levels 
return, readiness will decline across all Air Force core missions and 
we will not be able to meet our 2023 readiness goals.
    Our units will have to fly at reduced training rates and the Air 
Force will again be forced to stand down units, similar to actions 
taken in FY13. As the Department indicated in the sequestration 
reports, the Air Force will be forced to consider additional force 
structure options, such as divesting the KC-10 and Global Hawk Block 40 
fleets and reducing by ten the number of MQ-9 orbits. BCA funding 
levels mean cuts to our readiness and recapitalization/modernization 
accounts and will result in fewer ready forces available to support the 
defense strategy. The result will be a less capable, smaller force that 
is even less ready for tomorrow's fight.
    Mr. Wittman. What would be the impacts to the Air Force's readiness 
posture if we maintained our current force structure with the current 
funding levels?
    General Spencer. The Bipartisan Budget Act's (BBA) funding levels 
do not resolve the long term readiness issues that stemmed from the 
imposition of the Budget Control Act and years of declining readiness. 
Anticipated funding based on the BBA helps reverse the readiness 
decline, but it will likely not fix Air Force readiness during the 
Future Years Defense Program (FYDP); this is one of the reasons that 
PB15 seeks increased resources (above the BBA level) in Fiscal Year 
2016 (FY16) and beyond. Achieving a ready Air Force will be an 
estimated ten year process, with recovery sometime around 2023. The 
longer term readiness picture remains uncertain due to the resource 
drain stemming from the Air Force's inability to shed excess force 
structure and the looming threat of a return to sequester-level budgets 
in FY16 and beyond.
    If the Air Force were to maintain its current force structure at 
current funding levels, we would be forced to shift critical funds out 
of our readiness and recapitalization/modernization accounts. Depending 
on the outcome of these budget-driven tradeoffs, units will be forced 
to fly at reduced training rates and the Air Force will again be forced 
to stand down units, similar to actions taken in FY13 and from which 
(as of May 2014) the Air Force has yet to fully recover. This would 
result in fewer ready forces to meet the requirements of the defense 
strategy and a less capable, smaller force that is even less ready.
    Mr. Wittman. If Congress fails to grant the Air Force authority to 
cut A-10s, do you anticipate implications for force readiness? If so, 
can you provide specifics?
    General Spencer. Yes, we do expect negative impacts to readiness if 
we are not permitted to divest the A-10. Without a $4.2 billion 
addition to the Air Force's topline that is necessary to maintain the 
current A-10 fleet across the Future Years Defense Program (FYDP), the 
Air Force would be forced to shift critical funds out of our readiness 
and recapitalization/modernization accounts. Without these savings, 
units will be forced to fly at reduced training rates and the Air Force 
will again be forced to stand down units, similar to actions taken in 
fiscal year 2013 and from which (as of May 2014) the Air Force has yet 
to fully recover. This would result in fewer ready forces to meet the 
requirements of the defense strategy and a less capable, smaller force 
that is even less ready.
    Mr. Wittman. The budget request funds only 65% of facility 
sustainment requirements. What is the impact of this budget decision? 
What tradeoffs were made to justify this determination? When do you 
anticipate this issue to be addressed? How much budget authority is 
required?
    General Spencer. The Air Force's Fiscal Year 2015 President's 
Budget (FY15 PB) budget decision accepts near-term risk with long-term 
effects in facilities sustainment, restoration, and modernization 
(FSRM). The impact of this budget decision is further degradation of an 
already older/aging infrastructure. The current fiscal environment 
required difficult choices. We prioritized readiness and modernization 
over facilities to balance capacity, capability, and readiness. The 
FY15 PB supports that strategy, but a return to sequestration-level 
budgets will make the choices worse.
    Mr. Wittman. How much excess capacity does the Air Force currently 
have with respect to installations and facilities? How did you 
determine this percentage? What current information do you have to make 
this determination?
    General Spencer. The Secretary of Defense's 2004 Sec. 2912 Report 
to Congress stated the Air Force had 24 percent excess infrastructure. 
Broad mission categories were parametrically assessed, compared to 
mission requirements, and yielded a non-specific, excess capacity 
result. The 24 percent conclusion was mission focused (i.e., bomber, 
depots, training) and not base-by-base.
    This excess infrastructure was not sufficiently addressed by the 
base realignment and closure round in 2005 (BRAC 2005). Only eight 
minor installations were closed and less than one percent of Plant 
Replacement Value (PRV) was reduced. Since BRAC 2005, the Air Force has 
further reduced its force structure by approximately 500 aircraft and 
eight percent of military manpower authorizations. Add to this the FY15 
PB proposal to reduce force structure by an additional 500 aircraft and 
up to 20,000 Airmen, and the need for BRAC becomes even more 
compelling.
    Mr. Wittman. Last year, the committee provided the Air Force with 
budget authority to demolish a number of excess buildings across 
installations. What is the status of demolition projects and do you 
need additional authority this year?
    General Spencer. In FY14, Congress authorized $2.88B in Facilities 
Sustainment, Restoration and Modernization (FSRM). From this FSRM, the 
Air Force had planned for $29M in Demolition.
    Due to budget constraints, the Air Force made the decision to 
target resources on ``mission-critical, worst-first'' infrastructure 
needs, and defer demolition (low risk) to focus resources on mission-
enabling renovations (restoration and modernization).
    The Air Force has currently funded five projects in fiscal year 
2014 (FY14) worth $4.1 million and is prepared to fund 12 more projects 
in FY14 worth $8.3 million.
    Mr. Wittman. Which readiness accounts are you most concerned about? 
What can we do to help? If provided with extra budgetary authority, 
what would you seek to do?
    General Spencer. The Air Force's primary readiness concern is to 
ensure adequate funding levels for flying hours, weapons system 
sustainment (WSS), ranges, preferred munitions, simulators, and 
exercises. Without adequate funding, the Air Force cannot maintain a 
ready force or even begin reversing our long-standing downward 
readiness trend, which we are currently addressing under the Bipartisan 
Budget Act. The Air Force will prioritize flying hours, WSS, ranges, 
munitions, simulators, and exercises to recover readiness and to meet 
our 2023 readiness goals.
    Mr. Wittman. Can you articulate the impact of cancelled training 
that occurred over the last two years as a result of sequestration?
    General Spencer. Loss of high-intensity training has eroded the Air 
Force's full-spectrum readiness. As of May 2014, nearly 50 percent of 
the units stood down in fiscal year 2013 (FY13) due to sequestration 
had yet to recover to their suboptimal, pre-sequester readiness levels. 
Sequestration forced the cancellation or curtailment of weapons school 
classes and several major exercises in FY13, including RED FLAG, which 
has further eroded the Air Force's readiness and made us less prepared 
to decisively win in future contingencies in contested and highly-
contested environments.
