[Senate Hearing 113-452]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-452
 

   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                  APPROPRIATIONS FOR FISCAL YEAR 2014

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

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   on

                               H.R. 2216

  MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION, THE DEPARTMENT OF
   VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
               SEPTEMBER 30, 2014, AND FOR OTHER PURPOSES

                               __________

                         Department of Defense
                     Department of Veterans Affairs

                               __________

         Printed for the use of the Committee on Appropriations


   Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/
        committee.action?chamber=senate&committee=appropriations

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                        COMMITTEE ON APPROPRIATIONS

               BARBARA A. MIKULSKI, Maryland, Chairwoman
PATRICK J. LEAHY, Vermont            RICHARD C. SHELBY, Alabama, Vice
TOM HARKIN, Iowa                         Chairman
PATTY MURRAY, Washington             THAD COCHRAN, Mississippi
DIANNE FEINSTEIN, California         MITCH McCONNELL, Kentucky
RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            SUSAN M. COLLINS, Maine
MARY L. LANDRIEU, Louisiana          LISA MURKOWSKI, Alaska
JACK REED, Rhode Island              LINDSEY GRAHAM, South Carolina
FRANK R. LAUTENBERG, New Jersey      MARK KIRK, Illinois
MARK L. PRYOR, Arkansas              DANIEL COATS, Indiana
JON TESTER, Montana                  ROY BLUNT, Missouri
TOM UDALL, New Mexico                JERRY MORAN, Kansas
JEANNE SHAHEEN, New Hampshire        JOHN HOEVEN, North Dakota
JEFF MERKLEY, Oregon                 MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska                  JOHN BOOZMAN, Arkansas

                   Charles E. Kieffer, Staff Director
                Gabrielle Batkin, Deputy Staff Director
             William D. Duhnke III, Minority Staff Director
                                 ------

Subcommittee on Military Construction and Veterans Affairs, and Related
                                Agencies

                  TIM JOHNSON, South Dakota, Chairman
PATTY MURRAY, Washington             MARK KIRK, Illinois
JACK REED, Rhode Island              MITCH McCONNELL, Kentucky
MARK L. PRYOR, Arkansas              SUSAN M. COLLINS, Maine
JON TESTER, Montana                  LISA MURKOWSKI, Alaska
TOM UDALL, New Mexico                DANIEL COATS, Indiana
JEANNE SHAHEEN, New Hampshire        JOHN HOEVEN, North Dakota
MARK BEGICH, Alaska                  MIKE JOHANNS, Nebraska
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
  (ex officio)                         (ex officio)

                           Professional Staff

                            Christina Evans
                             Chad Schulken
                              Michael Bain
                       Dennis Balkham (Minority)
                       D'Ann Lettieri (Minority)

                         Administrative Support

                              Kali Matalon
                      Courtney Stevens (Minority)


                            C O N T E N T S

                              ----------

                        Thursday, April 18, 2013

                                                                   Page

Department of Veterans Affairs...................................     1
    Office of Inspector General..................................    39

                         Thursday, May 9, 2013

Department of Defense:
    Office of the Secretary of Defense...........................    93
    Department of the Navy.......................................   131

                        Wednesday, May 15, 2013

Department of Defense:
    Department of the Army.......................................   151
    Department of the Air Force..................................   169

 
   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                  APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                        THURSDAY, APRIL 18, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:43 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Tim Johnson (chairman) presiding.
    Present: Senators Johnson, Reed, Udall, Begich, Mikulski,
Kirk, Collins, Murkowski, and Hoeven.

                     DEPARTMENT OF VETERANS AFFAIRS

STATEMENT OF HON. ERIC K. SHINSEKI, SECRETARY OF
            VETERANS AFFAIRS
ACCOMPANIED BY:
        HON. ROBERT A. PETZEL, M.D., UNDER SECRETARY FOR HEALTH
        HON. ALLISON HICKEY, UNDER SECRETARY FOR BENEFITS
        W. TODD GRAMS, EXECUTIVE IN CHARGE, OFFICE OF MANAGEMENT AND
            CHIEF FINANCIAL OFFICER
        HON. STEVE L. MURO, UNDER SECRETARY FOR MEMORIAL AFFAIRS
        STEPHEN WARREN, ACTING ASSISTANT SECRETARY FOR INFORMATION AND
            TECHNOLOGY


                opening statement of senator tim johnson


    Senator Johnson. Good afternoon. This hearing will come to
order. We meet today to review the President's fiscal year 2014
budget request for the Department of Veterans Affairs (VA).
    Secretary Shinseki, I welcome you and your colleagues, and
I thank you for your appearance before this subcommittee.
    I'm also very pleased to welcome back my colleague and
ranking member, Senator Mark Kirk. Senator Kirk has made great
progress in his recovery due, I'm sure, as much to his sheer
grit and determination as to his medical team. Senator Kirk has
been a strong supporter and partner on this subcommittee, and I
look forward to continuing our work on behalf of the Nation's
vets.
    Mr. Secretary, I'm pleased to see that eliminating the
backlog in claims processing is among your top priorities. We
must fix this problem once and for all. After fighting for our
Nation on the battlefield, our vets simply cannot be subject to
months, if not years, of fighting redtape to secure the
benefits they have earned.
    This subcommittee has provided every time the VA has
requested to improve claims processing. I understand the
challenges posed by the growing number and complexity of
claims.
    I understand the challenges of recruiting and training
additional claims processors. But despite the VA's best
efforts, the situation has grown worse, not better.
    Mr. Secretary, I know you share my frustration. I look
forward to hearing the VA's way forward to solve this problem
sooner rather than later.
    I'm also concerned with progress of efforts to integrate
the Department of Defense (DOD) and VA health records. It is
imperative that the DOD and VA develop an electronic health
record system that will allow the seamless exchange of vets'
medical records between the two agencies.
    The original plan was to develop a single integrated system
to serve both agencies. Recently, the agencies changed course
and are now pursuing separate systems that can essentially talk
to each other.
    I certainly support a faster, cheaper way to allow DOD and
the VA to share vets' health records, but I'm wary of any
change in strategy that might result in the quick surface
improvements, but not capture the full range of a patient's
health history; in other words, settling for an executive
summary instead of a full report.
    Mr. Secretary, I look forward to your testimony, and I now
ask my ranking member for any opening remarks he cares to make.
    Senator Kirk.


                     statement of senator mark kirk


    Senator Kirk. I'm mad at you for announcing your
retirement. You have been an honorary member of my medical
recovery team, with your wife and her support to my girlfriend.
That has been really something.
    Constantly through my medical recovery, I was asking,
``What can Tim do?'' and meet that area. It was always great to
think about you back here rocking and rolling.
    I will say, Mr. Secretary, very good to see you here today.
I want to thank you. And I've thanked you over and over again
for shepherding the Stryker vehicle through the U.S. Army. As a
reservist in Afghanistan, I had an opportunity to use it. I
will say, in the small time that I had in the vehicle, we did
have a little problem with the coffeemaker. The espresso
setting wasn't quite fully functional.
    Let me just continue slightly. I want to continue on the
unified record issue. Our vision is to have someone join the
Navy and then retire, and the record all passes straight into
the VA. That is what we were hoping. My understanding is we
have a choice between two software systems--one in the VA
called VistA, which handles the VA systems.
    And the one thing I want to commend you on, Mr. Secretary,
is you have released the code to what you own, is what I
understand. My hope is that someday we would go with, for lack
of a better term, we would have an android-kind of culture, an
explosion of apps that the private sector can develop on the
VistA or AHLTA backbone now that it's open source, and we have
an explosion of innovation in health records management of
advantage to veterans and sailors everywhere.


                           prepared statement


    Just a last thing to say, I have been in touch with
Chairman Culberson to eventually bring an end to this
combination process. I think at some date prior to the big
markup of this subcommittee, that we should pick either VistA
or AHLTA as the backbone, so just VA or DOD wins and so the
taxpayer only pays for one software management system.
    [The statement follows:]
                Prepared Statement of Senator Mark Kirk
    Thank you, Mr. Chairman. I'm pleased to be back here today as
ranking member of this subcommittee. I would like to join you in
welcoming Secretary Shinseki and our other witnesses and guests to
discuss the President's 2014 budget request for the Department of
Veterans Affairs (VA).
                                overview
    The 2014 request for the Department of Veterans Affairs proposes
$149.6 billion, which consists of $63.5 billion in discretionary
funding, which is 4 percent above the 2013 enacted level, and $86.1
billion in mandatory funding, which is 18 percent above the 2013
enacted level. In addition, the Department is requesting $55.6 billion
in advance appropriations for the medical care accounts in 2015. That
is a total of $205 billion before us today--a tremendous amount of
money--and in a time of record-high deficits and debt, my priority and
the priority of this subcommittee is not only to give our veterans the
very best care this Nation can provide, but also to analyze this budget
to ensure we are spending our taxpayers' dollars wisely, without excess
or redundancy.
    Mr. Chairman, the VA under the leadership of Secretary Shinseki is
doing a great job taking care of our Nation's veterans and I would like
to thank him for his hard work and dedication. There are many issues we
need to discuss today but I want to focus on two issues that will play
a significant role in the lives of all veterans: electronic health
record and claims processing.
               integrated electronic health record (iehr)
    Earlier this year, we learned the VA and DOD's decision to create a
single, common, joint, integrated Electronic Health Record (iEHR) has
changed, and now the two Departments are no longer planning to operate
on one core system--instead, the VA will stay with a modernized VISTA
system while the Department of Defense will select another system. This
was due, we were told, to the exorbitant cost creep associated with the
creation of a truly joint record. Secretary Shinseki, I hope to hear
details today about your discussions with the new Secretary of Defense,
and the plan you have to move forward on a joint, open-architecture,
non-proprietary designed electronic health record system. Our men and
women in uniform need to trust their health record will follow them
seamlessly from the day they raise their right hand through their time
as a proud veteran of this Nation and we will work with you and your
Department to make this a reality.
                           claims processing
    Mr. Secretary, you have stated numerous times one of your highest
priorities was to eliminate the disability claims backlog by 2015. You
also stated the Veterans Benefits Management System and the Veterans
Relationship Management initiative would help your Department make
significant headway in reducing the backlog, yet today, 70 percent of
claims are older than 125 days and the average wait time is nearly a
year. In Chicago, the average wait time actually increased by 141 days
in 2012 to an astonishing 431 day wait. I look forward to hearing
details from you today on how the Department will meet or beat the
deadline you set for a reduction in the backlog. I know you are working
hard on this process, but we desperately need results.
                                closing
    Mr. Chairman, this subcommittee has always worked hard together to
provide the Department with the all the resources it needs. I look
forward to working with you to make sure we give our veterans all they
have earned.
    Thank you, Mr. Chairman.

    Senator Johnson. Thank you, Senator Kirk.
    Again, Mr. Secretary, welcome and thank you for appearing
before this subcommittee. I understand that yours will be the
only opening statement. Your full statement will be included in
the record, so please feel free to summarize your remarks.
    Please proceed.

               SUMMARY STATEMENT OF HON. ERIC K. SHINSEKI

    Secretary Shinseki. Well, thank you very much, Chairman
Johnson, Ranking Member Kirk--I understand Chairwoman Mikulski
will be attending at some point; I acknowledge that--other
distinguished members of the subcommittee.
    Thank you for this opportunity to present the President's
2014 budget and 2015 advanced appropriations request for VA. We
deeply value your partnership and support in providing the
resources needed to ensure quality care and services for
veterans. That's been true for the 4 years that I've served in
this capacity.
    Let me also acknowledge other partners who are here today,
our veterans service organizations whose insights and support
make us much better at our mission of caring for veterans,
their families, and survivors.
    Mr. Chairman, if I could just take a few seconds here to
introduce the other members of my panel. Seated to my far left
and to your right, Steph Warren is our Acting Assistant
Secretary for Information and Technology. To my left is Todd
Grams, our Chief Financial Officer. To my right is Dr. Randy
Petzel, Under Secretary for Health, and then Allison Hickey,
Under Secretary for Benefits. On the far right is Mr. Steve
Muro, our Under Secretary for Memorial Affairs.
    Mr. Chairman, thank you for accepting my written record.
    Let me just say very quickly, the 2014 budget and the 2015
advanced appropriations requests demonstrate the President's
steadfast commitment to our Nation's veterans. I thank the
members for your resolute commitment to veterans as well and
seek your support for these requests.
    The latest generation of veterans is enrolling in VA at a
higher rate than previous generations; 62 percent of those who
deployed in support of operations in Iraq and Afghanistan have
used at least one VA benefit or service.
    VA's requirements are expected to continue growing for
years to come. Our plans and resourcing must be robust enough
to care for them all. What you'll see in our plan is that look
to the future.
    The President's 2014 budget for VA requests $152.7 billion,
with $66.5 billion in discretionary funding, and $86.1 billion
in mandatory funding. An increase of $2.7 billion in
discretionary funding equates to about a 4.3-percent increase
above the 2013 level.
    This is a strong budget, which enables us to continue
building momentum for delivering the three major goals we set
for ourselves 4 years ago. One, to increase veterans' access to
VA's benefits and services, and we have done that. Two,
eliminate the disability claims backlog in 2015, and we've put
together a robust plan that's funded in order to accomplish
that. Finally three, end veterans' homelessness in 2015 as
well.
    These were bold and ambitious goals 4 years ago, and they
remain bold and ambitious goals today, because veterans deserve
a VA that advocates for them and then puts the resources behind
the promises it has made.
    When it comes to access, of the roughly 22 million living
veterans in the country today, more than 11 million now receive
at least one benefit or service from VA, and that's an increase
of over 1 million veterans in the last 4 years. We have
achieved this by opening new facilities, renovating others,
increasing investments in telehealth and telemedicine, sending
mobile clinics and vet centers to remote areas where veterans
live, and then using every means available, including social
media, to connect more veterans to VA. Increasing access has
been a success story for us and our numbers show it.
    Backlog--too many veterans wait too long to receive the
benefits they've earned and they deserve. We know this is
unacceptable and no one wants to turn this around anymore than
I do or Secretary Hickey, or the workers at the Veterans
Benefits Administration (VBA); 52 percent of whom are veterans
themselves. We are resolved to eliminate the claims backlog in
2015 when claims will be processed in 125 days or less at a 98
percent accuracy level.
    Our efforts mandate investments in VBA's people, processes,
and technology.
    As far as people are concerned, more than 2,300 claims
processors have completed training to improve the quality and
productivity of their decisions. More are being trained today,
and VBA's new employees now complete more claims per day than
their predecessors.
    In terms of processes, we use a disability benefits
questionnaire--we call it a DBQ--an online form for submitting
medical evidence. And that has dropped the average processing
times of medical exams and increased accuracy.
    There are now three lanes for processing claims: an express
lane for those that will predictably take less time; a special
operations lane, if you will, for unusual cases or those
requiring special handling; and a core lane for probably the
majority of claims that will be handled.
    Technology is critical to this discussion. It is critical
to ending the backlog. Our paperless processing system, and it
is called Veterans Benefits Management System (VBMS) will be
faster, improve access, drive automation, and reduce variance.
    Thirty-six regional offices out of our 56 regional offices
all now have VBMS, 36 of 56. We had planned to have this
fielding completed by the end of this year, December. We're
going to beat that milestone. We're pulling fielding to the
left as far as we can. Those are all the adjustments that are
underway.
    In terms of homelessness, the last of our three priorities
is to end veterans homelessness in 2015. Since 2009, we've
reduced the estimated number of homeless veterans by 17
percent. The latest available estimate from January 2012 is
62,600 veterans remain homeless on the streets. There's more
work to be done here, but we've mobilized a national program
that reaches into communities all across this country.
    The rescue phase of this is intended to end in 2015.
Continuing long beyond that, we expect that we're going to have
a prevention of veterans homelessness program that will be the
follow-on main effort, preventing veterans from ending up on
the streets.