    If desired, we can provide more detail in a classified forum.
    Mr. Wittman. What level of unit readiness does the President's 
Budget Request assume? If funded at the budget request level, how long 
until we regain sufficient full spectrum readiness?
    General Spencer. PB15 funding levels enable the Air Force to 
achieve its readiness goals by 2023. Below this funding level, we 
assume greater risk across the full range of military operations that 
are required to support the defense strategy. Current fiscal 
constraints pose difficult choices between our strategy-based 
modernization/acquisition programs and the need to simultaneously 
address our near- and long-term full-spectrum readiness shortfalls. 
Without PB15 funding levels, the Air Force cannot realize a ready 
force. The Air Force began reversing our long-standing downward 
readiness trend in Fiscal Years 2014-15 with funding provided by the 
Bipartisan Budget Act.
    The return of Budget Control Act (BCA) funding levels would 
significantly impact our ability to adequately resource flying hours, 
weapons system sustainment, depot maintenance, training ranges, 
preferred munitions, simulators, and large-force exercises. If BCA 
funding levels return, readiness will decline across all Air Force core 
missions and we will not be able to meet our 2023 readiness goals.
    Mr. Wittman. Much of the $26 billion Opportunity, Growth, and 
Security Initiative (OGSI) Fund is aimed at mitigating short-term 
readiness shortfalls. If funded at the budget request levels, what 
additional readiness shortfalls are present within the Services? Can we 
expect the OGSI to mitigate all or most of these? What is the impact or 
risk if OGSI is not funded?
    General Spencer. The Fiscal Year 2015 President's Budget (FY15 PB) 
request continues to rebuild readiness levels for the Air Force by 
funding all executable flying hours, sustaining space enterprise 
capabilities, and investing in cyber operations readiness. However, 
emergent requirements in the nuclear enterprise and critical shortfalls 
for Combat Air Force exercises, ranges, and training still remain. The 
Opportunity, Growth, and Security Initiative (OGSI) and the Air Force 
unfunded priority list (UPL) seek to mitigate all of these shortfalls 
in FY15 by funding over $100 million in nuclear force improvement 
program initiatives, increasing funding for combat training ranges, and 
restoring installation support funding that directly enhances Air Force 
preparedness for combat, contingency, and day-to-day operations. If the 
OGSI/UPL is not funded, it will take the Air Force longer to return to 
full-spectrum training and achieve necessary readiness levels required 
to fully execute combatant commander requirements.
    Mr. Wittman. Which readiness accounts are you most concerned about? 
What can we do to help? If provided with extra budgetary authority, 
what would you seek to do?
    General Spencer. The Air Force's primary readiness concern is to 
ensure adequate funding levels for flying hours, weapons system 
sustainment (WSS), ranges, preferred munitions, simulators, and 
exercises. Without adequate funding, the Air Force cannot maintain a 
ready force or even begin reversing our long-standing downward 
readiness trend, which we are currently addressing under the Bipartisan 
Budget Act. The Air Force will prioritize flying hours, WSS, ranges, 
munitions, simulators, and exercises to recover readiness and to meet 
our 2023 readiness goals.
    Mr. Wittman. Can you articulate the impact of cancelled training 
that occurred over the last two years as a result of sequestration?
    General Spencer. Loss of high-intensity training has eroded the Air 
Force's full-spectrum readiness. As of May 2014, nearly 50 percent of 
the units stood down in fiscal year 2013 (FY13) due to sequestration 
had yet to recover to their suboptimal, pre-sequester readiness levels. 
Sequestration forced the cancellation or curtailment of weapons school 
classes and several major exercises in FY13, including RED FLAG, which 
has further eroded the Air Force's readiness and made us less prepared 
to decisively win in future contingencies in contested and highly-
contested environments.
    If desired, we can provide more detail in a classified forum.
    Mr. Wittman. How dependent are you on OCO for day-to-day 
operations? How will the dependence change after the majority of, or 
possibly all, combat troops are out of Afghanistan?
    General Spencer. The Air Force currently executes over $9 billion 
per year in OCO operations and maintenance (O&M) funding. This funding 
covers flying hours, weapon system sustainment (WSS), transportation, 
and base operating support (BOS) for Air Force-operated installations 
in the U.S. Central Command area of responsibility (CENTCOM AOR). Over 
80 percent of our OCO BOS costs are for installations located outside 
of Afghanistan. We anticipate those requirements and costs will endure.
    The Air Force does not anticipate significant changes in CENTCOM 
enduring requirements. Operations over the last 20 years suggest the 
demand for Air Force capabilities will remain high even after combat 
operations cease, particularly in terms of continued rotational 
deployments and sustaining the bases in the CENTCOM AOR that are not in 
Afghanistan. If OCO is no longer available, the Air Force will need a 
topline funding increase to the baseline budget or supplemental funding 
to continue operations to support combatant commander requirements.
    Mr. Wittman. Please describe the enduring, non-Afghanistan-related 
requirements your service funds through OCO. How would you address 
those requirements in the absence of OCO?
    General Spencer. The Air Force anticipates a number of enduring 
requirements, particularly in terms of continued rotational deployments 
and sustaining the Air Force-operated bases in the U.S. Central Command 
area of responsibility (CENTCOM AOR) that are not in Afghanistan. If we 
continue to deploy and sustain these bases, all of the associated costs 
(e.g., flying hours, weapon system sustainment (WSS), base operating 
support (BOS)) must be funded, either by baseline growth or continued 
supplemental funding. Without increased baseline or continued 
supplemental funding, we will be forced to fund these requirements 
within the current operations and maintenance (O&M) baseline. This 
could result in similar impacts seen during fiscal year 2013 
sequestration: insufficient flying hours to maintain readiness, 
standing down flying units, less ready units for emergent requirements, 
and potentially not enough ready units for rotational demands, such as 
theater security packages in U.S. Pacific Command (PACOM) or CENTCOM. 
The Air Force would either need increased baseline or supplemental 
funding as the magnitude of the efforts cannot be sustained in current 
baseline funding levels. The impact of no overseas contingency 
operations (OCO) funding depends on requirements. If all of the 
requirements--to include flying hours, transportation, WSS, and BOS--
were to go away, the Air Force would only need OCO funding for a finite 
reset period of a few years, after which there would be minimal impact 
to terminating OCO funding. However, as stated earlier the Air Force 
does not anticipate significant changes in the CENTCOM requirements.
    Mr. Wittman. Please describe your service's efforts to migrate 
enduring requirements into the base budget. How challenging has 
sequestration made that task? What is most at-risk?
    General Spencer. The Air Force is focused on maximizing full 
spectrum readiness requirements. As overseas contingency operations 
(OCO) missions decline, funding for flying hour and weapon systems 
sustainment (WSS) programs will require additional baseline funding to 
return to full spectrum readiness training as the Air Force continues 
to execute the same number of flying hours and depot maintenance 
levels. The Air Force incrementally increased the OCO-to-base funding 
request for WSS in the fiscal year 2015 (FY15) Future Years Defense 
Program (FYDP) to account for this enduring requirement. Programmed 
increases start in FY16 by approximately $1 billion to $1.5 billion a 
year, increasing base funding from 70 percent to 80 percent of the WSS 
requirement. This is the only OCO to base transfer the Air Force has 
made in the FY15 budget submission. However, this plan is not 
achievable if the Air Force has to maintain Budget Control Act levels 
in FY16 and out.
    Mr. Wittman. Although you may not be able to discuss specifics 
until the FY15 OCO budget is officially released, how confident are you 
in the adequacy of this year's OCO budget request? How much of your 
services' operations, maintenance, and training requirements are met by 
the base budget?
    General Spencer. The Air Force is confident that the fiscal year 
2015 (FY15) overseas contingency operations (OCO) budget request will 
be adequate to properly fund the OCO mission. The Air Force is 
maximizing the use of operations and maintenance (O&M) dollars to help 
recover full-spectrum readiness, which is directly tied to operations, 
maintenance, and training requirements. Readiness recovery needs a 
stable level of funding and reduced operations tempo over time rather 
than a total requirement funded in a single year.
    Mr. Wittman. How would your overall readiness be affected by the 
elimination of OCO? What training would be curtailed? What 
infrastructure would be affected? How would ability to maintain 
equipment and fully staff units be affected?
    General Spencer. The Air Force relies on overseas contingency 
operations (OCO) funds to adequately resource weapon system sustainment 
(WSS) accounts. WSS is a critical component of overall readiness, 
encompassing depot maintenance, contract logistics support (CLS), and 
sustainment engineering. WSS directly impacts fleet availability and 
the ability of front line units to generate aircraft at a rate that can 
support the flying hour program, and, hence, the ability to train for a 
full spectrum of operations called for in the defense strategy.
    The elimination of OCO funding would significantly impact Air Force 
full-spectrum readiness. Should OCO funding be unavailable in future 
budgets and without an equivalent increase to the Air Force's topline, 
depot throughput and weapon system repair capabilities would be 
significantly impacted and jeopardize the Air Force's ability to meet 
2023 readiness goals.
    In addition, the Air Force needs adequate flying hours to generate 
trained and ready aircrew. We anticipate continued deployment 
requirements in the U.S. Central Command area of responsibility 
(CENTCOM AOR) even after combat operations end, and if the Air Force is 
compelled to resource these flying hours from the baseline flying hour 
program (vice OCO or supplemental funding), readiness will 
significantly degrade.
    Finally, operations, sustainment, repair, maintenance, and 
construction of some overseas infrastructure and real property assets 
are funded through OCO. These costs are significant. The elimination of 
OCO funding would greatly reduce the ability of the Air Force to 
provide engineering capabilities and services to the combatant 
commanders, limit their ability to generate combat power, and reduce 
readiness across the Air Force. An alternate funding source, or 
migration of these costs to the Air Force base budget and an equivalent 
increase to the Air Force topline, will be required.
    Mr. Wittman. In light of the civilian personnel hiring freezes and 
furloughs in FY2014, what impacts, if any, were there on the shipyards 
and aviation depots? How were they mitigated or what risk was assumed? 
What is the civilian personnel hiring plan for the shipyards in FY15?
    General Spencer. The Air Force focused on recovering from 
sequestration in fiscal year 2013 (FY13) and getting depot production 
back on track in 2014. FY13 sequestration negatively impacted the time 
required to perform depot maintenance at Oklahoma City Air Logistics 
Complex, Ogden Air Logistics Complex, and Warner Robins Air Logistics 
Complex. We expect to fully recover from flow day delays by December 
2014. In terms of depot maintenance manpower, the Air Force manages 
workforce based on the available funded workload per Title 10 USC 2472. 
As a result, any personnel actions underway at the depot in FY14 are 
not expected to add risk to the funded workload.
    Mr. Wittman. How will each of your services achieve the 
headquarters reductions ordered by Secretary Hagel and at the same time 
ensure critical functional capabilities are not lost? What is your 
strategic human capital plan?
    General Spencer. The Air Force has undertaken a fundamental process 
review across all levels of headquarters to identify and streamline 
staff capabilities, while ensuring we do not lose all critical 
functional capabilities resident on the staff. Where applicable, we are 
moving organizations with key warfighting-enhancing capabilities out 
from under the Headquarters Air Force and to the major commands 
responsible for conducting those operations. Within the headquarters 
reductions, the strategic human capital plan will maximize use of all 
voluntary measures, such as voluntary early retirement authority and 
voluntary separation incentives, in order to achieve any necessary 
headquarters reductions.
    Mr. Wittman. Can you address the impact of the furlough on the 
military and civilian workforces? Have you seen spikes in post-furlough 
separations or retirements? Do you anticipate another furlough will be 
required?
    General Spencer. The furlough decreased the morale and sense of 
value of the civilian workforce. We are working to rebuild trust, and 
we do not anticipate the need for a furlough in fiscal year 2014 (FY14) 
or beyond. The impacts of the furlough have translated into very 
minimal impacts to current recruitment efforts and the retention of 
civilians. In fact, there was a downward trend in the overall number of 
civilian retirements from FY12 to FY13.
    Mr. Wittman. How did the Secretary's mandatory 20% headquarters 
cuts impact readiness accounts, if at all?
    General Spencer. The Air Force implemented the management 
headquarters cost reduction per Secretary Hagel's direction in the 
Fiscal Year 2015 President's Budget (FY15 PB) submission. The cost 
reduction in management headquarters overhead allowed the Air Force to 
maintain more funding in readiness accounts within the FY15 PB 
submission than would have been possible otherwise.
    Mr. Wittman. Considering the significant variability associated 
with the budget and the resulting force structure, why does the 
Department feel that it is an appropriate time to request an additional 
BRAC round?
    General Spencer. An additional base realignment and closure (BRAC) 
round is needed now to allow the Air Force to properly address its 
excess infrastructure, and thus focus limited resources on remaining 
essential force structure and readiness.
    Annually, the Air Force expends $5 billion on facilities and $9 
billion to operate installations. It is becoming more and more 
difficult to sustain installation infrastructure, with sustainment 
funds reduced from 80 percent in the Fiscal Year 2014 President's 
Budget (FY14 PB) to 65 percent in the FY15 PB. The Air Force has 
accepted near-term risk (with long-term detrimental effects) in order 
to keep installations running.