                           PREPARED STATEMENT

    Mr. Chairman, we're committed to the responsible use of the
resources Congress provides. Again, thank you for this
opportunity to appear here today, and for your support of
veterans. We look forward to your questions.
    [The statement follows:]
              Prepared Statement of Hon. Eric K. Shinseki
    Chairman Johnson, Ranking Member Kirk, distinguished members of the
Senate Appropriations Committee, Subcommittee on Military Construction,
Veterans Affairs and Related Agencies: Thank you for the opportunity to
present the President's 2014 budget and 2015 advance appropriations
requests for the Department of Veterans Affairs (VA). This budget
continues the President's historic initiatives and strong budgetary
support and will have a positive impact on the lives of Veterans, their
families, and survivors. We value the unwavering support of the
Congress in providing the resources and legislative authorities needed
to care for our Veterans and recognize the sacrifices they have made
for our Nation.
    The current generation of Veterans will help to grow our middle
class and provide a return on the country's investments in them. The
President believes in Veterans and their families, believes in
providing them the care and benefits they've earned, and knows that by
their service, they and their families add strength to our Nation.
    Twenty-two million living Americans today have distinguished
themselves by their service in uniform. After a decade of war, many
Servicemembers are returning and making the transition to Veterans
status. The President's 2014 budget for VA requests $152.7 billion--
comprised of $66.5 billion in discretionary funds, including medical
care collections, and $86.1 billion in mandatory funds. The
discretionary request reflects an increase of $2.7 billion, 4.3 percent
above the 2013 level. Our 2014 budget will allow VA to operate the
largest integrated healthcare system in the country, with more than 9.0
million Veterans enrolled to receive healthcare; the ninth largest life
insurance provider, covering both Active Duty members as well as
enrolled Veterans; an education assistance program serving over 1
million students; a home mortgage service that guarantees over 1.5
million Veterans' home loans with the lowest foreclosure rate in the
Nation; and the largest National Cemetery System that leads the Nation
as a high-performing organization, with projections to inter about
121,000 Veterans and family members in 2014.
                             priority goals
    Over the next few years, more than 1 million Veterans will leave
military service and transition to civilian life. VA must be ready to
care for them and their families. Our data shows that the newest of our
country's Veterans are relying on VA at unprecedented levels. Through
January 31, 2012, of the approximately 1.58 million Veterans who
returned from Operations Enduring Freedom, Iraqi Freedom, and New Dawn,
at least 62 percent have used some VA benefit or service.
    VA's top three priorities--increase access to VA benefits and
services; eliminate the disability compensation claims backlog in in
2015; and end Veterans homelessness, also in 2015--anticipate these
changes and identify the performance levels required to meet emerging
needs. These ambitious goals will take steady focus and determination
to see them through. As we enter the critical funding year for VA's
priority goals, this 2014 budget builds upon our multiyear effort to
position the Department through effective, efficient, and accountable
programming and budget execution for delivering claims and homeless
priority goals.
                        stewardship of resources
    Safeguarding the resources--people, money, time--entrusted to us by
the Congress, managing them effectively, and deploying them
judiciously, is a fundamental duty. Effective stewardship requires an
unflagging commitment to use resources efficiently with clear
accounting rules and procedures, to safeguard, train, motivate, and
hold our workforce accountable, and to assure the effective use of time
in serving Veterans on behalf of the American people. Striving for
excellence in stewardship of resources is a daily priority. At VA, we
are ever attentive to areas in which we need to improve our operations,
and are committed to taking swift corrective action to eliminate any
financial management practice that does not deliver value for Veterans.
    VA's stewardship of resources begins at headquarters. Recognizing
the very difficult fiscal constraints facing our country, the 2014
request includes a 5.0 percent reduction in the departmental
administration budget from the 2013 enacted level. This reduction
follows a headquarters freeze in the 2013 President's budget--a 2-year
commitment.
    Recent audits of the Department's financial statements have
certified VA's success in remediating all three of our remaining
material weaknesses in financial management, which had been carried
forward for over a decade. In terms of internal controls and fiscal
integrity, this was a major accomplishment. In the past 4 years, we
have also dramatically reduced the number of significant financial
deficiencies from 16-to-1.
    At VA, we believe that part of being responsible stewards is
shutting down Information Technology (IT) projects that are no longer
performing. Developed by our Office of Information and Technology, the
Project Management Accountability System (PMAS) requires IT projects to
establish milestones to deliver new functionality to its customers
every 6 months. Now entering its third year, PMAS continues to instill
accountability and discipline in our IT organization. Through PMAS, the
cumulative, on-time delivery of IT functionality since its inception is
82 percent, a rate unheard of in the industry where, by contrast, the
average is 42 percent. By implementing PMAS, we have achieved at least
$200 million in cost avoidance by shutting down or improving the
management of 15 projects.
    Through the effective management of our acquisition resources, VA
has achieved savings of over $200 million by participating in Federal
strategic sourcing programs and establishing innovative IT acquisition
contracts. In 2012, VA led the civilian agencies in contracting with
Service-Disabled Veteran-Owned Small Businesses, which, at $3.4
billion, accounted for 19.3 percent of all VA procurement awards. In
addition, we have reduced interest penalties for late payments by 19
percent (from $47 to $38 per million) over the past 4 years.
    Finally, VA's stewardship achieved savings in several other areas
across the Department. The National Cemetery Administration (NCA)
assumed responsibility in 2009 for processing First Notices of Death to
terminate compensation benefits to deceased Veterans. Since taking on
this responsibility, NCA has advised families of the burial benefits
available to them, assisted in averting overpayments of some $142
million in benefit payments and, thereby, helped survivors avoid
possible collections. In addition, we implemented the use of Medicare
pricing methodologies at the Veterans Health Administration (VHA) to
pay for fee-basis services, resulting in savings of over $528 million
since 2012 without negatively impacting Veteran care and with improved
consistency in billing and payment.
                               technology
    To serve Veterans as well as they have served us, we are working on
delivering a 21st century VA that provides medical care, benefits, and
services through a digital infrastructure. Technology is integrated
with everything we do for Veterans. Our hospitals use information
technology to properly and accurately distribute and deliver
prescriptions/medications to patients, track lab tests, process MRI and
X-ray imaging, coordinate consults, and store medical records. VA IT
systems supported over 1,300 VA points of healthcare in 2012: 152
medical centers, 107 domiciliary rehabilitation treatment programs, 821
community-based outpatient clinics, 300 Vet Centers, 6 independent
outpatient clinics, 11 mobile outpatient clinics, and 70 mobile Vet
Centers. Technology supports Veterans' education and disability claims
processing, claims payments, home loans, insurance, and memorial
services. Our IT infrastructure consists of telephone lines, data
networks, servers, workstations, printers, cell phones, and mobile
applications.
    No Veteran should have to wait months or years for the benefits
that they have earned. We will eliminate the disability claims backlog
in 2015; technology is the critical component for achieving our goal.
VA is deploying technology solutions to improve access, drive
automation, reduce variance, and enable faster and more efficient
operations. Building on the resources Congress has provided in recent
years to expand our claims processing capacity, the 2014 budget
requests $291 million for technology to eliminate the claims backlog--
$155 million in Veterans Benefits Management System (VBMS) for our new
paperless processing system, and $136 million in the Veterans Benefits
Administration (VBA) to support a Veterans Claims Intake Program, our
new online application system that will allow for the conversion of
paper to digital images for our new paperless processing system, the
Veterans Benefits Management System (VBMS). Without these resources, VA
will be unable to meet its goal to eliminate the disability claims
backlog in 2015.
Information Technology
    At VA, advances in technology--and the adoption of and reliance on
IT in our daily commercial life--have been dramatic. Technology is
integral to providing high-quality healthcare and benefits. The 2014
budget requests $3.683 billion for IT, an increase of $359 million from
the President's 2013 budget, reflecting the critical role technology
plays in VA's daily work in serving and caring for Veterans and their
families. Of the total request, $2.2 billion will support the operation
and maintenance of our digital infrastructure and $495 million is for
IT development modernization and enhancement projects.
    The 2014 budget includes $32.8 million for development of VBMS, our
new paperless processing system that enables VA to move from its
current paper-based process to a digital operating environment that
improves access, drives automation, reduces variance, and enables
faster, more efficient operations. As we increase claims examiners' use
of VBMS version 4.2 to process rating disability claims, our major
focus is on system performance, as we tune the system to be responsive
and effective. VA will complete the rollout of VBMS in June 2013.
    In addition, the 2014 budget includes $120 million for development
of the Veterans Relationship Management (VRM) initiative, which
enhances Veterans' access to comprehensive VA services and benefits,
especially in the delivery of compensation and pension claims
processing. The program gives Veterans secure, personalized access to
benefits and information and allows a timely response to their
inquiries. Recently, VRM released Veterans Online Application Direct
Connect (VDC), which enables Veterans to apply for VBA benefits by
answering guided interview questions through the security of the
eBenefits portal. Claims filed through eBenefits use VDC to load
information and data directly into VBMS.
    The Virtual Lifetime Electronic Record (VLER) is an overarching
program which aims to share health, benefits, and administrative
information, including personnel records and military history records,
among DOD, VA, SSA, private healthcare providers, and other Federal,
State, and local government partners. eBenefits is already reaching 2
million Veterans and Servicemembers and 1 million active users with
BlueButton. The 2014 budget requests $15.4 million for VLER to develop
and support these functions as well as the Warrior Support Veterans
Tracking Application; the Disability Benefits Questionnaires; a VA-DOD
joint health information sharing project known as Bidirectional Health
Information Exchange; and a storage interface known as Clinical Data
Repository/Health Data Repository. All of these efforts are designed to
enable the sharing of health, military personnel and personal
information among VA, other Federal agencies, Veteran Service
Organizations and private healthcare providers to expedite the award
and processing of disability claims and other services such as
education, training and job placement.
                     eliminating the claims backlog
    Too many Veterans wait too long to receive benefits they have
earned. This is unacceptable. Today's claims backlog is the result of
several factors, including: increased demand; over a decade of war with
many Veterans returning with more severe, complex injuries; decisions
on agent orange, gulf war, and combat PTSD presumptions; and,
successful outreach to Veterans informing them of their benefits. These
facts, in no way, diminish the urgency that we all feel at VA to fix
this problem which has been decades in the making. VA remains focused
on eliminating the disability claims backlog in 2015 and processing all
claims within 125 days at a 98-percent accuracy level.
    To deliver this goal, the Veterans Benefits Administration (VBA) is
implementing a comprehensive transformation plan based on more than 40
targeted initiatives to boost productivity by over the next several
years. However, as VBA transforms its people, processes, and
technologies, its claims demand is expected to exceed on million
annually. From 2010 through 2012, for the first time in its history,
VBA processed more than 1 million claims in three consecutive years. In
2013, VBA expects to receive another million claims and similar levels
of demand are anticipated in 2014. This is driven by successful
outreach, claims growth not previously captured in VBA's baseline, and
new requirements. Included are mandatory Servicemember participation in
VOW/VEI benefits briefings and an expected increase upon successful
completion of a transition assistance program, revamped by the
President as Transition: Goals, Plan, Success (GPS). As more than 1
million troops leave service over the next 5 years, we expect our
claims workload to continue to rise. In addition, VBA is experiencing
an unprecedented workload growth arising from the number and complexity
of medical conditions in Veterans' compensation claims. The average
number of claimed conditions for our recently separated Servicemembers
is now in the 12 to 16 range--roughly five times the number of
disabilities claimed by Veterans of earlier eras. While the increase in
compensation applications presents challenges, it is also an indication
that we are being successful in our efforts to expand access to VA
benefits.
    Investments in transformation of our people, processes, and
technologies are already paying off in terms of improved performance.
For example:
  --People.--More than 2,100 claims processors have completed Challenge
        Training, which improves the quality and productivity of VBA
        compensation claims decision makers. As a result of Challenge
        Training, VBA's new employees complete more claims per day than
        their predecessors--with a 30-percent increase in accuracy.
    VBA's new standardized organizational model incorporates a case-
        management approach to claims processing that organizes its
        workforce into cross-functional teams that work together on one
        of three segmented lanes: express, special operations, or core.
        Claims that predictably can take less time will flow through an
        express lane (30 percent); those taking more time or requiring
        special handling will flow through a special operations lane
        (10 percent); and the rest of the claims flow through the core
        lane (60 percent). Initially planned for deployment throughout
        2013, VBA accelerated the implementation of the new
        organizational model by 9 months due to early indications of
        its positive impact on performance.
    VBA instituted Quality Review Teams (QRTs) in 2012 to improve
        employee training and accuracy while decreasing rework time.
        QRTs focus on improving performance on the most common sources
        of error in the claims processing cycle. Today, for example,
        QRTs are focused on the process by which proper physical
        examinations are ordered; incorrect or insufficient exams
        previously accounted for 30 percent of VBA's error rate. As a
        result of this focus, VBA has seen a 23-percent improvement in
        this area.
  --Process.--Disability Benefits Questionnaires (DBQs) are online
        forms used by non-VA physicians to submit medical evidence. Use
        of DBQs has improved timeliness and accuracy of VHA-provided
        exams--average processing time improved by 6 days from June
        2011 to October 2012 (from 32 to 26 days).
    Fully developed claims (FDCs) are critical to reducing ``wait
        time'' and ``rework.'' FDCs include all DOD service medical and
        personnel records, including entrance and exit exams,
        applicable DBQs, any private medical records, and a fully
        completed claim form. Today, VBA receives 4.5 percent of claims
        in fully developed form and completes them in 117 days, while a
        regular claim takes 262 days to process. Fulfilling the
        Veterans Claims Assistance Act, to search for potential
        evidence, is the greatest portion of the current 262-day
        process. The Veterans Benefit Act of 2003 allows Veterans up to
        365 days, from the date of VA notice for additional information
        or evidence, to provide documentation. Of the 262 days to
        complete a regular claim, approximately 145 days are spent
        waiting for potential evidence to qualify the application as a
        fully developed claim.
    VBA built new decision-support tools to make our employees more
        efficient and their decisions more consistent and accurate.
        Rules-based calculators provide suggested evaluations for
        certain conditions using objective data and rules-based
        functionality. The Evaluation Builder uses a series of check
        boxes that are associated with the Veteran's symptoms to help
        determine the proper diagnostic code of over 800 codes, as well
        as the appropriate level of compensation based on the Veteran's
        symptoms.
  --Technology.--The centerpiece of VBA's transformation plan is VBMS--
        a new paperless electronic claims processing system that
        employs rules-based technology to improve decision speed and
        accuracy. For our Veterans, VBMS will mean faster, higher
        quality, and more consistent decisions on claims. Our strategy
        includes active stakeholder participation (Veterans Service
        Officers, State Departments of Veterans Affairs, County
        Veterans Service Officers, and Department of Defense) to
        provide digital electronic files and claims pre-scanned through
        online claims submission via the eBenefits Web portal.
    VBA recently established the Veterans Claims Intake Program (VCIP).
        This program will streamline processes for receiving records
        and data into VBMS and other VBA systems. Scanning operations
        and the transfer of Veteran data into VBMS are primary intake
        capabilities that are managed by VCIP. As VBMS is deployed to
        additional regional offices, document scanning becomes
        increasingly important as the main mechanism for transitioning
        from paper-based claim folders to the new electronic
        environment.
    There are other ways that VA is working to eliminate the claims
backlog. VHA has implemented multiple initiatives to expedite timely
and efficient delivery of medical evidence needed to process a
disability claim by VBA. As a result, timeliness improved by nearly
one-third, from an average of 38 days in January 2011 to 26 days in
October 2012. Recently, VA launched Acceptable Clinical Evidence (ACE),
an initiative that allows clinicians to review existing medical
evidence and determine whether they can use that evidence to complete a
DBQ without requiring the Veteran to report for an in-person
examination. This initiative was developed by both VHA and VBA in a
joint effort to provide a Veteran-centric approach for disability
examinations. Use of the ACE process opens the possibility of doing
assessments without an in-person examination when there is sufficient
information in the record.
    Another way to eliminate the claims backlog is by working closely
with the DOD. The Integrated Disability Evaluation System (IDES) is a
collaborative system to make disability evaluations seamless, simple,
fast and fair. If the Servicemember is found medically unfit for duty,
the IDES gives them a proposed VA disability rating before they leave
the service. These ratings are normally based on VA examinations that
are conducted using required IDES examination templates. In fiscal year
2012, IDES participants were notified of VA benefit entitlement in an
average of 54 days after discharge. This reflects an improvement from
67 days in May 2012 to 49 days in September 2012.
    The Benefits Delivery at Discharge (BDD) and Quick Start programs
are two other collaborations for Servicemembers to file claims for
service-connected disabilities. This can be done from 180 to 60 days
prior to separation or retirement. BDD claims are accepted at every VA
Regional Office and at intake sites on military installations in the
United States, and at two intake site locations overseas. In 2012, BDD
received more than 30,300 claims and completed 24,944--a 14-percent
increase over 2011's productivity (21,657). During this same period of
time Quick Start decreased their rating inventory by over 44 percent.
               expanding access to benefits and services
    VA remains committed to ensuring that Veterans are not only aware
of the benefits and services that they are entitled to, but that they
are able to access them. We are improving access to VA services by
opening new or improved facilities closer to where Veterans live. Since
2009, we have added 57 community-based outpatient clinics (CBOCs), for
a total of 840 CBOCs through 2013, and increased the number of mobile
outpatient clinics and mobile Vet Centers, serving rural Veterans, to
81. Last August, we opened a state-of-the-art medical center in Las
Vegas, the first new VAMC in 17 years. The 2014 medical care budget
request includes $799 million to open new and renovated healthcare
facilities and includes the authorization request for 28 new and
replacement medical leases to increase Veteran access to services.
    Today, access is much more than the ability to walk into a VA
medical facility; it also includes technology, and programs, as well
as, facilities. Expanding access includes taking the facility to the
Veteran--be it virtually through telehealth, by sending Mobile Vet
Centers to rural areas where services are scarce, or by using social
media sites like Facebook, Twitter, and YouTube to connect Veterans to
VA benefits and facilities. Telehealth is a major breakthrough in
healthcare delivery in 21st century medicine, and is particularly
important for Veterans who live in rural and remote areas. The 2014
budget requests $460 million for telehealth, an increase of $388
million, or 542 percent, since 2009.
    As more Veterans access our healthcare services, we recognize their
unique needs and the needs of their families--many have been affected
by multiple, lengthy deployments. VA provides a comprehensive system of
high-quality mental health treatment and services to Veterans. We are
using many tools to recruit and retain our large mental healthcare
workforce to better serve Veterans by providing enhanced services,
expanded access, longer clinic hours, and increased telemental health
capabilities. In response to increased demand over the last 4 years, VA
has enhanced its capacity to deliver needed mental health services and
to improve the system of care so that Veterans can more readily access
them. Since 2006, the number of Veterans receiving specialized mental
health treatment has risen each year, from over 927,000 to more than
1.3 million in 2012, partly due to proactive screening. Outpatient
visits have increased from 14 million in 2009 to over 17 million in
2012. VA believes that mental healthcare must constantly evolve and
improve as new knowledge becomes available through research.
    The 2014 budget includes $168.5 million for the Veterans
Relationship Management (VRM) initiative, which is fundamentally
transforming Veterans' access to VA benefits and services by empowering
VA clients with new self-service tools. VA has already made major
strides under this initiative. Most recently, in November 2012, VRM
added new features to eBenefits, a Web application that allows Veterans
to access their VA benefits and submit some claims online. Veterans can
now enroll in and manage their insurance policies, select reserve
retirement benefits, and browse the Veterans Benefits Handbook from the
eBenefits Web site. With the help of Google mapping services, the
update also enables Veterans to find VA representatives in their area
and where they are located. Since its inception in 2009, eBenefits has
added more than 45 features allowing Veterans easier, quicker, and more
convenient access to their VA benefits and personal information.
    VBA has aggressively promoted eBenefits and the ease of enrolling
into the system. We currently have over 2.5 million registered
eBenefits users. Users can check the status of claims or appeals,
review VA payment history, obtain military documents, and perform
numerous other benefit actions through eBenefits. The Stakeholder
Enterprise Portal (SEP) is a secure Web-based access point for VA's
business partners. This electronic portal provides the ability for VSOs
and other external VA business partners to represent Veterans quickly
and efficiently.
    VA also continues to increase access to burial services for
Veterans and their families through the largest expansion of its
National Cemetery System since the Civil War. At present, approximately
90 percent of the Veteran population--about 20 million Veterans--has
access to a burial option in a national, State, or tribal Veterans
cemetery within 75 miles of their homes. In 2004, only 75 percent of
Veterans had such access. This dramatic increase is the result of a
comprehensive strategic planning process that results in the most
efficient use of resources to reach the greatest number of Veterans.
                      ending veteran homelessness
    The last of our three priority goals is to end homelessness among
Veterans in 2015. Since 2009, we have reduced the estimated number of
homeless Veterans by more than 17 percent. The January 2012 Point-In-
Time estimate, the latest available, is 62,619. We have also created a
National Homeless Veterans Registry to track our known homeless and at-
risk populations closely to ensure resources end up where they are
needed. In 2012, over 240,000 homeless or at-risk Veterans accessed
benefits or services through VA and 96,681 homeless or at-risk Veterans
were assessed by VHA's homeless programs. Over 31,000 homeless and at-
risk Veterans and their families obtained permanent housing through VA
specialized homeless programs.
    In the 2014 budget, VA is requesting $1.393 billion for programs to
assist homeless Veterans, through programs such as Department of
Housing and Urban Development-VA Supportive Housing (HUD-VASH), Grant
and Per Diem, Homeless Registry, and Health Care for Homeless Veterans.
This represents an increase of $41 million, or 3 percent over the 2013
enacted level. This budget will support our long-range plan to end
Veteran homelessness by emphasizing rescue and prevention--rescue for
those who are homeless today, and prevention for those at risk of
homelessness.
    Our prevention strategy includes close partnerships with some 150
community nonprofits through the Supportive Services for Veteran
Families (SSVF) program; SSVF grants promote housing stability among
homeless and at-risk Veterans and their families. The grants can have
an immediate impact, helping lift Veterans out of homelessness or
providing aid in emergency situations that put Veterans and their
families at risk of homelessness. In 2012, we awarded $100 million in
Supportive Service grants to help Veterans and families avoid life on
the streets. We are currently reviewing proposals for the $300 million
in grants we will distribute later this year. In 2012, SSVF resources
directly helped approximately 21,000 Veterans and over 35,000 household
members, including nearly 9,000 children. This year's grants will help
up to 70,000 Veterans and family members avoid homelessness. The 2014
budget includes $300 million for SSVF.
    To increase homeless Veterans' access to benefits, care, and
services, VA established the National Call Center for Homeless Veterans
(NCCHV). The NCCHV provides homeless Veterans and Veterans at-risk for
homelessness free, 24/7 access to trained counselors. The call center
is intended to assist homeless Veterans and their families, VA medical
centers, Federal, State, and local partners, community agencies,
service providers, and others in the community. Family members and non-
VA providers who call on behalf of homeless Veterans are provided with
information on VA homeless programs and services. In 2012, the National
Call Center for Homeless Veterans received 80,558 calls (123-percent
increase) and the center made 50,608 referrals to VA medical centers
(133-percent increase).
    VA's Homeless Patient Aligned Care Teams (H-PACTs) program provides
a coordinated ``medical home'' specifically tailored to the needs of
homeless Veterans. The program integrates clinical care with delivery
of social services and enhanced access and community coordination.
Implementation of this model is expected to address health disparity
and equity issues facing the homeless population. Expected program
outcomes include reduced emergency department use and hospitalizations,
improved chronic disease management, and improved ``housing readiness''
with fewer Veterans returning to homelessness once housed.
    During 2012, 119,878 unique homeless Veterans were served by the
Health Care for Homeless Veterans Program (HCHV), an increase of more
than 21 percent from 2011. At more than 135 sites, HCHV offers
outreach, exams, treatment, referrals, and case management to Veterans
who are homeless and dealing with mental health issues, including
substance use. Initially serving as a mechanism to contract with
providers for community-based residential treatment for homeless
Veterans, many HCHV programs now serve as the hub for myriad housing
and other services that provide VA with a way to outreach and assist
homeless Veterans by offering them entry to VA medical care.
    VA's Homeless Veterans Apprenticeship Program was established in
2012--a 1-year paid employment training program for Veterans who are
homeless or at risk of homelessness. This program created paid
employment positions as Cemetery Caretakers at 5 of our 131 National
Cemeteries. The initial class of 21 homeless Veterans is simultaneously
enrolled in VHA's Homeless Veterans Supported Employment program.
Apprentices who successfully complete 12 months of competency-based
training will be offered permanent full-time employment at a National
Cemetery. Successful participants will receive a Certificate of
Competency which can also be used to support employment applications in
the private sector.
    Another avenue of assistance is through Veterans Treatment Courts,
which were developed to avoid unnecessary incarceration of Veterans who
have developed mental health problems. The goal of Veterans Treatment
Courts is to divert those with mental health issues and homelessness
from the traditional justice system and to give them treatment and
tools for rehabilitation and readjustment. While each Veterans
Treatment Court is part of the local community's justice system, they
form close working partnerships with VA and Veterans' organizations. As
of early 2012 there are 88 Courts.
    The Veterans Justice Outreach (VJO) program exists to connect these
justice-involved Veterans with the treatment and other services that
can help prevent homelessness and facilitate recovery, whether or not
they live in a community that has a Veterans Treatment Court. Each VA
Medical Center has at least one designated justice outreach specialist
who functions as a link between VA, Veterans, and the local justice
system. Although VA cannot treat Veterans while they are incarcerated,
these specialists provide outreach, assessment and linkage to VA and
community treatment, and other services to both incarcerated Veterans
and justice-involved Veterans who have not been incarcerated.
                 multiyear plan for medical care budget
    Under the Veterans Health Care Budget Reform and Transparency Act
of 2009, which we are grateful to Congress for passing; VA submits its
medical care budget that includes an advance appropriations request in
each budget submission. The legislation requires VA to plan its medical
care budget using a multiyear approach. This policy ensures that VA
requirements are reviewed and updated based on the most recent data
available and actual program experience.
    The 2014 budget request for VA medical care appropriations is $54.6
billion, an increase of 3.7 percent over the 2013 enacted level of
$52.7 billion. The request is an increase of $157.5 million above the
enacted 2014 advance appropriations level. Based on updated 2014
estimates largely derived from the Enrollee Health Care Projection
Model, the requested amount would allow VA to increase funding in
programs to eliminate Veteran homelessness; continue implementation of
the Caregivers and Veterans Omnibus Health Services Act; fulfill
multiple responsibilities under the Affordable Care Act; provide for
activation requirements for new or replacement medical facilities; and
invest in strategic initiatives to improve the quality and
accessibility of VA healthcare programs. Our multiyear budget plan
assumes that VHA will carry over negligible unobligated balances from
2013 into 2014--consistent with the 2013 budget submitted to Congress.
    The 2015 request for medical care advance appropriations is $55.6
billion, an increase of $1.1 billion, or 1.9 percent, over the 2014
budget request. Medical care funding levels for 2015, including funding
for activations, non-recurring maintenance, and initiatives, will be
revisited during the 2015 budget process, and could be revised to
reflect updated information on known funding requirements and
unobligated balances.
                          medical care program
    The 2014 budget of $57.7 billion, including collections, provides
for healthcare services to treat over 6.5 million unique patients, an
increase of 1.3 percent over the 2013 estimate. Of those unique
patients, 4.5 million Veterans are in Priority Groups 1-6, an increase
of more than 71,000 or 1.6 percent. Additionally, VA anticipates
treating over 674,000 Veterans from the conflicts in Iraq and
Afghanistan, an increase of over 67,000 patients, or 11.1 percent, over
the 2013 level. VA also provides medical care to non-Veterans through
programs such the Civilian Health and Medical Program of the Department
of Veterans Affairs (CHAMPVA) and the Spina Bifida Health Care Program;
this population is expected to increase by over 17,000 patients, 2.6
percent, during the same time period.
    The 2014 budget proposes to extend the Administration's current
policy to freeze Veterans' pharmacy co-payments at the 2012 rates,
until January 2015. Under this policy, which will be implemented in a
future rulemaking, co-payments will continue at $8 for Veterans in
Priority Groups 2 through 6 and at $9 for Priority Groups 7 through 8.
    The 2014 budget requests $47 million to provide healthcare for
Veterans who were potentially exposed to contaminated drinking water at
Camp Lejeune as required by the Honoring America's Veterans and Caring
for Camp Lejeune Families Act of 2012, enacted last August. Since VA
began implementation of the law and in January 2013, 1,400 Veterans
have contacted us concerning Camp Lejeune. Of these, roughly 1,100 were
already enrolled in VA healthcare. Veterans who are eligible for care
under the Camp Lejeune authority, regardless of current enrollment
status with VA, will not be charged a co-payment for healthcare related
to the 15 illnesses or conditions recognized, nor will a third-party
insurance company be billed for these services. In 2015, VA expects to
start treating family members as authorized under the law and has
included $25 million for this purpose within the 2015 advance
appropriations request. VA continues a robust outreach campaign to
these Veterans and family members while we press forward with
implementing this complex new law.
Mental Healthcare and Suicide Prevention
    At VA, we have the opportunity and the responsibility to anticipate
the needs of returning Veterans. Mental healthcare at VA is a system of
comprehensive treatments and services to meet the individual mental
health needs of Veterans. VA is expanding mental health programs and is
integrating mental health services with primary and specialty care to
provide better coordinated care for our Veteran patients. Our 2014
budget provides nearly $7.0 billion for mental healthcare, an increase
of $469 million, or 7.2 percent, over 2013. Since 2009, VA has
increased funding for mental health services by 56.9 percent. VA
provided mental health services to 1,391,523 patients in 2012, 58,000
more than in 2011.
    To serve the growing number of Veterans seeking mental healthcare,
VA has deployed significant resources and is increasing the number of
staff in support of mental health services. Consistent with the
President's August 31, 2012, Executive order, VHA is on target to
complete the goal of hiring 1,600 additional mental health clinical
providers and 300 administrative support staff by June 30, 2013, to
meet the growing demand for mental health services. In addition, as
part of VA's efforts to implement the Caregivers and Veterans Omnibus
Health Services Act of 2010, VA has hired over 100 Peer Specialists in
recent months, and is hiring and training nearly 700 more.
Additionally, VA has awarded a contract to the Depression and Bipolar
Support Alliance to provide certification training for Peer
Specialists. This peer staff is expected to be hired by December 31,
2013, and will work as members of mental health teams.
    In addition to hiring more mental health workers, VA is developing
electronic tools to help VA clinicians manage the mental health needs
of their patients. Clinical Reminders give clinicians timely
information about patient health maintenance schedules, and the High-
Risk Mental Health National Reminder and Flag system allows VA
clinicians to flag patients who are at-risk for suicide. When an at-
risk patient does not keep an appointment, Clinical Reminders prompt
the clinician to follow-up with the Veteran.
    Since its inception in 2007, the Veterans Crisis Line in
Canandaigua, New York, has answered over 725,000 calls and responded to
more than 80,000 chats and 5,000 texts from Veterans in need. In the
most serious calls, approximately 26,000 men and women have been
rescued from a suicide in progress because of our intervention--the
equivalent of two Army divisions.
    We recently completed a 2012 VA suicide data report, a result of
the most comprehensive review of Veteran suicide rates ever undertaken
by VA. We are working hard to understand this issue--and VA and DOD
have jointly funded a $100 million suicide research project. We will be
better informed about suicides, but while research is ongoing, we are
taking immediate action and are not waiting 10 years for final study
outcomes. These actions include Veterans Chat on the Veterans Crisis
Line, local Suicide Prevention Coordinators' for counseling and
services, and availability of VA-DOD Suicide Outreach resources.
The Affordable Care Act
    The Affordable Care Act (ACA) expands access to coverage, reins in
healthcare costs, and improves the Nation's healthcare delivery system.
The Act has important implications for VA. Beginning in 2014, many
uninsured Americans, including Veterans, will have access to quality,
affordable health insurance choices through Health Insurance
Marketplaces, also known as Exchanges, and may be eligible for premium
tax credits and cost-sharing reductions to make coverage more
affordable. The 2014 budget requests $85 million within the Medical
Care request and $3.4 million within the Information Technology request
to fulfill multiple responsibilities as a provider of Minimum Essential
Coverage under the Affordable Care Act, including: (1) providing
outreach and communication on ACA to Veterans related to VA healthcare;
(2) reporting to Treasury on individuals who are enrolled in the VA
healthcare system; and (3) providing a written statement to each
enrolled Veteran about their coverage by January 2015.
Medical Care in Rural Areas
    VA remains committed to the delivery of medical care in rural areas
of our country. For that reason, in 2012, we obligated $248 million to
support the efforts of the Office of Rural Health to improve access and
quality of care for enrolled Veterans who live in rural areas. Some 3.4
million Veterans enrolled in the VA healthcare system live in rural or
highly rural areas of the country; this represents about 41 percent of
all enrolled Veterans. For that reason, VA will continue to emphasize
rural health in our budget planning, including addressing the needs of
American Indian and Alaska Native (AI/AN) Veterans.
    VA is committed to expanding access to the full range of VA
programs to eligible AI/AN Veterans. Last year, VA signed a Memorandum
of Agreement with the Indian Health Service (IHS), through which VA
will reimburse IHS for direct care services provided to eligible
American Indian and Alaska Native Veterans. While the national
agreement applies only to VA and IHS, it will inform agreements
negotiated between the VA and tribal health programs.
    This follows the agreement already in place between VA and IHS
whereby nearly 250,000 patients served by IHS have utilized a
prescription program that allows IHS pharmacies to use VA's
Consolidated Mail Outpatient Pharmacy (CMOP) to process and mail
prescription refills for IHS patients. By accessing the service, IHS
patients can now have their prescriptions mailed to them, in many cases
eliminating the need to pick them up at an IHS pharmacy.
Women Veterans Medical Care
    Changing demographics are also driving change at VA. Today, we have
over 2.2 million women Veterans in our country; they are the fastest
growing segment of our Veterans' population. Since 2009, the number of
women Veterans enrolled in VA healthcare increased by almost 22
percent, to 591,500. However, by 2022--less than a decade from now--
their number is projected to spike to almost 2.5 million, and an
estimated 900,000 will be enrolled in VA healthcare.
    The 2014 budget requests $422 million, an increase of 134 percent
since 2009, for gender-specific medical care for women Veterans. Since
2009, we have invested $25.5 million in improvements to women Veterans'
clinics and opened 19 new ones. Today, nearly 50 percent of our
facilities have comprehensive women's clinics, and every VA healthcare
system has designated women's health primary care providers, and has a
women Veteran's program manager on staff.
    In 2012, VA awarded 32 grants totaling $2 million to VA facilities
for projects that will improve emergency healthcare services for women
Veterans, expand women's health education programs for VA staff, and
offer telehealth programs to female Veterans in rural areas. These new
projects will improve access and quality of critical healthcare
services for women. This is the largest number of 1-year grants VA has
ever awarded for enhancing women's health services.
                            medical research
    Medical Research is being supported with $586 million in direct
appropriations in 2014, with an additional $1.3 billion in funding
support from VA's medical care program and through Federal and non-
Federal grants. VA Research and Development will support 2,224 projects
during 2014.
    Projects funded in 2014 will be focused on supporting development
of New Models of Care, identifying or developing new treatments for
Gulf War Veterans, improving social reintegration following traumatic
brain injury, reducing suicide, evaluating the effectiveness of
complementary and alternative medicine, developing blood tests to
assist in the diagnosis of post-traumatic stress disorder and mild
traumatic brain injury, and advancing genomic medicine.
    The 2014 budget continues support for the Million Veteran Program
(MVP), an unprecedented research program that advances the promises of
genomic science. The MVP will establish a database, used only by
authorized researchers in a secure manner, to conduct health and
wellness studies to determine which genetic variations are associated
with particular health issues--potentially helping the health of
America's Veterans and the general public. MVP recently enrolled its
100,000th volunteer research participant, and by the end of 2013, the
goal is to enroll at least 150,000 participants in the program.
                 veterans benefits administration (vba)
    The 2014 budget request of $2.455 billion for VBA, an increase of
$294 million in discretionary funds from the 2013 enacted level, is
vital to the transformation strategy that drives our performance
improvements focused most squarely on the backlog.
    Virtually all 860,000 claims in the VBA inventory, including the
600,000 claims that have been at VA for over 125 days and are
considered backlogged, exist only in paper. Our transition to VBMS and
electronic claims processing is a massive and crucial phase in VBA
transformation. VA awarded two VCIP contracts in 2012 to provide
document conversion services that will populate the electronic claims
folder, or eFolder, in VBMS with images and data extracted from paper
and other source material. Without VCIP, we cannot populate the eFolder
on which the VBMS system relies. The 2014 request for $136 million for
our scanning services contracts will ensure that we remain on track to
reach this key goal. In addition, the budget request includes $4.9
million for help desk support for Veterans using the Veterans On-Line
Application/eBenefits system.
    VBA projects a beneficiary caseload of 4.6 million in 2014, with
more than $70 billion in compensation and pension benefits obligations.
We expect to process 1.2 million compensation claims in 2014, and we
are pursuing improvements that will enable us to meet the emerging
needs of Veterans and their families.
Veterans Employment
    Under the leadership of President Obama, VA, DOD, the Department of
Labor, and the entire Federal Government have made Veterans employment
one of their highest priorities. In August 2011, the President
announced his comprehensive plan to address this issue and to ensure
that all of America's Veterans have the support they need and deserve
when they leave the military, look for a job, and enter the civilian
workforce. He created a new DOD-VA Employment Initiative Task Force
that would develop a new training and services delivery model to help
strengthen the transition of our Veteran Servicemembers from military
to civilian life. VA has worked closely with other partners in the Task
Force to identify its responsibilities and ensure delivery of the
President's vision. On November 21, 2012, the effective date of the VOW
Act, VA began deployment of the enhanced VA benefits briefings under
the revised Transition Assistance Program (TAP), called Transition GPS
(Goals, Plans, Success). VA will also provide training for the optional
Technical Training Track Curriculum and participate in the Capstone
event, which will ensure that separating Servicemembers have the
opportunity to verify that they have met Career Readiness Standards and
are steered to the resources and benefits available to them as
Veterans. Accordingly, the 2014 budget requests $104 million to support
the implementation of Transition GPS and meet VA's responsibilities
under the VOW Act and the President's Veterans Employment Initiative.
Veterans Job Corps
    In his State of the Union address in 2012, President Obama called
for a new Veterans Job Corps initiative to help our returning Veterans
find pathways to civilian employment. The 2014 budget includes $1
billion in mandatory funding to develop a Veterans Job Corps
conservation program that will put up to 20,000 Veterans back to work
over the next 5 years protecting and rebuilding America. Jobs will
include park maintenance projects, patrolling public lands,
rehabilitating natural and recreational areas, and administrative,
technical, and law enforcement-related activities. Additionally,
Veterans will help make a significant dent in the deferred maintenance
of our Federal, State, local, and tribal lands including jobs that will
repair and rehabilitate trails, roads, levees, recreation facilities
and other assets. The program will serve all Veterans, but will have a
particular focus on Post-9/11 Veterans.
Post-9/11 and Other Education Programs
    Since 2009, VA has provided over $25 billion in Post-9/11 GI Bill
benefits to cover the education and training of more than 893,000
Servicemembers, Veterans, family members, and survivors. We are now
working with Student Veterans of America to track graduation and
training completion rates.
    The Post-9/11 GI Bill continues to be a focus of VBA transformation
as it implements the Long-Term Solution (LTS). At the end of February
we had approximately 60,000 education claims pending, 70 percent lower
than the total claims pending the same time last year. The average days
to process Post-9/11 GI Bill supplemental claims has decreased by 17
days, from 23 days in September 2012 to 6 days in February 2013. The
average time to process initial Post-9/11 GI Bill original education
benefit claims in February was 24 days.
                 national cemetery administration (nca)
    The 2014 budget includes $250 million in operations and maintenance
funding for the National Cemetery Administration (NCA). As we move
forward into the next fiscal year, NCA projects our workload numbers
will continue to increase. For 2014, we anticipate conducting
approximately 121,000 interments of Veterans or their family members,
maintaining and providing perpetual care for approximately 3.4 million
gravesites. NCA will also maintain 9,000 developed acres and process
approximately 345,000 headstone and marker applications.
Review of National Cemeteries
    For the first time in the 150-year history of National Cemeteries,
NCA has completed a self-initiated, comprehensive review of the entire
inventory of 3.2 million headstones and markers within the 131 National
Cemeteries and 33 Soldiers' Lots it maintains. The information gained
was invaluable in validating current operations and ensuring a
sustainment plan is in place to enhance our management practices. The
review was part of NCA's ongoing effort to ensure the full and accurate
accounting of remains interred in VA National Cemeteries. Families of
those buried in our national shrines can be assured their loved ones
will continue to be cared for into perpetuity.
Veterans Employment
    NCA continues to maintain its commitment to hiring Veterans.
Currently, Veterans comprise over 74 percent of its workforce. Since
2009, NCA has hired over 400 returning Iraq and Afghanistan Veterans.
In addition, 82 percent of contracts in 2012 were awarded to Veteran-
owned and service-disabled Veteran-owned small businesses. NCA's
committed, Veteran-centric workforce is the main reason it is able to
provide a world-class level of customer service. NCA received the
highest score--94 out of 100 possible--in the 2010 American Customer
Satisfaction Index (ACSI) sponsored by the University of Michigan. This
was the fourth time NCA participated and the fourth time it received
the top rating in the Nation.
Partnerships
    NCA continues to leverage its partnerships to increase service for
Veterans and their families. As a complement to the National Cemetery
System, NCA administers the Veterans Cemetery Grant Service (VCGS).
There are currently 88 operational State and tribal cemeteries in 43
States, Guam, and Saipan, with 6 more under construction. Since 1978,
VCGS has awarded grants totaling more than $500 million to establish,
expand, or improve Veterans' cemeteries. In 2012, these cemeteries
conducted over 31,000 burials for Veterans and family members.
    NCA works closely with funeral directors and private cemeteries,
two significant stakeholder groups, who assist with the coordination of
committal services and interments. Funeral directors may also help
families in applying for headstones, markers, and other memorial
benefits. NCA partners with private cemeteries by furnishing headstones
and markers for Veterans' gravesites in these private cemeteries. In
January of this year, NCA announced the availability of a new online
funeral directors resource kit that may be used by funeral directors
nationwide when helping Veterans and their families make burial
arrangements in VA National Cemeteries.
                         capital infrastructure
    A total of $1.1 billion is requested in 2014 for VA's major and
minor construction programs. The capital asset budget reflects VA's
commitment to provide safe, secure, sustainable, and accessible
facilities for Veterans. The request also reflects the current fiscal
climate and the great challenges VA faces in order to close the gap
between our current status and the needs identified in our Strategic
Capital Investment Planning (SCIP) process.
Major Construction
    The major construction request in 2014 is $342 million for one
medical facility project and three National Cemeteries. The request
will fund the completion of a mental health building in Seattle,
Washington, to replace the existing, seismically deficient building. It
will also increase access to Veteran burial services by providing a
National Cemetery in Central East Florida; Omaha, Nebraska; and
Tallahassee, Florida.
    The 2014 budget includes $5 million for NCA for advance planning
activities. VA is in the process of establishing two additional
National Cemeteries in Western New York and Southern Colorado,
according to the burial access policies included in the 2011 budget.
These two new cemeteries, along with the three requested in 2014, will
increase access to 550,000 Veterans. NCA has obligated approximately
$16 million to acquire land in 2012 and 2013 for the planned new
National Cemeteries in Central East Florida; Tallahassee, Florida; and
Omaha, Nebraska.
Minor Construction
    In 2014, the minor construction request is $715 million, an
increase of 17.8 percent from the 2013 enacted level. It would provide
for constructing, renovating, expanding and improving VA facilities,
including planning, assessment of needs, gravesite expansions, site
acquisition, and disposition. VA is placing a funding priority on minor
construction projects in 2014 for two reasons. First, our aging
infrastructure requires a focus on maintenance and repair of existing
facilities. Second, the minor construction program can be implemented
more quickly than the long-term major construction program to enhance
Veterans' services.
    In light of the difficult fiscal outlook for our Nation, it's time
to carefully consider VA's footprint and our real property portfolio.
In 2012, VA spent approximately $23 million to maintain unneeded
buildings. Achieving significant reduction in unneeded space is a
priority for the Administration and VA. To support this priority, the
President has proposed a Civilian Property Realignment Act (CPRA),
which would allow agencies like VA to address the competing stakeholder
interests, funding issues, and red tape that slows down or prevents the
Federal Government from disposing of real estate. If enacted by
Congress, this process would give VA more flexibility to dispose of
property and improve the management of its inventory.
                              legislation
    Besides presenting VA's resource requirements to meet our
commitment to the Nation's Veterans, the President's budget also
requests legislative action that we believe will benefit Veterans.
There are many worthwhile proposals for your consideration, but let me
highlight a few. For improvements to Veterans healthcare, our budget
includes a measure to allow VA to provide Veterans with alternatives to
long-stay nursing homes, and enhance VA's ability to provide
transportation services to assist Veterans with accessing VA healthcare
services. Our legislative proposal also request that Congress make
numerous improvements to VA's critical homelessness programs, including
allowing an increased focus on homeless Veterans with special needs,
including women, those with minor dependents, the chronically mentally
ill, and the terminally ill.
    We also are putting forward proposals aimed squarely at the
disability claims backlog--such as establishing standard claims
application forms--that are reasonable and thoughtful changes that go
hand-in-hand with the ongoing transformation and modernization of our
disability claims system. We are offering reforms to our Specially
Adaptive Housing program that will remove rules that in some
circumstances can arbitrarily limit the benefit. The budget's
legislative proposals also include ideas for expanding and improving
services in our National Cemeteries.
    Finally, this budget includes provisions that will benefit Veterans
and taxpayers by allowing for efficiencies and cost savings in VA's
operations--for example, we are forwarding a proposal that would
require that private health plans treat VA as a ``participating
provider''--preventing those plans from limiting payments or excluding
coverage for Veterans' non-service-connected conditions. VA merits
having this status, and the additional revenue will fund medical care
for Veterans. We are also requesting spending flexibility so that we
can more effectively partner with other Federal agencies, including
DOD, in pursuit of collaborations that will benefit Veterans and
Servicemembers and deliver healthcare more efficiently.
                                summary
    Veterans stand ready to help rebuild the American middle class and
return every dollar invested in them by strengthening our Nation. And
we, at VA, will continue to implement the President's vision of a 21st
century VA, worthy of those who, by their service and sacrifice, have
kept our Nation free. Thanks to the President's leadership and the
solid support of Congress, we have made huge strides in our journey to
provide all generations of Veterans the best possible care and benefits
through improved technology that they earned through their selfless
service. We are committed to continue that journey, even as the numbers
of Veterans using VA services increase in the coming years, through the
responsible use of the resources provided in the 2014 budget and 2015
advance appropriations requests. Again, thank you for the opportunity
to appear before you today and for your steadfast support of our
Nation's Veterans.

    Senator Johnson. Thank you.
    For the information of my colleagues, we will limit
questions to 6-minute rounds to ensure that everyone has a
chance to be heard. If needed, we will have a second round.

                              BLACK HILLS

    Secretary Shinseki, I was surprised to find that the fiscal
year 2014 budget request includes a request for an
authorization for a new residential rehab treatment facility
and multispecialty outpatient clinic in Rapid City, South
Dakota. This goes against your repeated assurances to me and
other members of the South Dakota delegation, and our
constituents, that a final decision has not been made regarding
the VA's proposed realignment of Black Hills' healthcare
systems.
    How can we believe that you are honestly still considering
other alternatives when the budget sets the VA's proposal in
motion?
    Secretary Shinseki. Chairman Johnson, let me apologize for
the language that appears in the budget submission on Black
Hills. It wasn't appropriate, and it's an oversight on our
part.
    As you and I have agreed, this is a dialogue that's
underway. I assure you I have not made a decision, and this is
also proof that I don't read every line in the budget. It
shouldn't have been there, and next time I'll be more thorough.
    Senator Johnson. Do you intend to notify the authorization
committees that this was a mistake?
    Secretary Shinseki. I will do that.

               VETERANS BENEFITS MANAGEMENT SYSTEM (VBMS)

    Senator Johnson. One of the key elements in the VA's
strategy to break the claims backlog is the successful
deployment of the VBMS, or paperless claims processing system.
I noted from your testimony that the Department plans to have
this system deployed by 2013. However, I'm concerned about
reports of the system's performance failures.
    Will VBMS be deployed on time? Will it work? And when can
we expect tangible results from its implementation? In other
words, when will this system speed up the process for vets?
    Secretary Shinseki. Mr. Chairman, let me assure you that
VBMS works. As I indicated, we had set in our plan by December
2013 to have it fully fielded. We began fielding in September
2012 and here we are, 6 months later, in 36 of our 56 regional
offices. We intend to complete fielding to the remaining 20 as
soon as we can. I am confident that it's not going to take us
until December.
    I believe the reference to the problem that you're hearing
about is the last issuance of VBMS. We started with VBMS 1.0,
and then 2.0, and 3.0. We just fielded 4.2, which has probably
100 patches associated with it. One of them wasn't functioning
properly. Everything else went.
    We held this off because it wasn't performing the way we
wanted and it was creating some concern. We held it off for a
week and retested it. It is finally now updated with 4.2. We're
on schedule, and it's functioning.

                              ACCESS TO VA

    Senator Johnson. Mr. Secretary, the budget request includes
an additional $158 million for medical services in fiscal year
2014, of which $85 million is projected to impact the
Affordable Care Act (ACA) on the VA healthcare system. Is this
funding intended to implement any aspect of the ACA?
    As I said, the ACA is expected to bring more eligible vets
into the VHA healthcare system, more specifically, vets who do
not currently have health insurance. Will this help VA's goal
to give more eligible vets access to VA healthcare?
    Secretary Shinseki. Mr. Chairman, I'm going to call on Dr.
Petzel here in a second to provide some details, but I'd like
to be very clear up front.
    VA will continue to provide eligible veterans with high-
quality care, comprehensive healthcare, and benefits they have
earned. That will not change.
    We do modeling whenever we think there's going to be a
major change in the delivery of a service. Through our
modeling, it was suggested that we might have a modest
increase. The $85 million is put in there to be prepared in
case this is realized.
    I will assure you that the veterans who are currently using
VA will see no degradation in the quality or the timeliness of
the service they receive.
    Dr. Petzel.
    Dr. Petzel. Thank you, Mr. Secretary.
    Mr. Chairman, as the Secretary relayed, the Affordable Care
Act will not affect the care that we deliver to veterans. As he
said, there is a modest increase that may occur as a result of
the implementation of it.
    There are two aspects to the Affordable Care Act, just very
briefly: First is the mandate that one have insurance; the VA
healthcare system does provide the minimum essential coverage,
as does our CHAMPVA program. Second is the effects that it may
have on Medicare.
    When we looked at those two aspects of the Affordable Care
Act and evaluated the potential impact on VA, as the Secretary
has mentioned, the indications were that there may be some net
increase in the number of people moving to the VA. Thus, the
$85 million is to cover the cost of that increased care.
    Senator Johnson. Senator Kirk.
    Senator Kirk. Let me do a drill down here since the ACA
might be somewhat controversial.
    You guys are basically saying, for an Illinois veteran who
has signed up to the Illinois exchange, it's more likely they
seek care in the VA, is what you're estimating?
    Secretary Shinseki. I wouldn't say we have specifically
focused on Illinois. I think it has to do with whether States
make decisions regarding Medicaid, or not.
    Senator Kirk. I am going to interrupt you one second.
Usually, my questions kind of tend to the State of Illinois.
    Secretary Shinseki. Yes, I know. I'm not familiar with
where Illinois stands on its decision.
    It was based on those decisions by States that, we thought
there might be an influx, a slight influx of veterans.

                             CLAIMS BACKLOG

    Senator Kirk. I will massively suck up to my chairwoman and
ask about Baltimore, where, I understand, Madam Chair, I
understand that we're up to 380 days for adjudication of VA
disability in Baltimore. I think you're extremely concerned
about Baltimore veterans.
    Senator Mikulski. I'm hot about it. But, please, go ahead.
    Senator Johnson. Go ahead.
    Senator Kirk. Thank you, Mr. Chairman.
    I just want to say one thing. I understand that in Chicago,
it is at 431 days, and we would want to shorten it, as you have
laid out.
    Secretary Shinseki. Senator Kirk, I'll just say that this
is something we've been working on for a number of years now.
    We were, 4 years ago, a paper process. And it's a huge
paper juggernaut. We get paper from DOD. We process paper. We
get claims submitted in paper. That's traditionally the way
things are done.
    After over a decade of war now, requirements have gone up.
There's greater complexity. If we're going to end the backlog,
we have to do something different than just to continue to
process the way we have been.
    What we have done is approach DOD and ask for electrons.
They have agreed that, by the end of this year, they're going
to begin sending us their records in electrons. Also veterans
need an online capability to submit claims electronically. We
are now providing that.
    We have about 800,000-plus claims today already in our
inventory. We're taking the ones that it's smart to do and
putting them through a scanning process, creating electrons to
be stored into our electronic tool as we stand the system up.
    There are some that are already started in paper. It makes
sense to just finish them in paper. So we're just going to suck
it up and keep driving on.
    But at the same time, now we need a catcher's mitt to
gather all these electrons, and that's what VBMS is about. It's
taken us about 2 years to develop. Six months ago, we started
fielding it. As I said before, here we are 6 months later,
we're at 36 out of 56.
    This comes together this year. It's what we've been
planning. The increase in the number of claims in the inventory
is a set of decisions we made in 2010 that was intended to
clean up some unfinished business.
    This was Vietnam veterans, and agent orange with three
diseases were added to the workload. These were new adds, not
anything that VA had been resourced to deal with. Desert Storm
1 had nine diseases associated with gulf war illness that were
added to the workload; more paper workload.
    Finally, for combat veterans, post-traumatic stress
disorder (PTSD) is as old as combat. What we have done is to
just say, if you have verifiable PTSD and you've been in
combat, then whatever other reasons there may be, this is good
enough. Let's go ahead and take care of our responsibilities
here.
    Those three decisions have added to the inventory.
    Three years ago, when we made the decision, in testimony we
said, ``Look, this is going to grow the inventory, but we're
going to build an automation tool that in time will take this
down.'' I think we even predicted that the number of waiting
days was going to go up fairly high.
    It has. All of that's borne out. It doesn't excuse the fact
that veterans are waiting too long for decisions. I am
committed to ending the backlog and correcting all of this.
    That's why this year's budget, it increases VBA, our
benefits administration, by 13.6 percent, and increases the
information technology tool, VBMS, among others. Increasing the
information technology (IT) budget by 10.8 percent is critical
for us to make this crossover from what has been a paper
process to a digitized one.
    Senator Johnson. The chairwoman of the full committee has
joined us. At this point, I want to welcome her, and call upon
her for any statement or questions she may have.
    Chairwoman Mikulski.
    Senator Mikulski. Thank you very much, Senator Johnson. And
thank you for the great job you've been doing.
    And, Senator Kirk, it's so good to see you back at the
table.
    I used to chair the VA in the old VA-HUD days, so it's deja
vu to rejoin you at the table.
    And I wanted to come and just, first of all, affirm my
support for both of you. And I note that the President has
submitted a Department of Veterans Affairs appropriations
request of $152.7 billion.
    This is the number three subcommittee under the entire full
committee. Number one is Defense at $600 billion. Then there's
HHS-Labor, which is really three agencies. And then the
Department of Veterans Affairs itself at $152.7 billion.
    $86 billion of that is in mandatory. $63 billion of that is
in discretionary. And then there's $3 billion in third-party
collections.
    So there's a tremendous amount of money and resources that
we need to ponder in what is the most effective way to work
with the executive branch to serve our veterans.
    I want you to know, we intend to follow regular order. We
hope to mark up at a topline of the $1.05 trillion, which is
mandated by the Budget Control Act. The House Budget Act number
is $966 billion, so there are some resolutions that need to
occur.
    But we're going to work together on this and work with you
on how you want to do this.

                       BALTIMORE REGIONAL OFFICE

    So I wanted to come to affirm our support for working
together. But like you, I'm ballistic about this backlog, and I
was mortified over the fact that Baltimore was one of the top
worst claims areas in the entire Nation.
    Senator Kirk, you already gave some of the numbers. But we
were in the top three of a very embarrassing list.
    Now, General Shinseki, you came to Baltimore, and I
appreciated that, with your team. And then you made certain
promises, which are being followed through.
    But what happened is, that as you said now, the entire
Baltimore office is being shut down for training. Are you aware
of that?
    Secretary Shinseki. I'm not aware they've been shut down.
My understanding is they're continuing to process claims.
Training has been integrated into their day-to-day work.
    Senator Mikulski. Well, sir, that's not the way it is on
boots on the ground.
    The entire Baltimore office is now in training. There is
one person answering the phone--one person answering the phone.
    Now, there were 10 people on the phone to answer our
questions, 10 people from there. We can't have this, that we're
going to shut down a whole office so they're more fit for duty,
which we like the training, which you said you would do, and
we're excited about that. But we can't shut it down. Or if we
can, we need you to send temporary claims processors to
Baltimore to take in the cases and begin the methodology that's
established while this 4-week training is going on.
    Secretary Shinseki. I understand we have help teams that
have been added to Baltimore. Let me ask Secretary Hickey for
some details.
    Ms. Hickey. Chairwoman Mikulski, my apologies to you. There
was some miscommunication, I believe, to you about the nature
of what was happening in Baltimore. So I will accept
responsibility for that miscommunication.
    There are 4 hours a day where they are literally still
working claims. The other 4 hours, they are in a class, but
while they're in that class, but they're working live claims
that belong to the Baltimore regional office.
    That's the way the training is designed. It's designed so
they actually work claims, and they go through a training
process while that happens.
    In the meantime, I know about your concern, and I'm very
sensitive to that concern. We are continuing to get the support
of three other regional offices, as I committed to you, to
ensure that the Baltimore backlog is coming down. They continue
to do those claims and are still working them.
    We are also looking to see if we can bring one more team in
while they're working in the training environment to supplement
the additional support during the training period.
    I will share with you that we have already seen production
increases in Baltimore since we visited with you. I appreciate
your taking time out of your schedule to visit Baltimore.
    Not only increases in production have been seen, but also
increases in the quality, as a result of bringing in some of
those help teams, with subject-matter experts who come in and
help coach, and facilitate some improvements in Baltimore.
    Senator Mikulski. Well, I think we need to talk about it. I
don't want to take the time of the subcommittee.
    There has been a breakdown in communication. And there's a
breakdown in communication even in the way the director of that
office talks with us. He was silent on the phone.
    When we asked, ``Where would these records go?'' we heard
they were in the cloud. Nobody could tell us where these
records were going. We're not happy.
    But rather than go on and turn this into a discussion on
Baltimore, what I fear is that this is the problem everywhere,
and not only a backlog, but then the lack of communication.
Yes, they do work in the afternoon, but we hear it's a very few
set of coaches with a very few set of cases with coaches.
    So let's really talk and get this straight, and let's not
take the time.

                             COLLABORATIONS

    I'd like to go nationally, and if I could, General
Shinseki, did I hear you right--and it goes to what we're all
raising--we understand that in order for VA to do their job,
they need the cooperation of four other agencies, plus the
National Guard. They need the cooperation of VA, the Social
Security Administration (SSA) to send you records, and, to a
certain extent, the Internal Revenue Service (IRS). Is that
correct?
    Now, in the hearing, does VA really cooperate with you? Or
you don't want to say, because you're a good guy, and used to
be in the chain of command, and hoorah, hoorah?
    Secretary Shinseki. No. Madam Chairman, I would tell you
that I spent 38 years in uniform, as you know. In all that
time, I knew there was a VA, but there was almost no
interaction between my duties in uniform and the Department.
    And so when I became Secretary of this Department, I
realized how little education I had received. One of the first
things that Secretary Bob Gates and I did was to agree, with a
handshake as we were standing in line waiting to be sworn in to
our respective duties, to bring our departments together.
    And so it began with Bob Gates. It continued with Leon
Panetta. It continues now with Secretary Hagel.
    The whole point is that our departments culturally look in
two different directions. That's not good enough. We are
working to bring our departments into greater synergy.
    Part of that has to do with this seamless transition that
we talk about, which includes getting electronic records from
DOD, and allowing us to match up.
    Senator Mikulski. Well, is that happening?
    Secretary Shinseki. In terms of information that arrives
for us to be able to use, with personnel records, we have an
agreement with DOD that by December of this year, 2013, we will
begin to receive electronic records.
    We're working on--and this is probably the more critical
one--a single, common, joint, integrated electronic health
record that is open in architecture and nonproprietary in
design. All those terms are code word to force us to come up
with a single system that applies to both departments.