    In the absence of BRAC, the Air Force has pursued other available 
avenues to reduce costs, demolishing 48.8 million square feet of aging 
building space since 2006 and saving $300 million in the process. 
Demolition cannot address the full extent of Air Force excess 
infrastructure, however, and another BRAC is necessary to reduce long-
term costs in the face of continuing budgetary pressures.
    Mr. Wittman. Please provide an update as to when the Department is 
expected to complete the European Infrastructure Consolidation 
Initiative as required by Section 347 of the National Defense 
Authorization Act for Fiscal Year 2012. Why does the Department feel it 
is appropriate to request an additional round of BRAC prior to 
completing the assessment of infrastructure in Europe?
    General Spencer. The Office of the Secretary of Defense (OSD) 
European Infrastructure Consolidation (EIC) analysis and recommended 
scenarios is expected to be complete in summer 2014. The EIC has 
progressed sufficiently to validate infrastructure requirements and has 
revealed opportunities for reductions and savings. The EIC also 
validated the current force structure requirement in Europe, which will 
remain relatively constant in order to support the national strategy 
and alliance commitments.
    But the potential savings are not enough to offset the declining 
Department of Defense (DOD) budget and contracting forces the 
Department anticipates in the coming years. The Fiscal Year 2015 
President's Budget (FY15 PB) requests a BRAC round in 2017, which 
allows the Department two years to prepare. The process will begin by 
providing Congress a certified force structure plan and installation 
inventory. BRAC authority will allow the Air Force time to conduct the 
appropriate analysis, authoritatively measure and compare force 
structure and infrastructure requirements, and validate operational and 
support requirements.
    We know at this juncture an additional round of BRAC, that best 
aligns infrastructure to anticipated mission and personnel end states, 
will provide significant savings. For these reasons the Department 
requests a BRAC even as the EIC report concludes.
    Mr. Wittman. Has the Secretary of Defense assessed whether excess 
infrastructure exists in the Department? What empirical support can the 
Department provide to support a request for additional BRAC rounds?
    General Spencer. The Air Force has not conducted a capacity 
analysis to determine the current level of excess infrastructure since 
the base realignment and closure round in 2005 (BRAC 2005). For BRAC 
2005, as part of Section Sec. 2912 of the National Defense 
Authorization Act for Fiscal Year 2003, the Secretary of Defense's 2004 
BRAC report to Congress stated that the Air Force had approximately 24 
percent excess infrastructure capacity.
    The BRAC 2005 Commission recommendations for the Air Force resulted 
in eight closures, but only reduced Air Force infrastructure by 
approximately one percent of plant replacement value. Since then, the 
Air Force has reduced force structure by approximately 500 aircraft and 
eight percent of its military authorizations. The Fiscal Year 2015 
President's Budget further proposes to reduce force structure by an 
additional 500 aircraft and cut military authorizations by up to 20,000 
Airmen. We therefore believe the Air Force currently retains excess 
infrastructure capacity.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MS. BORDALLO
    Ms. Bordallo. The DOD and Army budget submissions highlight 
reductions in depot maintenance personnel as an area of cost savings. 
By what percentage does the Army plan to reduce its depot maintenance 
workforce in FY15? What is the risk?
    General Campbell. The DOD and Army budget submissions do not 
highlight reductions in depot maintenance personnel as an area of cost 
savings. Personnel reductions to the organic industrial base would not 
result in any direct savings because these personnel are employed on a 
reimbursable basis. The FY15 President's Budget submission projects a 
3.8% (818 people) reduction of civilian personnel from industrial 
operation activities.
    The personnel reductions are aligned with declining workloads, will 
not result in a loss of required critical skill sets, and demonstrate 
that the Army is effectively executing its strategic vision outlined in 
The Army's Organic Industrial Base Strategic Plan; specifically, depot 
and arsenal work force and infrastructure will be sized and adjusted 
accordingly over time to sustain core depot and critical manufacturing 
capabilities to support war fighting equipment during current and 
future contingency operations.
    Ms. Bordallo. DOD indicates that the budget protects core 
functions. Under the FY15 budget proposal, does the Army fund core at 
each of its 5 primary maintenance depots? If not, where does it fall 
short?
    General Campbell. The Army's goal is to satisfy 100% of core 
workload requirements. Currently, the Army projects funding 72% of its 
total core requirements in FY15, but falls short in meeting minimum 
core requirements for ground vehicles (Stryker, Bradley, Paladin, 
Tactical Wheeled Vehicles, etc.) and communications electronics systems 
(AN/TPQ-36, SMART-T, etc). Currently, these weapon systems do not need 
depot level repair above the budgeted level because of low Operating 
Tempo rates and reduced fleet ages as a result of the Army's robust 
Reset and Recapitalization programs. The Army will mitigate these 
shortfalls through Army funded programs, other Service funded work, 
repair of Foreign Military Sales equipment, and like system work 
requiring similar artisan skills.
    Ms. Bordallo. Are there any areas where there is insufficient FY15 
workload proposed for assignment to a depot to meet the core 
requirement, but funded workload that meets the definition of core is 
contracted to the private sector? The committee is aware of those types 
of situations taking place in Fiscal Year 13 in the Army and would like 
to know under what authority the Department or a military service could 
take such an action. Is that taking place in the current fiscal year?
    General Campbell. The Army has core shortfalls due to reduced 
available workload for ground vehicles (Stryker, Bradley, Paladin, 
Tactical Wheeled Vehicles, etc.) and communications electronics systems 
(AN/TPQ-36, SMART-T, etc). Currently, these weapon systems do not need 
depot level repair above the budgeted level because of low Operating 
Tempo rates and reduced fleet ages as a result of the Army's robust 
Reset and Recapitalization programs. The Army is able to mitigate these 
shortfalls through the provision of depot level repairs in support of 
the Foreign Military Sales program, other Service workload, and like 
system work requiring similar artisan skills.
    A small percentage of ground vehicle and communication electronics 
system workload that is contracted to private industry could be used to 
meet Army core requirement shortfalls in FY15. However, this contracted 
workload was initially identified as above core requirements and the 
majority of the work is performed under public-private partnerships, 
Title 10 U.S. Code 2474, between the organic depots and original 
equipment manufacturers. The Army currently projects 59.4% of its depot 
level workload will be performed in organic depots and 40.6% of that 
work to be contracted to private industry in FY15.
    Ms. Bordallo. How was the analytically based workforce-to-workload 
review conducted that was designed to preserve mission essential skills 
and capabilities that suggested the proposed reductions in depot 
maintenance personnel in the Army? Who conducted the review and when 
was it conducted? Please share the findings with the committee.
    General Campbell. The Army re-calculated its core depot 
requirements using the Department of Defense Instruction 4151.20, Depot 
Maintenance Core Capabilities Determination process. Core requirements 
are based on the number of weapon systems and other military equipment 
assigned to Army organizations and required to deploy in support of 
contingency and emergency operations.
    The analytically based workforce-to-workload review begins by 
converting the equipment densities required to support these operations 
into annual peacetime repair quantities and then converting the repair 
quantities into annual direct labor hour requirements. Once core 
requirements are determined, the workforce capabilities and skills 
necessary to support the core workload requirements are established at 
selected organic depots.
    HQDA G-4, in coordination with the Army Materiel Command, completed 
the Army's Biennial Core Report that will be released to Congress this 
summer. The Army core requirements will continue to evolve as force 
structure and equipment densities required to support joint warfighting 
scenarios change.
    Ms. Bordallo. The budget submission indicates that changes reflect 
Component-identified opportunities for reshaping their civilian 
workforces through realignments and workload reductions consistent with 
Departmental strategies, and with due consideration of statutory total 
force management and workload sourcing mandates. What realignments are 
you proposing for depots or the organic industrial base to ensure 
efficiency of operations? What statutory mandates were considered in 
making proposals for large scale reductions in Army depot personnel?
    General Campbell. The FY15 President's Budget submission projects a 
3.8% (818 people) reduction in civilian personnel across all Army 
Organic Industrial Base (OIB) activities. Title 10 U.S. Code, Section 
2472, was considered in making these personnel reduction decisions to 
efficiently support the declining workloads, without the loss of 
critical workforce skill sets.
    The Army Organic Industrial Base Strategic Plan provides the 
strategy and management framework to size the OIB workforce to sustain 
core depot and critical manufacturing capabilities as the Army draws 
down from a decade of combat operations, and adjusts to declining 
workload requirements. This plan is designed to ensure the OIB remains 
effective, efficient, and capable of meeting future Army contingency 
requirements. As part of this strategic plan, the Army will develop a 
Human Capital Investment Plan for depots and arsenals that will inform 
future personnel alignment decisions.
    Currently, OIB facilities adjust the size of their workforce to 
meet the workload demand through a judicious use of Government 
temporary and term personnel, and contractor support and use overtime 
compensation to meet surge workload requirements.
    Ms. Bordallo. What percentage of reset dollars do you expect to 
allocate to organic depots? How much of that workload is core?
    General Campbell. The Army expects to execute approximately 80% of 
its FY14 Sustainment Reset funding within organic industrial base 
facilities; approximately 45% of that workload satisfies Army's core 
workload requirements.
    Ms. Bordallo. What percentage of depot maintenance requirement is 
funded in FY15?
    General Campbell. 44% ($1.19 billion) of the Army's critical depot 
maintenance requirements are funded in the FY15 budget request. The 
Army has assumed a level of risk in depot maintenance as we work toward 
a balanced program in future budget submissions. The Army views this 
level of risk as manageable so long as the Congress supports OCO 
funding requirements for equipment Reset.
    Ms. Bordallo. In calculating core, the military services have 
increasingly placed an emphasis on minimum capabilities; however, the 
statute also requires efficient operations. Under the FY15 budget, 
should we assume that each of the services' organic primary maintenance 
depots and shipyards have been workloaded and funded at efficient 
levels before workload is planned for the private sector?
    General Campbell. Army depots are assigned available workload to 
meet the intent of 10 USC Section 2464, Core Depot-level Maintenance 
and Repair Capabilities, prior to outsourcing workload to the private 
sector.
    Although depot level work load is declining commensurate with the 
end of combat operations in Afghanistan, the Army continues to balance 
depot level workload between organic and the private sector. Adhering 
to 10 USC Section 2474, which authorizes the use of Public Private 
Partnership, the Army employs the Army's Organic Industrial Base 
Strategic Plan to set conditions for establishing complementary 
capabilities between organic and commercial industrial base providers. 
This practice ensures the Army appropriately assigns available depot 
level workload to each sector. The Army also adheres to 10 USC Section 
2466, which limits the Army to using no more than 50% of funds received 
in a fiscal year to contract for the performance of such workload by 
non-Federal Government personnel.
    Ms. Bordallo. In light of section 832 of the FY12 NDAA (Public Law 
112-81), regarding the assessment, management, and control of O&S costs 
for major weapon systems:
      What predictive analysis and modeling processes have been 
the most effective at weapon systems optimization across the 
enterprise? Are there specific examples of successes or best practices 
that might be cited?
      How are modeling and simulation results comparing to 
actual performance once the decisions have been implemented? Although 
some savings may take time to materialize, are there indications of ROI 
are they achieving?
      In accordance with the NDAA section 823, how should DOD 
be using predictive analysis and modeling and simulation to understand 
the real impact of the DOD 5000.2 (http://www.acq.osd.mil/ie/bei/pm/
ref-library/dodi/p50002r.pdf) on the effectiveness and efficiency of 
the DOD enterprise?
    a. What predictive analysis and modeling processes have been the 
most effective at weapon systems optimization across the enterprise?
    General Campbell. The Army has placed increased emphasis on 
estimating weapon system operating and sustainment (O&S) costs early in 
the acquisition process. Estimates for O&S are conducted and updated at 
specific stages throughout the lifecycle of a program, including 
Analysis of Alternative studies, Milestone Decision reviews, and Full 
Rate Production Decisions/Full Deployment Decisions. The Army Costs 
Review Board (CRB) was established to provide an independent service-
level cost position for programs. The cost position is a development to 
divestment lifecycle cost estimate.
    The life cycle cost estimate (LCCE) is an effective predictive 
analysis and modeling tool for optimizing investment in new equipment 
capabilities. The LCCE helps identify nearly all program costs up 
front, which informs analysis regarding the affordability of the 
system. Additionally, the LCCE can be used to identify critical high 
cost sub-systems and components that ultimately drive operation and 
sustainment (O&S) costs. These high cost items can be emphasized during 
the design phase both to minimize O&S cost impacts and posture the Army 
to sustain these systems. The LCCE can also be used to identify trade 
space in the requirements, which provides program managers the 
flexibility to trade performance where it will not gain capability for 
better sustainability that will lower O&S costs.
    The estimate development process is collaborative, with 
participation from all stakeholder Army agencies, and includes the O&S 
resources that contribute to weapon systems. The estimate incorporates 
Lifecycle Sustainment Plans and uses actual cost data from the 
sustainment of current weapon systems. This enables leadership to make 
cost-informed decisions early in the acquisition strategy planning 
process. The CRB process results in defined programs with high-quality 
cost estimates that are documented, defendable, and affordable.