                               ROUNDTABLE

    Senator Mikulski. Thank you.
    Mr. Chairman, Senator Kirk, colleagues, I'm going to
suggest this, as the full committee chair, the subcommittee
does their business, and they've been doing a great job on
this. But as the full committee chair, I thought I would
convene a roundtable of the four agencies that have to serve
our veterans, and actually get Hagel in the room with Shinseki,
and their assistant deputy coordinator of the health records,
and techno-micro-chips. Does this sound like a good idea?
    Senator Kirk. That sounds like an awesome idea. We get both
secretaries in here to explain why we haven't combined the two
systems.
    And I would give you a little partisan edge on that, a
partisan edge. By that I mean, in VA versus DOD, and just say
that I don't understand why the taxpayer has to pay for two
totally separate systems.
    And I want DOD to insist on why they need to have a
separate system, that I think we should go date-certain with
just VistA, which is the VA system, and force DOD to say why we
have to slow down and have a separate system.
    Senator Mikulski. Well, this subcommittee has been the
driving force. I thought we could get DOD, bring Social
Security and IRS in. And I'd really love for Appropriations to
be the committee that cracks the code on the VA backlog. It
would be a great tribute to you as a veteran.
    Senator Johnson. Madam Chairwoman, that is an excellent
idea. The details need to be figured out, but I'll take charge
of that.
    Senator Mikulski. Yes. And we look forward to working with
you to do that. Thank you.
    Senator Johnson. Senator Reed.
    Senator Reed. By order of appearance, or if it's back and
forth, I'd be happy to yield to one of my colleagues.
    Senator Johnson. Senator Kirk had the last comments. I'll
turn to Senator Reed.
    Senator Reed. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary.

                         TRANSITION ASSISTANCE

    I have a series of simple questions, which might actually
be pretty dumb questions. But is entry into the VA automatic
upon discharge from the service? Or does a discharged military
person have to formally apply to VA?
    Secretary Shinseki. Today, it is not automatic. But this is
what the Secretary of Defense and Secretary of VA are working
on.
    As you know, the Department of Defense has a transition
assistance program. That is their transition program.
    We have included ourselves in that process before the
uniform comes off. Whatever claims that need to be addressed,
we want to start that early.
    Senator Reed. It just seems to me, Mr. Secretary, and, you
know, you said you spent 38 years in Active Duty. The day you
raise your hand as an E-1, or whatever, you're probably going
to be a veteran with perhaps 1 percent, 2 percent deviation
there.
    Have we missed the focus? Shouldn't we be looking not at
the transition point from active service to another service,
but actually the point of induction, or basic training?
    Secretary Shinseki. We agree. That's what we've been
working on. Today, we at VA, have created an eBenefits
automation tool. As young men and women are being inducted into
the military, they have access to that tool.
    As you know, they participate in some of our education
programs, and mortgage programs. For the military, with
servicemembers group life insurance, we are their insurer.
    So this ought not to be a decision to be made when the
uniform comes off. It ought to be seamless. It ought to be
mandated. Making that commitment is all about what the
electronic health record is designed to do.
    Senator Reed. Does that require any further legislation, or
that's within your authority today to enroll? Pick an obvious
point, completion of basic training, you're enrolled in the VA
system. You get information, you're eligible for some programs,
but not all programs. Can you do that?
    Secretary Shinseki. I would say there's a certain
definition, a time of service, before a requirement for
veterans status is rendered. Then, as you know, depending on
the character of discharge, that status could change.
    Senator Reed. Right, but that's----
    Secretary Shinseki. I'm not expert enough on it for an
answer today. Let me give you an answer for the record. I think
what we're getting at here is, let's make this truly seamless
between the departments, and I think we can work on that.
    [The information follows:]

    VA strives to reach out to all separating servicemembers to ensure
they are aware of and can access VA benefits, healthcare and other
services. As an example, VA sends a personalized letter to all recently
discharged veterans reminding them of these benefits.
    In August 2011, the President called on the Department of Defense
(DOD) and Veterans Affairs (VA) to lead a task force with the White
House economic and domestic policy teams and other agencies, including
the Department of Labor (DOL), to develop proposals to maximize the
career readiness of all servicemembers. This DODVA Veterans Employment
Initiative Task Force is one element of the plan to reduce veteran
unemployment and to ensure that all of America's veterans have the
support they need and deserve when they leave the military, look for a
job, and enter the civilian workforce.
    To meet the President's call for a ``career-ready military,'' the
DOD-VA Veterans Employment Initiative Task Force developed a new
training and services delivery model to help strengthen the transition
of our servicemembers from military to civilian life as they become
veterans. This revamped TAP curriculum, named Transition Goals,
Planning, Success (Transition GPS), is meant to provide servicemembers
with a set of value-added, individually tailored training programs and
services to equip them with the set of tools they need to pursue post-
military goals successfully. This model represents an improved DOD/VA/
DOL Transition Assistance Program (TAP). The new model was implemented
in November, 2012 and is consistent with Public Law 112-56, the VOW to
Hire Heroes Act of 2012 (VOW Act) which requires mandatory TAP
participation of members of the Armed Forces. This has significantly
increased VA healthcare benefits awareness and application
opportunities for all separating servicemembers. Long before these
changes, VA has had a long standing effort in place to assist veterans
with enrollment into VA healthcare system through participation in
various DOD demobilization events. An application for healthcare
benefits, named the 10-10EZ, must be completed by all veterans to
enroll in VA healthcare. As part of the outreach activities, VA works
directly with transitioning servicemembers to complete this form. It
can also be completed via the Internet and over the phone.
    In addition, we now enroll every new servicemember in eBenefits as
part of the mandatory TAP enrollment. eBenefits is the highly
successful VA and DOD online Web site/portal providing a central
location for veterans, servicemembers, and their families to research,
find, access, and manage a growing list of benefits and personal
information such as certificates of eligibility for VA home loans,
Post-9/11 GI Bill enrollment information, and service verification (DD
214).
    The below Federal Register notice regarding ``Duty Periods for
Establishing Eligibility for Health Care'' below shows the complexity
of the question/response.

https://www.federalregister.gov/articles/2013/05/09/2013-11051/duty-
periods-for-
establishing-eligibility-for-health-
care?utm_campaign=subscription+mailing+list
&utm_medium=email&utm_source=federalregister.gov

    The Virtual Lifetime Electronic Record (VLER) project being worked
on by VA and DOD will allow VA, DOD, and others to easily share
information on servicemembers and veterans and enable VA to provide
proactive care and benefits to veterans that they have earned and
deserve. The end goal of VLER is to share health, benefits, and
administrative information, including personnel records and military
history records, among DOD, VA, HHS, SSA, private healthcare providers,
and other Federal, State, and local governmental partners; and enable
caregivers, clinicians, and benefits providers to view all relevant
information about a veteran securely, regardless of where it was
documented, in a secure, electronic record.

    Senator Reed. Well, again, I think the sooner you do it,
not the discharge point but the point where that young man or
woman is going to be presumably on Active Duty for 3 years,
then become a veteran, gives you more time and actually
acclimates them to the system.

             INTEGRATED DISABILITY EVALUATION SYSTEM (IDES)

    Let me shift gears, basically. The Integrated Disability
Evaluation System (IDES), which you're working on, ideally--
unfortunately, we had two systems.
    We had a DOD evaluation of your disability, and then we had
a separate VA system, and that was regulatory arbitrage, et
cetera. And it didn't help the veterans. Now you're trying to
make an integrated system. That's the goal.
    I'll just ask another sort of dumb question. If you have
that integrated disability system, if you have actually
assessed that individual, before they leave the service, why
would they technically have to make a claim? Couldn't you
automatically make the benefits available to them based upon
their evaluation?
    Secretary Shinseki. I would agree that I think that sort of
approach makes sense, but I think we have a requirement to make
sure we do a complete investigation and consult with the
individual on their disability.
    There may be things that are not in the record. I'm
thinking of the kinds of things some youngsters may prefer not
to be in the record. Just looking at the record alone may not
be complete enough.
    We want to give veterans an opportunity to lay out the
things that they may have masked for----
    Senator Reed. Well, you have as much sensitivity to how
soldiers, sailors, marines, and airmen think and act than
anyone in this room.
    But it seems to me that if the goal is to have one
evaluation complete of their health, psychological, physical,
et cetera, it might not be fully complete because of lack of
disclosure, but at least that's a starting point for automatic
benefits.

                              CLAIMS EXAM

    Now, subsequently, and it could be 5 years later, if
someone discovers that they have a condition they weren't aware
of, well, that is the time for a claim. But I would think that
would speed up the process and be more rational.
    What I observed and what you observed, too, is it was sort
of people were trying to get the highest possible DOD
disability evaluation before they left so that they were--you
know, they wanted to leave but they didn't want to leave. They
were in that situation. Then they had to go through a whole
separate process at the VA.
    It just doesn't seem to be efficient nor helpful for
veterans.
    Secretary Shinseki. Well, Senator, we have moved to the
single exam, a separation exam, and tried to reduce as much
overlap on these things.
    There was a little difference when we conducted two
separate exams. The youngster who wants to remain in uniform
wants the lowest percentage adjudication. The youngster who's
getting out wants the better one. And so I can understand why
there may be a different approach in DOD.
    Once the decision is made that the youngster is not going
to be able to be retained for whatever medical reason, then the
single exam, which is the way we've gone, by VA, will govern
both decisions, both their departure and then their arrival to
us.
    Senator Reed. Again, thank you, Mr. Secretary. My time has
expired. Thank you for your service. Thank you, ladies and
gentlemen.
    Senator Johnson. Senator Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman.
    And, Secretary Shinseki, thanks for being here. Thanks for
the meeting in your office recently with Senator Collins and
Senator Murkowski. I thought it was very helpful and appreciate
you taking time to do that, as well as your commitment to our
veterans, your service and your commitment to our veterans.
    Also, I appreciate very much that you've come out to the VA
Health Center in Fargo, which serves a lot of North Dakota and
Minnesota as well, and I think does a phenomenal job.

                                 LEASE

    One of the things that's been really important for us is
getting another outpatient clinic in Devil's Lake, North
Dakota, and I've talked to you about this before.
    And I believe, as a follow-up, your staff indicated to me
that they're planning to have a lease in place for that
facility in August of this year, and then have it open by
December.
    I want your commitment that we're going to get it open this
year. We've been working to get that for some time and maybe
just comment on the length of time it takes, because last year
we talked about getting it, which, again, we appreciate very
much and that they're very much looking forward to in Devil's
Lake, but just your comments on the length of time or what's
required to set it up and, hopefully, a commitment that we'll
have it in place this year.
    Secretary Shinseki. Let me call on Dr. Petzel for the
opening.
    Dr. Petzel. Thank you, Mr. Secretary.
    Senator Hoeven, we've been talking about the clinic at
Devil's Lake since I was a Network Director in Minneapolis,
which goes back a couple of years. There have been difficulties
in coming to an agreement about the kind of clinic, et cetera.
    That's on track now, and we expect to make an award for
space in August 2013. The planned occupancy is December 2013.
    I will keep track of that, and we will provide feedback to
your staff periodically about how we're doing with that
timeline.
    Senator Hoeven. Thank you, I appreciate it. We're very much
looking forward to that facility. It'll make a real difference
for our veterans. And so, if you will stay in touch with us on
it, I'd appreciate it very much.

                           SUICIDE PREVENTION

    The other thing, Mr. Secretary, I'd like to just touch on
again, two of the things that we've been working on I know
you're very dedicated to as well, on behalf of our veterans,
are both suicide prevention and also dealing with PTSD.
    Would you talk about how in this budget we're doing more to
make sure that we're addressing these very serious challenges
on behalf of veterans, both the suicide prevention and
addressing their needs in regard to PTSD?
    Secretary Shinseki. Senator, let me start and then let me
ask the good doctor, Dr. Petzel, to comment on our approach to
suicides.
    I would just say up front, one suicide is a tragedy and
it's one suicide too many.
    We go at this with a lot of energy and, as you know, we
have put in place a national crisis line for veterans in
Canandaigua, New York. In the last 5 or so years, there have
been over 740,000 phone calls.
    I think important in that number is that more than 26,000
of them were suicides in progress. They were intervened and
people were taken care of.
    We've watched the numbers of calls continue to go up but
the number of crisis calls have begun to taper off a bit. What
we interpret here is that calls are coming in earlier as
opposed to in crisis. People are being referred to treatment.
The treatment they're receiving works.
    We're watching our suicide numbers, which are still high at
22, that is a rate of 22 a day, staying flat and not
necessarily spiking, as we have seen elsewhere.
    We believe we have a good set of treatments and the
opportunity to medicate folks properly.
    Let me call on Dr. Petzel.
    Dr. Petzel. Thank you, Mr. Secretary.
    Again, Senator Hoeven, suicide is a national tragedy, and
suicide amongst veterans, I think, is even a deeper tragedy.
This, PTSD, and depression are the results of their service
experience and are sort of the unseen wounds of war.
    I think we have a tremendous obligation in the VA to find
ways to deal effectively with these things.
    Just briefly, our mental health budget is $7 billion. We're
going to be spending almost $500 million more this year in 2014
rather than we have spent this last year.
    In terms of PTSD, there are about 500,000 veterans with
that diagnosis, 119,000 of them come out of this present
conflict. We'll be devoting, again, about $500 million to those
veterans and their treatment.
    We, in addition to that, have a research budget of almost
$49 million in PTSD research within VA itself, and then a
cooperative effort with DOD that takes $50 million from the VA
and $50 million from DOD over a period of 5 years and combines
into two research projects on PTSD and traumatic brain injury
(TBI).

                                OUTREACH

    Just a few words about suicide, the VA has a highly
integrated approach to suicide, and we're fortunate that we
have this national system that allows us to do this level of
integration that you can't necessarily do in other venues. For
veterans, we have the crisis hotline and, as the Secretary
mentioned, it has been very effective. Almost 800,000 calls and
26,000 rescues; people prevented from harming themselves who
were in danger of harming themselves.
    We have suicide prevention coordinators at every single one
of our medical centers and a team of both outreach and case
management mental health professionals for people that are
deemed to be at high risk for suicide.
    Then we have a public service campaign that we're involved
in, in combination with the Department of Defense, to, pardon
the expression, destigmatize suicide and destigmatize mental
health. It's called, ``Make the Connection,'' and it's
vignettes by people who have suffered from mental illness or
have attempted suicide, urging people to make that connection
with the VA, telling them that this is not something that they
should view with trepidation, et cetera.
    It's been a very effective campaign, and I think it has
been responsible for the fact that we've seen about an 88,000
veteran increase in the number of people we're treating for
mental health.
    Senator Hoeven. Doctor, thank you.
    And, Secretary, this absolutely has to be an area of
emphasis, along with your emphasis on homelessness. I encourage
you to involve the veterans groups. I think they're tremendous,
can be a big help for you in this area. And, of course, share
my concern on the disabilities claims, and I know you're
working on that very diligently and know how important it is.
    But this area of suicide prevention, PTSD, as well as
homelessness, has to be an area of emphasis. And hopefully,
you'll reach out to the veterans groups and get them to help,
too. I think it's a tremendous network.
    Secretary Shinseki. We will do that outreach, Senator. Just
to underscore how important we think it is, I think Dr. Petzel
said very quickly that, in mental health this year, our budget
is over $7 billion for mental health alone. If we were to look
back from 2009 to the 2014 timeframe, our investments in mental
health have gone up nearly 57 percent.
    So this is an area of importance to us, and we will
continue to emphasize that care.
    Senator Hoeven. Thank you.
    Senator Johnson. Senator Udall.
    Senator Udall. Thank you, Chairman Johnson.
    And thank you, Secretary Shinseki, for being here today and
bringing your very able team to appear before us.
    And let me say, from my perspective, I very much appreciate
your many years of service both in and out of uniform. And I
also appreciate the time you took to spend with me talking
through New Mexico veterans issues and veterans around the
country.
    New Mexico is a very rural State. And as you're aware from
our discussions, in rural New Mexico, as well as rural areas
throughout the country, it can be very difficult to recruit
doctors and nurses and staff to serve in rural clinics,
including VA clinics.

                            RURAL VA CLINICS

    What is the VA currently doing, and how will this budget
support the recruiting and retention of qualified personnel to
serve at rural VA clinics?
    Secretary Shinseki. Let me call on Dr. Petzel about the
recruiting and retention efforts.
    Dr. Petzel. Thank you, Mr. Secretary.
    Senator Udall, you put your finger on an issue that is
important to us, and that is being able to provide medical care
in rural America. Forty percent of our veteran population lives
in rural or highly rural areas. There's a cascade of things
that we do. Let me just quickly go through them.
    Number one, we have community-based outpatient clinics, 121
of those clinics around the country. We have the vet centers,
which are scattered into some very rural areas, and the mobile
vet centers, 70 of them that can go out to other areas.
    The largest growing way that we do this is telehealth. And
I am getting at the recruitment. We are the largest purveyor of
telehealth in the country, and we are now setting up separate
individual telehealth clinics where we have a clinical
professional, perhaps not a physician, at a site where patients
can come in and be connected to their provider via telehealth.
It would be a primary care or specialty care.
    It began in Colorado, and now it has spread across the
country. It's one of the things that we're going to be using in
New Mexico to help us supplement the care that we're delivering
in rural America.
    In terms of recruitment----
    Senator Udall. Dr. Petzel, let me stop you there. So, even
for primary care, you're using telehealth?
    Dr. Petzel. We can. Yes, sir.
    Senator Udall. And when you do that, have you taken a
reading of satisfaction of vets with doing telehealth for
primary care? I mean, I'm wondering from a perspective of
seeing that most people like to meet with their doctor in
person. And I can understand, and I think everybody can, the
telehealth for specialists and things like that.
    But as you do that, I think it's very important that you
try to take the temperature of veterans in terms of how they
feel about not ever seeing an actual doctor in person.
    And that's the thrust of this question of mine, because
when you see the clinics, at least in New Mexico and I bet this
is across the country, what happens is you'll have big gaps.
They'll lose a doc, and then it will be 18 months or 2 years
before you're able to get another doctor.
    And so if you can fill it with telehealth, that's fine, and
have a good satisfaction level, but the thrust of my question
is really going to the recruitment of docs into these areas.
    And maybe the mobile option you're talking about is a good
one, too. The reality is many of these doctors and other
professionals don't want to live in these rural areas, and so
it's very hard to get them there.
    And you may want to try to team up with the medical
schools. I mean, we have a big problem in New Mexico because
our medical school on the day of graduation--we invest in all
this; the State of New Mexico puts in money--75 percent of our
graduates leave the State on that day of graduation. And so
we're trying to work with them to see how do we keep the people
there, and then how do we also get them in rural areas.
    Please, go ahead.
    Dr. Petzel. Senator, just a quick word about the telehealth
clinics. The patients love it. They like it because, number
one, there is a clinician there. There's a clinical person,
usually an R.N., but they don't have to drive 80 miles or 100
miles to see their doctor. They can see this person face-to-
face.
    Many of the things that you would do in a visit face-to-
face are done. Blood pressure is transmitted electronically, an
EKG, et cetera. So the satisfaction levels are higher than we
see in our clinics.
    Now just briefly about recruitment, salary is an important
thing. We have tremendous flexibility in terms of salary.
Providing the support around that physician is important, and
we can do that.
    We don't have any more difficulty, generally, recruiting
into highly rural areas than the communities do. It's just a
very difficult task to get people who haven't lived in a small
town to come to a small town, and their wives have some
influence on doing that, too.
    We are looking at scholarships to individuals where we
select people that come from rural communities, provide them
with support while they go through medical school, and they
have an obligation then to us for a period of 3 or 4 years,
depending on how long we've been providing them a scholarship,
to go back to a rural community. I think that's going to be
very effective.
    Your medical school in New Mexico, I think, is doing some
of those similar things.
    Senator Udall. Yes, they are. They are.

                             TRANSPORTATION

    Just quickly, my second question was about the travel that
veterans--you know, many times in New Mexico they have to
travel 5 and 6 hours to get to the VA center in Albuquerque,
sometimes spend the night, and then come back. And it takes a
person from the family or others to take time to drive them
when they're older.
    I assume telehealth is some of the answer there, but part
of my question is to ask about what this budget does to
increase transportation options for vets, in terms of trying to
travel up to get specialized care in these centers.
    Dr. Petzel. Thank you. That is an excellent question.
    The budget has in it money for the Veterans Transportation
Network, which is a network that the VA is setting up to
provide transportation services in these rural areas.
    In addition to that, there's a second element, and that is
grants to other organizations, usually service organizations,
to provide transportation for veterans.
    So there's a substantial--I would have to get back to you
with the exact amount--there's a substantial amount of money in
there to provide transportation services in these rural areas.
    [The information follows:]

    The budget provides money for the Veterans Transportation System
(VTS), a network that VA is setting up to provide beneficiaries not
otherwise eligible for VA travel benefits and with access issues,
including those in rural areas, a way to transport to VA healthcare.
Transporting veterans to specialized care is enabled through the use of
American Disability Act vehicles supplied by VTS. Such vehicles have
the capability to transport veterans requiring wheelchair, scooter or
needing boarding assistance: all vehicles are equipped with passenger
lift ramps. VA currently funds VTS staff and vehicles at 44 facilities
with an additional 20 facilities scheduled to begin implementation this
fiscal year. VA hopes to have VTS system-wide by 2015. VA has included
this initiative in the fiscal year 2014 President's budget request. In
2012, Congress authorized this program for 1 year. In the fiscal year
2014 budget, VA has requested that Congress extend this authorization.
Without the proposed extension, it is possible that VTS will need to be
significantly reduced or curtailed in January 2014, particularly in
rural areas of the country. S. 455 and H.R. 1702 in the House have been
proposed to resolve this issue.
    In addition, the Grants for Transportation of Veterans in Highly
Rural Areas program, created in response to a congressional mandate in
section 307 of Public Law 111-163, will provide grants to eligible
entities to assist veterans in highly rural areas through innovative
transportation services to travel to VA medical centers, and to
otherwise assist in providing transportation services in connection
with the provision of VA medical care to these veterans. VA recently
published required program regulations and will be soliciting grant
applications shortly. More information can be found here: https://
www.Federalregister.gov/articles/2013/04/02/2013-07636/grants-for-
transportation-of-veterans-in-highly-rural-areas. VA has included this
initiative in the fiscal year 2014 President's budget request.

    Senator Udall. Good. I hope you'll do that. Thank you very
much.
    And sorry for running over, Mr. Chairman.
    Senator Johnson. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    This is a very important discussion to be having,
particularly as to how we care for our veterans in these highly
rural areas.
    And you mentioned the transportation fund. In far too many
of Alaska's communities, we're simply not connected by road; 80
percent of the communities in the State of Alaska are not
accessible by road, so we've got to fly. So the expense is
considerable.
    And then, of course, when you're in town, you have taxi,
you have to rent a car, you have overnight accommodations.
    And so how we provide for those who are--we call them off
the road system in Alaska--is a huge issue for us.
    One of the things that I thank you for your leadership,
Secretary Shinseki, in Alaska, we have an agreement between the
VA and the native health system, where the veterans can go to
the Indian Health Service (IHS) facilities for that level of
care. So it's within their region.
    It might not necessarily be in their village, but it's
within their region so they don't have to fly to the major
cities for this level of care.
    And it was something that Senator Stevens and I had worked
on. We think that it can be an opportunity, particularly in
very rural areas, whether it's South Dakota or New Mexico. It
was a great idea, and we want it to work. And the VA has really
led on this as they have led with telehealth.

                               HEALTHCARE

    One of the things that I'm hearing anecdotally is from one
of the larger and better health systems in the State. They're
saying that they're not seeing the patient loads that they had
expected. We're trying to drill down into this and find out, is
it lack of publicity that the program is available? Is it lack
of unfunded travel that's prohibiting them from accessing it?
    We're trying to understand how we can make it better,
because we recognize we're never going to be able to get the
providers out into these remote areas. So if we can work within
existing systems, we've got more of an opportunity.
    So, Secretary, if you can address that. I know Dr. Petzel
has been working on this, of course, for years diligently with
us. But we want to try to make this work. We think it has great
promise.
    Secretary Shinseki. That's certainly our intent. I was not
aware that we haven't seen the response in the local clinics,
and we'll certainly get on that.
    For this discussion about delivering healthcare across the
country, our commitment is a veteran living in a rural area or
a remote area has the same entitlement to access and to care.
That's what we're committed to.
    There isn't a cookie-cutter approach to this. It affects
everything from recruitment and retention bonuses to having an
affiliation with a local medical school and bringing together
VA's resources with what's already there. We have a memorandum
of understanding (MOU) with the Indian Health Service to
provide services that veterans can get access to, and we
reimburse for those services. We're not trying to deliver
something that's already available. Telehealth and telemedicine
give access wherever the veteran is able to enter the VA
system.
    So it's sort of ``all the above.'' There is no cookie
cutter that says, since this worked in New Mexico, it'll work
in Alaska. We tune these tools up as the situation needs.
    And certainly, as Dr. Petzel says, a challenge is
recruiting folks to go to some of the rural areas. The
scholarship program here in small numbers is intended to get a
youngster, a promising youngster, out of those communities,
help with their education, and then go home and working for the
VA. That's a work in progress and the next initiative we're
trying to seed.
    Senator Murkowski. Well, if we can work with you to
identify how we might be more effective in reaching our
veterans in these highly rural areas, we would like to do that
with you.

                  AMYOTROPHIC LATERAL SCLEROSIS (ALS)

    I'd like to ask about what is going on within the VA system
as it relates to amyotrophic lateral sclerosis (ALS)?
    And, Mr. Secretary, you and I have had this conversation
before about Lou Gehrig's disease, the fact that VA has granted
ALS the presumption of service connection, as we know that
those who serve in the military are twice as likely to develop
ALS as those who have not served.
    We recognize that there are certain technologies that are
out there that allow for the individual who is afflicted with
this disease to just live an easier quality of life as they
deal with this very degenerative and very debilitating process.
    But there are certain procedures that the VA has not
accepted. One, for instance, is this diaphragm pacing system. I
mentioned it at the breakfast that we had visited at, Mr.
Secretary.
    And this is a process that allows the diaphragm to keep
moving when it begins to fail from ALS. The pacer was granted
humanitarian status under the Food and Drug Administration
(FDA). Insurance covers it as it does for Medicare.
    But apparently, these life-extending measures are not
recognized within the VA system. And we've had to work within
the VA to try to push to provide a level of assistance.
    It would seem to me that given that the VA has granted ALS
the presumption of service-connection disability, there ought
to be some consistency in the standards, so that these
individuals that are faced with this horrid disease don't have
to fight the VA to get some assistance with some life-extending
therapies.
    So I don't know if you have an answer for me today, but I
feel like I must raise it on behalf of the people who are
afflicted with this. Their life should not be made that much
more difficult towards the end, when they have to take on the
system.
    Secretary Shinseki. Senator, I agree. We discussed the
diaphragm pacing system during our visit together. Let me give
you a better answer for the record. We're still investigating
this.
    But I agree with you, that if we've recognized ALS as a
service-connected condition, we ought to provide all the care
and benefits that go along with caring for our veterans.
    [The information follows:]

    VA has used the diaphragm pacing system (DPS) for veterans with
amyotrophic lateral sclerosis (ALS) or Lou Gehrig's disease since 2008.
DPS is considered when the Veteran with ALS has threatened respiratory
insufficiency that is not better managed by other means that are not
agreeable to the Veteran. Other means include a pressure supported
bilevel positive airway pressure, or BiPAP. The BiPAP supports both
inhalation and also exhalation by lowering the positive airway pressure
to facilitate exhalation.

    Senator Murkowski. Well, I appreciate that, and I know that
those that are afflicted and their families care a great deal
as well.
    Secretary Shinseki. Thank you.
    Senator Johnson. Senator Collins.
    Senator Collins. Thank you very much, Mr. Chairman.
    Mr. Secretary, it's good to see you again. I want to add my
thanks to those of my colleagues for your briefing us in your
office and introducing the new members of this subcommittee to
the important work and your priorities.
    Doctor, I want to follow up on questions that Senator
Hoeven asked you about suicides in the military and among our
veterans. And I'm very concerned about the epidemic of
suicides.
    I know that a 2012 VA report on suicide data that was based
on information from 21 States found that an estimated 22
veterans lose their lives to suicide each day. And we know in
addition that, last year, there were approximately 350 military
suicides as well.
    Obviously, these data are alarming and tragic. I listened
very carefully as you went through the list of what the VA is
doing. And I commend you for the focus.

                             OVERMEDICATION

    But the fact is, there is substantial evidence that
prescription-drug abuse is a major contributing factor in both
military Active Duty and veterans' suicides.
    And it is for that reason that in July of last year, I
wrote to the Attorney General and asked that he use the
authority that Congress had provided him by the Secure and
Responsible Drug Disposal Act of 2010 to allow military and VA
treatment facilities to conduct controlled-substance take-back
programs. These have occurred in my State with considerable
success.
    It's my understanding that the Drug Enforcement
Administration, the DEA, recently proposed new regulations to
expand the options available to collect controlled substances.
And by this, I'm talking about unused prescriptions, for
example. That's probably the most common example.
    But the regulations, much to my dismay, failed to authorize
VA and DOD pharmacies, medical facilities, or medical
personnel, to take part in appropriate drug take-back programs.
So I'm introducing a bipartisan bill that will require the
Attorney General to work with the VA, with Secretary Shinseki,
and with the Secretary of Defense, to implement drug take-back
programs.
    I'm interested in your assessment, whether you would
support the VA being involved, and able to directly take back
these drugs, and thus mitigate the possibility of abuse of them
ending up on the black market, or being given to another
veteran who has mental-health problems, and perhaps leading to
very tragic results.
    Secretary Shinseki. Senator, I tell you, I'm in great
agreement with you here on drug abuse. Even within the VA, I've
asked a question of ourselves, do we overmedicate people, and
then, so what happens with the drugs?
    We are now part of the State monitoring system for
prescription writing. I think this take-back policy you're
describing just makes sense with everything else we're doing.
    I think prescription drugs continue to show up as a part of
the problem when we deal with lots of other issues. So we're
happy to work with you on this.
    Senator Collins. Thank you. I think this is absolutely
critical and really could make a difference. And I'm
particularly concerned when our Active Duty military leave and
go back home, and they may have these very powerful
prescriptions, and very little follow-up, which brings me to
another issue.
    One of you mentioned the fact that 41 percent of total
enrolled veterans reside in either rural or highly rural areas
of our country. And of course, that certainly describes much of
the State of Maine.

                              PROJECT ARCH

    And we know that providing access to care is one of the
VA's top priority objectives, and that you're especially
focusing on those 3.4 million rural veterans who are enrolled
in the VA system. There is a 3-year VA pilot project that is
known as Project ARCH.
    One of the sites happens to be in my hometown of Caribou,
Maine. It has been an extraordinary success. The veterans that
use that program absolutely give it very high approval ratings.
    They can get the care they need without traveling far to
get it. The one VA hospital in Maine, for example, is 4 hours
away from my hometown of Caribou.
    And I believe that in your budget, you cited this pilot
project, the Project ARCH program, as one of your
accomplishments, and rightly so, based on what I've seen.
    So this allows veterans in rural and highly rural areas to
receive specialty care closer to home from community healthcare
providers, which also helps with that continuity problem that
we were discussing earlier with the turnover at VA facilities,
instead of being forced to drive hundreds of miles to the
nearest VA hospital, for example.
    So my question is, given the success of Project ARCH, do
you intend to extend this program beyond fiscal year 2014?
    Dr. Petzel. Well, Senator Collins, thank you very much for
the kind words. We have also been very pleased with it,
particularly the way it has worked in Maine. The arrangements
with the Cary Medical Center really have been excellent.
    We're in the third year of Project ARCH. It's a 5-year
pilot study being done at five sites. I think that we would
probably hold our cards for a bit yet to see what the
evaluation, once we're deeply into the pilot, is of the four
sites around the country.
    Certainly, if it proves to be a successful concept, we
would want to extend this beyond those five pilot sites. But I
think the evaluation needs to be done. We've got at least
another year or two before we do that.
    Senator Collins. Well, I would say that I think the
preliminary indications are that you've got a real winner. And
I would invite any of you to come to the program in northern
Maine at any time, if you want to see it.
    It is an extremely successful program. And Maine has a very
high rate of veterans in its population, and I feel so good
about the fact that in the middle of the winter, we're not
forcing these veterans to have to travel long distances to get
the specialty care that they need. They can get it right at the
local hospital.
    So it's been a great program, and it saves travel time and
money as well. So I hope they're all as successful as the one
at Cary Memorial Hospital in Caribou, Maine.
    Thank you.
    Senator Johnson. Secretary Shinseki, I again thank you and
your colleagues for appearing before this subcommittee, and I
look forward to working with you this year.
    We will convene panel two momentarily.
    Mr. Griffin, please come forward.
                      Office of Inspector General

STATEMENT OF RICHARD J. GRIFFIN, DEPUTY INSPECTOR
            GENERAL
ACCOMPANIED BY:
        JOHN DAVID DAIGH, JR., M.D., ASSISTANT INSPECTOR GENERAL FOR
            HEALTHCARE INSPECTIONS
        LINDA HALLIDAY, ASSISTANT INSPECTOR GENERAL FOR AUDITS AND
            EVALUATIONS
    Senator Johnson. Mr. Griffin, I welcome you to this
hearing. This is the first time we have had the VA Inspector
General's Office (OIG) testify on the budget. And I thank
Chairwoman Mikulski for suggesting it.
    In an agency as large and complex as the VA, your office
plays a unique and crucial role in ensuring that the VA
delivers the quality care and service that our vets depend on,
and that the agency's resources are properly managed and
accounted for.
    In reviewing the fiscal year 2014 budget submission, I see
that quality of care, management of regional office operations,
disability claims workloads, and effective oversight of
information technology programs and projects, are listed among
your major management challenges.
    I'm also concerned about a report your office issued
earlier this week regarding mismanagement of the contract
mental health program at the Atlanta VA Medical Center.
According to the report, the lack of effective patient care
management and program oversight by the facility contributed to
problems with access to mental healthcare and contributed to
patients falling through the cracks.
    As you know, this is not an abstract problem. Of the three
cases cited in the report, two vets committed suicide and one
was incarcerated due to the facility's failure to ensure
continuity of care.
    Due to the surge in mental health issues among recent vets
and the efforts at increased funding that this subcommittee has
supported to improve access to mental healthcare, I worry that
this is not an isolated incident.
    Allowing vets with mental conditions to fall through the
cracks is not acceptable. I'm interested in your thoughts on
how contract mental health programs can be improved throughout
the VA.
    Thank you, Mr. Griffin. You may proceed. Please feel free
to summarize your remarks. Your full statement will be included
in the record.

                SUMMARY STATEMENT OF RICHARD J. GRIFFIN

    Mr. Griffin. Thank you, Mr. Chairman, and thank you for the
opportunity to discuss VA Office of Inspector General
priorities in fiscal year 2014.
    I'm accompanied by Ms. Linda Halliday, Assistant Inspector
General for Audits and Evaluations, and Dr. John David Daigh,
Assistant Inspector General for Healthcare Inspections.
    In fiscal year 2012, the OIG issued 299 reports, and our
oversight produced a 36-to-1 return on investment. This return
is realized in terms of program savings, cost avoidance,
questioned costs, and actual dollars recovered.
    One of VA's core missions is to provide compensation
benefits for those injured during their service in the
military. The delivery of these benefits is a major challenge
for VA and our work indicates that much work continues to be
needed in both technology initiatives and better training for
staff to reduce the growing backlog of claims.
    In February 2013, we issued a report on a Veterans Benefits
Management System known as VBMS. We reported that even though
VA had not fully tested VBMS, they continued to deploy it to
the VA regional offices. The system had not been fully
developed to the extent that its capability to process claims
from initial application through review, rating, award, and,
finally, to benefits delivery could be sufficiently evaluated.
We note that the partial VBMS capability deployed to date has
experienced system performance issues.
    In addition, as of the VBMS report date, VBA did not have a
detailed plan for scanning and digitization of veterans'
claims, nor an analysis of requirements. In our recent
inspections in January, March, and April of this year of the
regional offices in Houston, Milwaukee, and Newark, 25
employees provided us a users' perspective of VBMS.
    Generally, staff expressed frustration with the system
because of spontaneous system shutdowns; latency issues related
to slow times to download documents, such as medical evidence
for review; longer times to review the electronic evidence;
mislabeled electronic evidence; and mixing evidence from one
veteran's electronic file to another veteran's file.
    Given the incremental system development approach used and
the complexity of the automation initiative, VA will continue
to face extremely difficult challenges in meeting its goal of
eliminating the backlog of disability claims processed by 2015.
    As you referenced, in our full statement we have reported
on a number of challenges confronting the Veterans Health
Administration. Topics addressed include waiting times; access
to mental healthcare; non-VA fee care, including fiscal
controls; staffing standards; the VISN management structure;
and women's health issues.
    In reality, these are overlapping issues. Without accurate
waiting times and productivity standards, it is difficult or
impossible to know how many specialists you need for timely
access to mental healthcare and women's healthcare. If there's
more demand for VA care than VA providers can handle, you need
proper management structure and focus at the VISNs and medical
centers to direct the quality of care, as well as the fiscal
oversight of the non-VA fee-basis programs.
    At a time of unprecedented demand for VA benefits and
service, the OIG has directed its oversight efforts on VA's
most formidable challenges. We are committed to these efforts
because it is both good Government and because it honors our
Nation's commitment to those who served.
    With increased attention to the areas outlined in our
statement, we believe we can help ensure that veterans get the
care, support, and recognition they've earned in service to our
country.