    The Army also has implemented the Long-range Investment 
Requirements Analysis (LIRA) process to manage the lifecycle of weapon 
systems from a holistic approach over a 30 year period. LIRA uses input 
from multiple organizations within the Army to synchronize across the 
modernization, sustainment, training, and installation communities, 
coordinating materiel development schedules to eliminate production/
sustainment gaps and redundant solutions for identified requirements. 
LIRA also reviews Science and Technology initiatives, operational 
testing efforts, key decisions and timelines, total lifecycle cost 
assessments, program new starts or transitions to sustainment, 
potential infrastructure adjustments and timelines for developing 
training and requirements, to eliminate redundancies and promote 
efficiency. LIRA provides a strategic view of investments over time and 
informs the Army's overall investment strategy to meet the long term 
vision and goals.
    In addition to these broader initiatives, the Army is also 
controlling O&S cost at the program level through incorporation of 
Condition-Based Maintenance Plus (CBM+) and Item Unique Identification 
(IUID) on Army weapon systems as part of the design process. CBM+ is a 
proactive maintenance capability that predicts and reports impending 
system failures by monitoring system health indicators. IUID is a 
capability to identify and track individual items and systems 
throughout the lifecycle. The combined objectives of both efforts are 
to increase platform availability, readiness, and safety; increase 
maintainer efficiency and productivity; and decrease logistics 
footprint and maintenance support requirements. To date, the Army has 
installed CBM+ sensors on 2,835 aircraft, 1,425 missiles, and over 200 
tactical wheel vehicles.
    b. Are there specific examples of successes or best practices that 
might be cited? The emphasis on O&S cost reduction has been implemented 
for all Army programs, from upgrades to Blackhawk helicopters to the 
design of a new light tactical vehicle. These best practices will 
ensure systems are sustainable and will increase efficiencies in their 
respective logistics infrastructures and footprints. The Joint Light 
Tactical Vehicle (JLTV) is an example of a program controlling cost 
through best practices. The JLTV program has used historical data and 
an independently certified lifecycle cost estimate to identify critical 
requirements driving O&S cost, along with continuing analysis at 
milestone decision points to continue affordability through the 
lifecycle.
    c. How are modeling and simulation results comparing to actual 
performance once the decisions have been implemented?
    Due to the newness of these recently implemented policies and the 
lack of currently fielded systems that were designed with O&S as a main 
requirement, there is not yet sufficient data to compare M&S results 
with actual performance. The Army is committed to fielding highly 
sustainable systems and is still searching out new as well as refining 
old methods to further reduce O&S costs.
    Ms. Bordallo. What percentage of reset dollars do you expect to 
allocate to organic depots? How much of that workload is core?
    Admiral Ferguson. Slightly less than 10% of PB15 reset funding is 
expected to be allocated to organic depots. None of the work executed 
with this OCO funding is core workload (as defined by 10 USC 
Sec. 2464).
    The majority of reset funding will support ship depot maintenance 
to liquidate the backlog of maintenance on our surface ships undergoing 
depot availabilities in FY15. All reset work will be conducted in the 
private sector and will include no core workload.
    Some reset funding will support aviation airframe depot 
maintenance. This maintenance is conducted primarily in organic depots, 
but includes no core workload.
    Some reset funding will support Navy Expeditionary Combat 
Enterprise depot maintenance. None of this funding will be allocated to 
organic Navy depots or fund core workload.
    Ms. Bordallo. What percentage of depot maintenance requirement is 
funded in FY15?
    Admiral Ferguson. Navy's FY15 baseline budget request funds 80% of 
ship and aviation depot maintenance requirements.
    Ms. Bordallo. In calculating core, the military services have 
increasingly placed an emphasis on minimum capabilities; however, the 
statute also requires efficient operations. Under the FY15 budget, 
should we assume that each of the services' organic primary maintenance 
depots and shipyards have been workloaded and funded at efficient 
levels before workload is planned for the private sector?
    Admiral Ferguson. The Navy's organic primary maintenance depots and 
shipyards have been funded to perform at an efficient level. 
Specifically, the workload and funding at the Naval shipyards are set 
at levels that ensure the efficient performance of depot and 
intermediate-level maintenance, modernization, and emergency repair 
work on nuclear-powered aircraft carriers and submarines.
    Core capability is maintained to perform maintenance on unique 
surface ship systems, while nearly all of conventional surface ship 
maintenance is performed in the private sector. Likewise, the workload 
and funding at Fleet Readiness Centers are set at levels that ensure 
the efficient performance of depot-level maintenance, modernization, 
and special re-work on aircraft and engines.
    Ms. Bordallo. In light of section 832 of the FY12 NDAA (Public Law 
112-81), regarding the assessment, management, and control of O&S costs 
for major weapon systems:
      What predictive analysis and modeling processes have been 
the most effective at weapon systems optimization across the 
enterprise? Are there specific examples of successes or best practices 
that might be cited?
      How are modeling and simulation results comparing to 
actual performance once the decisions have been implemented? Although 
some savings may take time to materialize, are there indications of ROI 
are they achieving?
      In accordance with the NDAA section 823, how should DOD 
be using predictive analysis and modeling and simulation to understand 
the real impact of the DOD 5000.2 (http://www.acq.osd.mil/ie/bei/pm/
ref-library/dodi/p50002r.pdf) on the effectiveness and efficiency of 
the DOD enterprise?
    Admiral Ferguson. The industry standard in forecasting future 
Operating and Support (O&S) phase costs entails the use of compiled 
actual system performance data as well as statistical regression 
analysis of extrapolated data of analogous systems. To that end, the 
Department of Navy (DON) maintains a database compliant with Section 
832 of the 2012 NDAA, called the Visibility and Management of Operating 
and Support Costs. It catalogs historical costs and operational metrics 
for DON weapons platforms. Modeling of O&S costs is accomplished using 
the Operating and Support Cost Analysis Model. Together, these 
databases represent the DON authoritative data source for historical 
costs and associated operational/logistic metrics for DON weapons 
systems.
    Best practices for modeling O&S costs are captured in the March 
2014 O&S Cost Estimating Guide maintained by OSD Cost Assessment and 
Program Evaluation (CAPE). The Navy staff also tracks O&S phase return 
on investment which is used in its coordination of a yearly Total 
Ownership Cost (TOC) reduction process. This process evaluates, 
selects, and prioritizes affordability candidates within the Navy for 
inclusion in Navy program/budget development. In February 2012, lessons 
learned from these efforts were captured in the DON TOC Guidebook 
detailing the means to mitigate and reduce weapon system O&S related 
costs. Navy's TOC efforts also serve as an input to major acquisition 
program gate reviews where they are used to assess the life cycle 
management of cost reduction initiatives. Additionally, opportunities 
to better control or reduce TOC are a key element in the models that 
develop program/budgetary requirement inputs for Navy's operations/
maintenance accounts.