                           PREPARED STATEMENT

    Mr. Chairman, thank you for the opportunity to discuss the
oversight work of the OIG, and we appreciate the continued,
steadfast support and interest you and the subcommittee have
demonstrated for our mission. We welcome any questions that you
may have for us this afternoon.
    [The statement follows:]
                Prepared Statement of Richard J. Griffin
                              introduction
    Mr. Chairman and members of the subcommittee, thank you for the
opportunity to discuss the Department of Veterans Affairs (VA) Office
of Inspector General (OIG) priorities in fiscal year 2014. I will focus
on recent OIG work in claims processing and access to healthcare
because they continue to be challenges for VA. In addition, I will
briefly cover OIG work in VA's other programs and operations. I am
accompanied by Ms. Linda Halliday, Assistant Inspector General for
Audits and Evaluations, and Dr. John D. Daigh, Jr., Assistant Inspector
General for Healthcare Inspections.
    In fiscal year 2012, the OIG issued 299 reports and our oversight
produced a $36 to $1 return on investment;\1\ as of March 31, 2013, we
have issued 164 reports and realized a $33 to $1 return on investment.
This return is realized by VA in terms of program savings, cost
avoidance, questioned costs, and actual dollars recovered. The OIG's
Office of Healthcare Inspections, whose mission results in improving
the healthcare provided to veterans rather than saving dollars, is not
included in the return on investment calculation.
---------------------------------------------------------------------------
    \1\ Office of Inspector General Department of Veterans Affairs
Semiannual Report to Congress April 1, 2012--September 30, 2012.
---------------------------------------------------------------------------
                 veterans benefits administration (vba)
    One of VA's core missions is to provide compensation benefits for
those injured during their service in the military. The delivery of
these benefits is a major challenge for VA and our reports indicate
that much work continues to be needed in both technology initiatives
and better training for staff to reduce the growing backlog of claims.
            veterans benefits management system development
    In February 2013, we issued a report on the Veterans Benefits
Management System (VBMS) \2\ that found VA had not fully tested VBMS
yet continued to deploy it to VA regional offices. Due to the
incremental development approach VA chose, the system had not been
fully developed to the extent that its capability to process claims
from initial application through review, rating, award, to benefits
delivery could be sufficiently evaluated. However, we determined the
partial VBMS capability deployed to date has experienced system
performance issues. For example, on April 8, 2013, VBA performed an
update to the portion of the VBMS system related to rating claims. As a
result, the system was unexpectedly unavailable nationwide for 2 days.
---------------------------------------------------------------------------
    \2\ Review of VBA's Transition to a Paperless Claims Processing
Environment (February 4, 2013).
---------------------------------------------------------------------------
    As of the VBMS report date, VBA did not have a detailed plan for
scanning and digitization of veterans' claims nor an analysis of
requirements. We identified issues hindering VBA's efforts to convert
hard-copy claims to electronic format for processing within VBMS,
including disorganized electronic claims folders and inadequate
management of hard-copy claims. As one of VBA's main transformation
initiatives, the Under Secretary for Benefits indicated VBMS is
designed to assist VA in eliminating the claims backlog. At the end of
fiscal year 2010, VBA's inventory of pending claims was just over
530,000 that took an average of 166 days to complete; as of March 2013,
VBA's inventory of pending claims had grown to over 850,000 and is now
taking an average 292 days to complete.
    In our more recent inspections of the VA regional offices (VAROs)
in Houston, Texas; Newark, New Jersey; and Milwaukee, Wisconsin; 25
staff provided us a user's perspective of VBMS. Generally, staff
expressed frustration with the system in part because of spontaneous
system shutdowns, latency issues related to slow times to download
documents such as medical evidence for review, longer times to review
the electronic evidence, mislabeled electronic evidence, and mixing
evidence from one veteran's electronic file to another veteran's file.
    Further, as outlined in our April 2013 report \3\ we found that
claims processing inaccuracy at the Baltimore, Maryland, VARO had more
than doubled for the types of medical disability claims we reviewed
since our first inspection in June 2009. The error rates changed from
28 percent inaccurate to 68 percent inaccurate for the claims we
reviewed. VBA's Systematic Technical Accuracy Review (STAR) \4\ of a
cross section of all claims found the Baltimore VARO went from 76.8
percent accuracy in 2009, down to 74.4 percent in 2013. The inventory
of pending claims grew significantly from 7,000 in 2009 and about
19,000 in 2013, while the staffing level only increased slightly from
134 staff to 143 staff respectively. The average days to complete
disability claims went from 210 days in 2009 to 342 days in 2013.
---------------------------------------------------------------------------
    \3\ Inspection of VA Regional Office Baltimore, Maryland (April 11,
2013).
    \4\ STAR is a key mechanism for evaluating regional office
performance in processing accurate benefit claims for veterans and
beneficiaries. The STAR process provides a comprehensive review and
analysis of compensation rating processing associated with specific
claims or issues.
---------------------------------------------------------------------------
    Given the incremental system development approach used and the
complexity of the automation initiative, VA will continue to face
challenges in meeting its goal of eliminating the backlog of disability
claims processing by 2015. We are continuing our oversight of VA's
ongoing VBMS system development efforts assessing the system's
functionality, costs, and ability to establish and meet schedule
milestones.
                  temporary 100 disability evaluations
    Our January 2011 report, Audit of 100 Percent Disability
Evaluations, identified veterans receiving long-term payments to which
they were not entitled. We projected that since January 1993 regional
office staff overpaid veterans a net amount of about $943 million.
Without timely corrective action, we conservatively projected that VBA
would overpay veterans $1.1 billion over the period of calendar year
2011 through calendar year 2015. Over the last 3 years our VARO
Inspections Program repeatedly reported systemic problems are
continuing in VBA's processing of temporary 100 percent disability
ratings. None of the 57 VAROs inspected fully followed VBA policy,
which resulted in VARO staff not adequately processing temporary 100
percent ratings for approximately 66 percent of cases reviewed. These
errors resulted in just under $17,000,000 in overpayments and almost
$311,000 in underpayments.
    In our inspections of three California VAROs,\5\ we reported high
errors rates, ranging from 53 to 97 percent, in processing temporary
100 percent disability evaluations. The magnitude of these and other
claims processing errors caused VBA to temporarily cease operations at
the Oakland and Los Angeles VAROs in order to provide training to
staff.
---------------------------------------------------------------------------
    \5\ Inspection of the VA Regional Office Los Angeles, California
(May 10, 2012); Inspection of the VA Regional Office Oakland,
California (May 10, 2012); Inspection of the VA Regional Office San
Diego, California (May 10, 2012).
---------------------------------------------------------------------------
    In June 2011, and again in August 2012, VBA officials modified the
electronic system to ensure suspense diary dates for medical re-
examinations would automatically populate and remain in the system
without manual entry. Currently, it appears these system corrections
are working as we have observed that the diary dates remain in the
system after being automatically populated. Although VBA has taken
action to modify their electronic systems, these system fixes have not
fully addressed the staff errors we frequently find. For example,
during our fiscal year 2012 inspection cycle and through March 2013,
where we reviewed 29 VAROs, 524 (62 percent) of the total 848 temporary
100 percent disability evaluations contained processing errors. Within
this group of 524 errors, 338 (approximately 65 percent) were
attributed to human error. These errors include staff not scheduling
medical reexaminations after receiving reminder notifications to do so,
or staff not following up to reduce the temporary evaluations after
notifying veterans of their intent to do so.
      medical examinations and disability benefits questionnaires
    Our VARO inspections continue to find claims processing errors
associated with the use of medical examinations that do not contain the
required information to render sound disability determinations.
Further, we identified 30 of the 365 disability benefits questionnaires
(DBQs) that did not contain adequate information to make accurate
disability determinations.
    Our February 2012 report, Audit of VA's Internal Controls Over the
Use of Disability Benefits Questionnaires, reported VA began using DBQs
in October 2010 as an initiative to help reduce the claims backlog.
DBQs are condition-specific forms designed to capture medical
information relevant to veterans' disability benefits claims. We
reported that VA needed to strengthen internal controls over the use of
DBQs in order to better prevent, detect, and minimize the risk of fraud
and provide reasonable assurance that medical documentation used in the
rating process is authentic and unaltered. Specifically, VBA had not
developed adequate internal controls to ensure DBQs completed by
private physicians were authentic and unaltered.
                  veterans health administration (vha)
    For many years, the Veterans Health Administration (VHA) has been a
national leader in the quality of care provided to patients when
compared with other major U.S. healthcare providers. VHA's use of the
electronic medical record, its National Patient Safety Program, and its
commitment to use data to improve the quality of care has sustained
VHA's quality of care performance. However, VHA faces particular
challenges in managing its healthcare activities. The effectiveness of
clinical care, budgeting, planning, and resource allocation are
negatively affected due to the continued yearly uncertainty of the
number of patients who will seek care from VA.
                    access to mental health services
    The OIG conducted a review \6\ at the request of the VA Secretary,
Chairmen and Ranking Members of the U.S. Senate and U.S. House
Committees on Veterans' Affairs, and the Chairman and Ranking Member of
the House Veterans' Affairs Committee's Subcommittee on Health, after
they expressed concerns that veterans may not be able to access the
mental healthcare they need in a timely manner. In response, OIG
reported VHA does not have a reliable and accurate method of
determining whether they are providing patients timely access to mental
healthcare services.
---------------------------------------------------------------------------
    \6\ Review of Veterans' Access to Mental Health Care (April 23,
2012).
---------------------------------------------------------------------------
    VHA did not provide first-time patients with timely mental health
evaluations, and existing patients often waited more than 14 days past
their desired date of care for their treatment appointments. In fiscal
year 2011, VHA had reported 95 percent of first-time patients received
a full mental health evaluation within 14 days. Using the same data VHA
used to calculate the 95 percent success rate, we selected a
statistical sample of completed evaluations to review which supported
only 49 percent of these evaluations occurred within 14 days. In fact,
on average, for the remaining patients, it took VHA about 50 days to
provide them with their full evaluations. Further, we reported
approximately 1.2 million or 12 percent of patient follow-up
appointments exceeded 14 days. We concluded that a series of timeliness
and treatment engagement measures could provide decisionmakers with a
more comprehensive view of the ability with which new patients can
access mental health treatment. We offered recommendations to the Under
Secretary for Health to revise the full mental health evaluation
measure to ensure the measurement is calculated to reflect a veterans'
actual wait time experience.
    This week we released two reports on the mental healthcare program
at the Atlanta VA Medical Center in Decatur, Georgia. The first \7\ was
focused on allegations of an inpatient's death due to mental health
service leadership's negligence and mismanagement of unit policies,
patient monitoring, staffing, and lack of caring about patients. We did
not substantiate the allegations of inadequate staffing, inappropriate
staff assignments, or that leadership did not care about patients.
However, we substantiated that the facility did not have adequate
policies or practices for patient monitoring, contraband, visitation,
and urine drug screening. We found inadequate program oversight
including a lack of timely follow-up actions by leadership in response
to patient incidents.
---------------------------------------------------------------------------
    \7\ Healthcare Inspection--Mismanagement of Inpatient Mental Health
Care, Atlanta VA Medical Center, Decatur, Georgia (April 17, 2013).
---------------------------------------------------------------------------
    We recommended that the Under Secretary for Health ensure that VHA
develops national policies to address contraband, visitation, urine
drug screening, and escort services for inpatient mental health units.
We also recommended that the Veterans Integrated Service Network (VISN)
and facility directors ensure that the inpatient mental health unit
develops these policies; strengthen program oversight and follow-up;
improve communication with staff; and ensure functional and well-
maintained life support equipment.
    The second report \8\ assessed the allegations of mismanagement and
lack of oversight of a mental health contract. We substantiated
mismanagement in the administration of the contract, and also
substantiated additional allegations that there was inadequate
coordination, monitoring, and staffing for oversight of contracted
mental health patient care. Facility managers did not provide adequate
staff, training, resources, support, and guidance for effective
oversight of the contracted mental health program. Mental health
service line managers and staff voiced numerous concerns including
challenges in program oversight, inadequate clinical monitoring, staff
burnout, and compromised patient safety.
---------------------------------------------------------------------------
    \8\ Healthcare Inspection--Patient Care Issues and Contract Mental
Health Program Mismanagement, Atlanta VA Medical Center, Decatur,
Georgia (April 17, 2013).
---------------------------------------------------------------------------
    The facility referred patients to the Community Service Boards
(CSBs) for several years before they started to track the patients
referred. The facility estimated that they referred between 4,000 and
5,000 patients since 2010, but did not know the status of those
patients. The facility managers were aware that a large number of
patients were, in the words of employees, ``falling through the
cracks'' and estimated that the Mental Health Assessment Team continued
to refer up to 60 new patients each week to the CSBs.
    We reviewed 85 electronic health records from a list received from
the facility of CSB-referred patients. We found that 21 percent of our
random sample of CSB-referred patients were never provided care by the
CSBs, with no follow up provided by the facility. VHA requires that an
initial mental health appointment be scheduled within 14 days of
referral. The contract did not have a time requirement, but only stated
that the expectation was patients would be seen as soon as possible. We
found that patients waited an average of 19 days for their initial
assessment (range from 1 to 80 days). Seventy-four percent of CSB-
referred patients had wait times greater than 14 days, with a wait time
average of 92 days and a median range of 56 days (range from 5 to 432
days).
    We recommended that the Under Secretary for Health rectify the
deficiencies described in this report with respect to the provision of
quality mental healthcare and contract management, with the goal that
veterans receive the highest quality medical care from either the VA or
its partners. The Under Secretary for Health and the VISN and facility
directors concurred with our recommendations and provided an acceptable
action plan. We will follow up on the planned actions until they are
completed.
    These reports are particularly troublesome because in July 2011, we
reported \9\ on problems with the management of the electronic wait
list for several mental health clinics at the same facility. Among the
findings of that report, we substantiated that several mental health
clinics had significantly high numbers of patients on their electronic
wait lists over a period of months in fiscal year 2010, and we
substantiated that facility managers were aware of the wait lists but
were slow in taking actions to address the condition. Large mental
health electronic wait lists are inherently problematic as they
represent impaired access to critically needed care.
---------------------------------------------------------------------------
    \9\ Healthcare Inspection--Electronic Waiting List Management for
Mental Health Clinics Atlanta VA Medical Center Atlanta, Georgia (July
12, 2011).
---------------------------------------------------------------------------
    These new findings stand in contrast to our findings \10\ in March
2009 regarding mental healthcare for veterans in Montana. In that
report, we found that VA leverages community resources, VA resources,
and fee care to provide mental healthcare for rural veterans.
---------------------------------------------------------------------------
    \10\ Healthcare Inspection--Access to VA Mental Health Care for
Montana Veterans (March 31, 2009).
---------------------------------------------------------------------------
                        non-va fee care programs
    The OIG has reported that VHA faced significant challenges to
address serious nationwide weaknesses in its Non-VA Inpatient and
Outpatient Fee Care Programs.\11\ Specifically, our audits disclosed
serious weaknesses in the pre-authorization of fee service. The cost of
fee care rose from $1.6 billion in fiscal year 2005 to almost $4.3
billion in 2013. As early as 2009, we reported that VHA improperly paid
37 percent of outpatient fee claims resulting in $225 million in
overpayments and $52 million in underpayments. We estimated $1.1
billion in overpayments and $260 million in underpayments over the next
5-year period if VHA did not strengthen its processes for authorizing
fee care services. In fiscal year 2010, we reported that VHA improperly
paid 28 percent of inpatient fee claims resulting in net overpayments
of $120 million and estimated $600 million in improper payments could
be processed over the next 5-year period. Weak authorization procedures
resulted in VA healthcare facilities not having reasonable assurance
that requests for services are medically necessary.
---------------------------------------------------------------------------
    \11\ Audit of Veterans Health Administration's Non-VA Outpatient
Fee Care Program (August 3, 2009); Audit of Non-VA Inpatient Fee Care
Program (August 18, 2010); Review of Veterans Health Administration's
Fraud Management for the Non-VA Fee Care Program (June 8, 2010); Review
of Alleged Mismanagement of Non-VA Fee Care Funds at the Phoenix VA
Health Care System (November 8, 2011); Administrative Investigation--
Improper Contracts, Conflict of Interest, Failure to Follow Policy, and
Lack of Candor, Health Administration Center, Denver, Colorado (April
12, 2012); and Review of Enterprise Technology Solutions, LLC,
Compliance with Service-Disabled Veteran-Owned Small Business Program
Subcontracting Limitations (August 20, 2012).
---------------------------------------------------------------------------
    Approximately 5 years have passed since we issued our first report
on the fee care program, yet we continue to have concerns that the
authorization of fee care services is still too weak to ensure
sufficient funds for these services are available to pay for the
services veterans receive. In January 2013, our review \12\ of the
South Texas Veterans Healthcare Systems' management of fee care funds
substantiated an allegation that the healthcare system authorized $29
million in fee care without sufficient funds to pay for the services
received by veterans. We found management at the South Texas Healthcare
System and the VISN lacked effective oversight mechanisms to ensure the
financial management and stewardship of these funds.
---------------------------------------------------------------------------
    \12\ Review of VHA's South Texas Veterans Health Care System's
Management of Fee Care Funds (January 10, 2013).
---------------------------------------------------------------------------
    In response to our August 2010 audit of Non-VA Inpatient Fee Care
Program, VHA and OIG agreed there will be general cost-savings and
efficiencies realized with consolidating the fee program's claims
processing system to achieve better economies of scale. Although
specific cost-savings depend on the actual consolidated strategy VA
selects and on how well VA implements the chosen strategy, we
conservatively estimated that current program inefficiencies cost VHA
about $26.8 million in fiscal year 2009, and could cost about $134
million over the next 5 years. We recommended the Under Secretary for
Health evaluate alternative payment processing options to identify
mechanisms to improve payment processing costs and timeliness. Today,
we do not see VHA moving forward with an actual consolidation strategy
for payment processing in the fee care program.
        physician staffing standards for specialty care services
    In December 2012, we issued a report on VHA's Physician Staffing
Levels for Specialty Care Services. We found VHA did not have an
effective staffing methodology to ensure appropriate staffing levels
for specialty care services. The need for VHA to develop a staffing
methodology is not a recent issue. As early as 1981, we recommended
that VHA develop a methodology to measure physician productivity. VHA
has not established productivity standards for 31 of 33 specialty care
services we reviewed, and VA medical facility management did not
develop adequate staffing plans. VHA's lack of productivity standards
and staffing plans limit the ability of medical facility officials to
make informed business decisions on the appropriate number of specialty
physicians to meet patient care needs.
    To determine an approximate measure of current physician specialty
productivity, we established a rudimentary standard by identifying
VHA's relative value unit median for each specialty care service. The
national median is the middle value among each specialty care service.
Using that median, we analyzed the collective group of specialty
physicians at all medical facilities and determined that 12 percent of
physician full-time equivalents did not perform to the standard, and
represented $221 million in physician salaries during fiscal year 2011.
Although we did not analyze the productivity of individual physicians,
our results support the need for an in-depth evaluation of staffing.
The primary message of this report is that VHA needs to implement
productivity standards to measure and compare the collective
productivity of physicians within a specialty care service at VA
medical facilities. This information is necessary and fundamental to
planning and building appropriate budgets to meet veteran's needs and
ensuring timely access to care.
                         women's health issues
    VA must provide care to a growing number of women veterans,
currently 10 percent of the veteran population. In fiscal year 2009, VA
spent $180 million on gender-specific medical care. In fiscal year
2014, the President's budget plans on spending $422 million, a change
of approximately 134 percent from fiscal year 2009.
    In December 2012,\13\ we issued a report on VHA services available
to women veterans who have experienced military sexual trauma (MST). We
conducted the review at the request of the Senate Committee on
Veterans' Affairs. VHA policy states that veterans and eligible
individuals who report experiences of MST, but who are deemed
ineligible for other VA healthcare benefits or enrollment, may be
provided MST-related care only. VHA also requires that veterans and
eligible individuals must have access to residential or inpatient
programs able to provide specialized MST-related mental healthcare,
when clinically needed, for conditions resulting from MST. VHA requires
that all facilities screen veterans for MST.
---------------------------------------------------------------------------
    \13\ Healthcare Inspection--Inpatient and Residential Programs for
Female Veterans with Mental Health Conditions Related to Military
Sexual Trauma (December 5, 2012).
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    We reviewed inpatient and residential programs identified by VHA as
resources for female veterans who have experienced military sexual
trauma. We conducted site visits and reviewed the electronic health
records of female veterans with MST discharged from these programs
between October 1, 2011, and March 31, 2012. We found:
  --Nearly all the women in our review had more than one mental health
        diagnosis. Ninety-six percent were diagnosed with PTSD. Major
        depression and substance use disorders were also common. Almost
        90 percent of the women in the review were receiving outpatient
        mental health services in the 3 months prior to admission to
        the inpatient or residential program.
  --Gender-specific care and same gender therapists were available.
        Treatments utilized varied by site, but all programs employed
        one or more evidence-based psychotherapies.
  --Women were often admitted to programs outside their VISN. Some of
        these veterans travel across the country to VA residential
        programs that consider themselves national resources. Obtaining
        authorization for travel funding was frequently cited as a
        problem for patients and staff. The Beneficiary Travel policy
        indicates that only selected categories of veterans are
        eligible for travel benefits and payment is only authorized to
        the closest facility providing a comparable service. This is
        not aligned with the MST policy, which states that patients
        with MST should be referred to programs that are clinically
        indicated regardless of geographic location.
  --We recommended that the Under Secretary for Health review existing
        VHA policy pertaining to authorization of travel for veterans
        seeking MST-related mental health treatment at specialized
        inpatient/residential programs outside of the facilities where
        they are enrolled.
    In a report \14\ from December 2010 on VA healthcare and
compensation benefits for combat stress in women veterans, we found:
---------------------------------------------------------------------------
    \14\ Review of Combat Stress in Women Veterans Receiving VA Health
Care and Disability Benefits (December 16, 2010).
---------------------------------------------------------------------------
  --Female veterans generally were more likely to transition to and
        continue to use VA healthcare services.
  --Higher proportions of female veterans generally were diagnosed with
        mental health conditions by VA after separation, but lower
        proportions were diagnosed with post-traumatic stress disorder
        (PTSD) or traumatic brain injury (TBI).
  --Higher proportions of female veterans generally were receiving
        disability benefits for mental health conditions, but a lower
        proportion for PTSD and TBI.
  --Gender-based biases were not identified in VBA's adjudication of
        male and female disability claims, but data limitations affect
        a full assessment of some outcomes.
  --VBA has guidance and training for evaluating MST claims, but
        sensitivity training is needed for claims processors and women
        veterans coordinators.
  --VBA has not assessed the feasibility of requiring MST-specific
        training and testing.
                         prosthetics management
    As a result of our oversight reports,\15\ VHA acknowledged that
improvements in prosthetics inventory management are necessary. In
March 2012, we reported VHA needs to strengthen VA Medical Center
(VAMC) management of prosthetic supply inventories to avoid spending
funds on excess supplies and to minimize risks related to supply
shortages. We estimated during April through October 2011 that VAMCs
maintained inventories of approximately 93,000 specific prosthetic
items worth about $70 million. Further, we estimated that VAMC
inventories exceeded current needs for almost 43,500 items (47 percent)
and were too low for nearly 10,000 items (11 percent).
---------------------------------------------------------------------------
    \15\ Audit of VHA Acquisition and Management of Prosthetic Limbs
(March 8, 2012); Audit of VHA's Prosthetics Supply Inventory Management
(March 30, 2012).
---------------------------------------------------------------------------
    VHA cannot accurately account for these inventories and because
inventory management practices are weak, inventory losses associated
with diversion can go undetected at VAMCs. To avoid spending taxpayer
dollars on excess prosthetic supply inventories and risking the
disruption of patient care by experiencing supply shortages, VHA must
ensure VAMCs properly manage prosthetic inventories. By strengthening
VAMC management of prosthetic supply inventories and using supplies
stocked in excess inventories instead of purchasing additional
supplies, VHA can reduce prosthetic supply costs by approximately $35.5
million. VA cannot afford to use valuable financial resources to
purchase, maintain, and store more prosthetic supplies than necessary.
In response to our work, VHA now has a plan to replace its inventory
systems with a comprehensive inventory management system. Completion of
the new system is projected for fiscal year 2015, pending the
availability of funds.
    In addition to the management of prosthetics, we conducted a review
\16\ to evaluate VA's capacity to deliver prosthetic care. We assessed
VA credentialing requirements for prosthetists and orthotists; the
demand for healthcare services; and psychosocial adjustments and
activity limitations of Operation Enduring Freedom/Operation Iraqi
Freedom/Operation New Dawn (OEF/OIF/OND) veterans with amputations and
their satisfaction with VA prosthetic services. We found:
---------------------------------------------------------------------------
    \16\ Healthcare Inspection--Prosthetic Limb Care in VA Facilities
(March 8, 2012).
---------------------------------------------------------------------------
  --All required prosthetist and orthotist staff in VA regional
        amputation centers and polytrauma amputation network sites and
        all their prosthetic laboratories were certified.
  --Veterans with amputations are a complex population with a variety
        of medical conditions and are significant users of VA
        healthcare services and not just prosthetic services.
  --OEF/OIF/OND veterans with amputations were generally adapting to
        living with their amputations. While some veterans reported
        receiving excellent care at VA facilities, many veterans
        indicated that VA needed to improve care. Concerns with VA
        prosthetic services were centered on the VA approval process
        for fee basis or VA contract care, prosthetic expertise, and
        difficulty with accessing VA services.
         veterans integrated service network (visn) management
    In March 2012,\17\ OIG assessed Veterans Integrated Service Network
(VISN) office management controls and fiscal operations to determine if
funds and resources, accountability and transparency, effective
oversight of VHA healthcare facilities, were in compliance with VA
policies. Since their establishment 16 years ago, the VISN
organizational office expenses had increased over 500 percent above the
original estimates. OIG reported VISN offices lacked adequate financial
controls and accurate information for areas such as travel, leased
office space, and performance awards. The growth in operational costs
and the fiscal issues identified supported that VHA needed to
strengthen VISN office financial management and fiscal controls. VHA
lacked fundamental management controls and quality data needed to
ensure that VISN offices effectively and efficiently use staffing
resources that might otherwise be used for direct patient care.
---------------------------------------------------------------------------
    \17\ Audit of VHA's Management Control Structures for Veterans
Integrated Service Network Offices (March 27, 2012); Audit of VHA's
Financial Management and Fiscal Controls for Veterans Integrated
Service Network Offices (March 27, 2012).
---------------------------------------------------------------------------
    The Under Secretary for Health agreed with the findings and
recommendations and put plans in place to establish a more uniform
organizational structure. VHA established work teams to analyze the
VISN office operations and to address the VISN offices' lack of a clear
consistent definition of purpose that links to a standard structure and
function capability. VHA now has agreement on a clear plan to
streamline and standardize VISN organizational structure and staffing
and is in the process of implementing this plan for more effective
oversight of its healthcare facilities and related community-based
outpatient clinics, nursing homes, and veterans' centers.
       veterans integrated service network procurement practices
    Since fiscal year 2000, the OIG has identified procurement
practices as a major management challenge. VA made major changes
intended to strengthen its procurement process including establishing
an integrated oversight process that replaced traditional, technical,
and legal reviews. In a review of VISN contracts,\18\ the OIG assessed
whether VHA implemented the new controls effectively and provided the
oversight and resources needed to ensure VISN contracting officers
award and manage contracts in accordance with acquisition laws,
regulations, and VA policy. We reported that required integrated
oversight reviews were not conducted on about 68 percent of contracts,
when required. In fact, we estimated almost 3,000 contracts valued at
just under $1.6 billion were at risk because systemic contracting
deficiencies associated with acquisition planning, contract award, and
administration were not effectively addressed.
---------------------------------------------------------------------------
    \18\ Audit of VHA's Veterans Integrated System Network Contracts
(December 1, 2011).
---------------------------------------------------------------------------
                          veteran homelessness
    In November 2009, the VA Secretary announced a goal to end
homelessness among veterans by 2015. OIG performed an audit \19\ to
determine whether community agencies receiving funds from the Grant and
Per Diem Program are providing services to homeless veterans as agreed
upon in their grant agreements in fiscal year 2012. Further, we
examined whether program funding was effectively aligned with program
priorities. This program provides transitional housing for homeless
veterans through partnerships with nonprofit and local government
agencies. Serious female veterans' housing, safety, security, and
privacy issues were discovered during the course of our audit that
required immediate management attention by VHA.
---------------------------------------------------------------------------
    \19\ Audit of VHA's Homeless Providers Grant and Per Diem Program
(March 12, 2012); VHA's Safety, Security, and Privacy for Female
Veterans at a Chicago, Illinois, Homeless Grant Provider Facility
(September 6, 2011).
---------------------------------------------------------------------------
    We reported the placement of homeless females in a male-only
approved provider facility. The seriousness of the issues supported a
need for VHA to perform a nationwide assessment to identify other
inappropriate housing situations placing veterans at risk under the
grant program. VHA officials took immediate action to conduct an
inventory to ascertain the gender-mix identified in each funded grant
proposal and the appropriateness of the services available relative to
the veterans currently served. Housing situations were assessed to
better ensure the privacy, safety and security of homeless veterans. We
also reported VHA lacked an effective mechanism to assess and measure
bed capacity, procedures to monitor the liability of reported
information, and sufficient training on program eligibility. A weak
grant application process created uncertainties on the abilities of
some providers to deliver the supportive services described in their
grant proposals. To minimize the risks to homeless veterans in this
program, VHA agreed to implement standards to ensure providers have the
capability and mechanisms to deliver proposed services to homeless
veterans prior to awarding grant funds.
                             va conferences
    In September 2012,\20\ OIG reported that VA processes and oversight
were too weak, ineffective, and in some instances non-existent, to
ensure conference costs were accurate, appropriate, necessary, and
reasonably priced. Simply put, accountability and controls were
inadequate to ensure effective management and reporting of dollars
spent for two human resources conferences. We questioned about $762,000
as unauthorized, unnecessary, and/or wasteful expenses. More than a
year after the conferences, VA was unable to provide an accurate and
complete accounting of costs associated with two of its conferences.
Further, significant expenditures were authorized by VA staff lacking
authority to make the purchases, resulting in unauthorized commitments.
Transparency was lacking for what services VA purchased and paid for.
Sound conference management processes and practices were needed to gain
assurance that future business could be conducted in an economical
manner in order to ensure proper fiscal stewardship of taxpayer funds.
This work is important since VA conference spending had reached almost
$100 million annually.
---------------------------------------------------------------------------
    \20\ Administrative Investigation of the fiscal year 2011 Human
Resources Conferences in Orlando, Florida (September 30, 2012).
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          office of inspector general (oig) investigative work
    From April 1, 2012, through March 31, 2013, the Office of
Investigations opened 1,028 and closed 1,046 investigations, arrested
493 individuals for a wide variety of criminal offenses, and completed
judicial actions resulting in more than $1.8 billion in fines,
penalties, restitutions, and civil judgments.
         service-disabled veteran-owned small business program
    We arrested 13 individuals who defrauded VA's Service-Disabled
Veteran-Owned Small Business Program. Those sentenced during this
timeframe received 142 months' imprisonment and were ordered to pay
$8.7 million in fines, restitution, and forfeiture. Additionally, the
13 individuals and companies involved have been referred to the VA
committee for suspension and debarment. During this timeframe, seven
individuals and four companies were suspended, and four individuals and
one company were debarred from contracting with other Federal agencies.
                            fiduciary fraud
    We arrested 19 individuals who stole money from VA beneficiaries
who were not competent to handle their financial affairs. In addition
to the 266 months' imprisonment imposed this past year, restitution
ordered exceeded $3.5 million.
                          threats and assaults
    The OIG received 561 threat referrals, resulting in 57 full
investigations. We open a referral on every threat allegation that is
reported by VA, VA police service, or others. The vast majority involve
preliminary investigations that normally include an interview of the
subject and results in the subject admitting that they were not serious
about the threat and were only trying to get VA to act on their
particular issue. Full investigative cases are opened for cases that
involve the arrest, involuntary committal, or result in a substantial
amount of investigative work. These full investigations resulted in 36
arrests. Although many threat referrals do not result in judicial
action, we take all threats against VA employees and VA property
seriously.
    We also conducted 35 non-sexual assault investigations resulting in
27 arrests, and 25 sexual assault investigations resulting in 11
arrests. These involved veteran assaults on VA employees, VA employee
assaults on veterans, employee on employee assaults, and veteran on
veteran assaults.
                        beneficiary travel fraud
    We recently prioritized the deterrence of fraud associated with
VA's beneficiary travel reimbursement program, which was funded at
approximately $861 million in fiscal year 2012. Typically, this type of
fraud involves veterans grossly inflating the number of miles driven to
and from VA facilities by providing a false home address on the claim
form. During the last 12 months, we conducted 201 of these
investigations, resulting in the arrest of 63 individuals. In each of
these prosecutions, we encouraged prosecutors to issue press releases
to deter this type of fraud. In addition to developing our own data
analytic tool to proactively identify potential fraud, we have worked
closely with VHA program officials to significantly enhance their data
mining efforts and design new warning posters to be placed where
veterans file claims.
                          new oig initiatives
    We are currently performing an audit to assess whether VHA is
effectively managing purchased home care services to ensure veterans
receive appropriate services.
    OIG's current work in VHA includes examining the management of
hearing aids, as hearing loss is the most common service-connected
disability. We are also assessing whether VHA is effectively managing
the allocation of Home Telehealth Program funds to improve access to
care and to reduce patient treatment. Work in VBA includes projects
that are examining the accuracy and timeliness of GI Bill payments and
assessing the effectiveness of VBA's processing of Quick Start Claims.
While it is too early to report results on the GI Bill project, our
preliminary results support that the processing of Quick Start Program
claims is taking longer to process than the average time for all
disability claims. In addition, our preliminary results are that VBA
needs to improve the Quick Start claims-processing accuracy rate.
    As President Obama's administration has placed emphasis on reducing
spending on management support service contracts, we are examining if
VHA ensured support service contract requirements were justified, and
assessing how well contract performance is monitored. As we continue to
focus our efforts to help VA improve the weaknesses in contract awards
and administration, we have teams examining whether the Technology
Acquisition Center (TAC) is effectively awarding and administering
information technology service contracts. From October 2010 to June
2012, the TAC awarded almost 4,475 contracts valued at $8.8 billion. We
also have two active projects reviewing purchase card activity. One
project is identifying opportunities for VHA to realize savings
annually by leveraging purchase card use while the other project is
examining the extent that VA personnel are making unauthorized
commitments using purchase cards. Lastly, we plan follow-up work to
assess the effectiveness of VA's controls over conference management
expenditures, to determine whether VA is demonstrating effective
controls in spending.
                               conclusion
    At a time of unprecedented demand for VA benefits and service, the
OIG has directed its oversight efforts on VA's most formidable
challenges, including disability claims processing and mental
healthcare. We will continue to provide VA with recommendations on how
to improve benefits and services to veterans, and the information
technology, financial, and acquisition systems that support VBA and
VHA's delivery of these services. We are committed to these efforts
both because it is good government and because it honors our Nation's
commitment to those who served. With increased attention to the areas
outlined in this statement, we believe that VA can improve performance,
achieve savings, and reduce risks.
    Mr. Chairman, thank you for the opportunity to discuss the results
of the work of the OIG. We appreciate the continued steadfast support
and interest you and the subcommittee have demonstrated for our
mission. We welcome any questions that you or other members of the
subcommittee may have.

                           BACKLOG OF CLAIMS

    Senator Johnson. Mr. Griffin, the VA's strategy to breaking
the claims logjam is pinned on successfully developing and
deploying VBMS. Deployment of this paperless system to all
regional offices is scheduled for June 2013.
    In February, the inspector general issued a report on VBMS
and found that the VA had not fully tested the system. However,
the Department continued with the deployment.
    Moreover, I've been told that as recently as last week, the
system was experiencing performance problems. This is very
concerning, to say the least.
    What has the inspector general found in its investigations?
And are you planning any follow-up reports on this issue?
    Mr. Griffin. I would say that the deployment of VBMS at the
regional offices that it has been sent to is not necessarily an
indication that the system is 100 percent operable and ready to
perform. I know that VBA would tell you the same thing, that
there are multiple new initiatives that are being rolled out
simultaneously, and it's being done at a time when they're
facing massive new claims from post-9/11 veterans, from
veterans who are aging, veterans who qualified for newly
identified agent orange diagnoses and benefits, et cetera.
    So they do have a steep climb, but there's not one silver
bullet that's going to make this thing right. There are a whole
series of different initiatives that are being rolled out all
at once, and it's going to be a tough task to try and have
everything work just perfectly in order to meet the 2015 goal.
    Now as far as this follow up work, if I may, Linda
Halliday, who oversees our audit staff, as I mentioned, has a
team that is going to continue to monitor VBMS deployment. And
she has another team that is doing inspections of all the
regional offices on a 3-year cycle. So I would ask her if she
would like to add anything.
    Senator Johnson. Please.
    Ms. Halliday. We are looking at the system, the functional
requirements that are being developed, to see if there is any
gap in those, looking at the viability of the project schedule,
looking at things like the expected transaction volume response
time and whether the system really can produce accurate
results.
    Right now, VBMS has really processed about 4,000 claims.
Not all of those claims were processed through the VBM system
completely, because some went through as the pilots and the
staff doing some of the claims toggled back and relied on
legacy systems when they had some system performance issues.
    But VBA is moving forward, and we will look at both the
production and the system viability and the risks in that
scheduled deployment. We will also look at the accuracy of
claims.
    Senator Johnson. Mr. Griffin or Ms. Halliday, does your
office believe that the 2015 goal is achievable?
    Mr. Griffin. Mr. Chairman, everyone who has attended this
hearing today would love for that to be an accurate prediction.
But is that January 2015? Or is that December 2015?
    Senator Johnson. That the VA can----
    Mr. Griffin. That's a year apart. So I think it's a stretch
goal in the face of the number of different initiatives that
are being brought to bear simultaneously.
    And as Madam Chairman indicated, there's a certain amount
of training that's going to be required in order to make the
switch from the old legacy systems to VBMS.
    And as expected, what we have found is that it's causing
the process to be slower now. That was acknowledged up front,
but that's the reality.
    So 2015 would take a great coming together of a number of
issues, and I think it's really a stretch goal.
    Senator Johnson. Mr. Griffin, as I mentioned in my
statement, I'm concerned that shortfalls in monitoring mental
healthcare patients being treated by outside contractors could
be more widespread than just one facility.
    Does the inspector general's office plan to conduct spot
audits of any other VA medical centers, particularly those in
densely populated urban areas, to assess whether the problems
found at the Atlanta Medical Center are potentially widespread?

                       ACCESS TO VA MEDICAL CARE

    Mr. Griffin. I will give you a preliminary response, and I
want to ask Dr. Daigh to also weigh in on this issue. We did do
an audit on wait times in mental health about 1 year ago. We
found that the methodology that was being utilized to determine
wait times was not one that we found to meet VA's own standard.
We issued a report about that, and we received comments back
from the Department.
    We get about 30,000 hotline contacts a year in our
organization. It covers the full range of activities. A lot of
them involve claims. A lot of them will involve access.
    Frankly, the point that Senator Collins brought up about
excessive medications and the resulting outcomes, which we've
witnessed in the form of sexual assault and regular assault,
and threats on VA employees, veteran-on-veteran threats and
veteran-on-employee threats, are a byproduct of that same
issue. So it is a very important issue.
    Dr. Daigh's people go to every medical center in the
country on a 3-year cycle. They identify what we think to be
the most critical areas to look at, and certainly mental health
is on their radar. So I would ask Dr. Daigh if he would expound
upon that.
    Senator Johnson. Dr. Daigh.
    Dr. Daigh. Yes, sir.
    I would say that the breakdown that we found in Atlanta was
probably best described as an inability to coordinate and
monitor the care of veterans. Because VA Atlanta was
overwhelmed with mental healthcare demand, they had to send to
outside providers for treatment.
    So it's fairly common for me to find, through usually
hotline work, that VA has a very difficult time managing care
that they procure either through what they call their fee-basis
program or, in this case, where they had contracts with these
community mental health providers.
    I should say that in a prior report looking at Montana, we
found the actual opposite result. We found that in Montana
several years ago, VA had a very good alliance with local
mental healthcare providers, to a great impact in a positive
way on delivery of mental healthcare services to veterans.
    I think that VA needs to say to themselves that we're
responsible for all the veterans, not just those who are
enrolled at our facility. And if you start with that mindset,
then when you think about the veterans who are in your region,
and you realize that travel time is an issue, it forces you to
look at the provision of care locally, like Project ARCH, which
I'm only minimally familiar with. But ARCH works well reflects
the kind of coordination that I think VA needs to work on more.
    So there is a system of community mental health providers
and clinics that vary State-to-State and sometimes county-to-
county. But in order to be effective, VA has to have a way to
pay efficiently and pay a reasonable price for the care. They
have to have a way to get the medical record the VA has
electronically into the hands of the provider they'd like to
see this patient. And they have to wait then to receive
information on the care provided.
    So if you simply say, here's a chit for fee basis, go get
care, that doesn't work very well.
    And in Atlanta, again, the failure for the business
practices of the contract, and then the clinical practices of
ensuring that the proper information went with the veteran to a
provider, and that information was received, was really totally
broken.
    So we've seen it work, and, unfortunately, I've seen it
fail more than I've seen it work.
    Senator Johnson. Senator Begich.
    Senator Begich. Mr. Chairman, thank you very much. I just
have a couple questions.
    Thank you all for being here.

                ANCHORAGE VA REGIONAL OFFICE INSPECTION

    You all did an inspector general report for Alaska. VA
showed an error rate, and I'm just curious if you could expand
on that, and what you saw was maybe a significant issue there,
or was it multiple issues?
    Could you help me there on the error rate disability
claims? As you probably saw in the authorizing committee a few
weeks ago, I got a little animated on this issue, because it
was somewhat amazing to me.
    And for such a--I want to say a closed environment--and
Alaska's not complicated. We're not having people leave State,
come back to States. You know, they're there. It's not a
complicated thing.
    And so, first, I want to say, thank you for doing the
report, because without your report, I'm not sure we would have
known the depth of this issue, and the impact it's having on
Alaskans. And it's also a little piece of the bigger issue of
disability claims.
    Can you just give me a sense of where those problems are?
And then, do you feel that they are moving forward at a decent
rate of correcting these errors or these issues?
    And I'll give you one comment here, and that is, as a
former mayor, we had an internal auditor. I always liked when
our Department said, after the audit, they all said, ``We agree
with their conclusions,'' and blah, blah, blah. And then a year
later, I find out my department hasn't done one damn thing.
    So can you give me the assurance I need that they're
actually doing and following up on the issues you've brought
forward?
    I didn't mean to give you a lot there, but this one is a
big issue, as you know.
    Ms. Halliday. Well, we did our first benefits inspections
in 2009. And at that time, we went in and we looked at four
different medical type ratings. The Anchorage VARO had an error
rate at that point of 29 percent for that group of claims.

                     TEMPORARY 100 PERCENT RATINGS

    The second time, in January 2013, we went in and looked at
temporary 100 percent disability evaluations and traumatic
brain injury, and just those two areas, because we were clearly
focusing on some of the financial risks associated with
inaccuracies there.
    Senator Begich. Very good.
    Ms. Halliday. The error rate had gone up to 47 percent. We
were concerned that----
    Senator Begich. Can I pause you there for a second?
    In your 2009 report, did you not have not only notification
of the problem, but suggestions or recommendations, or at least
areas of concern that they should focus on?
    Ms. Halliday. Yes, we did.
    Senator Begich. Is that a fair statement?
    Ms. Halliday. Yes.
    Senator Begich. Did they not do that?
    Now, remember, you're the inspector general. You get to say
what we need you to say to make sure we're trying to figure
this out. Because it sounds like--I mean, that's 4 years--for 3
years. Let's say 3, because 2013 isn't completed.
    Help me understand. You give them a list, and tell them 29,
or whatever the percent is. Three years later, you take two of
the subsets. And they, I don't want to say double, but pretty
sizable increase in errors. So something didn't happen, or
maybe not as aggressively as it could have. Help me here.
    Mr. Griffin. Let me step back a little bit on the process
that we use, because VBA has their own process, called STAR,
wherein they evaluate accuracy in their claims processing.
That's the number that when they're saying in 2015 they'd like
to get to 98----
    Senator Begich. Percent fulfillment and so forth.
    Mr. Griffin. Right. Accuracy.
    Senator Begich. Right.
    Mr. Griffin. When we, with the resources we have available,
go into a regional office to look at the claims that were done
there, if someone is a double amputee, that's one of those
express lane type cases, there's no--I mean, that's a slam-
dunk. This is 100 percent, and you're done with it.
    Senator Begich. Right.
    Mr. Griffin. We change from one cycle to the next what we
think we need to look at. So in 2009, the types of claims we
looked at, we gave them specific recommendations, and they
agreed to fix those.
    When we went back----
    Senator Begich. But did they?
    Mr. Griffin [continuing]. We had different ones.
    Senator Begich. So do you not then, on those that they
agreed to fix, how do you know----
    Mr. Griffin. We will check. We do follow-up. We have a
separate unit that when we put recommendations out----
    Senator Begich. Okay, but it's 3 years.
    Mr. Griffin [continuing]. They say we will fix this by a
date certain.
    Senator Begich. Did they give you dates that are now past
due?
    Mr. Griffin. Yes, that's in our report. In the 2009 report,
when they concur, they will say, completion date of x.
    Senator Begich. Okay, understood. I don't have 2009 sitting
in front of me.
    Mr. Griffin. Right. I know, but just from a process
perspective.
    Senator Begich. Sure. Okay.
    Mr. Griffin. We will keep that report open until we're
satisfied that the issue has been fixed.
    Senator Begich. Is that report still open?
    Mr. Griffin. I don't have it in front of me, either.
    Senator Begich. Okay.
    Mr. Griffin. We will let you know about that and the
subsequent report.
    [The information follows:]

    The 2009 report on the Inspection of the VA Regional Office
Anchorage, Alaska, contained 12 recommendations. We closed our report
on June 17, 2010, which means that the VA Regional Office provided
information on actions they implemented that we believed would address
all of our recommendations. The most recent inspection report released
in January 2013, contains six recommendations and all remain open as of
the date of the hearing.

    Mr. Griffin. So you have to realize, when we review these
temporary 100 percent claims, after 18 months, when you're a
temporary 100 percent claim, there has to be a follow-up
medical exam to see if you still deserve 100 percent.
    Senator Begich. Understood.
    Mr. Griffin. So if that medical exam doesn't happen, and
there are a number of reasons why it wasn't happening, one
being that in some instances there was a problem in the
software, and even if it was put in, it was dropping out of the
system.
    Senator Begich. Understood. Okay.
    Mr. Griffin. But we've looked at the universe of all of
them, in an audit from January 2011, and we concluded after
that audit that over 5 years, if this wasn't fixed, it was
going to cost $1.1 billion.
    Senator Begich. In this office?
    Mr. Griffin. No, nationwide.
    Ms. Halliday. Nationwide.
    Senator Begich. Nationwide, okay. You almost gave me a
heart attack there.
    Mr. Griffin. And we did the Baltimore office weeks ago. We
issued that report. They had an 83 percent error rate in the
temporary 100 percenters.
    So if it's $200 million a year, we're 2 years and 3 months
past the date of that national audit.
    And now the computer glitch is supposed to have been
addressed, but that just deals with future cases. The ones that
we identified as needing to be reviewed to make sure that if it
had fallen out, that it's reinserted, we're still waiting for
proof that that's all been done.
    Senator Begich. Let me ask this, and then I'll ask, Mr.
Chairman, if it's okay, I do have a couple other questions, but
I'll submit those for the record.
    But here's what I want to be able to know and be able to
understand, because this is very frustrating to me, because
being on the appropriations side and being on the authorizing
side, it's kind of an interesting story, you might say.
    So you do the audits. You make recommendations. You follow
that up through a separate office. You keep the audit open
until those items are satisfied, I mean those things they said
were going to be done, are done.
    And then you take another step to make sure what they said
they were going do is done, and producing the results, in
theory, right, to lower the error rate. Would that be the
theory? What you recommend should lower the error rate. Is that
right?
    Mr. Griffin. Yes.
    Senator Begich. Okay. But do you take that last and final
step and give maybe here or to the authorizing committee,
because here's my biggest frustration around this place here.
It's almost like, 3 years from now, we'll have the same
discussion, because everyone does their reports and everyone
says that you bet, we will concur. And then they kind of
concur, but maybe not as robust as we said, and then they'll
tell us we didn't have enough money to do it. And then you do
another audit. And then we say, why don't you do some more?
    So is there a process that we see actually you go and you
audit. They say they do this. You say they've completed it.
And, oh, by the way, now there are results, because the result
you just give me, it's going the wrong way, even though it's a
subset. I recognize that. They are apples and oranges, to a
degree.
    But if they're having problems in this, I would put money
on it, they're having problems elsewhere. I'm just doing an
educated guess, not a data-driven.
    Is that a fair statement or am I way off here?
    Mr. Griffin. It is fair, but what is not fair is the apples
and oranges part.
    The 2009 review looked at different areas. As I said, it
would make no sense for us to invest time and resources to look
at something that is a slam-dunk. And you're not going to get
it----
    Senator Begich. I agree.
    Mr. Griffin. TBI is tough.
    Senator Begich. I agree.
    Mr. Griffin. PTSD is tough.
    Senator Begich. Right.
    Mr. Griffin. Gee, is this, 100 percent, 50 percent, 20
percent or none? And it's a very difficult process.
    The physical injuries are a slam-dunk, and those should be
expedited. TBI is tough. This temporary 100 percenter has just
been something that, you know, has taken too long to get fixed.
    In further answer to your question, when her team goes back
in 2012 to look at what's going on now, they will have looked
at the 2009 report. They will see, yes, they said they'd fix
these things. And while they're there, they will satisfy
themselves that they did.
    The same thing with Dr. Daigh's personnel that are going to
the medical centers on a 3-year cycle. If they were in the
medical center in Chicago at Hines 3 years ago and gave them 10
things or 5 things that they thought needed to be addressed, we
would track those through follow-up.
    It would be too intensive to go back every time. So show me
your policy, show me how you did it.
    But then when his people go back 3 years later, they will
make sure of it.
    Senator Begich. Look at the outcome. Very good. Thank you.
    Thank you, Mr. Chairman. I didn't mean to go on there, but
I think disability claims is a common thread among us all here,
and to understand this process is, I think, helpful for all of
us.
    Thank you very much.
    Senator Johnson. Thank you for your testimony, Mr. Griffin
and colleagues. And thank you for your work on behalf of the VA
and the Nation's vets.

                     ADDITIONAL COMMITTEE QUESTIONS

    For the information of members, questions for the record
should be submitted by the close of business on April 26.
    [The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
              Questions Submitted to Hon. Eric K. Shinseki
               Questions Submitted by Senator Tim Johnson
               integrated electronic health record (iehr)
    Question. Secretary Shinseki, the budget includes $344 million for
the integrated Electronic Health Record. The subcommittee has been very
supportive of this joint VA-DOD effort. However, there are questions
about the future and direction of this program.
    Can you please explain to us what has changed since last year and
what direction the iEHR is taking in 2013?
    Answer. To be clear, VA and the Department of Defense (DOD) are not
moving away from the goal of a single, joint, integrated Electronic
Health Record--both Secretary Shinseki and Secretary Panetta reaffirmed
the Departments' commitment to this in public statements on February
5th. What has changed is the strategy that we will use to accomplish
that goal. The revised program strategy includes a shift in focus to
``quick win'' interoperability accelerators and a shift in strategy
from ``buy, adopt, create'' to ``adopt, buy, create,'' which will
reduce risk and cost, while also accelerating the delivery of
capability to users. As part of this strategy to get the compatibility
sooner, the Departments will define a ``core'' set of integrated
Electronic Health Record (iEHR) capabilities that will allow us to
evaluate the selection of existing Electronic Health Record (EHR)
products to reduce program risks and costs while accelerating
implementation. VA has committed to deploying an iEHR core based on
VistA. DOD is currently in the process of evaluating options, including
both VistA and commercially available products, for its core system.
All of these efforts are focused on meeting the key dates of Initial
Operating Capability (IOC) in 2014 and Full Operating Capability (FOC)
in 2017.
    As well as renewing our commitment to IOC and FOC, VA, and DOD
added a focus this year on accelerators. First, VA and DOD clinical
health data will be made available in near real-time using translation
mechanisms such as the Health Data Dictionary and DOD's adoption of
Blue Button. This data interoperability work will be completed by
January 2014. Second, the Secretaries approved deployment of the
presentation software called JANUS Graphical User Interface (GUI) to
five VA polytrauma rehabilitation centers and two associated Military
Treatment Facilities by July 31, 2013. JANUS is the tool clinicians use
to view VA and DOD health data simultaneously. Third, the Departments
will create a VA-DOD Medical Community of Interest network and security
infrastructure to enable the creation of a logical ``single medical
enclave'' that meets both Departments' security requirements, provides
equal access to iEHR services by both Departments, leverages existing
DOD and VA existing infrastructure, and provides connectivity between
DOD and VA medical networks. This is scheduled to be accomplished by
November 2013. Fourth, the Departments will rapidly adopt an identity
management solution to establish consistent methods for identifying and
retrieving persons across the two organizations. This is scheduled to
be completed by December 31, 2013.
    Question. And, what will this change mean in terms of the overall
cost of the program and timeline for deployment?
    Answer. While the original budget estimate in 2011 projected a
development and deployment budget of $4-$6 billion, this estimate was
conducted using analogous work based on the requirements and
architecture known at that early stage. The Interagency Program Office
(IPO) developed a bottom-up Life Cycle Cost Estimate (LCCE) in
September 2012. This LCCE was nearly double the budget estimate that
was made when the program was just beginning. The development of LCCE
was required as part of the Milestone B approval process, a part of
DOD's acquisition process and the process adopted across the broader
iEHR Program. While VA agrees with the methodology used to develop the
new LCCE, VA is still working with IPO to adjust LCCE to reflect the
significantly lower costs seen by VA as a result of fully embracing the
Program Management Accountability System.
    We believe costs will be driven down by the decision to accelerate
data interoperability capabilities, the shift in strategy to select a
minimal core set of capabilities from an existing EHR system as the
foundation of iEHR, the adjustment of the business rule to ``adopt,
buy, create,'' and institutionalizing the delivery of customer-facing
software in increments of 6-months or less.
    The timeline for deployment has not changed. The Departments are
committed to meeting IOC in 2014 and FOC in 2017.
                       board of veterans appeals
    Question. Mr. Secretary, the average time to resolve an appeal
before the Board of Veterans Appeals is currently approaching 2 years,
and the backlog of claims is growing, from more than 39,000 claims in
2012 to a projected level of more than 65,000 claims in 2013--close to
double. At the same time, staffing at the BVA has been steadily
decreasing. At my direction, the fiscal year 2013 MILCON-VA bill
included an additional $8 million above the budget request for
additional personnel at the BVA.
    What is the current staffing plan for the BVA, and what steps is
the VA taking to address this unacceptable backlog of claims before the
BVA?
    Answer. As noted in the chairman's annual report, in fiscal year
2012 the average time to resolve an appeal before the Board of
Veterans' Appeals (BVA or Board) from physical receipt of the case at
BVA to issuance of a BVA decision was 251 days. This includes the
Board's cycle time of 117 days. Cycle time measures the time from when
an appeal is physically received at the Board until a decision is
reached, excluding the time the case is with a Veterans Service
Organization (VSO) representative for preparation of the written
argument. Notably, the appeals process is bifurcated with most of the
appeals processing steps taking place at the VA Regional Office (RO)
level and the final appeals adjudication taking place at the Board
level. Specifically, when the RO issues a decision with which the
veteran disagrees, the veteran can initiate an appeal at the RO by
filing a Notice of Disagreement (NOD). After that point, the RO issues
a second decision known as a Statement of the Case (SOC). In fiscal
year 2012, the average number of days between the RO's receipt of an
NOD and the issuance of an SOC was 270 days. Following the SOC, if a
veteran wishes to formalize the appeal, the veteran must file a
substantive appeal (VA form 9). After that point, the RO can certify
and send the appeal to the Board for a final decision.
    BVA has commenced an aggressive hiring plan to execute the $8
million additional funding provided in the Consolidated and Further
Continuing Appropriations Act of 2013. In order to complete this hiring
effort, BVA has obtained the necessary Human Resources (HR) support by
signing a memorandum of understanding with the Veterans Health
Administration's HR staff. The Board has also assessed its critical
needs by position type and has updated its Spend Plan accordingly.
Additionally, the Board is in the process of surveying existing office
space, equipment and training needs to accommodate the increase in Full
Time Employees (FTE). Finally, in order to recruit the requisite staff,
BVA has ongoing job announcements open.
    As a result of these efforts, BVA expects to on-board approximately
25 attorneys in the next month. The Board is reviewing and interviewing
additional applicants on an ongoing basis, and will continue to hire
attorney staff for the remaining 4 months of fiscal year 2013 to
execute the additional funding. There is a direct and proportional
correlation between the number of BVA employees and the number of
decisions produced per year, with an average of 90 decisions produced
per FTE. With the $8 million increase, BVA will be able to hire
approximately 55 FTE (all attorneys), thus resulting in an additional
4,950 decisions produced per fiscal year once they are fully trained.
    In addition to pursuing this aggressive hiring plan, to address
BVA's growing pending inventory of appeals, the Board is also actively
engaged in efforts to increase efficiencies in the appeals process. In
particular, BVA has increased Video Teleconference (VTC) hearings,
which allows BVA judges to reduce travel for hearings, and, thus,
remain in the office and leverage the down time to work cases when an
appellant fails to appear for a hearing. VBA and BVA have also
partnered on a Joint Training Initiative to reduce remands to the field
and the resulting rework that is required when BVA remands to VBA.
Additionally, BVA is pursuing a Lean Six Sigma study of the BVA
decision-writing process to find efficiencies to increase decision
output. BVA is also leveraging technology to further streamline
operations, to include use of a virtual docket that allows for
efficient electronic management of BVA hearings, and virtualization of
hearing transcripts and mail processes, thereby eliminating delay
caused by adding paper copies to claims folders. Finally, BVA has set
forth a number of legislative proposals that seek to streamline the
adjudicatory process. These include: (1) allowing BVA more flexibility
in scheduling VTC hearings in order to minimize travel time and
expenses related to conducting in-person hearings in the field; (2)
reducing the time period to initiate an appeal with an NOD from 1 year
to 180 days; (3) clarifying that a timely filed Substantive Appeal (VA
form 9) is a jurisdictional requirement for BVA review; (4) simplifying
the content requirements of BVA decisions, making them more
understandable to veterans; and (5) changing Equal Access to Justice
Act (EAJA) fee requirements to better focus attorney energy at the
Court of Appeals for Veterans Claims (CAVC) on achieving improved
results for veterans.
                                 leases
    Question. Mr. Secretary, as you are aware, the Congressional Budget
Office has changed the way in which it scores VA medical facility
leases. This change has effectively made leasing medical facilities
nearly impossible because of Government accounting rules. This inside
the beltway accounting practice has already prevented 15 new medical
facilities from opening.
    What contingency plans will the Department be instituting to ensure
that VA clinics are accessible to vets should these scoring practices
continue?
    Answer. If the leases requiring authorization do not receive
authorization, VHA will need to execute multiple, smaller leases to
meet the projected demand for the existing services. This will ensure
patients do not face increased wait times, deficient parking, and
cramped space to accommodate the anticipated increases in workload.
Unfortunately, this will create inefficiency with duplication of staff
and logistics at multiple sites, a lack of continuum of care for
veterans in having different facilities providing various services, and
increased costs to contract care to ensure services are provided closer
to the veteran.
    Question. And are current leased facilities in danger of closing
when the lease is up for renewal?
    Answer. Eight leased facilities are in danger of closing, including
five clinical and three research and administrative. They currently
require authorization to renew their current size.
     mental health inspector general report and continuity of care
    Question. Mr. Secretary, the VA inspector general's office recently
released a report regarding mismanagement of the contract mental
healthcare program at the Atlanta VA Medical Center. Alarming as that
report was, I am concerned that the problem may not be limited to only
one facility. Increasing access to mental healthcare has been a
priority of this subcommittee as we have seen the staggering statistics
on PTSD, Traumatic Brain Injury (TBI), substance abuse and other mental
health conditions among the Iraq and Afghanistan vets. And most
troubling, as we have seen a spike in suicides among veterans of these
wars.
    The inspector general reported that a lack of program oversight and
patient care management allowed thousands of patients to ``fall through
the cracks.'' Sadly, some of those patients committed suicide. A lack
of adequate funding and staffing were cited as contributing to the
problems at the Atlanta hospital.
    What is the VA doing nationwide to ensure that mental healthcare
patients are receiving the continuity of care they need, and that
contract mental health programs are being effectively monitored?
    Answer. VA has developed a quality improvement process to confirm
that facilities are implementing the required services and programs for
mental health to ensure veterans receive high-quality mental
healthcare. In fiscal year 2012, VA conducted site visits at all 140 VA
Health Care Systems to review implementation status of the required
mental health programs. Mental health site visitors, trained in the
standardized site visit protocol, were experienced field-based mental
health leaders and staff and mental health subject matter experts from
the Office of Mental Health Operations, Mental Health Services, Veteran
Integrated Service Network (VISN) leadership, and Office of Homeless
Programs. Site visitors spoke not only with facility leadership but
also frontline mental health staff, veterans, and families. The site
visitors served as consultants to support facilities to improve areas
that were noted to be challenging. Following the visit, the facilities
were also asked to develop and submit action plans for ongoing
improvement in areas needing improved quality, including improvements
in continuity of care. VA is working with the facilities to monitor
these improvement efforts and to make additional changes if required.
    In fiscal year 2013, the Veterans Health Administration (VHA)
Mental Health began identifying VA medical centers interested in
initiating community contracts to address local mental health access
problems. VHA Mental Health and medical centers involved in this
workgroup are collectively developing examples of effective quality of
care requirements and processes in contracting for mental health
services. The products will be made available for all VA facilities or
VISNs who are seeking community contracts.
                 black hills health care system (bhhcs)
    Question. Federal law requires the VA to protect, use, and preserve
its historic resources; consider multiple alternatives to proposed
undertakings; solicit and consider public input; and take into account
the effects of the VA's proposed changes to National Historic
Landmarks. Can you describe how the VA has fulfilled each of these
requirements in relation to any potential changes in services that may
be proposed at the Hot Springs, South Dakota, facility?
    Answer. In May 2012, as required by the National Historic
Preservation Act of 1966 (NHPA), VA initiated formal consultation with
the South Dakota State Historic Preservation Office, the National Park
Service, and other consulting parties, regarding proposals to
reconfigure the VA Black Hills Health Care System (VA BHHCS). VA
continues to identify and evaluate a range of alternatives for
providing veterans with safe, quality healthcare services, while also
assessing, in collaboration with other stakeholders, potential effects
to historic properties these alternatives may have. Any recommended
reconfiguration of VA BHHCS services that has the potential to
adversely affect the Hot Springs campus or other historic properties
will continue to be the subject of NHPA consultation, as well as
National Environmental Policy Act analyses, to address such effects
through avoidance, reduction, or mitigation. Stakeholder input
collected by VA will be evaluated as part of the ongoing processes in
accordance with Federal law.
    Question. VA's performance and accountability report for 2012
states that the agency is using the space it owns or directly leases by
116 percent (page II-83); in other words, it is in an overutilization
condition. As a result, the agency's leased space costs have risen to
$608 million in 2012 (page III-52). Yet the agency stewards an
inventory of at least 850 buildings and structures that are unused or
underutilized, some of which are in Hot Springs. How are these assets
accounted for in the VA's space utilization consideration and
performance reporting? Are they removed from the equation and, if so,
why?
    Answer. VA's capital inventory includes all buildings at all
facilities nationwide, including the ``underutilized'' buildings at Hot
Springs. While it is true that VA is in an ``overutilization'' state by
16 percent nationally, the demographics and utilization figures have
wide variance related to specific market conditions, veteran
demographics, and service needs. The Hot Springs campus currently
indicates an excess of space because of the decreasing workload at that
facility caused by the declining veteran population. This has resulted
in the underutilized buildings at the Hot Springs campus.
                                 ______

              Questions Submitted by Senator Mark L. Pryor
                    mental healthcare professionals
    Question. In August 2012, the President issued an Executive order
on ``Improving Access to Mental Health Service for Veterans,
Servicemembers, and Military Families.'' One of the President's
directives was to expand the Department of Veterans Affairs mental
health services staff. Specifically, the VA was directed to hire 1,600
mental health professionals by June 30, 2013, and to hire and train 800
peer to peer counselors.
    In late March, it was reported that 1,089 mental health
professionals had been hired and that the Department was confident it
would reach its target by the end of June.
    Please comment on the specific qualifications of these mental
healthcare professionals. For example, do they range from certified
counselors and therapists, to psychologists with a master's or higher
degree?
    Answer. Basic requirements for all mental health positions include
U.S. citizenship (however, non-citizens may be appointed when it is not
possible to recruit qualified citizens) and the following requirements:
  --Licensed Professional Mental Health Counselor.--Hold a master's
        degree in mental health counseling, or a related field, from a
        program accredited by the Council on Accreditation of
        Counseling and Related Educational Programs and hold a full,
        current, and unrestricted license to independently practice
        mental health counseling, which includes diagnosis and
        treatment.
  --Marriage and Family Therapist (MFT)--Education.--Hold a master's
        degree in marriage and family therapy from a program approved
        by the Commission on Accreditation for Marriage and Family
        Therapy Education or have graduated from a nationally
        accredited program conferring a comparable mental health degree
        as specified in the qualification standards of those
        disciplines (social work, psychiatric nursing, psychology, and
        psychiatry). All additional course work taken to be accepted
        for MFT licensure must come from a nationally accredited
        program in one of the above areas and hold a full, current, and
        unrestricted license to independently practice marriage and
        family therapy in a State.
  --Social Worker--Education.--Hold a master's degree in social work
        from a school of social work fully accredited by the Council on
        Social Work Education. Graduates of schools of social work that
        are in candidacy status do not meet this requirement until the
        school of social work is fully accredited. A doctoral degree in
        social work may not be substituted for the master's degree in
        social work. Furthermore, applicants must hold a current, full,
        active, and unrestricted license or certification by a State to
        independently practice social work at the master's degree
        level.
  --Nurse (Registered Nurse)--Education.--Graduate of a school of
        professional nursing approved by the appropriate State agency
        and accredited by one of the following accrediting bodies at
        the time the program was completed by the applicant: The
        National League for Nursing Accrediting Commission or The
        Commission on Collegiate Nursing Education, an accrediting arm
        of the American Association of Colleges of Nursing. Applicants
        must hold a current, full, active and unrestricted registration
        as a graduate professional nurse in a State, territory, or
        Commonwealth of the United States (e.g., Puerto Rico), or the
        District of Columbia.
  --Psychologist--Education.--Hold doctoral degree in psychology from a
        graduate program in psychology accredited by the American
        Psychological Association (APA). Successfully completed a
        professional psychology internship training program that has
        been accredited by APA and hold a full, current, and
        unrestricted license to practice psychology at the doctoral
        level in a State, territory, Commonwealth of the United States
        (e.g., Puerto Rico), or the District of Columbia.
  --Physician--Education.--Degree of doctor of medicine or an
        equivalent degree resulting from a course of education in
        medicine or osteopathic medicine. The degree must have been
        obtained from one of the schools approved by the Secretary of
        Veterans Affairs for the year in which the course of study was
        completed. Approved schools are: (1) schools of medicine
        holding regular institutional membership in the Association of
        American Medical Colleges for the year in which the degree was
        granted; (2) schools of osteopathic medicine approved by the
        American Osteopathic Association for the year in which the
        degree was granted; and (3) schools (including foreign schools)
        accepted by the licensing body of a State, territory, or
        Commonwealth (e.g., Puerto Rico), or the District of Columbia
        as qualifying for full or unrestricted licensure and hold a
        current, full, and unrestricted license to practice medicine or
        surgery in a State, territory, Commonwealth of the United
        States, or the District of Columbia.
    Question. What method does the VA use to determine how many mental
healthcare professionals are needed to service the veteran population?
Is there a ratio of providers to veterans?
    Answer. VA has developed staffing guidance for general outpatient
mental health teams based on identifying staffing requirements per
1,000 veterans. VA is currently developing similar guidance for
specialty outpatient mental health teams. The factors considered in
developing these models include:
  --veteran population in the service area;
  --mental health needs of veterans in that population; and
  --range and complexity of mental health services provided in the
        service area.
    This guidance is still being evaluated based on access, veteran and
provider satisfaction, quality of care, and provider productivity to
ensure the staffing guidance ensures access to high-quality veterans'
care.
    Question. How is the VA identifying the rural veteran population,
and ensuring they have access to the same level of care?
    Answer. VA has the same staffing requirements for rural veterans as
it does for urban veterans. However, VA has multiple innovative
strategies for ensuring staffing requirements for rural veteran are met
including the use of contract care, the use of telemental health, and
specialized healthcare delivery and transportation programs
specifically designed to meet the unique access needs of rural
veterans. The VA Office of Rural Health (ORH) addresses mental health
needs of rural veterans by funding targeted projects submitted by field
personnel and other related program offices in response to a request
for proposals that is announced each year. Mental health, homelessness,
provider training on mental health issues, and rural clinic mental
health staffing support are always high priorities for ORH. Each
application submitted is peer-reviewed for how well the proposed
intervention or program addresses the identified need. Local needs
assessments are conducted as part of the proposal preparation process.
Typically, the proposals will include information as to the number of
rural veterans potentially impacted, the prevalence of mental health
disorders in the local population, and a geographic gap analysis of
services. In fiscal year 2013, ORH funded 61 projects across 20 VISNs
totaling $21.8 million that included support for the following mental
health related projects.

           FISCAL YEAR 2013 ORH MENTAL HEALTH FUNDED PROJECTS
------------------------------------------------------------------------
      VISN                     Project name                   Funding
------------------------------------------------------------------------
            V01 Chronic Pain Treatment Project                $226,011
            V01 Mental Health Rural Pilots                     400,000
 V01, V03, V06, Rural Health Training and Education          1,112,077
       V21, V23  Initiative
            V02 Behavioral Health Expansion in the             250,000
                 Tompkins/Cortland County Rural Areas
            V02 Depression Medication Monitor Case-            213,328
                 Finding Outreach Program for Rural
                 Veterans
            V02 Equine Therapy for Rural Veterans               20,000
            V02 Veteran Rural Health Medical and               515,278
                 Psychological Resource and Services
                 Center
            V05 Enhance Rural Access Network for               366,473
                 Growth Enhancement (E-RANGE) for
                 Eastern  Shore
            V05 Women's Health, Education and Training         476,791
                 in Rural Areas, Mental Behavioral
                 Health
            V06 Albemarle Primary Outpatient Clinic          1,761,697
                 Includes Mental Health
            V06 Building Communities: Planning for a           106,599
                 National Roll-Out of Rural Clergy
                 Training
            V06 Emporia CBOC Includes Mental Health          1,660,000
                 Services
            V06 Greenbrier County CBOC Includes Mental       1,687,304
                 Health Services
            V06 Robeson County Mental Health Community          28,441
                 Outreach Program
            V06 Staunton CBOC, Wytheville CBOC, and            299,450
                 Lynchburg CBOC Telemental Health
                 Include Mental Health Services
            V06 Tazewell Telemental Health                     146,888
            V06 Educating Rural Clergy                         180,707
            V07 Public Psychiatry Fellowship                    20,000
            V07 Telephone Assisted Dementia Outreach           175,693
            V07 Substance Use Disorders (SUD) and Post         710,815
                 Traumatic Stress Disorder  (PTSD)
                 Services at CBOCs
            V07 Supported Employment for Rural                 235,088
                 Veterans with Post Traumatic Stress
                 Disorder (PTSD)
            V08 Mental Health Intensive Case                   287,057
                 Management
            V10 Expansion of Non-Drug Chronic Pain              41,000
                 Treatment
            V10 Mental Health Intensive Case                   176,346
                 Management Team
            V10 Telemental Health Services                     197,000
            V12 Hancock CBOC Enhance Rural Access              344,000
                 Network for Growth Enhancement Team
                 (E-RANGE)
            V12 Integrated Primary Care Mental Health          860,671
                 Program for Rural Community Based
                 Outpatient Clinics
            V12 Rhinelander CBOC Enhance Rural Access          195,000
                 Network for Growth Enhancement Team
                 (E-RANGE) Team
            V16 Enhance Rural Access Network Growth            303,957
                 Enhancement (E-RANGE)
            V16 Relaxation Training and Self-                   81,240
                 Management of Pain
            V16 South Central Mental Illness Research          458,291
                 Education & Clinical Center (SC
                 MIRECC) Clergy-Mental Health
                 Partnership to Improve Care for Rural
                 Veterans
            V17 Central TX Telemental Health Expansion         120,000
                 Domiciliary
            V17 Harlingen Outpatient Clinic Enhance            360,000
                 Rural Access Network for Growth
                 Enhancement Team (E-RANGE) Team
                 Program
            V17 Telemental Health Virtual Care Clinic          289,790
            V17 Telepsychiatry within Central Texas            494,000
                 Veterans Health Care System Project
                 Expansion
            V17 VISN-Wide Telemental Health Clinic for         150,000
                 Underserved Rural Veterans
            V18 CBOC Show Low/Globe Includes Mental            804,441
                 Health Services
            V18 Enhance Mental Health Services and             164,700
                 Post Traumatic Stress Disorder
                 Outreach for Rural Veterans on the
                 Navajo/Hopi Nation
            V18 Enhance Mental Health Services for             260,000
                 Rural Veterans at the Northern
                 Arizona VA Health Care System CBOCs
            V18 Post-Traumatic Stress Disorder (PTSD)           40,000
                 Awareness Training/Collaboration with
                 Indian Health Services
            V19 Mental Health Rural Pilots                     271,339
            V19 Telepain Treatment                             305,909
            V19 Sheridan VA Medical Center Challenge             5,800
                 Course Enhancement
            V19 Rural Native Veteran Telehealth                102,433
                 Collaborative Education &
                 Consultation
             V2 Depression Medication Monitor Case-            213,328
                 Finding Outreach Program for Rural
                 Veterans
            V20 Alaska Rural Native Telebehavioral             131,500
                 Health Development
            V20 Oregon Rural Mental Health Initiative        1,804,620
            V20 Mental Health Rural Pilots                     200,000
            V20 Sustainment of Mountain Home Outreach          485,800
                 Clinic
            V20 Veteran Cycling for Health & Wellness          134,128
            V21 Extension of Kauai CBOC Mental Health          207,187
                 Services to North/West Kauai
            V21 Extension of Kona CBOC Primary Care            197,800
                 and Mental Health Services to North
                 and South Areas of the Big Island
            V21 Home-Based Telemental Health (HBTMH)           282,382
                 for Pacific Region Rural Veterans
                 Requiring Post Traumatic Stress
                 Disorder Follow-up
            V21 Treatment for Veterans and Family              106,766
                 Members
            V23 Fargo Mental Health Intensive Case             336,000
                 Management (MHICM)
            V23 Mental Health Rural Outreach--Max J.            89,982
                 Beilke (Alexandria) CBOC
            V23 Telemental Health Connectivity with            134,000
                 Good Samaritan Hospital
            V23 Rural Mental Health and Social Work            151,200
                 Services
            V23 Telemental Health Care of Operation            132,278
                 Enduring Freedom/Operation Iraqi
                 Freedom/Operation New Dawn (OEF/OIF/
                 OND) Veterans at Western Illinois
                 University--Macomb Campus
            V23 Addressing Rural Veteran Barriers to           176,884
                 Mental Health Care Using Web-based
                 Screening, Tailored Education, and
                 Direct Outreach
            V23 Evaluation of a Permanent Housing              104,788
                 Model for Homeless Rural Veterans:
                 The Lodge Project Phase 2
               ---------------------------------------------------------
                      TOTAL                                 21,794,257
------------------------------------------------------------------------