    For Acquisition Category (ACAT) I programs, Deputy Assistant 
Secretary of the Navy (Cost and Economics) (DASN (C&E)) performs 
independent cost estimates and assessments, to include O&S costs, prior 
to milestone reviews. Unless specifically designated to do so, they do 
not perform cost analyses on ACAT II and below, nor does DASN (C&E) 
maintain a repository of all O&S specific models and simulations. DASN 
(C&E) is not chartered to continue involvement in programs beyond the 
``full rate production'' milestone, as programs enter execution.
    DOD Instruction 5000.2R was canceled in lieu of DOD Instruction 
5000.02 (December 2013). This instruction requires CAPE to review all 
cost estimates and cost analyses for major defense acquisition/
information system programs, including estimates of their O&S costs. 
Any questions regarding the impact of modeling and simulation on the 
effectiveness/efficiency of the DOD Enterprise are better directed to 
OSD CAPE, Office of the Under Secretary of Defense for Acquisition, 
Technology, and Logistics (OSD (AT&L)), or Assistant Secretary of the 
Navy Research, Development & Acquisition ASN(RDA).
    Ms. Bordallo. What percentage of reset dollars do you expect to 
allocate to organic depots? How much of that workload is core?
    General Paxton. Due to the recent increase in FY15 reset 
requirements stemming from the Marine Corps' decision to increase its 
enduring requirement for MRAP vehicles, the Marine Corps is conducting 
analysis to determine the optimal source of repair strategy for its 
FY15 reset workload. The Marine Corps plans to validate its FY15 reset 
requirements and source of repair strategy during its annual depot 
maintenance requirements review in August of 2014, and expects to 
solidify its FY15 workload sourcing strategy by the end of the fiscal 
year.
    Ms. Bordallo. What percentage of depot maintenance requirement is 
funded in FY15?
    General Paxton. The Marine Corps is funded to approximately 83% of 
its FY15 baseline depot maintenance requirement and the Marine Corps' 
FY15 OCO request accounts for 100% of planned FY15 depot maintenance 
OCO requirements. The Marine Corps appreciates the continued support of 
the Congress for our depot maintenance and Operation Enduring Freedom 
reset requirements. Although the Marine Corps baseline is not funded to 
100%, the Marine Corps remains confident that it can manage baseline 
risk by prioritizing and optimizing depot maintenance requirements 
through its Enterprise Lifecycle Maintenance Planning (ELMP) process.
    Ms. Bordallo. In calculating core, the military services have 
increasingly placed an emphasis on minimum capabilities; however, the 
statute also requires efficient operations. Under the FY15 budget, 
should we assume that each of the services' organic primary maintenance 
depots and shipyards have been workloaded and funded at efficient 
levels before workload is planned for the private sector?
    General Paxton. The Marine Corps considers numerous factors when 
sourcing depot maintenance workload including depot providers' 
capability, capacity and ability of the depot to meet quality standards 
and timelines; best value for the government; previously established 
Depot Source of Repair (DSOR) decisions; and preserving its core 
organic workload to maintain depot viability. The Marine Corps is 
confident that our organic depot is sufficiently resourced in FY15 to 
support efficient operations per the statute.
    Ms. Bordallo. In light of section 832 of the FY12 NDAA (Public Law 
112-81), regarding the assessment, management, and control of O&S costs 
for major weapon systems:
      What predictive analysis and modeling processes have been 
the most effective at weapon systems optimization across the 
enterprise? Are there specific examples of successes or best practices 
that might be cited?
      How are modeling and simulation results comparing to 
actual performance once the decisions have been implemented? Although 
some savings may take time to materialize, are there indications of ROI 
are they achieving?
      In accordance with the NDAA section 823, how should DOD 
be using predictive analysis and modeling and simulation to understand 
the real impact of the DOD 5000.2 (http://www.acq.osd.mil/ie/bei/pm/
ref-library/dodi/p50002r.pdf) on the effectiveness and efficiency of 
the DOD enterprise?
    General Paxton. The Marine Corps has initiated the transition from 
a document-based to a model-based engineering approach for acquisition 
by implementing the Framework for Assessing Cost and Technology Tool 
(FACT). FACT, a government-owned, web-based tool, provides the 
framework that integrates disparate data and models into a decision-
support system that permits concurrent engineering analysis. This 
predictive modeling solution allows for bottom-up, detailed system 
designs to be built, explored in a top-down concurrent cross-domain 
fashion, filtered and scored against a set of dynamically assigned 
requirements. For example, the Marine Corps' modeling and simulation 
system engineering assisted I MEF in integrating networks, databases, 
command and control devices, ground and air training virtual 
simulations and training simulators to enhance home station training.
    Marine Corps Systems Command (MCSC) uses FACT among other 
predictive life-cycle modeling capabilities to support various life-
cycle analyses and Marine Corps ground weapon systems programmatic 
decisions. By using such modeling and simulation (M&S) capabilities, 
multiple risks can be examined to include the potential impacts of 
executing particular courses of action throughout the weapon system 
lifecycle. Decisions made during the early stages of acquisition could 
have an impact during the O&S phase. For example, conducting predictive 
analysis throughout the systems engineering process (SEP), Analyses of 
Alternatives (AoA) and Business Case Analyses (BCA), design changes, or 
updates to maintenance support strategies can assist decision-makers in 
implementing a course of action with a defined degree of confidence in 
a resultant outcome in terms of O&S cost and performance.
    While the capability is maturing in knowledge and application, to 
include organic capability, the Marine Corps is applying a predictive 
analysis strategy that will support continuous process improvement 
(CPI) across the full range of actions required to maintain and sustain 
ground equipment. Recent analyses results indicate that there is an 
inherent ROI which indicates statistical probabilities of outcomes 
based on available data.
    The application of Model Based engineering and the use of model 
based systems engineering will have an impact on the effectiveness and 
efficiency of the DOD enterprise.
    Ms. Bordallo. What percentage of reset dollars do you expect to 
allocate to organic depots? How much of that workload is core?
    General Spencer. Approximately 39 percent of the Air Force's Fiscal 
Year (FY) 15 Overseas Contingency Operations (OCO) request for Weapon 
System Sustainment (WSS) funding is planned for work at organic depots. 
In addition, approximately 23 percent of the Air Force's FY15 Flying 
Hour Program (FHP) OCO submission request is projected to pay for Depot 
Level Reparables using OCO dollars. Since the Air Force does not have a 
final approved or funded FY15 OCO position, these numbers may change.