    Question. Please describe and discuss the peer to peer counselor
initiative and any current results from the program, or expected impact
once fully implemented.
    Answer. Pursuant to Public Law 110-387, Public Law 111-163, and the
August 31, 2012, Executive order titled ``Improving Access to Mental
Health Service for Veterans, Service Members, and Military Families,''
VHA's Office of Mental Health Services is implementing and expanding
peer support services nationwide. By the end of December 2013, VHA
expects to have 800 peer specialists and peer apprentices deployed
among each VA medical center and each very large community-based
outpatient clinic (CBOC). As a condition of employment, peers working
in VHA must be certified to provide peer support services. VA has
contracted with a not-for-profit community agency to provide the peer
certification training at no cost to the peer. Peer specialists provide
services adjunctive to the services provided by degreed professionals
and are placed in a variety of mental health programs. Peer specialists
promote recovery by sharing their own recovery stories, providing
encouragement, instilling a sense of hope, and teaching skills to
veterans.
    It is too early in the expansion of peer support to provide
clinical outcomes from the program. However, there have been studies of
peer support from non-VA settings as well as from the early, initial
implementation of peer support in VHA. The VA studies show that peers
influenced veterans' involvement in their own care and increased
veterans' social relationships. Other studies have shown several
benefits from peer support, including a decrease in the use of
inpatient mental health facilities, greater satisfaction and quality of
life, greater hopefulness, better treatment engagement, and better
social functioning. We expect similar results from the implementation
of peer support services nationwide.
                        2012 suicide data report
    Question. This February the VA released a comprehensive report on
veterans who die by suicide.
    In Mr. Petzel's response to the 2012 Suicide Data Report he
outlined four immediate actions the Department must take. Action No. 1
stipulated that he receive a full report with ``risk identification
strategies and patient-centered focused care options'' no later than
March 1, 2013. Has this report been created, and can you speak to its
findings?
    Answer. A task group was chartered to address how to move mental
healthcare to a more patient-centered care approach for the five
highest risk groups including veterans with post-traumatic stress
disorder (PTSD), sleep disorders, chronic pain, substance use
disorders, and depression. A plan for addressing this issue was
submitted to Robert Petzel, M.D., Under Secretary for Health, who
approved moving ahead with the implementation strategy. Templates for
care for these groups are being developed as well as a communication
plan to assist in the culture shifts that will be required to fully
implement this strategy within mental health.
    Question. Regarding Action No. 4, can you please discuss the VA-DOD
Joint Suicide Repository in terms of what data is included, and how
that data will enable the VA's suicide intervention strategy?
    Answer. The suicide data repository will hold death and suicide
attempt information from both the Department of Defense (DOD) and VA.
Joint data purchases have been made from the Centers for Disease
Control and Prevention to obtain any death records available for anyone
who has served in the military since 1979. Also included in the
repository will be internal VA and DOD databases that include current
suicide attempt and completion data. Looking at this data from a
combined, broad perspective will allow us to identify more specific
risk factors about military and post-military individuals including,
but not limited to, risk information related to: discharge timeframes,
job categories, deployments, service branch and job categories, medical
diagnosis, medication use, etc. Knowing which and when veterans are at
risk will allow targeted education and outreach strategies as well as
enhanced care at critical periods.
    Question. In addition to the Joint Suicide Repository, how are the
VA and DOD working together to address suicide prevention techniques?
    Answer. VA and DOD have a long history of working together in
suicide prevention. Annual joint educational conferences are held to
share current research findings and care-related strategies. The
Veterans Crisis Line/Chat/and Text Service connects veterans in crisis
and their families and friends with qualified, caring VA responders
through a confidential toll-free hotline, online chat, or text. It also
serves as the Military Crisis Line and provides all the same services
to Active Duty servicemembers both in country and abroad. There are
toll-free options to call from Europe, Korea, and the Middle East. The
VA-DOD Joint Clinical Practice Guidelines have been developed and are
in the review process. Education and awareness programs and materials
are freely shared between the two departments. VA is also an active
member of the DOD Suicide Prevention and Risk Reduction Committee.
                         veterans homelessness
    Question. In 2012 it is estimated that there were 62,619 homeless
veterans on a single night in the United States (Annual Homeless
Assessment Report (AHAR) prepared by HUD). While this is a significant
decline since 2009, veteran homelessness remains a significant issue,
one that my home State of Arkansas is working hard to address.
    The President's budget request commits $1.4 billion towards
programs which prevent or reduce veteran homelessness.
    Can you comment on the types of community-based organizations the
VA provides grants to, and measures of effectiveness that requires
continued and increased funding?
    Answer. VA's partnerships with community-based organizations
provide the backbone to VA's efforts to end veteran homelessness. VA
provides grants to consumer cooperatives, public, and nonprofit private
community providers through the Grant and Per Diem (GPD) Program and
the Supportive Services for Veteran Families (SSVF) Program. VA also
partners with community-based organizations through its Health Care for
Homeless Veterans (HCHV) Contract Residential Treatment Program.
                    grant and per diem (gpd) program
    Question. The GPD Program provides funding through grants to public
(State and local governments and Indian tribal governments) and
nonprofit private organizations to develop and operate transitional
housing and supportive services for homeless veterans. The GPD Program
currently has over 15,000 operational transitional housing beds in
every State, the District of Columbia, Puerto Rico, and Guam. During
fiscal year 2012, over 41,000 unique veterans received services from
the GPD Program. This included over 2,800 women. Over 12,000 veterans
exited the program to permanent housing in fiscal year 2012.
    Answer. There is one 40-bed transitional housing GPD project in the
State of Arkansas. The GPD Program in Arkansas provided services to 192
unique veterans in fiscal year 2012, including 20 women veterans, with
102 veterans exiting the program to permanent housing during that year.
    For the past 20 years, the GPD Program has been a mainstay of VA's
continuum of homeless programs. The GPD Program currently measures its
success through a performance metric which has a target of 60 percent
of homeless veterans exiting to an independent housing arrangement.
Through April 2013, the GPD Program is at 64.55 percent for this
performance measure, currently exceeding the target.
            supportive services for veteran families program
    Question. The SSVF Program provides supportive services grants to
private nonprofit organizations and consumer cooperatives to coordinate
or provide supportive services for very low-income veteran families.
The SSVF Program is designed to rapidly re-house homeless veteran
families and prevent homelessness for those at imminent risk of
homelessness due to a housing crisis. In fiscal year 2012, SSVF awarded
$100 million in funding to 151 community-based organizations serving
veterans families in 49 States, the District of Columbia, and Puerto
Rico. In 2013, the SSVF Program is expected to award nearly $300
million in supportive services grants.
    Answer. St. Francis House based in Little Rock, Arkansas, is
currently the one SSVF grantee in Arkansas. Through March 2013, St.
Francis House has served 94 participants. Of the 94 participants, 76
participants have been discharged from SSVF with 73 participants (96
percent) being placed in permanent housing.
    VA tracks performance of SSVF grantees through data collected in
the Homeless Management Information System and VA's Homeless Registry.
In fiscal year 2012, the first year of SSVF Program operations,
community-based grantees assisted over 35,000 homeless and at-risk
veteran families participating in the SSVF Program. This participation
rate significantly exceeded VA's projected expectation to serve 22,000
in the first year of operation. In fiscal year 2012, the SSVF Program
achieved significant success, with 86 percent of those exiting SSVF
services either being placed or being able to maintain permanent
housing.
   health care for homeless veterans contract residential treatment
                                program
    Question. HCHV Contract Residential Treatment Program provides a
gateway to VA and community supportive services for eligible veterans
who are homeless. This includes ensuring that chronically homeless
veterans and/or those with serious mental health diagnoses can be
placed in community-based programs which provide quality housing and
services that meet the needs of these special populations. Although
VA's HCHV Contract Residential Treatment Program is not technically a
grant program, local VA facilities offer competitive contract
solicitations to community-based providers to provide contract
residential treatment services and housing. Dedicated community
partners are essential to the success of this program. During fiscal
year 2012, HCHV provided funding for 3,287 beds through 299 contracted
community providers in all 50 States, the District of Columbia, and
Puerto Rico.
    Answer. During fiscal year 2012, over 11,500 unique veterans
received residential services from the HCHV Contract Residential
Treatment Program. Over 3,800 veterans exited the program to permanent
housing in fiscal year 2012. In Arkansas alone during fiscal year 2012,
the HCHV Contract Residential Treatment Program provided residential
services to 281 unique veterans and 112 veterans exited the program to
permanent housing. There are currently 139 operational HCHV beds via
six contracted community providers in the State of Arkansas.
                       veteran education benefits
    Question. Since implementation of the Post-9/11 GI Bill, the VA has
also implemented the Yellow Ribbon Program. The Yellow Ribbon program
allows universities (public or private) to supplement this VA benefit,
by covering 50 percent of the difference between that universities
tuition and the highest public in-State tuition rate. The other 50
percent is covered by the VA.
    How has the Yellow Ribbon program improved veteran access to degree
granting institutions?
    Answer. The Yellow Ribbon Program allows veterans to attend and
obtain degrees from private institutions of higher learning or to
attend and obtain degrees from out-of-State public institutions of
higher learning at no cost or with reduced out-of-pocket expenses at
participating schools. There are 1,862 schools, representing 3,269
locations, participating in the Yellow Ribbon Program for the 2013-2014
academic year.
    Question. Since implementation, how many veterans, on average,
participate in the Yellow Ribbon Program annually?
    Answer. VA has not yet collected the data that would allow us to
determine the average number of Yellow Ribbon participants.
Opportunities to participate in the Yellow Ribbon Program were offered
at 1,181 schools in 2009-2010; 1,109 schools in 2010-2011; 2,323
schools in 2011-2012; and 1,859 schools in 2012-2013.
    Question. How long does the VA propose to fund this program?
    Answer. The Yellow Ribbon Program is a permanent part of the Post-
9/11 GI Bill, and as such, is a mandatory expense which is funded
through the ``Readjustment Benefits'' account.
                                 ______

                Questions Submitted by Senator Tom Udall
    Question. As you know I worked to help pass the bipartisan burn
pits registry act last year. I believe that the VA should do more to
inform veterans about the possible threats to their health from
exposure to open burn pits in Iraq and Afghanistan.
    What plans does VA have to inform veterans about the possible
threats to their health and how will this budget support those efforts?
    Answer. VA is committed to the implementation of the burn pit
registry and to a strong communications effort with veterans. VA has
many ongoing programs to inform veterans of the potential health
effects of military service. VA provides a summary of the current
scientific assessment of the long-term health consequences of potential
exposure to open burn pits and other airborne hazards on its public
health Web site . In
addition to this robust Web site, VA subject matter experts (SMEs)
present at various scientific conferences where veterans groups have
been in attendance. SMEs also brief Veterans Service Organizations
periodically, provide information through VA social media such as
Facebook and Twitter, and provide exposure information to veterans
subscribed to the GovDelivery listserv. VA intends to leverage these
programs within its existing budget and is developing a comprehensive
communications plan focused on the burn pits registry. VA has
recognized the need for health risk communication and outreach and has
included this as an element of its joint VA-DOD Airborne Hazards Action
Plan developed in collaboration with DOD. Existing products include a
Web site focused on military exposures developed with veteran feedback,
a Federal Register notice summarizing VA's response to the October 2011
Institute of Medicine study on the Long Term Health Consequences of
Exposure to Burn Pits in Iraq and Afghanistan, periodic briefings to
Veterans Service Organizations (VSO), and educational products to
assist VA staff in communicating health risk from potential exposure to
burn pits and other airborne hazards to veterans.
    Planned communications will continue to emphasize that open burn
pit emissions during deployment to Iraq and Afghanistan are one of the
many exposures of which veterans need to be aware. VA is conducting
epidemiologic studies on health effects associated with deployment to
include potential exposure to burn pits and working to establish the
Airborne Hazards and Open Burn Pit Registry by January 10, 2014, as
required by law. VA's communications plan for the registry has four
main objectives:
  --Increase awareness of VA's burn pit registry;
  --Increase participation in the burn pit registry;
  --Increase care of symptomatic veterans and consultations with
        concerned veterans as appropriate; and
  --Foster understanding of VA's commitment and efforts to characterize
        health effects.
    Our primary target for our communication is veterans who served in
Iraq, Afghanistan, or the 1990-1991 gulf war. Other audiences will be
targeted to enable and encourage them to increase participation in the
registry. These audiences include VSOs and other advocacy groups, as
well as VA staff, including environmental health coordinators,
Operation Enduring Freedom/Operation Iraqi Freedom/Operation New Dawn
Program managers and advocates, women's health coordinators, vet center
counselors, Transition Assistance Program coordinators, and public
affairs officers.
    Question. Last year the VA and the Indian Health Service announced
an agreement in which VA would reimburse IHS for direct healthcare
services provided to American Indian and Alaska Native veterans.
    What is the status of this partnership, and does the budget provide
enough funds to continue expansion of this program to improve access to
Native veterans?
    Answer. The partnership between VA and Indian Health Service (IHS)
continues to grow. For IHS, VA has one signed VA-IHS National
Reimbursement Agreement, with 10 signed Local Implementation Plans for
Phase 1. This was completed ahead of the VA-IHS Reimbursement Agreement
6-month timeline. VA and IHS are coordinating Phase 2 implementation of
all remaining IHS sites. With regard to Tribal Health Program (THP)
reimbursements, VA continues to work closely with individual THPs to
finalize more VA-THP Reimbursement Agreements. There are currently 29
signed THP Reimbursement Agreements.
    Adequate funding is available in the fiscal year 2013 and fiscal
year 2014 budgets to continue implementation of the VA-IHS National
Reimbursement Agreement and THP agreements.
    Question. Like my fellow Senators, the VA Claims backlog is an
issue that I am also concerned about and I am committed to working with
the VA to reduce these claims and support the shift to a paperless and
more efficient system. The current claims process is unacceptable and
our veterans deserve better. That being said, I'd like to shift to one
of the related challenges of your solution to the backlog--a shift to a
paperless system--which creates a significant cybersecurity challenge.
    What precautions is the VA taking to protect veterans information
in personal records from intrusion, and has the VA worked with other
agencies working to reduce the cyber threat such as the military and
the national labs through NNSA?
    Answer. VA is committed to protecting the information we hold on
millions of veterans, their beneficiaries and more than 300,000 VA
employees, and protecting the data VA holds on our Nation's veterans is
one of our highest priorities. VA is responsible for providing the
tools, services and systems that are necessary to protect veteran
information at 151 hospitals, 827 community-based outpatient clinics,
57 benefits processing offices, and over 160 cemeteries or memorial
sites. Our network supports over 400,000 users, and 750,000 individual
devices.
    IT security threats continue to evolve. To that end, we have
implemented the continuous monitoring program, which constantly checks
IT systems and monitors the devices attached to the VA's network.
    VA launched the Continuous Readiness in Information Security
Program (CRISP) in 2012 to proactively address process and policy
deficiencies as well as architecture and configuration issues, and to
change the culture of VA's workforce to ensure that veteran information
security is ``baked into'' their daily routine. As part of the CRISP
effort, VA conducts rigorous vulnerability scanning, continuous
monitoring and patching and software inventory, implementing port
security, anti-virus services, and encryption of non-medical IT
desktops and laptops. The Department has worked to train staff on the
importance of protecting veteran data; as of June 1, over 98 percent of
VA's employees have taken mandatory information security training.
    In addition, through Web Application Security Assessments, VA is
able to identify critical vulnerabilities and potential exploits in VA
systems. VA protects the network infrastructure by identifying all
networks assets, critical database stores, all external connections, as
well as providing the Trusted Internet Connection Gateways services.
    VA works with the Department of Homeland Security and other Federal
entities to protect VA systems and data.
    Question. Last Congress I introduced the Southern New Mexico and El
Paso, Texas Veterans Traumatic Brain Injury Care Improvement Act with
the hope of bringing attention to the need to create a center where
veterans in the region can receive treatment at a polytrauma center or
network site. The polytrauma system of care of the Department includes
four polytrauma rehabilitation centers and 21 polytrauma network sites,
none of which are located within 300 miles driving distance of Fort
Bliss, White Sands Missile Range, or Holloman Air Force Base, all areas
where many veterans have chosen to reside.
    What is VA doing to address the lack of a polytrauma center in the
region and will the VA consider locating a center in the area in the
future and providing sufficient funding for a polytrauma center?
    Answer. VA agrees with the proposal to enhance services for
polytrauma and traumatic brain injury (TBI) in the Southern New Mexico
and El Paso region by establishing a Polytrauma Support Clinic Team at
the El Paso VA Health Care System. This Polytrauma Support Clinic Team,
with an enhanced telehealth component at the El Paso VA Health Care
System, would meet the needs and the workload volume of veterans with
mild to moderate TBI residing in the catchment area and concurrently
facilitate access to TBI rehabilitation care for other veterans from
rural Texas, Arizona, and New Mexico, through telehealth. In fiscal
year 2012, 549 veterans received rehabilitation care related to TBI or
polytrauma at the El Paso VA Health Care System. This workload is
comparable to that of other Polytrauma Support Clinic Teams and
indicates the need for the development of similar capacity at El Paso.
    The VA Polytrauma/TBI System of Care consists of four levels of
facilities, including: 5 Polytrauma Rehabilitation Centers (PRC), 23
Polytrauma Network Sites (PNS), 87 Polytrauma Support Clinic Teams, and
41 Polytrauma Points of Contact. This integrated, tiered system of
specialized care offers comprehensive clinical rehabilitative services
including: treatment by interdisciplinary teams of rehabilitation
specialists; specialty care management; patient and family education
and training; psychosocial support; and advanced rehabilitation and
prosthetic technologies.
    Veterans recovering from TBI and polytrauma in southern New Mexico
and El Paso, Texas, are currently served by the PRC in San Antonio,
Texas; the PNS in Tucson, Arizona, Dallas, Texas, and San Antonio,
Texas; the Polytrauma Support Clinic Teams in Albuquerque, New Mexico,
and Phoenix, Arizona; and the Polytrauma Points of Contact in Amarillo,
Texas; Big Spring, Texas; Prescott, Arizona; and El Paso, Texas. These
facilities participate in regular educational and training activities
focusing on TBI and polytrauma care. Telehealth technologies are used
successfully to complement face-to-face clinical encounters and to
facilitate access to care for veterans residing at a distance from
medical facilities. Services provided via telehealth include
rehabilitation assessment and treatment, mental health, and other
clinical services.
    Question. My office has heard concerns and requested help for many
veteran-owned business attempting to work through the Center for
Veterans Enterprise verification process. I understand the need to
ensure that a business which is claiming veteran-owned status is
actually veteran-owned. Businesses that are not veteran-owned should
not be receiving the benefits intended for veterans. However, I am
concerned about the pace of the process, especially since some
businesses in New Mexico have reported having to wait up to a year or
longer for their certification.
    Does the VA need more resources to help process these claims and
what are your proposals to help veteran-owned businesses, such as those
in New Mexico get through the process faster?
    Answer. The Center for Veterans Enterprise (CVE) has received the
resources needed through the VA Supply Fund to process verification
applications. A solicitation for the development of a new case
management system, called the Veterans Enterprise Management System
(VEMS), is expected to be released in May 2013, with initial
capabilities expected in October 2013. This new system will automate
many labor-intensive parts of the process, producing increased
consistency and efficiency of the program.
    By regulation, 38 CFR part 74, CVE has 60 days, when practicable,
to process a new verification application once it has been deemed
complete. CVE is currently processing new applications in fewer than 40
days. This is down from 73 days at the end of October 2012. VA
attributes this to a number of reasons. First, the Verification
Assistance Program was created. This program has four parts, where a
veteran can take advantage of one or all of the parts. The four parts
include: (1) Verification Assistance Briefs that explain common issues
that lead to denial in layman's terms; (2) the Verification Self-
Assessment Tool that walks the veteran through the regulation and their
documentation to determine if the documentation is in compliance with
the criteria contained in the regulation; (3) Verification Assistance
Partners that offer CVE-trained counselors to assist veterans with
their applications; and (4) the Pre-Application Workshop that helps
veterans understand what must be included in the application and what
to expect from the process. The second factor, introduced in March
2013, is the elimination of certain transfer restrictions, including
the right of first refusal, as a basis for denial. The third factor is
the new Pre-Determination Findings (PDF) program that was launched May
1, 2013. The PDF program issues a findings letter to every business
that would have initially been denied on the basis of the documentation
submitted. Those businesses, whose compliance issues are confined to a
list of certain easily corrected issues, are allowed to clarify their
issues and/or make adjustments to their documentation within a
specified time period with the intent to avoid denial. Those businesses
with more complicated compliance issues, or who do not wish to make the
changes required for compliance are given the opportunity to withdraw
their application prior to receiving a denial letter. By withdrawing,
they can take the time they need to address the issues and resubmit the
application at any time, rather than having to wait in the queue for a
request for reconsideration or the 6-month wait period required by
regulation before submitting a new application once denied.
    Although it is too early to have significant data on the
elimination of transfer restrictions and the pre-determination
findings, the combined factors have driven the approval percentage on
initial applications from 58 percent at the end of fiscal year 2012 to
84 percent at the end of April 2013.
    VA believes that those veterans reporting having to wait up to a
year or longer for their verification are businesses whose
documentation submitted with their initial application was not
compliant with the eligibility criteria in the regulation and were
subsequently denied. The queue for the request for reconsideration, a
process where a firm that was found ineligible can address the issues
found and submit the updated documentation, was taking an average of
146 days to process at the end of December 2012. The average processing
time for requests for reconsideration fell to 92 days in April 2013.
The higher approval percentage of initial applications has driven down
the number of businesses entering the request for reconsideration
queue, thus reducing the overall queuing time for these businesses. VA
expects this trend to continue going forward.
                                 ______

               Questions Submitted by Senator Mark Begich
                     tribal veteran representatives
    Question. I am glad to see you have identified rural veterans--$250
million is included for rural health initiatives such as mobile
clinics, fee-basis care, and telemedicine. Of particular interest, this
funding will also support ``exploring collaborations with other Federal
and community providers.
    You know I have been supportive of expanding services to veterans
to community providers, and my push for a Hero Card, has resulted in
the successful VA/tribal agreements, I would like to know what
``exploring collaborations'' with community and Federal providers
encompasses?
    Answer. VA is committed to increasing access to care closer to home
for rural veterans. This includes collaborating with other Federal
agencies and community providers to provide care and maintain high-
quality standards. For example, under the auspices of the 2010
Memorandum of Understanding (MOU) between VA and IHS, VA increased the
number of online clinical trainings available to IHS providers who
treat veterans by more than 200 new courses. Another VA-IHS
collaborative team established a Bar Code Medication Administration
pilot and related training plan for IHS inpatient facilities. Sharing
agreements have been established or are being developed between VA and
IHS to cover the collaborative use of space, providers, and telehealth
equipment.
    VA and the Department of Health and Human Services (HHS) recently
signed a new MOU that will promote the secure exchange of health
information between VA and community healthcare providers and increase
the knowledge and expertise of the Health Information Technology (IT)
Workforce. This MOU supports the mutual goals of both agencies to have
a highly educated health IT workforce that can support the meaningful
use of electronic health record technology in rural communities. The
MOU also ensures the interoperability and compatibility of VA and
community health IT systems that will ensure better coordination of
care for rural veterans who are dual users of both VA and non-VA
healthcare systems. These non-VA systems may include providers in
private practice, at federally qualified healthcare centers, critical
access hospitals, and other rural healthcare facilities. Projects
created as a result of this MOU include joint VHA Office of Rural
Health (ORH) and HHS Office of the National Coordinator for Health
Information Technology (ONCHIT) innovative new patient-centered Health
Information Exchange pilots that will empower veteran patients to
electronically forward information from their VHA Electronic Health
Records (EHRs) to non-VA community providers. The goals of this multi-
State project are to enhance care coordination, improve medication
reconciliation, decrease duplicative lab testing, and increase patient
safety. VHA and the Health Resources and Services Administration (HRSA)
of HHS are also collaborating and participating in existing rural
health provider training initiatives at pilot sites across the country.
    Also under the auspices of the VA/HHS MOU, VA is collaborating with
the HHS-funded Northeast Telehealth Resource Center to develop a
telehealth training curriculum for Certified Nursing Assistants (CNA).
The CNA Telemedicine Curriculum will be offered to graduates of the CNA
course currently conducted by the Augusta Maine Adult Education program
in collaboration with the Togus Maine VA Medical Center. Many rural
veterans served by VA supplement their VA care with non-VA healthcare
services in their communities. CNAs are widely used in community home
healthcare and nursing home settings where utilization of telehealth
technologies, especially in rural areas, is projected to grow.
    Question. My question is in regard to the Tribal Veteran
Representatives (TVRs), this volunteer program trains workers in
settings like our tribal health facilities to reach out and sign up
veterans in rural areas in VA. I know you have had trainings in Alaska.
These individuals serve as points of contact for veterans in their
community and as liaisons between the veteran and the VA. They learn
about VA healthcare benefits, VA disability, pension, and vocational
rehabilitation benefits, and burial and memorial affairs benefits.
    Can you tell me what the budget is for these important trainings, I
hear there are some funding issues with our Tribal Veteran
Representative (TVR) classes that are held in Alaska? The impact of
canceling one class is huge and could cost us the momentum we have
gained to date. We currently have 109 trained TVRs and one day our
dream is to have TVRs in every community. One other item of note is
they help us reach people in the communities while on outreach that no
one else could. The return on investment is the huge increase in claims
and medical coverage in the State. What do you need from us to keep
these trainings viable?
    Answer. Outreach to American Indian and Native Alaskan veterans to
inform them of the benefits and services they may be entitled to is a
priority for VA. While there is no established budget for TVR
trainings, adequate funding is available to implement this program. VA,
like all Federal agencies, is working to increase its efficiency and
accountability within programs requiring travel and training, including
the TVR program. In addition, VHA is exploring ways to provide this
training via video conferencing and other virtual modalities. The most
recent TVR training, completed this month in Farwell, Michigan, cost
approximately $100,000 for 60 attendees.
                 veterans retraining assistance program
    Question. The increase in FTEs is due to the need for more claims
processors as a result of VRAP (Veterans Retraining Assistance Program,
be a 35-60 years old veteran, unemployed, 12-month training program in
degree or certificate accredited program).
    VRAP has had a rough start in Alaska, and thank you for helping
with the University of Alaska eligibility, what do you need from us to
expand the dates, since some of the rural schools had a late start? Can
you give me some numbers on participants in the program and successes?
    Answer. There are currently two bills pending in Congress that
would extend the end date of the Veterans Retraining Assistance Program
(VRAP). S. 6, Putting Our Veterans Back to Work Act of 2013, proposes
to extend VRAP through March 31, 2016, as well as add an additional
100,000 slots for veterans to begin training after March 31, 2014. H.R.
562 proposes to extend VRAP for 3 months, making the end date of the
program June 30, 2014, instead of March 31, 2014. As of July 19, 2013,
57,409 veterans have used VRAP since the program began in July 2012.
    Of the 240 veterans who have been approved for VRAP in the State of
Alaska, 64 veterans have been awarded benefits.
                                security
    Question. My question is about VA police and security. We have
received reports of CBOCs and regional offices that have no police
coverage or have only contracted security guards. You have been
responsive after inquiries from my office in placing a security guard
in the Kenai and Wasilla offices. While the main clinic in Anchorage
has VA police officers, they are so under staffed that none of the
clinics or leased properties have VA police officers. Due to a suicide
in the parking lot of our Mat-Su CBOC, we have a contracted, un-armed
security guard who leaves the property prior to staff on many
occasions, and the Kenai clinic with contracted security, both I
understand are not trained in working with veterans, I suggest they
take mental health first aid training.
    VA/Alaska also leases space at the Northway Mall in Anchorage. They
have at least 30 employees working there to include all of C&P staff.
It seems as though pocket areas across the country, specifically rural,
have less VA police on staff. Perhaps lower staffing numbers may be
correlated to an assessment by facilities in communities of low risk;
and on the other hand strengthening presence in high crime communities.
    I am very concerned about the recruitment/retention. Even before
the downgrades started 3 years ago, VA police are underpaid compared to
DOD police. What are your plans to beef up security and pay the VA
police wages that will retain them?
    Answer. In response to growing concern for the safety of our
patients and staff at the VA Alaska Healthcare System's four CBOCs, the
following measures were incorporated:
  --May/June 2012--cameras were brought online which are monitored by
        VA police during business hours for our most at-risk
        facilities: Mat-Su and Kenai.
  --May 2012--contract security was brought on board for the Mat-Su and
        Kenai CBOCs.
  --VA police physically report to any CBOC for a law enforcement
        presence when requested or needed.
    The CBOCs located in Fairbanks and Juneau have excellent local
support and are located in fairly secure areas. Fairbanks is located
within the Fort Wainwright military base and perimeter providing on
site security and a very speedy response to requests for service. The
Juneau CBOC is located within a Federal building inside a perimeter
that is protected by a metal detector, 100-percent ID check, and full-
time on-site security staff contracted by Federal Protective Service.
    Since the incorporation of contract security at Mat-Su and Kenai,
there have been no documented reports of concerns or incidents.
    In regards to training, a training sergeant provides veteran-
specific training to each contract security officer that comes on
board. This includes, at minimum:
  --security general orientation;
  --completion of VA security law enforcement forms and report;
  --handling disturbances;
  --package examination procedures;
  --VA police standard operating procedures;
  --response to bomb threats and other disturbances; and
  --VA general orientation.
    All contract security officers also attend new employee
orientation.
    Security officers arrive at 0800, when the clinics open, and leave
at approximately 1600, which is when the clinics close. Although some
staff remain on-site after hours, the clinics are secured at the time
of closing.
    Question.
    $300 Million for Supportive Services for Veteran Families.--The
Supportive Services for Veterans Families (SSVF) is one of the first
programs the VA has that supports families, and I commend you on your
efforts to prevent family homelessness. I know the Catholic Social
Services in Alaska has shown some good results in keeping veteran
families in their homes, what are your plans for the $300 million in
this budget, are you expanding the program?
    (HUD-VASH) Case Management; and $250 Million for the Grant and Per
Diem Program.--Approximately 75 percent of the increase of the 2013
enacted level is to fund case management for additional HUD-VASH
vouchers that VA anticipates will be allocated in fiscal year 2014.
HUD-VASH and grant per diem both important to your goal of ending
veterans homelessness. I do have concerns about the case management
piece. I want you to tell me about VA effort to expand the case
management to the community, I don't see why you have to hire VA
employees, when there are qualified case managers in the communities,
for example, in rural areas, there may not be a CBOC, so chances are
the veterans would not be able to access HUD-VASH vouchers. Tell me
your plans to look at community case managers (outside of the VA
employees).
    Answer. The HUD-VASH Program remains a crucial component of VA's
Plan to End Homelessness Among Veterans. The HUD-VASH Program is
focused on ensuring the most in-need and vulnerable veterans are
accessing the valuable resources of the program. To this end, VA
closely monitors case loads to ensure they include primarily those who
are chronically homeless and in need of intensive case management to
navigate the system and sustain long-term housing stability.
Partnerships with community agencies are a key strategy in advancing
this goal. In addition to actively partnering with communities to
outreach and identify chronically homeless veterans, VA recognizes the
potential for community agencies to provide contracted case management
services in lieu of VA. VA has encouraged medical centers to consider
this approach in the past 2 years. To assist VAMCs in their contracting
efforts, VA Central Office recently convened an Integrated Product Team
(IPT) with the charge of reviewing VA's contracting efforts in the HUD-
VASH Program and to determine how best to facilitate contracting as an
option for providing case management services. This IPT produced
standardized contracting solicitations as well as a new national
Statement of Work for VAMC use in pursuing contracting in the future.
The IPT standardized products should facilitate a quicker and more
efficient contracting process for those VAMCs that choose to contract
for case management services.
    Unfortunately, many VAMCs attempting to contract for case
management services have experienced challenges identifying community
agencies with sufficient capacity, experience, and training that can
provide the requisite case management services in a cost-effective
manner. In fact, VAMCs in both Washington and Alaska attempted to
contract for case management services in fiscal year 2012 and
ultimately determined contracting would be cost prohibitive. In
contracting for case management services, VA must also ensure
compliance with all regulatory contracting requirements, a process that
can be time intensive. Additionally, some communities have found it
difficult to identify agencies willing or able to provide equivalent
case management to the standard provided within VA programs. Despite
these challenges, VA continues to evaluate and encourage the
development of capacity for community case management and is open to
suggestions and mechanisms that would allow further engagement with
community partners.
                                 leases
    Question. Can you tell me about the challenge the CBO has created
by changing the scoring on medical leases? What impact could this have
on veterans if it is not resolved?
    Answer. [A response was not provided at press time.]
                                 ______

                Questions Submitted by Senator Mark Kirk
               integrated electronic health record (iehr)
    Question. The VA agreed in March 2011, along with the Department of
Defense, to develop an integrated Electronic Health Record (iEHR) for
use by both Departments. Earlier this year, the project took a very
different turn the decision was made not to create a truly joint
record, but instead develop an ``interoperable'' record.
    VistA must be modernized in order to meet the demands of the iEHR.
How much will it cost to modernize VistA, and what is the timeline for
modernization? Does the VA have enough information on the end-product
to begin work modernizing VistA?
    Answer. VistA represents a longstanding and overwhelmingly
successful investment on the part of VA that remains viable with a
strategic modernization investment. VA is managing VistA modernization
via an ``open source'' strategy. This will allow VA to meet its
commitment to keeping the code open source and more rapidly develop and
deploy enhanced versions. Our open source model ensures that veteran
and clinician needs are met without a slow feedback loop between
establishing requirements and development. The availability of VistA as
an open source solution provides opportunities for both small and large
businesses to offer implementation support as well as value-added
enhancements and modernization. In fact, there is already a large VistA
developer community that participates in new code development.
    VA is managing its open source modernization of VistA through the
Open Source Electronic Health Record Agent (OSEHRA), which was
established in August 2011 as an essential element of VA's health
record modernization initiative. OSEHRA, which we sometimes refer to as
a custodial agent, is a code repository with community-structured
design, implementation, access, and licensure mechanisms. With over
2,200 members representing 100 companies, OSEHRA already provides a
transparent and cost-effective means to incorporate new features and
capabilities into the VistA source code.
    VistA was made to be adaptable and extendable. Although VistA has
been around for some time, the functionality and technology continue to
evolve. Major releases and enhancements in the last few years include
Bed Management System, Pharmacy Reengineering Emergency Department
Information Software, Surgery Quality Workflow Manager, and others.
Continuous improvements include over 2,211 changes deployed in
incremental patches over the last 3 years. The fact that VA was able to
deploy the changes mentioned above emphasizes the ease of change and
version control to VistA.
    Question. Can it be assured a modernized VistA will be compatible
with the new core system the DOD will select so the result is an actual
interoperable health record?
    Answer. At the joint meeting in early 2013, both Secretary Panetta
and Secretary Shinseki codified that both Departments' ``cores'' must
conform to previously agreed upon standards (data, interfaces,
enterprise service bus, and user interface) to ensure interoperability.
The Secretaries agreed that the DOD core will be seamlessly
interoperable.
    Question. Has the VA given any consideration to utilizing another
core option, like a current commercial off the shelf system or the
development of an entirely new system (much like DOD is currently
doing)? Why is the VA satisfied with utilizing VistA? Is there a need
to review other options?
    Answer. Please see the attached ``Why VistA?'' white paper.
    [The referenced white paper was not available at press time.]
    Question. How will the end-user (the veterans, the doctors) be
affected by the VA and DOD decision to utilize different core systems
rather than one joint system?
    Answer. If all of the agreed to standards and secretarial
commitments are met, the end-user should not be negatively impacted.
    Question. Would it be overall less expensive for the two
Departments to utilize the same core system (e.g., both use VistA or
both use the core DOD selects)?
    Answer. It is possible that if both Departments bought and deployed
the same core, economies of scale would be achieved and the cost would
be less.
    Question. The President's fiscal year 2014 request asks for $252
million in development funding for the Interagency Program Office
(IPO). That is more than half of the entire IT development request.
What will the IPO produce in fiscal year 2014 with this development
funding? Outline specific expected deliverables in fiscal year 2014.
    Answer. The President's fiscal year 2014 request for iEHR includes
funds that will be obligated by both VA and IPO to deliver key
functionality of the iEHR program. This includes the modernization of
VistA and delivery of key products needed in order to make the 2014 IOC
delivery date. The funds include money for the Virtual Lifetime
Electronic Record-Health, patient scheduling, systems integration,
pharmacy, laboratory, order services, and development of the enterprise
service bus, among other key deliverables.
    Question. How will the iEHR Initial Operating Capability (IOC)
``play a critical role in resolving the major pharmacy challenges that
are currently being experienced at the James A. Lovell Federal Health
Care Center?'' (Page 5A-47 volume 2.)
    Answer. IOC will not play a critical role in resolving the pharmacy
challenges. IOC is about delivering on the commitment to deploying a
single, joint, common, iEHR system that is based on an open
architecture and non-proprietary in design. In addition, VA is
committed to fixing the pharmacy issue at the James A. Lovell Federal
Health Care Center in North Chicago through the Data Management Service
and other initiatives specific to North Chicago.
                           claims processing
    Question. Mr. Secretary, the VA has received a lot of press
lately--none of it complementary--regarding an issue that we have long
followed here on this subcommittee, claims processing. In spite of
Congress's appropriation of additional funds to address personnel and
technological issues, the backlog continues to grow and has now reached
unbelievable levels, especially in Chicago.
    When will we know if your efforts to reduce the backlog are
working?
    Answer. Right now, too many veterans wait too long to receive
benefits they deserve. This has never been acceptable to the Department
of Veterans Affairs (VA) or to the dedicated employees of VBA--52
percent of who are veterans themselves. VBA is aggressively
implementing its Transformation Plan, a series of people, process, and
technology initiatives designed to eliminate the claims backlog and
achieve our goal of processing all claims within 125 days with 98-
percent accuracy in 2015. VBA is retraining, reorganizing, streamlining
business processes, and building and implementing technology solutions
based on the newly redesigned processes in order to improve benefits
delivery.
    Initially planned for deployment throughout fiscal year 2013, VBA
accelerated the implementation of the new organizational model by 9
months, beginning in fiscal year 2012, due to early indications of its
positive impact on performance. Given the magnitude of this change,
each office transitioned to the new organizational model individually.
Significant support and training were critical throughout this
transition. As of March 2013, the new organizational model was fully
operational at all 56 regional offices. As is anticipated with any
change of this magnitude, there was some short-term impact on
performance as we ensured that the training, communications, and other
essential change management activities were conducted to appropriately
prepare the workforce.
    At the same time we also began the nationwide deployment of our new
paperless electronic claims processing system, the Veterans Benefits
Management System (VBMS). Generation One of VBMS began in 2010 with the
conceptualization, piloting, development, and deployment of baseline
system functionality with improved quality (required actions and
automation) and efficiency (no paper). VBA began deployment of VBMS
Generation One in September 2012, concluding the calendar year with 18
stations on the system. It is important to note that early adopters of
first generation technology participated heavily in the development and
refinement of efficiencies and functionality of the system, which had a
direct impact on productivity as a result of the live test environment.
These stations paved the way for the accelerated deployment of VBMS,
which will enable VBA to track and measure productivity outcomes in a
consistent and accurate manner once all regional offices are operating
with the new technology and after a period of stabilization. The first
18 stations enabled VBA to also test business processes and
functionality for the establishment of eFolders in VBMS and the model
for tracking and shipping of paper-based claims with two scanning
vendors. Generation One of VBMS concluded with the successful
implementation of Release 4.1 in January 2013. This generation
culminated in a foundational Web-based, electronic claims processing
solution. Under our accelerated deployment schedule, all 56 regional
offices and our Appeals Management Center are now using VBMS. Each VBMS
site deployment is also supported by organizational change management
practices (including extensive training) to ensure employees are able
to adapt to and adopt the new technologies and solutions. We will also
continue to enhance the automated functionalities and build additional
system capabilities in three future generations of VBMS to be deployed
over the next 2 years. As we move into future generations of VBMS, our
focus is on leveraging more complex automation features and more
extensive data exchange and system integration capabilities so that our
employees will be able to process claims electronically from receipt to
payment.
    VBA is tracking execution of its transformation initiatives against
our key measures of performance, including pending and completed
ratings, timeliness, accuracy, and the impact on the backlog. The
quality of the transformation initiatives is measured through a 3-month
rolling average accuracy metric that is reported on VA's ASPIRE Web
site which can be found at http://www.vba.va.gov/reports/aspiremap.asp.
VA projected that the backlog (claims pending over 125 days) would be
approximately 595,000 claims at the end of fiscal year 2013. We are
currently significantly below that projection. As of May 14, 2013,
there are 566,802 claims in the backlog (67.3 percent of the
inventory). This is down from a peak of 611,073 claims on March 25,
2013--a reduction of 44,271 backlogged claims in less than 2 months.
    Question. When will we begin seeing a turnaround at regional
offices like Chicago?
    Answer. On April 19, 2013, VA announced a new initiative to
expedite compensation claims decisions for veterans who have waited 1
year or longer. Under this initiative, VA expects to have all claims
pending over 1 year eliminated from the current claims backlog within 6
months. As of June 15, 2013, over 2,700 Illinois veterans received a
decision on their pending claims. On June 20, 2013, VBA shifted its
focus to claims that have been pending over 1 year. Many veterans
served at the Chicago Regional Office (RO) will be provided decisions
on their claims as a result of this initiative. VA claims raters are
making provisional decisions on the oldest claims in inventory, which
will allow veterans to begin collecting compensation benefits more
quickly, if eligible. Veterans will be able to submit additional
evidence for consideration a full year after the provisional rating,
before the VA issues a final decision. Provisional decisions will be
based on all evidence provided to date by the veteran or obtained on
their behalf by VA. If a VA medical examination is needed to decide the
claim, it will be ordered and expedited.
    It is important to understand that as a result of this initiative,
metrics used to track benefits claims will experience significant
fluctuations. The focus on processing the oldest claims will cause the
overall measure of the average length of time to complete a claim--
currently 314 days nationally--to skew, rising significantly in the
near term because of the number of old claims that will be completed.
Over time, as the backlog of oldest claims is cleared and more of the
incoming claims are processed electronically through VA's new paperless
processing system, VA's average time to complete claims will
significantly improve. In addition, the average days pending metric--or
the average age of a claim in the inventory--will decrease, since the
oldest claims will no longer be part of the inventory.
    Question. By the end of 2013, what type of backlog should we expect
to see at regional offices around the country?
    Answer. VA projected that the backlog (claims pending over 125
days) would be approximately 595,000 claims at the end of fiscal year
2013. We are currently significantly below that projection. As of May
14, 2013, there are 566,802 claims in the backlog (67.3 percent of the
inventory). This is down from a peak of 611,073 claims on March 25,
2013--a reduction of 44,271 backlogged claims in less than 2 months.
    Question. What constitutes an accurate claim? How is accuracy
determined?
    Answer. VBA's Quality Assurance Program currently measures accuracy
of disability compensation claims on two different levels. The first
assessment is based on review of the claim as a whole (claim-level)
with all claimed disabilities or issues associated with a work credit
known as an end product (EP). Audit-style case reviews are conducted
after completion of all required processing actions on a claim. The
review represents a measure of accuracy of all adjudicative actions to
include addressing all issues, completing all required evidence
gathering actions, appropriately granting or denying benefits,
assigning correct evaluations and effective dates, and paying the
correct amount of benefits. Accuracy of the claim is determined if all
of these adjudicative actions are processed correctly. If there is
deficiency in any of these elements that would ultimately impact the
outcome of the decision, the entire claim or EP is considered
inaccurate. This process is considered an ``outcome-based'' accuracy
review.
    In addition to the claim-level accuracy measurement, VBA began
recording the accuracy of decisions at the issue-level on October 1,
2012. The premise of the issue-level review is generally the same;
however, each claimed disability or issue is independently determined
as correct or incorrect regardless of its impact on the other
decisions. This measurement of accuracy provides a more detailed and
accurate assessment of the work completed by field stations. The data
collected at this level allows for more focused training and will drive
behaviors that will ultimately improve the quality of decisions.
    Question. When will electronic claims filing be available to all
veterans?
    Answer. Currently, all veterans are able to file certain claims
electronically. Veterans can file electronic claims for disability
compensation including fully developed claims, additions and changes to
dependents, and claims for approval of school attendance. Veterans can
also request the appointment of a Veterans Service Organization (VSO)
as the claimant's representative and authorize and consent to release
information to VA electronically.
    Additional electronic claims capabilities expected to be available
to all veterans and VSOs later in 2013 will include:
  --Applications for increased compensation based on unemployability;
  --Statements in support of claim for service connection for Post-
        traumatic Stress Disorder (PTSD) and PTSD secondary to personal
        assault; and
  --Applications for burial benefits.
    Through its Veterans Relationship Management initiative, VA has
made it easy to file claims electronically by providing two entry
portals:
  --eBenefits is available for veterans who want to file a claim on
        their own. This is a joint VA/Department of Defense (DOD) Web
        portal that provides resources and self-service capabilities to
        veterans, servicemembers, and their families to research,
        access, and manage their VA benefits, military benefits, and
        personal information. eBenefits allows veterans, using a free
        premium account, to submit claims and upload supporting
        documentation.
  --The Stakeholder Enterprise Portal (SEP) will expand access to our
        external business partners, such as VSOs, education providers,
        physicians, attorneys, loan appraisers, other benefits
        providers who will be able to electronically access
        information, submit claims, and perform other actions on behalf
        of veterans. SEP currently allows members of accredited VSOs to
        electronically complete the same types of claims that are
        available for veterans to submit, upload supporting documents,
        view the status of claims, view payment history and details,
        and accept or reject power of attorney applications.
    Our veterans deserve a timely and positive experience each time
they contact VA. We are committed to making dramatic improvements, and
will continue our aggressive efforts to ensure we are providing
accurate and comprehensive information and assistance to our veterans
and their families in a professional and compassionate manner.
    Question. How many veterans currently receive VA benefits after
going through the Integrated Disability Evaluation System (IDES)? If
such figures were included in the total number of pending and completed
claims, how would it affect the backlog figures?
    Answer. In fiscal year 2012, 14,192 veterans completed VA benefit
claims through IDES. In fiscal year 2013 (as of May 13, 2013), 12,737
veterans have completed VA claims through IDES. All completed IDES
claims are counted in VA's total number of completed claims. Once VA is
notified that an IDES participant has been medically separated from the
military, the IDES claim becomes part of VA's pending disability claims
workload. It would not be appropriate to consider IDES claims from
servicemembers whose fitness for continued service has not yet been
adjudicated by the military as part of VA's pending workload.
    Question. It has recently been noted that a ``veteran's claim sits
stagnant for up to 175 days as VA awaits transfer of complete STR
(service treatment records) from DOD.'' How can Congress assist the VA
in coordinating with the Department of Defense to improve this wait
time?
    Answer. VBA continues to regularly and diligently work with DOD to
obtain complete service treatment records (STR) faster and more
efficiently. As such, no congressional action is needed.
    One of the largest endeavors VA and DOD are working towards jointly
is the electronic transfer of STRs to VA. On December 6, 2012, VBA
reached an agreement with DOD requiring the military services to
certify a servicemember's STRs as complete as possible at the point of
transfer to VA. Effective January 1, 2013, all five military services
began full implementation of STR certification.
    VA asked for and received two accounts for each VBA regional office
into DOD's Armed Forces Health Longitudinal Technology Application
(AHLTA) system, which enables VBA to review any DOD records that VBA
does not already possess in order to complete claims. The AHLTA print-
to-portable document format (PDF) pilot is scheduled to begin in
September 2013 to provide VA electronic data (PDF) of information
contained in AHLTA.
    DOD will also deploy the Healthcare Artifact and Image Management
Solution (HAIMS) to provide a mechanism for scanning and uploading
paper documents to make them readily available to VA. Additionally, the
technology could also be used to scan and upload paper medical record
items received from private-sector providers. DOD has initiated an
accelerated deployment schedule for HAIMS with a goal of stopping the
flow of paper STRs to VA by December 2013.
    Further, VBA has an agreement with DOD to provide 100-percent-
complete service treatment and personnel records in an integrated
Electronic Health Record (iEHR) for the 300,000 Active Duty, National
Guard, and Reserve servicemembers departing annually. This will
increase the number of fully developed claims submitted. In the short
term HAIMS and in the long term iEHR are both critical efforts to
reduce the time for VA to receive STRs from DOD significantly.
                           mandatory funding
    Question. Mr. Secretary, you stated in your budget request $86.1
billion is needed to satisfy entitlement spending for VA's mandatory
programs in fiscal year 2014. This is an 18-percent increase over the
fiscal year 2013 enacted level. The fiscal year 2013 request was also a
17-percent increase over the previous fiscal year 2012 enacted level.
    Do you foresee a trend where the VA's mandatory spending will
continue to increase each year by upwards of 20 percent? Should we
continue to expect such large mandatory increases each year?
    Answer. While the budget authority for VA's mandatory programs
increased by these amounts, overall mandatory obligations are not
increasing upwards of 20 percent. Of the $86.1 billion appropriation
requested for VA's mandatory programs in fiscal year 2014, $71.2
billion, or 83 percent, is for the Compensation and Pension (C&P)
account and $13.1 billion, or 15 percent, is for the Readjustment
Benefits (RB) account. Total obligations for these accounts grew 7.3
percent and 3.8 percent, respectively.
    The fiscal year 2014 budget authority for the C&P account increased
16 percent over the fiscal year 2013 level; however, total obligations
increased just 7.3 percent over the fiscal year 2013 level. The larger
increase in budget authority is due to an unobligated balance of $5.0
billion at the end of fiscal year 2012 which was carried into fiscal
year 2013. Funds appropriated to the C&P and RB accounts are authorized
to obligate until expended. Therefore, the $5.0 billion unobligated
balance at the end of fiscal year 2012 reduced the amount of new budget
authority required for fiscal year 2013. The fiscal year 2013 budget
authority also reflects a request for a transfer from the RB account to
the C&P account to fully fund fiscal year 2013 obligations. This
request is consistent with the administrative provision section 201,
and when coupled with the $5 billion in previously authorized funding
available for obligation in fiscal year 2013 and $60.6 billion
appropriation, supports anticipated obligations of $66.4 billion.
    In addition, the fiscal year 2014 appropriation request for C&P
does not anticipate an unobligated balance carried forward from fiscal
year 2013; therefore, budget authority equals obligations in fiscal
year 2014. Obligations for the C&P account are expected to continue to
increase at historical levels of around 7 percent annually. Please see
the following chart for additional detail.