    If the current submission is funded, 30 percent of the total WSS 
and FHP OCO requests would fund work used to sustain a core 
requirement.
    Ms. Bordallo. What percentage of depot maintenance requirement is 
funded in FY15?
    General Spencer. The Fiscal Year 2015 President's Budget baseline 
funds Total Force Weapon System Sustainment (WSS) for depot maintenance 
activities at approximately 70 percent without Overseas Contingency 
Operations (OCO) funding. The Air Force will likely request additional 
OCO funding, which would improve the total force WSS position to over 
80 percent. This includes depot maintenance activities in depot 
purchased equipment maintenance and contractor logistics support.
    Ms. Bordallo. In calculating core, the military services have 
increasingly placed an emphasis on minimum capabilities; however, the 
statute also requires efficient operations. Under the FY15 budget, 
should we assume that each of the services' organic primary maintenance 
depots and shipyards have been workloaded and funded at efficient 
levels before workload is planned for the private sector?
    General Spencer. Yes, for the Air Force under the fiscal year 2015 
(FY15) budget, our depots are work-loaded and funded to ensure 
effective and efficient operations. The Air Force considers the 
retention of a strong and viable industrial baseline critical to our 
ability to successfully complete the Air Force mission. In the 
Department of Defense (DOD) core process, the Air Force identifies 
required core capabilities and also allocates the workloads necessary 
to sustain effectively the core capabilities and efficient depot 
operation within public sector facilities. Specifically, the Air Force 
has issued policy to ensure the identification and establishment of 
sufficient organic core depot level capability on current and future 
weapon systems.
    But the greatest challenge facing the Air Force depots is budget 
uncertainty. The uncertainty drives risk in planning for the Air Force 
depot customers due to schedule and availability of assets. The budget 
uncertainty does not allow the depots to size to the workload early in 
the planning process, resulting in staffing uncertainty, impacting 
workforce stability, lowering workforce morale, and causing unnecessary 
production variance, all of which drives less efficiency and 
effectiveness at the depots. The budget uncertainty impacts all levels 
of suppliers supporting the depots' workload, since we cannot provide 
them a firm forecast. Many of the suppliers are small businesses, and 
the inability of the Air Force to provide them with a firm demand 
forecast increases inefficiency and drives longer delivery times of 
material in support of depot production. All of these challenges will 
only be exacerbated if sequestration returns in FY16.
    Ms. Bordallo. In light of section 832 of the FY12 NDAA (Public Law 
112-81), regarding the assessment, management, and control of O&S costs 
for major weapon systems:
    What predictive analysis and modeling processes have been the most 
effective at weapon systems optimization across the enterprise? Are 
there specific examples of successes or best practices that might be 
cited?
    General Spencer. We have been doing predictive modeling for 
operations and sustainment (O&S), primarily peacetime costs, since 
2005. We developed cost estimating relationships (CERs) that were 
suitable for estimating these costs with system concept information and 
very generic support concepts. We have made a number of improvements to 
our methodology, including:
    -- Developing growth rates with causal factors to account for 
sustainment cost growth over time;
    -- Including costs to upgrade and modify the aircraft;
    -- With the advent of performance based logistics, accounting for 
more complex sustainment strategies and evaluate those impacts; and
    -- Developing and demonstrating predictive models for cost and 
system availability for fielded systems with more detailed information 
to support the ongoing improvement in cost and performance.
    Based on the further interest over the last few years to improve 
product support we are developing methodology that accounts for more 
variables to directly evaluate impacts of system/component reliability, 
design improvements for sustainability, and product support strategies. 
This will directly support the new requirements in the law, but bear a 
higher cost in resources to develop, validate, and execute the 
methodology.
    Developing cost estimates from analogous historical actual cost 
data is the most effective approach to produce realistic estimates and 
identify cost drivers for improvement. Life Cycle Management Control 
(LCMC) demonstrated this approach on the E-4B program using actual 
costs from the Air Force Total Ownership Cost Database and program 
subject matter experts to predict future costs and identify cost 
reduction opportunities. Similar methodology has been developed and 
applied for multiple studies on new requirements for tankers, trainers, 
bombers, remotely piloted aircraft (RPA), and other systems over the 
last eight years. In the last two years, we integrated trade space 
analysis into that updated cost methodology allowing us to generate 
cost capability metrics that now inform requirements and program 
decisions. Air Force Materiel Command (AFMC) has completed six pilot 
studies and is developing guidance and training to promulgate that 
trade space analysis capability.
    Ms. Bordallo. How are modeling and simulation results comparing to 
actual performance once the decisions have been implemented? Although 
some savings may take time to materialize, are there indications of ROI 
are they achieving?
    General Spencer. Due to the 15 year or longer long lead time 
between when the development planning studies such as analyses of 
alternatives are completed and O&S activities are conducted, we have 
not been able to verify the impact of the new methodology yet. However, 
for studies conducted on programs in sustainment, we have received 
positive feedback on the utility and results. These results are being 
captured in new reporting requirements. Return on investment ROI 
calculations will be possible in the future since O&S costs are being 
included in the Selected Acquisition Reports SAR and other reports form 
the program offices.
    Ms. Bordallo. In accordance with the NDAA section 832, how should 
DOD be using predictive analysis and modeling and simulation to 
understand the real impact of the DOD 5000.2 (http://www.acq.osd.mil/
ie/bei/pm/ref-library/dodi/p50002r.
pdf) on the effectiveness and efficiency of the DOD enterprise?
    General Spencer. The Air Force defers on this part of the question 
to the Office of the Secretary of Defense Cost Assessment and Program 
Evaluation.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. BISHOP
    Mr. Bishop. The Navy's proposal to terminate the Tactical Tomahawk 
program beginning in Fiscal Year 2016 has the potential to decimate the 
defense industrial base that supports this weapons system, and the 
highly-specialized small turbine engine manufacturing capability in 
particular. Without sustainment funding to support the industrial base, 
there are doubts that it will be available to support the Navy's 
planned rectification of older Block IV Missiles projected for FY 2019. 
What does the Navy plan to do to ensure that the industrial base will 
be viable to support the recertification of older Block IV Missiles 
given the lack of program funding in FY16 through FY19?
    Admiral Ferguson. The industrial base is estimated to remain active 
through FY17 delivering missiles ordered in FY15. Industrial activity 
will be extended past FY17 as a result of rotatable spares buys in 
FY16. Additionally, there is substantial non-recurring engineering 
investment requiring Raytheon Missile Systems and vendor base 
contributions for recertification stand-up and Tactical Tomahawk 
modernization. These investments total more than $642.2M throughout the 
Future Years Defense Program.

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