----------------------------------------------------------------------------------------------------------------
                                   Compensation and pension funding (dollars in           Percent Change
                                                    thousands)                   -------------------------------
                                 ------------------------------------------------   Fiscal year     Fiscal year
                                                                                      2012 to         2013 to
                                    Fiscal year     Fiscal year     Fiscal year     fiscal year     fiscal year
                                       2012            2013            2014            2013            2014
----------------------------------------------------------------------------------------------------------------
Appropriation...................     $51,237,567     $60,599,855     $71,248,171           18.3%           17.6%
Transfer from RB................  ..............         824,838  ..............             N/A             N/A
Appropriation Adjusted..........      51,237,567      61,424,693      71,248,171            19.9            16.0
Unobligated Balance SOY.........      12,930,390       5,000,894  ..............             N/A             N/A
                                 -------------------------------------------------------------------------------
      Total Funding Available...      64,167,957      66,425,587      71,248,171             3.5             7.3
                                 ===============================================================================
Obligations.....................      59,167,063      66,425,587      71,248,171            12.3             7.3
----------------------------------------------------------------------------------------------------------------

    Similarly for the RB account, while the fiscal year 2014
appropriation request was 17.3 percent over the fiscal year 2013 level,
fiscal year 2014 obligations are expected to increase just 3.8 percent
over fiscal year 2013 levels. This is primarily due to an unobligated
balance of nearly $2.6 billion that was carried into fiscal year 2013
which, in addition to the new budget authority of $11.2 billion and
$321.6 million in collections from DOD, is available to fund benefits.
Please see the following chart for additional detail.


----------------------------------------------------------------------------------------------------------------
                                     Readjustment benefits funding (dollars in            Percent Change
                                                    thousands)                   -------------------------------
                                 ------------------------------------------------   Fiscal year     Fiscal year
                                                                                      2012 to         2013 to
                                    Fiscal year     Fiscal year     Fiscal year     fiscal year     fiscal year
                                       2012            2013            2014            2013            2014
----------------------------------------------------------------------------------------------------------------
Appropriation...................     $12,108,488     $12,023,458     $13,135,898           -0.7%            9.3%
Transfer to C&P.................  ..............        -824,838  ..............             N/A             N/A
Appropriation Adjusted..........      12,108,488      11,198,620      13,135,898            -7.5            17.3
Unobligated Balance SOY.........       1,221,327       2,554,542         577,047             N/A             N/A
Collections from DOD............         365,193         321,581         303,698           -11.9            -5.6
                                 -------------------------------------------------------------------------------
      Total Funding Available...      13,695,008      14,074,742      14,016,644             2.8            -0.4
                                 ===============================================================================
Obligations.....................      11,140,466      13,497,695      14,016,644            21.2             3.8
----------------------------------------------------------------------------------------------------------------

    Question. Will you explain the major factors contributing to this
large yearly increase in mandatory entitlement spending?
    Answer. Please see the response to question 1. In addition, while
the budget authority for VA's mandatory programs increased by these
amounts, overall mandatory obligations are not increasing upwards of 20
percent. Obligations for the C&P and RB accounts, which make 98 percent
of the mandatory request for fiscal year 2014, increase by a combined
6.6 percent, from $79.9 billion in fiscal year 2013 to $85.2 billion in
fiscal year 2014. Mandatory obligations are expected to increase
consistently with historical annual increases of around 7 percent.
Increases in obligations are consistent with net increases in caseload,
an upward trend in veterans' average degree of disability, increases in
the cost of education, and cost-of-living adjustments to monthly
payments.
    Question. Is there anything Congress can do to help the VA reduce
its mandatory spending?
    Answer. Mandatory spending provides entitlement benefit payments to
eligible veterans, their survivors, and dependents. VA is legally
obligated to make payments or provide aid to eligible veterans. VA is
committed to uphold President Lincoln's promise, ``To care for him who
shall have borne the battle, and for his widow, and his orphan.'' VA
welcomes discussion to determine best practices to meet the needs of
the Nation's veterans and families.
                              construction
    Question. Mr. Secretary, the fiscal year 2014 budget requests $342
million for major construction. This continues the reduction we have
seen over the past few years in the account. Yet, your Department's
estimated cost for fully funding all major construction infrastructure
is nearly $23 billion.
    In light of these funding cuts to major construction and this
downward trend, does the Department need to reassess its capital asset
program? Is there a plan to reconcile the major construction backlog
with future funding needs?
    Answer. The fiscal year 2014 budget request and fiscal year 2014
advanced appropriations provide the necessary resources to care for our
Nation's veterans. The VA's 2014 budget request would provide resources
to allocate funding between a mix of operating and capital accounts, to
deliver the best mix of services for veterans. In addition to expanding
access to VA services through the construction and renovation of
facilities, VA provides access to veterans through non-capital
solutions such as: fee care, telehealth, beneficiary travel, veteran
transportation services, etc.
    In fiscal year 2014, the budget request funds the completion of the
mental health building in Seattle, Washington, which is the highest
priority partially funded project from the list of outstanding projects
that previously received congressionally appropriated funds.
                             mental health
    Question. Mr. Secretary, last year the VA initiated a hiring
process to bring on board 1,900 mental health professionals and support
staff. This is supposed to be completed by June 30, 2013.
    Will you explain the hiring status to date of these 300
administrative staff and the 1,600 mental health professionals?
    Answer. The VA Mental Health Hiring Initiative has improved the
Veterans Health Administration's (VHA) ability to expand access to
mental health services to our Nation's veterans. As of June 3, 2013,
VHA has hired 1,607 clinical staff to fill the 1,600 new mental health
positions in accordance with the President's Executive order issued on
August 31, 2012. Additionally, VHA has hired 297 of the 300 new non-
clinical positions.
    Question. The VA stated it planned to hire 800 peer-to-peer
counselors. Will you elaborate on that plan?
    Have all 800 counselors been hired to date?
    Answer. As of June 4, 2013, 335 peer-to-peer counselors have been
hired in support of the goal to hire 800 by December 31, 2013.
    What is the role of a peer-to-peer counselor?
    Answer. Peer-to-peer counselors perform a variety of therapeutic
and supportive tasks including:
  --assisting their peers in articulating their goals for recovery;
  --helping their peers to learn and practice new skills;
  --helping their peers monitor their progress;
  --assisting them in their treatment;
  --modeling effective coping techniques and self-help strategies based
        on the counselor's own recovery experience; and
  --supporting their peers in advocating for themselves to obtain
        effective services.
    Where will these counselors be located?
    Answer. Peer-to-peer counselors will be geographically dispersed
across all of the VISNs to ensure veterans have access to the required
staffing levels. VA implemented staffing model guidance with the list
of skilled procedures and the number of providers that must be
available to every 1,000 veterans seeking services for mental health.
By the end of fiscal year 2013, there should be at least three
counselors at each medical center and at least two counselors at each
very large CBOC.
    Question. When would a veteran see a peer-to-peer counselor instead
of a mental health professional or do the two work in concert with one
another on a veteran's particular case?
    Answer. Peer-to-peer counselors function as part of an
interdisciplinary team. They do not provide services that replace the
services provided by degreed mental health professionals. Their work is
adjunctive to the work of degreed professionals. peer-to-peer
counselors are full members of the treatment team and provide a unique
perspective and set of services. By virtue of the fact that peer-to-
peer counselors are veterans who have been or are currently in recovery
from a mental health condition, they are role models who serve as an
example that recovery is attainable. They facilitate peer support
groups, assist with the development of treatment plans, provide crisis
support, and act as advocates for the veterans. These services work
hand-in-hand with the services provided by the other members of the
treatment team (e.g., medications, psychotherapy, placement services)
to provide a comprehensive, holistic, and recovery-oriented approach to
mental health treatment.
                                 ______

             Questions Submitted by Senator Mitch McConnell
    Question. Please provide an updated timeline for the design and
construction phases for the new Robley Rex VA Medical Center in
Louisville, Kentucky.
    Answer. The following timeline is as of May 2013. Projected dates
are based on current status and assumptions, and are subject to change:
  --Design commenced in March 2013, and VA received the design concept
        submission in late April 2013 which is being revised by the
        architect-engineer.
  --VA anticipates receipt of a revised concept submission and
        selection of preferred concept for design in spring 2013. VA
        anticipates starting Schematic Design at this time with
        completion by late winter 2014.
  --Design development can commence in early 2014 and can complete in
        the fall of 2014.
  --Construction documents can commence the fall of 2014 and can be
        complete in the summer of 2015.
  --The construction schedule is to be determined based on when funding
        is received.
    Question. What specific steps has the VA taken to successfully plan
for the large influx of currently Active Duty military personnel that
will enter the VA system over the coming years?
    Answer. For several years, the Department of Veterans Affairs (VA)
has worked with the Department of Defense (DOD) to ensure Active Duty
personnel are informed of VA programs and to help them transition to VA
benefits and services. As enrollment increased, additional programs
have been put in place and existing programs improved.
                         transition assistance
    In August 2011, the President called on DOD and VA to lead a task
force with the White House economic and domestic policy teams and other
agencies, including the Department of Labor (DOL), to develop proposals
to maximize the career readiness of all servicemembers. This DOD-
Veterans Employment Initiative Task Force is one element of the plan to
reduce veteran unemployment and to ensure that all of America's
veterans have the support they need and deserve when they leave the
military, look for a job, and enter the civilian workforce.
    To meet the President's call for a ``career-ready military,'' the
DOD-VA Veterans Employment Initiative Task Force developed a new
training and services delivery model to help strengthen the transition
of our servicemembers from military to civilian life as they become
veterans. This model represents an improved DOD/VA/DOL Transition
Assistance Program (TAP), called Transition Goals, Plans, and Success
(GPS). The new model was implemented in November 2012 as part of the
2012 VOW to Hire Heroes Act (VOW Act) and includes four parts:
  --Pre-Separation Counseling.--Servicemembers will conduct individual
        assessments and one-on-one counseling with military service
        representatives.
  --Employment Workshop.--DOL will assist servicemembers with
        translating military skills, searching for jobs, writing
        resumes, and interviewing.
  --Enhanced VA Benefit Briefings.--Veterans, servicemembers, their
        families, and survivors will attend comprehensive workshops
        covering the entire spectrum of VA benefits.
  --Individual Transition Plan.--A customized roadmap to tailor
        individual needs for success will be completed for every
        transitioning servicemember. Servicemembers will also have the
        option of attending one or more of the following 2-day
        Transition GPS Tracks:
    --Education Track.--Servicemembers pursuing college education will
            receive guidance to prepare for the college application
            process.
    --Career Technical Training Track.--Servicemembers pursuing further
            technical training will receive guidance and help in
            selecting schools and technical fields.
    --Entrepreneurship Track.--Servicemembers pursuing self-employment
            in the private or nonprofit sector will learn about the
            challenges faced by entrepreneurs, the benefits and
            realities of entrepreneurship, and the steps toward
            business ownership.
    Based upon VA's analysis of projected military service separation
data, it has developed models for the optimal delivery and support of
the VOW Act and Transition GPS. This support utilizes a regional hub-
and-spoke model. VA will deliver enhanced VA benefits briefings within
the framework of Transition GPS and is responsible for providing the
Transition Technical Training Track. VA will fully participate in the
Capstone event, a final review of the transitioning servicemember's
completion of the workshops and tracks, and ensure representatives are
available to receive and coordinate a ``warm handover'' for
servicemembers requiring additional support from VA regarding benefits,
services, and other programs.
                               healthcare
    VA has taken a number of actions in collaboration with DOD to
identify and track servicemembers who are transitioning to civilian
life and to ensure that those in need of care are properly identified.
VA and DOD transition assets and capabilities include:
  --liaison and care coordination staff to facilitate a seamless
        transition process;
  --enhanced health information sharing and numerous interagency
        initiatives that support shared standards of care; and
  --interoperable processes for care delivery that facilitates
        transition between the systems.
    For example, VA has 43 VA liaisons for healthcare stationed at 21
Military Treatment Facilities (MTF). VA liaisons for healthcare, either
licensed social workers or registered nurses, are co-located in MTFs,
under DOD's Care Management and Social Work Service, Office of Patient
Care Services, with concentrations of recovering servicemembers
returning from Iraq and Afghanistan. VA liaisons coordinate healthcare
as servicemembers transition from MTFs to a VA healthcare facility
closest to their homes or most appropriately located for the
specialized services their medical condition requires. VA liaisons
connect with VA's Operation Enduring Freedom/Operation Iraqi Freedom/
Operation New Dawn (OEF/OIF/OND) program manager to coordinate this
initial care and to have a VA case manager assigned with the
expectation that the servicemember will leave the MTF registered for VA
healthcare with a scheduled VA appointment.
    VA has also coordinated with DOD's inTransition program to develop
and provide joint training for staff to promote referrals from VA and
DOD providers to the inTransition program. inTransition is a DOD
program to assist servicemembers requiring behavioral health treatment
and who are transitioning between healthcare systems, status, or
location. inTransition's mission is to support continuity of care for
the servicemember during transition.
                     additional healthcare efforts
    There are several efforts by VA to reach out to departing military
personnel, which allows VHA to gauge the number of members turning to
VA in order to adjust programs for future demand.
    Individual Ready Reserve (IRR) Muster Events.--DOD provides VA with
dates and locations of the ``live'' Musters for the Marines and the
Army Reserve. VHA OEF/OIF staff conducts the 20-minute VHA briefing to
the attendees and the enrollment procedures. Many of these events are
held at VAMCs. Since 2009 the field has recorded that over 42,000 IRR
members have attended these VA briefings with over 13,000 enrolling
into VA healthcare. Since January 2013, the Marines and Air Force will
continue ``live'' Musters. The Navy and Army are developing ``virtual
musters''. Outreach staff is developing ``electronic'' VA outreach
materials in order to partner with the services in sending out
electronic materials to this population.
    DOD's Yellow Ribbon Reintegration Program.--This program was
established in 2008 and was implemented for all Reserve component
servicemembers and their families: VA is a major support partner at
VAMCs, regional offices and vet centers for these events and provides
``boots on the ground'' assistance and offers enrolment and referrals
for needed services. Specialized briefings are offered by VA staff on
suicide prevention, PTSD, TBI etc. The DOD Post Deployment Health
Reassessment (PDHRA) is a healthcare screening, required for all
National Guard and Reserve servicemembers 90-180 days post-deployment.
As part of the Yellow Ribbon Program at the 60-90 day event, all
members are given the opportunity to complete this screening
evaluation. The PDHRA results in referrals to VA facilities, such as VA
medical centers, VA community clinics, and vet centers. Local VAMC and
vet center staff provide outreach, education, enrollment, and as
needed, referral for clinical services. Referred veterans have a choice
to receive care at a local VAMC, vet center, MTF, or through TRICARE.
For servicemembers who request a VHA appointment during on-site PDHRA,
VA personnel are able to schedule appointments for them at their local
VAMC.
    National Guard Partnership.--In order to ensure that OEF/OIF/OND
combat veterans receive access to high-quality healthcare and
coordinated VA services and benefits, VA and the National Guard (NG)
developed a creative partnership. The NG hired 54 (now 64) National
Guard Transition Assistance Advisors (TAA) to serve as VA/NG liaisons
in the field at the State level to assist NG servicemembers and their
families with questions and assistance to access VA benefits and
services. VA staff conducted the training to enhance the outreach
skills of the TAAs. The TAAs have been the critical link in
facilitating access to VA by NG/Reserves returning combat troops in
each of the 50 States and 4 territories of Puerto Rico, Virgin Islands,
Guam, and the District of Columbia. TAAs have provided outreach to over
275,000 NG members and families. Since 2008, TAAs have facilitated VHA
enrollment or referrals for over 130,000 veterans and over 113,000 to
VBA and over 55,000 to vet centers.
    Question. With an already high unemployment rate, what is the VA
doing to help ensure that servicemembers are able to find jobs when
they return to civilian life?
    Answer. VA is helping to confront the issue of veteran unemployment
by first giving our veterans a strong foundation of education and
training on which to build their careers. The Post-9/11 GI Bill
provides financial support to veterans to pursue undergraduate and
professional degrees, vocational and technical training, licenses, and
certifications, and training in entrepreneurship.
    In addition, the Veterans Retraining Assistance Program (VRAP)
helps retrain those veterans hit hardest by unemployment. VRAP is
available to unemployed veterans between the ages of 35 and 60. VA has
provided over $318.6 million in program benefits to the more than
51,784 veterans enrolled in a training program.
    In addition to giving veterans a strong foundation of knowledge and
training, VA has long offered employment services through the
Vocational Rehabilitation and Employment (VR&E) program. More than 800
Vocational Rehabilitation Counselors (VRC) and over 90 Employment
Coordinators (EC) assist veterans with service-connected disabilities
prepare for, find, and keep suitable jobs. VRCs help veterans evaluate
their interests, aptitudes, and capabilities to determine a career
path. ECs leverage relationships with civilian employers to help match
each veteran with an appropriate work place.
    Over the last 2 years, VA significantly improved veterans' access
to online employment resources. VA's VetSuccess.gov Web site integrates
the tools and information veterans need to find employment and advance
their careers. The joint VA-DOD eBenefits portal assists transitioning
servicemembers and veterans in their job search by including a
searchable online personnel file where veterans can access important
service records and a ``Career Center'' with tools to help veterans
complete self-assessments, translate their military skills to civilian
occupations, and build their resumes.
    VA is leading the Federal Government in hiring veterans through our
VA For Vets Program. Part of the Veterans Employment Services Office,
the VA For Vets Program is fully dedicated to aiding veterans in
finding Federal employment and preparing job-seeking veterans for
careers at VA. The program assists veterans in translating their
military skills and training into civilian careers, and teaches human
resource professionals and supervisors how to recruit and retain
veterans. In its first year, VA For Vets offered career coaching to
19,000 veterans and helped produce over 28,000 veteran resumes.
    VA has partnered with the U.S. Chamber of Commerce to support the
Chamber's ``Hiring Our Heroes'' job fairs. Per a memorandum of
understanding between our two organizations, VA participates in Chamber
of Commerce job fairs across the country to advertise and educate
veterans on VA benefits and services.
    VA has also partnered with the First Lady's and Dr. Jill Biden's
Joining Forces Initiative dedicated to connecting our servicemembers,
veterans and military spouses with the resources they need to find jobs
at home.
    VBA is also working with partner agencies to collaboratively
address veterans employment, including participating in a White House
forum on credentialing. The forum seeks to bring together stakeholders
from both State and Federal Government, as well as the private sector,
to discuss how veterans can more easily obtain licenses and
certifications based on their military experience and obtain academic
credit for their military duty.
    In addition, VHA has developed a pilot program to hire medics and
corpsmen as emergency response technicians. This program enables
transitioning medics and corpsmen to obtain ready employment in the VA,
help meet VA workforce needs, enable them to serve other veterans, and
obtain advanced training and licensure (as nurses, physician
assistants, etc.) creating a pipeline for needed VA employees.
    Question. Numerous Kentucky veterans have expressed their concerns
about the massive backlog in claims at the VA--which has increased and
now totals over 860,000 pending claims. Why has the VA not reduced this
backlog in claims?
    Answer. Right now, too many veterans wait too long to receive
benefits they deserve. This has never been acceptable to VA or to the
dedicated employees of VBA--52 percent of whom are veterans themselves.
VBA is implementing its Transformation Plan, a series of people,
process, and technology initiatives designed to eliminate the claims
backlog and achieve our goal of processing all claims within 125 days
with 98-percent accuracy in 2015. VBA is retraining, reorganizing,
streamlining business processes, and building and implementing
technology solutions based on the newly redesigned processes in order
to improve benefits delivery. It is important to note that the VA
Strategic Plan to Eliminate the Compensation Claims Backlog sent to
Congress in January of 2013 (http://benefits.va.gov/transformation/
docs/va_strategic_plan_to_eliminate_the_compensation_claims_
backlog.pdf) indicates that the inventory of claims would continue to
increase for the near term before declining.
    Initially planned for deployment throughout fiscal year 2013, VBA
accelerated the implementation of the new organizational model by 9
months, beginning in fiscal year 2012, due to early indications of its
positive impact on performance. Given the magnitude of this change,
each office transitioned to the new organizational model individually.
Significant support and training were critical throughout this
transition. As of March 2013, the new organizational model was fully
operational at all 56 regional offices. As is anticipated with any
change of this magnitude, there was some short-term impact on
performance as we ensured that the training, communications, and other
essential change management activities were conducted to appropriately
prepare the workforce.
    At the same time we also began the nationwide deployment of our new
paperless electronic claims processing system, the Veterans Benefits
Management System (VBMS). Generation One of VBMS began in 2010 with the
conceptualization, piloting, development, and deployment of baseline
system functionality with improved quality (required actions and
automation) and efficiency (no paper). VBA began deployment of VBMS
Generation One in September 2012, concluding the calendar year with 18
stations on the system. It is important to note that early adopters of
first generation technology participated heavily in the development and
refinement of efficiencies and functionality of the system, which had a
direct impact on productivity as a result of the live test environment.
These stations paved the way for the accelerated deployment of VBMS,
which will enable VBA to track and measure productivity outcomes in a
consistent and accurate manner once all regional offices are operating
with the new technology and after a period of stabilization. The first
18 stations enabled VBA to also test business processes and
functionality for the establishment of eFolders in VBMS and the model
for tracking and shipping of paper-based claims with two scanning
vendors. Generation One of VBMS concluded with the successful
implementation of Release 4.1 in January 2013. This generation
culminated in a foundational Web-based, electronic claims processing
solution. Under our accelerated deployment schedule, all 56 regional
offices and our Appeals Management Center are now using VBMS. Each VBMS
site deployment is also supported by organizational change management
practices (including extensive training) to ensure employees are able
to adapt to and adopt the new technologies and solutions. We will also
continue to enhance the automated functionalities and build additional
system capabilities in three future generations of VBMS to be deployed
over the next 2 years. As we move into future generations of VBMS, our
focus is on leveraging more complex automation features and more
extensive data exchange and system integration capabilities so that our
employees will be able to process claims electronically from receipt to
payment.
    VBA is tracking execution of its transformation initiatives against
our key measures of performance, including pending and completed
rating, timeliness, accuracy, and the impact on the backlog. The
quality of the transformation initiatives is measured through a 3-month
rolling average accuracy metric that is reported on VA's ASPIRE Web
site which can be found at http://www.vba.va.gov/reports/aspiremap.asp.
    A major factor impacting all areas of VA's disability claims
workload was the addition of three new agent orange presumptive
disabilities. In 2009, Secretary Shinseki made the decision to add the
three presumptive conditions (Parkinson's disease, ischemic heart
disease, and B-cell leukemias) for veterans who served in the Republic
of Vietnam or were otherwise exposed to the herbicide agent orange. Due
to this policy change, the number of compensation and pension claims
received increased from 1 million in 2009 to 1.3 million in 2011 (a 30-
percent increase). In addition, beginning in October 2010, VBA
identified these claims for special handling to ensure compliance with
the provisions in the Nehmer court decision that requires VA to
readjudicate claims for these three conditions that were previously
denied. VBA dedicated over 2,300 claims staff to readjudicating these
claims. Nehmer claims for all live veterans were completed as of April
2012 and Nehmer survivor claims were completed in October 2012. The
claims staff is now working on reducing the backlog. Our focus on
processing these complex claims contributed to a larger claims backlog,
but it remains the right thing to do for our Vietnam veterans, many of
whom waited a long time for these benefits. Secretary Shinseki also
made an important decision to simplify the process to file claims for
combat PTSD. These decisions expanded access to benefits for thousands
of veterans and brought significantly more claims into the system.
    Several other factors have contributed to this growth in the volume
of incoming claims: extensive outreach; increased demand as a result of
10 years of war; improved access to benefits through the joint VA and
DOD Pre-Discharge Programs; and new regulations for processing claims
related to gulf war service and traumatic brain injuries.
    In addition, the average claim in VA's workload is getting more
complex. The number of medical conditions (issues) per original claim
for our returning Iraq and Afghanistan veterans increased dramatically,
from 6.4 at the beginning of fiscal year 2007 to 11.5 at the end of
fiscal year 2012. The total number of issues processed increased 180
percent, from 1.7 million in fiscal year 2009 to 4.8 million in fiscal
year 2012.
    VBA's goal is to process all claims within 125 days with 98-percent
accuracy in 2015, and we are confident that we will meet this goal as
we continue to implement our Transformation Plan.
    Question. As I understand it, VA Dependents Indemnity Compensation
(DIC) claims previously were decided at the local and State level, but
are now, in the case of Kentucky, decided in Milwaukee, Wisconsin. This
has reportedly resulted in longer wait times for veterans' spouses and
dependents to receive their claims. What caused the initial decision to
relocate this particular DIC claims processing office and what steps is
the VA taking to reduce the time it takes to make final DIC claims
decisions?
    Answer. In fiscal year 2003, VBA completed the consolidation of
pension maintenance work to three regional Pension Management Centers
(PMC): Philadelphia, Pennsylvania; St. Paul, Minnesota; Milwaukee,
Wisconsin. In fiscal year 2009, VBA subsequently consolidated the
processing of pension, DIC, and burial benefit claims at the PMCs. The
consolidation provides greater processing efficiency and specialization
for these claims and focuses attention and resources on the needs of
survivors and wartime veterans who require supplemental income.
    Fiscal-year-to-date through the end of April, the average days to
complete (ADC) DIC claims was 156 days. By way of comparison, for
fiscal year 2007, ADC for DIC claims was 132 days. Although ADC for DIC
claims has increased since consolidation (18.2 percent), ADC for all
types of compensation and pension claims has increased nationwide over
this period due to the dramatic growth in the volume of incoming
claims.
    VBA's Pension and Fiduciary (P&F) Service, which administers the
DIC program, recently reviewed the policies and procedures applicable
to the adjudication of DIC claims, to identify obstacles to timely
processing. It determined that VBA could quickly grant many DIC claims
with little or no additional development, and that certain claims
processing steps are redundant and appropriate for elimination.
    As a result of these efforts, on March 22, 2013, P&F Service issued
Fast Letter 13-04 (FL 13-04), Simplified Processing of Dependency and
Indemnity Compensation (DIC) Claims, which instructs VBA field staff on
the procedures to follow when processing claims. Among other things,
the new procedures require screening of claims at the intake point and
limited or no development of additional evidence when information in
VBA systems supports granting benefits. It also clarifies that VBA
grants DIC under 38 U.S.C. section 1318 based upon total service-
connected disability for a prescribed period before death in the same
manner as if the death were service connected. Accordingly, in these
cases, our field staff will grant service-connected burial benefits and
presume the permanence of total disability for purposes of establishing
the survivor's entitlement to VA education and healthcare benefits.
These new procedures will allow us to grant DIC benefits faster and
without unnecessary development.
    Question. What is the VA doing to enhance efforts to locate
homeless veterans and to provide resources and programs to help them?
    Answer. One of the key pillars of VA's Plan to End Homelessness
Among Veterans is to provide effective outreach to homeless and
veterans at risk of homelessness. Without effective outreach efforts
locating homeless and at-risk veterans, VA has little chance of ending
veteran homelessness. Although many VA homeless programs conduct
outreach, the HCHV Contract Residential Treatment Program is VA's
premier homeless outreach program. The foundation of the program is to
provide targeted outreach to veterans who are homeless or at risk of
homelessness and not currently receiving VA services. These outreach
efforts are an essential component of VA's plan to eliminate
homelessness among veterans and provide opportunities for critical
medical and psychiatric care and referrals. Once identified and
effectively engaged within their own communities, homeless veterans can
then be provided with both immediate and permanent stable housing
solutions and supportive services.
    In fiscal year 2012, HCHV staff conducted outreach and provided
outpatient services to over 119,660 veterans and offered more than
11,500 episodes of contract residential community-based treatment.
Outreach has proven to be a successful link, as overall data findings
suggest that more than 90 percent of the veterans engaged with HCHV
received VA mental health services (including direct services provided
by the HCHV Contract Residential Treatment Program) in the 6 months
following outreach.
    The HCHV Contract Residential Treatment Program works in
collaboration with other VA programs through a combination of outreach,
case management, housing, and supportive services. The program
collaborates with a multitude of VA homeless programs including, the
Housing and Urban Development--VA Supportive Housing (HUD-VASH)
Program, GPD Program, Veterans Justice Outreach (VJO) Program, Health
Care for Reentry Veterans (HCRV) Program, Homeless Veteran Supported
Employment Program, Homeless Patient Aligned Care Teams (HPACT) as well
as community outreach providers (e.g., 100,000 Homes Campaign, Projects
for Assistance in Transition from Homelessness (PATH) Program, and
local homeless Continuums of Care (CoC)).
    In addition to the HCHV Contract Residential Treatment Program, a
number of VA homeless programs contribute to extensive and effective
outreach. For example, each year VA programs and staff actively
participate in stand downs for homeless veterans. Stand downs are
collaborative events, coordinated between local VA facilities, assorted
Government agencies, and community agencies that serve the homeless.
The original stand down for homeless veterans was modeled after the
stand down concept used during the Vietnam war to provide a safe
retreat for units returning from combat operations. Stand downs provide
services to homeless veterans such as food, shelter, clothing, health
screenings, VA and Social Security benefits counseling, and referrals
to a variety of other necessary services, such as housing, employment,
and substance abuse treatment. In 2012, VA-sponsored 205 stand downs
nationally, serving over 50,000 veterans.
    VA's outreach efforts also include the National Call Center for
Homeless Veterans (NCCHV), a program dedicated to providing homeless
veterans with referrals to VA and community services, as well as
disseminating information to concerned family members and non-VA
providers about all the programs and services available to assist these
veterans. Calls to the NCCHV number (1-877-4AID VET; 1-877-424-3838)
are answered 24 hours a day, 7 days a week, with a brief screening by
responders to determine the severity of need. Responders at the NCCHV
then link those callers needing referral to their nearest VA medical
center (VAMC) anywhere in the country. VAMC homeless programs have
designated points of contact responsible for assisting veterans
referred to their facility, furthering assessment of need, providing
linkages to services within VA and the community, and developing a plan
of care appropriate for each veteran. In fiscal year 2012, there were
80,558 total calls to the NCCHV. Of these calls, there were 50,608
referrals to a VAMC homeless program point of contact.
    VA's Veterans Justice Programs (the HCRV and VJO Programs) also
provide extensive and crucial outreach to veterans involved with the
justice system to prevent veteran homelessness. The HCRV Program staff
conducts outreach to veterans who are preparing to reenter the
community from State and Federal prisons. The goal of this clinical
outreach is to connect veterans at risk of homelessness with
appropriate VA services, especially homeless, mental health, and
substance use services. In fiscal year 2012, the HCRV prison outreach
clinicians contacted and conducted re-entry planning with 10,572
veterans in 1,000 of 1,254 (80 percent) total State and Federal
prisons. Similarly, VJO program specialists provide outreach to
justice-involved veterans in jails and court systems and serve as
liaisons between VA and the local criminal justice system, including
law enforcement. Every VAMC has at least one full-time VJO specialist.
In fiscal year 2012, 27,251 veterans were seen by VJO Program staff.
    VA uses all available resources to locate and identify the need for
homeless services in each State and community. VA and HUD continue to
collaborate, develop, and publish HUD's AHAR. These reports, which
advance the Federal effort to end homelessness among veterans through
the collection and analysis of timely data, are intended to provide
policymakers, practitioners, and the general public with information
about the extent and nature of veteran homelessness. In addition to the
snapshot and annual estimates of veteran homelessness, the document
also describes the demographic characteristics of homeless veterans,
including race, ethnicity, gender, age, and disability status.
    Finally, VA continues to develop innovative ways to locate and
engage veterans at-risk of homelessness, including developing a more
proactive approach to identifying those who are homeless or at risk of
becoming homeless. In 2012, VA developed a universal screen of
homelessness risk for veterans in the VA healthcare system. The
Homelessness Screening Clinical Reminder serves veterans by identifying
those who may need housing-related assistance but had not accessed or
are not currently being served in a VA homeless program. It also
provides additional information about the profile of veterans who are
at risk of homelessness, the types of services they need and receive,
and how veteran homelessness can be better addressed throughout VA's
system. To date, over 2.7 million veterans have been screened using
this clinical reminder. Of those screened, 25,881 (0.95 percent)
screened positive for housing instability and 30,707 (1.12 percent)
screened positive for being at risk for homelessness. A total of 17,309
veterans agreed to referrals for social work services who provided
veterans with benefits assistance, counseling, and, where appropriate,
referral to homeless programs. Through this process, 14,895 veterans
were referred to homeless programs.
    Question. Veterans suffer from many health problems due to their
brave service and sacrifice. I have heard from Kentucky veterans that
do not live near VA hospitals or full medical centers that access to
certain healthcare services remains a concern for many. What criteria
are involved in determining which VA clinics provide specialty care,
such as access to mental health resources, podiatry, ophthalmology, and
dentistry?
    Answer. A VA medical center's process for determining sites of care
for services, including specialty care, begins with the annual
completion of the VA Health Care Planning Model. On a regular basis, a
review of the number of days it takes to provide specialty services to
all veterans is performed, with an emphasis on those in remote or rural
areas. VA medical centers also review the frequency with which it
refers veterans outside VA's system for services not currently
available and the distance from a veteran's home he/she may have to
travel to determine potential service additions at their CBOCs.
Finally, VA medical centers utilize community providers to augment its
healthcare system when it cannot provide those services in-house or
within a specified timeframe. Generally, specialty services such as
podiatry, ophthalmology, or dentistry services are not provided at
CBOCs due to their small size (less than 10,000 unique patients).
Specialty mental health services for PTSD, military sexual trauma, and
substance abuse are available in CBOCs and by telemental health to a
clinic closest to the veteran's home.
    Question. Many veterans face difficulty beginning families when
they return from service, particularly those who have sustained
injuries such as spinal cord injury or disorder (SCI/D). Is
reproductive assistance a standard VA medical service provided to
veterans with service-connected injuries? What is the VA doing to
address the needs of veterans seeking reproductive assistance? Does the
VA need additional legislative authority to provide reproductive
services?
    Answer. As part of the medical benefits package, VA provides
infertility services to include patient counseling, infertility
assessment, and infertility treatment. When medically indicated, VHA
will provide the following infertility services:

------------------------------------------------------------------------
                                           Infertility services for
Infertility services for female veterans         male veterans
---------------------------------------------------------------------
--Infertility counseling                  --Infertility counseling
--Laboratory blood testing (e.g.,         --Laboratory blood testing
 follicle-stimulating hormone,             (e.g., serum
 luteinizing hormone)                      testosterone)
--Genetic counseling and testing          --Semen analysis
--Pelvic and/or transvaginal ultrasound   --Evaluation and treatment
--Hysterosalpingogram                      of erectile dysfunction
--Saline infused sonohysterogram           (e.g., in spinal cord
--Endometrial biopsy (e.g., rule out a     injury)
 luteal phase defect)                     --Surgical correction of
--Post coital test                         structural pathology
--Diagnostic laparoscopy or hysteroscopy  --Vasectomy reversal \1\
--Surgical correction of structural       --Hormonal therapies
 pathology consistent with standard of    --Sperm cryopreservation
 care including operative laparoscopy      \1\
 and operative hysteroscopy               --Genetic counseling and
--Reversal of tubal ligation (Tubal        testing
 Reanastomosis) \1\                       --Sperm retrieval
--Hormonal therapies (Controlled ovarian   techniques
 hyper-stimulation)                       --Post-ejaculatory
--Oral medication for ovulation            urinalysis
 induction (i.e., Clomid/Serophene)       --Transrectal and/or
 (maximum of 4 ovulatory cycles)           scrotal ultrasonography
    --Injectable Gonadotropin
 Medications for ovulation induction
    --Additional hormonal therapies
 approved for use for this purpose by
 Pharmacy Benefits Management
--Intrauterine insemination (maximum of
 4 cycles)
--Oocyte cryopreservation
------------------------------------------------------------------------
\1\ For medically indicated conditions.

    The provision of In Vitro Fertilization (IVF) is excluded from VA's
medical benefits package. Also, infertility diagnosis and management is
a condition of couples. VA has limited authority to provide services to
non-veterans; however, in accordance with title 38, Code of Federal
Regulation (CFR) 17.272(a)(28), IVF is specifically excluded for
coverage under Civilian Health and Medical Program of VA.
    Most male veterans with spinal cord injuries or disorders (SCI/D)
have erectile dysfunction and infertility directly related to spinal
cord dysfunction. Available options for the evaluation and treatment of
infertility in veterans with SCI/D are limited. A full diagnostic
evaluation is provided. Treatment that is available in VA includes
approaches such as surgical correction of structural pathology,
hormonal therapies, sperm retrieval and cryopreservation, and
intrauterine insemination. In the vast majority of men with SCI/D, VA
treatments that are provided do not result in successful pregnancies.
Infertility services, including IVF and other Assisted Reproductive
Technologies (ART), restore or enhance the ability to procreate, but
successful treatment requires the provision of ART services to both the
ill/injured veteran and his or her spouse/partner. Currently and in the
past, VA has worked with DOD and community partners to identify
resources that are available for veterans with SCI/D.
                                 ______

            Questions Submitted by Senator Susan M. Collins
    Question. Secretary Shinseki, I spoke with you last August about my
disappointment with the wasteful conference spending and improper
behavior by Department of Veterans Affairs (VA) employees related to
two VA conferences held in Orlando, Florida, in 2011. More than $6.1
million was spent on these two conferences, and the VA Office of
Inspector General (OIG) found that as much as $762,000 was
unauthorized, unnecessary or wasteful spending.
    I share your belief that effective training of VA personnel--the
purpose for the conferences--is necessary. Despite the legitimate
purpose of training, there can be no excuse for excessive or wasteful
spending of VA resources. I know that you share my concerns about
wasteful spending, especially in these challenging fiscal times, and
that you agree that at a time when so many veterans are in need of care
and assistance, the VA must make every effort to spend each dollar in
support of its important mission.
    What steps has the VA taken to prevent similar waste and abuse of
Government resources in the future?
    Answer. VA employs over 320,000 employees who provide high-quality
healthcare, benefits, and services to veterans every day. VA is the
Nation's largest integrated healthcare system with nearly 1,300 centers
of care serving 8.6 million veterans across the country. A large number
of VA doctors, nurses, claims processors, and other employees directly
benefit from training events every year. Continuous workforce training
and development is essential to delivering timely and quality VA care
and services our veterans have earned and deserve. VA holds centralized
training forums to enhance the delivery of healthcare, benefits, and
memorial services unique to veterans. This includes employee
development through critical training to improve customer service and
the timely delivery of benefits and services; clinical training, which
includes post-deployment care, treatment of chronic conditions, mental
health, suicide prevention; and strategies to eliminate veteran
homelessness. Our training events are designed to achieve our goals--
better access, eliminate the backlog, and end veteran homelessness--by
training and developing our employees and empowering them to provide
the best care and services possible for our Nation's servicemembers and
veterans.
    VA has implemented a comprehensive action plan to revise and
strengthen policies and controls on the planning and execution of
training conferences and events. These actions are consistent with the
recommendations in the September 30, 2012, inspector general report and
are reflected in VA policy issued on September 26, 2012.
    Stringent internal controls for training conferences are in place
and oversight is provided by the senior executives in the Department.
Further, the newly established Training Support Office ensures
consistency and clear guidance regarding needed steps for adherence
with all appropriate regulations and requirements as the Department
balances critical training requirements to ensure achievement of stated
goals and objectives while minimizing costs.
    Automating data collection is essential to provide accurate and
timely information for senior leaders so they can execute their
responsibilities and respond to queries for training related events
from congressional and other Federal oversight bodies. VA is currently
engaged in developing and delivering an automated data collection tool
to increase accountability, control conference spending, and produce
congressionally required reports.
    VA's conference oversight memorandum dated September 26, 2012,
supersedes all previously issued conference guidance:
  --the approval authorities:
    --a senior executive must approve any conference under $20,000.
    --two senior executives, the Conference Certifying Official (CCO)
            and the Responsible Conference Executive (RCE), are
            appointed when a conference exceeds $20,000 to ensure
            adherence to all applicable statutes, regulations, and
            policies when planning and executing the approved
            conference.
    --an Under Secretary or Assistant Secretary must approve any
            conference within the threshold $20,000 to $100,000.
    --the Deputy Secretary is responsible for approving conferences
            exceeding $100,000 to $500,000.
    --conferences exceeding $500,000 require a waiver by the Secretary.
  --a quarterly conference planning and execution briefing is now
        required at least 120 days prior to the quarter of execution.
        This briefing outlines all the conferences planned for the
        targeted quarter to include cost, attendees, location, purpose,
        and outcomes.
    The VA conference process has four phases: concept, development,
execution, and reporting.
  --The concept phase is a disciplined conference authorization
        process. In October 2012, VA began our quarterly concept
        authorization briefing as part of the quarterly conference
        planning and execution briefing cycle where senior officials
        review all events to ensure the best value prior to being
        authorized to enter the development phase.
  --The development phase builds the business case for the event;
        provides the guidance for the planning and execution of the
        potential conferences; appoints a senior executive as the CCO
        and a senior executive as the RCE. The CCO certifies the event
        details are in compliance with all directives. The event plan
        is then submitted through the appropriate channels to the
        approving official for approval, disapproval or modification of
        the planned event.
  --The execution phase covers the period after the conference plan has
        been approved and the responsible organization begins to
        execute the approved plan. The RCE is responsible for executing
        the approved plan in accordance with laws, regulations, and
        policy. Additionally, the RCE oversees the spending and
        contract execution, approving any changes to contract
        agreements or increases in spending.
  --The reporting phase covers the period after the execution of the
        conference. The RCE submits an After Action Review (AAR)
        reflecting how the event was conducted; providing conference
        attendance and details on how the spending was tracked and
        reported in accordance with Public Law 112-154 and OMB M-12-12.
        The administrations and staff offices leadership review the AAR
        to verify that the event was executed in accordance with the
        plan and all applicable policies and regulations.
                                 ______

              Questions Submitted by Senator Daniel Coats
                           claims processing
    Question. The President's fiscal year 2014 budget calls for an 8.5-
percent increase in funding for the Department of Veterans Affairs from
fiscal year 2012. The administration justifies this increase in funding
in order to reach a target goal to ``process all claims within 125 days
with 98-percent accuracy in 2015.'' The average wait time in
Indianapolis is 600 days.
    With even more servicemembers entering the VA system in the next
year, as we drawdown from Afghanistan, how feasible is this goal?
    Answer. Right now, too many veterans wait too long to receive
benefits they deserve. This has never been acceptable to VA or to the
dedicated employees of VBA--52 percent of whom are veterans themselves.
In January 2013, VA delivered its Strategic Plan to Eliminate the
Compensation Claims Backlog to Congress (http://benefits.va.gov/
transformation/docs/va_strategic_plan_to_eliminate_the_
compensation_claims_backlog.pdf). We are confident that we will meet
our 2015 goal as we continue to implement our Transformation Plan.
While the troop drawdown may result in an influx of new claims, VBA has
anticipated this workload and considered its impact on VBA's ability to
reach the 2015 goals. It is important to note that the timeline for
eliminating the backlog could be affected if policymakers establish new
presumptive conditions, courts make new precedential decisions, or
legislators make laws that establish new entitlements. VBA continues to
monitor the performance impact of transformation, as well as other
external factors that could potentially have an impact.
    Question. What specific actions has the Department of Veterans
Affairs taken to reach this goal?
    Answer. VBA has developed and is implementing a comprehensive
Transformation Plan designed to eliminate the claims backlog and
achieve our goal of processing all claims within 125 days at a 98-
percent accuracy level in 2015. This major transformation in claims
processing includes a series of people, process, and technology
initiatives that are being implemented according to a carefully
developed multiyear timeline. The transformational initiatives are
being rolled out in a progressive, deliberate sequence that enables
efficiency gains while minimizing risks to performance.
    VBA reorganized its workforce into cross-functional teams that
enable employee visibility of the end-to-end case management approach
of the entire processing cycle of a veteran's claim. These cross-
functional teams work together on one of three segmented lanes:
express, special operations, or core. VBA instituted Challenge Training
in 2011 and Quality Review Teams (QRT) in 2012 to improve employee
training and quality while decreasing rework time. Challenge Training
is focused on overall skills and readiness of the workforce, and QRTs
focus on improving performance on the most common sources of error in
the claims processing cycle; data on VBA's largest sources of error are
captured and analyzed by its National Accuracy Team. VBA tracks the
impact of these initiatives on quality through a 3-month rolling
average accuracy metric that is reported on VA's ASPIRE Web site and
can be found online at http://www.vba.va.gov/reports/aspiremap.asp.
    VBA actively solicited innovative ideas for process improvement
from veterans, employees, and industry stakeholders through a variety
of structured mechanisms. Literally thousands of ideas were received
and culled down to those with the largest potential to attack the
backlog. For example, automated Disability Benefits Questionnaires
(DBQ) (discussed below)--arguably one of the most highly leveraged
changes--came from one of the VBA employee idea competitions.
Additionally, VBA has also conducted Lean Six Sigma and Kaizen events
on these selected targets of opportunity, all focused on five major
areas of focus: wait time, rework, productivity, digital intake, and
variance.
    VBA also implemented the simplified notification letter initiative.
This initiative has reduced key strokes and automated production
language in the decision letter for the veteran, thus improving rating
decision productivity and quality. VBA implemented this initiative on
March 1, 2012.
    Electronic DBQs are forms that physicians complete during an exam
that contain explicit medical information needed to decide a disability
compensation claim. The single largest category for rework that results
in delays in rating decisions are exams that contain insufficient data.
Fully and properly complete DBQs eliminate these errors. The DBQs, now
deployed to all 56 regional offices, can increase production and reduce
the amount of time spent on each claim by organizing key information.
Seventy-one DBQs are now available to private physicians as well. VBA
continues to work with DOD regarding the use of DBQs in exit exams.
    Key to VBA's transformation is ending its reliance on outmoded and
paper-intensive processes. VBA is developing technology solutions that
improve access, drive automation, reduce variance, and enable faster
and more efficient operations. The deployment of the VBMS, VBA's new
digital, paperless processing system, is occurring across four distinct
phases or generations of development. Generation One of VBMS concluded
with the successful implementation of Release 4.1 in January 2013. This
generation culminated in a foundational Web-based, electronic claims
processing solution. Under our accelerated deployment schedule, all 56
regional offices and our Appeals Management Center are now using VBMS.
We will also continue to enhance the automated functionalities and
build additional system capabilities in three future generations of
VBMS to be deployed over the next 2 years. As we move into future
generations of VBMS, our focus is on leveraging more complex automation
features and more extensive data exchange and system integration
capabilities so that our employees will be able to process claims
electronically from receipt to payment.
    Question. What actions will be taken in the future to make sure our
brave men and women are not waiting nearly 2 years to get a reply from
the VA?
    Answer. VA's goal of processing claims within 125 days with 98-
percent accuracy is a permanent goal. Our Transformation Plan, which
incorporates people, process, and technology initiatives, will ensure
that the backlog is resolved and that the results are sustained and
continuously improved upon.
    VBA's new organizational model, which incorporates a case-
management approach to claims processing, has been implemented at all
56 regional offices. VBA projects that the segmented lanes initiative,
part of this new organizational model, will accelerate simpler claims,
predictably taking less time through the express lane, with the
remainder of claims flowing through either a special operations lane
(claims requiring special handling) or core lane. This segmented, case-
management approach to claims processing is creating efficiencies
within our workforce.
    Under our accelerated deployment schedule, all 56 regional offices
and our Appeals Management Center are now using VBMS. Once fully
developed, VBMS is projected to provide a 20-percent increase in
productivity, or an estimated increase in production of over 200,000
claims in fiscal year 2015.
    Future generations of VBMS will focus on continuing to improve
electronic claims processing by providing increased system
functionality and more complex automation capabilities for all VBMS
end-users. VBA, in collaboration with the Office of Information and
Technology, is building new decision-support tools to make our
employees more efficient and their decisions more consistent and
accurate. We have already developed rules-based calculators for
disability claims decisionmakers to provide suggested evaluations. For
example, the hearing loss calculator automates decisions using
objective audiology data and rules-based functionality to provide the
decisionmaker with a suggested decision.
    VBA's partnership with Veterans Service Organizations (VSOs) is
also crucial to our transformation. Today, only about 5 percent of
claims received by VA come with the documentation necessary for a
decision. As a result, VBA reviewers commit countless hours attempting
to locate medical and service records, and arranging physical
examinations needed to support veterans' claims. VBA is greatly
expanding education and collaboration efforts with VSOs that result in
the submission of more ``fully developed'' claims (FDC) (http://
benefits.va.gov/transformation/fastclaims/)--claims that come to VA
ready for final review and decision.
    VBA is also completing the integration with other Federal
departments that enables inter-departmental data review and exchange to
support pension and disability claims processing. This includes the
Social Security Administration, Internal Revenue Service (income
verification), and the Department of Defense (military personnel and
medical records). Currently, claims take an average of 314 days to
process, and approximately 239 of those days are taken up in the
process of gathering information from other sources.
             patient centered community care (pccc) program
    Question. There are concerns from local healthcare providers that
the VA is not properly communicating the new Patient Centered Community
Care (PCCC) Program. For example, last September, the public was given
only 2 weeks to provide comments/suggestions to the VA's request for
proposal for the PCCC Program--this was not nearly enough time to
assess the impact of the implementation of PCCC nor was it enough time
for the 5,000-page program to be understood by the healthcare providers
who serve our veterans.
    Do you think there should have been a larger window for that
comment period to improve transparency?
    Answer. While we realize that not everyone in the community
responded with questions and comments, we believe ample time was
provided. We began our market research in 2011 with a Request for
Information (RFI) posted to Federal Business Opportunities (FedBizOps),
which allowed anyone in industry to respond to questions designed to
help guide the program's development. We also conducted Industry Day
events in Portland, Oregon, Minneapolis, Minnesota, and Atlanta,
Georgia, in November and December 2011 to allow anyone in the community
to attend and hear our plans, ask questions, and have one-on-one time
with the program team and contracting officers.
    A draft Request for Proposals (RFP) was released in September 2012
that allowed time for community/industry providers and companies to see
the actual requirements we planned to release and to provide comments
or ask questions. The final RFP was released in December 2012. Through
extensions, the RFP comment and question period was prolonged to March
6, 2013. From the time of the original RFI in November 2011 to the
extended RFP comment period, March 6, 2013, the program team, through
the contracting officer, was open for discussion and comments and also
held multiple briefings with U.S. House of Representatives and U.S.
Senate congressional staff.
    One of the attachments to the 114-page RFP added a number of pages
to the overall solicitation, but this data is intended to show the
types and volumes of care we have purchased historically. This
information was requested by industry so they could get a sense of care
purchased in the past and assist them in planning network development.
We assume the reference to 5,000 pages includes a printed version of
the fiscal year 2010-2012 data spreadsheet.
    Question. Second, what are your opinions on requiring a minimum
length for an open comment period for a proposal of this significance?
    Answer. Federal Acquisition Regulations (FAR) requires the agency
to establish a response time for commercial item acquisition that will
afford offerors a reasonable opportunity to respond. For non-commercial
item acquisitions, a minimum of 30 days is required by FAR. The time
allotted for offerors to respond with a proposal to the PCCC RFP
exceeded 30 days. With each amendment and extension of the proposal
submission timeline, open periods for comments and questions were
allowed. The final date range from initial RFP release to receipt of
proposals, after all amendments, is December 21, 2012, to May 28, 2013.
    There appear to be many concerns from healthcare providers about
the Patient Centered Community Care Program (PCCC). For example,
healthcare providers are worried their existing contracts will be
allowed to expire and replaced and the VA will prohibit contracting
with long-term care hospitals and hospice. Furthermore, some are under
the impression PCCC will require veterans in rural areas needing
hospital level care to travel up to four hours or more to receive care
even if care is available in the veteran's community but it is not a
PCCC hospital.
    Question. What specific communications strategies has the VA
implemented to address these questions from the public and better
inform them on these complex provisions stemming from PCCC.
    Answer. Through the draft RFP and final RFP comment and question
process, we responded to any questions asked about local contracts and
provided these answers in amendments posted to the RFP on FedBizOps.
This follows normal acquisition procedures. Furthermore, we provided a
fact sheet to congressional staff and followed up with briefings and
open general sessions, including:
  --holding a Four Corners briefing with the House and Senate Veterans'
        Affairs Committees in January;
  --responding to an inquiry from the Senate Budget Committee;
  --holding general session Non-VA Medical Care Contracting 101
        briefings for House and Senate staff;
  --briefing, in February and April 2013, the Senate Appropriations
        Committee; and
  --briefing, in May 2013, the House Appropriations Committee.
    VA is not restricting local VA medical centers from contracting
through the Federal acquisition process. Those community providers
wishing to support or continue supporting veterans through PCCC can
participate in an awarded contractor's network. Please note long-term
care and Hospice are not included in PCCC; therefore, these existing
contracts are not impacted in any way.
    Through contracts awarded as a result of PCCC procurement, we will
be able to partner with networks of community providers that already
have existing facilities in rural and highly rural areas that will be
available to our veterans when VA determines they should receive the
needed care in their communities. If the contracted partner does not
have a facility within reasonable range of the veteran's home,
individual authorizations are available to allow VA to furnish the care
from community providers not under the PCCC contract.
    The Patient Centered Community Care Program (PCCC) does not utilize
the most current quality outcome measurement tools, such as value based
purchasing used by Medicare. Instead, the RFP creates three quality
review committees looking at publicly available data instead of
requiring an outcome measurement system.
    Question. Why doesn't the VA include state-of-the-art patient
outcome measurement requirements of its contractors?
    Answer. The PCCC RFP includes quality requirements established by
VA clinical providers and management. A key principle in the PCCC
process is to get medical diagnostic and treatment information back to
VA care teams so that a veteran's care is managed and less fragmented
than can often occur outside VA. Requirements developed include:
timeliness for the return of medical documentation, credentialing,
privileging, licensure, board certification, medical documentation, and
safety reporting. The RFP also includes performance measurement
requirements specifically around surgical outcomes and cardio-thoracic
procedures that are not publicly available.
    The requirement for Peer Review and Quality Oversight Committees is
a positive lesson learned from VA's Project HERO pilot in which our
partners had these committees as standard network operations.
Operationally, medical staff review patient/episodic quality cases to
ensure patients are protected and receiving high-quality levels of
care. The Peer Review Committee is responsible for reviewing provider
standards of practice while the Quality Oversight Committee reviews
access, patient satisfaction, and performance standards. Most
commercial networks have existing medical officers and quality
committees to provide oversight of their networks. It is in the best
interest of VA to follow these community practices and benefit from
quality activities already in place in the business community. The
requirement for VA to be allowed to participate in these committees
enhances our assurances of the provision of quality care so we are not
delegating or abdicating quality oversight to the contracting networks.
    Publicly reported data will be sent to VA after acceptance by the
requesting organizations; VA will receive and evaluate that data versus
asking the contracted partner to have a subcommittee to accomplish that
activity. Our desire is to create partnerships that will leverage
existing valid quality management programs to enhance patient quality,
safety, and access to care. Additionally, as the Centers for Medicare
and Medicaid Services move toward full implementation of pay for
performance initiatives, VA will seek ways to collaborate and apply
these pay for performance initiatives to the care purchased for
veterans. The development of healthcare networks is a dynamic process;
as hospitals and healthcare providers are recognized as exceptional
performers, VHA can request potential recruitment of said performers
into the existing provider network.
                                 ______

               Questions Submitted to Richard J. Griffin
               Question Submitted by Senator Tim Johnson
                           va-dod cooperation
    Question. In the VA budget submission, information technology
oversight was listed as one of the major program challenges for the
inspector general. The VA-DOD integrated Electronic Health Record, or
iEHR, is certainly a major IT initiative. Being a joint agency project
no doubt presents oversight challenges. But it is top priority of both
the VA and DOD Secretaries, and essential to the seamless transition of
health records for veterans.
    I am very concerned about the direction of this initiative given
recent indications that the two agencies may drop plans for a joint
system in favor of separate systems with file-sharing capabilities. It
appears that soaring costs and time considerations played a major role
in this change of course.
    What is the VA inspector general planning to do to monitor the
cost, development timeline, and likelihood to meet program goals of the
iEHR?
    Answer. The status of the integrated Electronic Health Record
(iEHR) is currently in a state of uncertainty; as a result, we consider
it premature for the VA Office of Inspector General (VA OIG) to
undertake an assessment of the initiative at this time. We understand
that the Government Accountability Office is currently reviewing this
issue.
    VA continues with efforts to modernize the Veterans Health
Information Systems and Technology Architecture--its ``core'' system
for the iEHR initiative. The VA OIG will continue to monitor decisions
made regarding the iEHR so that we can review this system development
initiative when the timing is right. We will then initiate an audit
focusing on the VA perspective as the VA OIG's oversight authority does
not cross departmental lines.
                                 ______

               Question Submitted by Senator Mark Begich
                   mental health care in rural areas
    Question. Mental health continues to be a concern in rural areas,
access, wait times, etc. Can you tell me in your inspections, if
contract mental health is being utilized to the full extent and what
are your recommendations to expand?
    Answer. Our inspections indicate that VA struggles to provide
access to mental health services to veterans across the United States.
VA has the ability to utilize non-VA care (also known as fee basis) and
contract programs to provide healthcare to supplement the care VA is
able to provide through its own facilities. VA needs to institute
contract and fee basis agreements to permit timely and coordinated
mental healthcare for veterans who would benefit from these services.
Better coordination with State and local government mental health
officials, who often support community mental health services, and with
private mental health providers has the potential to dramatically
improve the access to mental health services by veterans.

                          SUBCOMMITTEE RECESS

    Senator Johnson. This hearing is recessed.
    [Whereupon, at 4:31 p.m., Thursday April 18, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]

 
   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                  APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                         THURSDAY, MAY 9, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:30 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Tim Johnson (chairman) presiding.
    Present: Senators Johnson, Udall, Begich, Kirk, and
Collins.

                         DEPARTMENT OF DEFENSE

                   Office of the Secretary of Defense

STATEMENTS OF:
        HON. ROBERT F. HALE, UNDER SECRETARY OF DEFENSE (COMPTROLLER)
            AND CHIEF FINANCIAL OFFICER
        JOHN CONGER, ACTING DEPUTY UNDER SECRETARY OF DEFENSE
            (INSTALLATIONS AND ENVIRONMENT)

                OPENING STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Good afternoon. This hearing will come to
order.
    We meet today to discuss the President's fiscal year 2014
budget request for military construction (MILCON) and family
housing for the Department of Defense (DOD) and the Navy.
    We will have two panels today. Our first panel includes Mr.
Robert Hale, Under Secretary of Defense, Comptroller; and Mr.
John Conger, Acting Deputy Under Secretary of Defense for
Installations and Environment. We welcome you both to this
hearing, and we look forward to your testimony.
    The President's fiscal year 2014 budget request for MILCON
and family housing is $11 billion, which is on par with the
fiscal year 2013 request and reflects the continued fiscal
constraints under which DOD is operating.
    I understand the fiscal reality, but I hope that military
construction accounts are not being starved to feed operational
priorities, as important as those programs are. Our troops
stationed around the world live, work, and train on U.S.
military bases. Many families live in military family housing,
are treated at military clinics and hospitals, and in some
areas, send their kids to on-base military schools. At a time
of unrelenting wartime pressure on our troops and their
families, we simply cannot afford to short-change them when it
comes to providing state-of-the-art training and operational
facilities and safe and convenient housing.
    I am very concerned about the impact of the sequester on
the fiscal year 2013 MILCON program, and potentially on the
fiscal year 2014 program. I understand that the Office of
Management and Budget (OMB) is still calculating the impact on
specific fiscal year 2013 MILCON projects, which is continuing
to cause delays in executing the projects. We are now more than
halfway through the fiscal year, and I hope OMB guidance will
be forthcoming soon.
    I am also concerned about the potential impact of a
sequester on the fiscal year 2014 MILCON program. The Office of
the Secretary of Defense (OSD) and the services may have the
resources now to make up funding shortfalls in projects by
backfilling them with bid savings. But as the MILCON program
continues to shrink, bid savings are likely to shrink as well.
I hope OSD has a plan B for executing the fiscal year 2014
MILCON program under a sequester.
    Secretary Hale and Mr. Conger, I look forward to discussing
these and other issues with you. Mr. Secretary, I know you have
worked tirelessly to manage and mitigate the impact of
sequestration on the Defense Department, including the troops
on the ground and the army of civilians that come to work every
day to support the defense of our Nation. We thank you for your
service.
    I now ask my ranking member for any opening remarks he
cares to make.
    Senator Kirk.

                     STATEMENT OF SENATOR MARK KIRK

    Senator Kirk. Thank you, Mr. Chairman.
    A quick overview. I want to talk about three things, which
are a request for a background and overseas bases
consolidation, and I will just note on the Base Realignment and
Closure (BRAC) 2005 it was estimated to cost $13 billion, and
it cost $35 billion. Only in the Government could a base
closing exercise end up overrunning its budget.
    I will say I think if we are to discuss any kind of a BRAC,
we need to complete the overseas base consolidation plan of DOD
to make sure that we have looked at everything overseas and we
don't launch into the BRAC, which affects many local economies.
    Mr. Chairman, Thank you. That's it.
    Senator Johnson. Thank you, Senator Kirk.
    I will remind our witnesses that their prepared statements
will be placed in the record, so I encourage you to summarize
your remarks.
    Secretary Hale, please proceed.

                SUMMARY STATEMENT OF HON. ROBERT F. HALE

    Mr. Hale. Mr. Chairman, Senator Kirk, Senator Collins,
thank you for the chance to be here today to discuss the MILCON
and family housing request. Your support is critical to our
required infrastructure. I will summarize my statement briefly.
    Let me first turn to a very brief overview of our defense
budget as a whole for context. We are requesting $526.6 billion
in discretionary budget authority, which is about the same as
our 2013 request, but about 8 percent higher than we are
executing right now in 2013 under sequestration. Beyond 2014,
if we are able to carry out the President's plan, we would
anticipate increases of about 2 percent a year, roughly enough
to keep up with inflation.
    Our overall budget request represents the amount the
President and the Secretary of Defense believe is needed to
protect our national security interests in a time of very
complex challenges. Our request does not take into account a
possible $52 billion reduction if sequester becomes an annual
event. However, the President has submitted a budget with a
balanced deficit reduction plan of $1.8 trillion over 10 years,
more than enough to meet the targets in the Budget Control Act.
We strongly hope the Congress will pass this plan or another
plan supported by President and repeal sequestration.
    Our proposed base budget was built on a number of guiding
principles, in particular the need to continue to serve as good
stewards of taxpayer dollars. Accordingly, the budget includes
$5.5 billion in fiscal year 2014 in efficiency savings, $34
billion over the 5-year period of 2014 through 2018. That is in
addition to several other efficiency packages we have submitted
over the last year; and, of course, the plan, the proposal last
year for $487 billion in DOD topline reductions over a decade.
    In an effort to be good stewards, we are proposing many
initiatives, ranging from healthcare to weapons terminations,
but let me emphasize one that I know is of interest and
probably of concern. We need to consolidate and reduce
infrastructure. The only effective way to do that is for
Congress to authorize a new round of base realignment and
closure, so we ask for a round in 2015.
    BRAC saves money. Let me say that again: BRAC saves money.
We are saving $12 billion a year from the past BRAC rounds. I
would hate to think what I would be doing right now as
Comptroller of the Department of Defense, especially in this
environment, if I had to find another $12 billion of savings in
the fiscal 2014 budget.
    And I might add I understand the concerns about 2005, and
we will discuss it. We do not intend to repeat the experience
of 2005. It was a move-around BRAC. This is going to be a
close-the-bases BRAC. It will be a lot less expensive and save
money much more quickly.
    We need your support so we can make further cuts in
infrastructure in 2015 and hold down the amount of dollars the
American taxpayer has to give us to meet our national security
needs.
    Seeking to be good stewards of the public funds is just one
of the themes in the budget. We also are seeking to strengthen
our alignment to the President's defense strategy that was
announced last year. We also seek a ready force with an
emphasis on people. But, frankly, sequestration is seriously
undermining both of those goals.
    Let me turn briefly to military construction for 2014. We
are requesting $9.5 billion in that category, roughly equal to
the President's request of $9.6 billion in 2013, and $11
billion, as you said, Mr. Chairman, in family housing. On the
MILCON side, we request $3.3 billion for operational training
facilities, $0.9 billion to modernize medical facilities, 17
dependent school projects, and many others. In addition, we are
asking for $1.5 billion in family housing, in order to provide
quality, affordable housing for our military families. My
colleague, John Conger, can provide more details on our MILCON
and family housing requests.
    In very brief terms, that is an overview of our 2014
budget. Let me close with a few words about the impact of
sequestration on military construction in the current year. We
are still researching the specific impacts, but we know most of
them.
    Most of the military construction accounts will not
experience sequester-related cuts in 2013 because of special
crediting provisions in the current law that apply when
Congress enacts major cuts in an appropriation. The law says if
the cuts are big enough, there is no further sequestration.
    For the construction accounts that are affected, which are
mainly Navy and Defense-wide, we believe we can absorb most of
the sequestration reductions with available bid savings. We
don't intend to reduce the scope of any construction projects,
at least as of now. We don't believe that will be necessary,
and we plan to minimize the number of canceled projects as a
result of sequestration. We will have to do a larger than
normal number of reprogrammings, which will add to our
workload, and also to yours.
    I should add that while sequestration and related problems
do not affect most military construction projects, they are
devastating military readiness. I just can't believe what we
are doing to the military right now. I don't think any of us
meant to do this. Moreover, facility sustainment and
restoration and modernization projects, which I know are of
interest to this subcommittee, are being cut severely in fiscal
2013. We are essentially funding only down to safety, life and
property projects for the rest of the year. Overall, I think
sequestration is living up to its unfortunate reputation for
imposing devastating effects on our military.

                           PREPARED STATEMENT

    Mr. Chairman, that concludes my opening statement. On
behalf of the men and women who wear America's uniform and the
civilians who support them, I want to thank you for your
support. After Mr. Conger finishes, I will welcome your
questions.
    [The statement follows:]
               Prepared Statement of Hon. Robert F. Hale
    Mr. Chairman, members of the subcommittee, thank you for the
opportunity to discuss the Military Construction and Family Housing
portion of the fiscal year 2014 budget for the Department of Defense.
    This subcommittee's support is essential if America's Armed Forces
are to have the infrastructure and facilities needed to carry out their
missions and to continue ensuring the security of the United States.
    Before I discuss the Military Construction and Family Housing
request, I would like to set the stage with a brief summary of the
President's budget for the entire Department of Defense.
                          base budget request
    For fiscal year 2014 the Department is requesting $526.6 billion in
discretionary budget authority. That is about 8 percent higher than
what we are executing in fiscal year 2013 under the impact of
sequestration, but it is similar to the level of funding in our fiscal
year 2013 budget request. In the years beyond 2014, we anticipate
budgets that will increase by about 2 percent per year, roughly enough
to keep pace with inflation.
    I would make two broad points regarding our request for fiscal year
2014. First, our overall budget is consistent with the adjusted
provisions of title I of the 2011 Budget Control Act (BCA). However, it
does not take into account what could be a $52 billion reduction if the
BCA remains unchanged and these reductions become an annual event. The
President has submitted a budget that calls for a balanced deficit
reduction of $1.8 trillion over the 10-year period. We hope that
Congress will enact this deficit reduction plan, or an alternative that
the President can sign, and then repeal sequestration.
    Second, our budget does not yet include a request for Overseas
Contingency Operations (OCO) funding. In order to give our commanders
time to make the best judgments about the drawdown of troop levels in
Afghanistan, the President did not announce force level decisions until
mid-February, and even then he did so only for the period through
February 2014. Since those force level decisions were made, we have
been working on completing the OCO budget, and we hope to deliver it to
Congress this month.
    In short, the request we submitted last month for $526.6 billion
represents the base budget for the Department. It was developed with a
number of fundamental principles in mind.
                              stewardship
    The first of these principles is to continue to serve as good
stewards of taxpayer dollars. We recognize that, in a time of
uncertainty when the Nation is beset by economic problems, we need to
do our part and stretch Defense dollars. Consequently, we have proposed
a budget that includes $5.5 billion in efficiency savings next year and
about $34 billion in the 5 years from 2014 through 2018. Keep in mind
that this is on top of the belt-tightening that the Department has gone
through in recent years, including a budget plan in fiscal year 2013
that reduced the Department's topline by $487 billion over a decade.
    As part of this ongoing commitment to good stewardship, we are
asking Congress for authority for a new round of Base Realignment and
Closure, better known as BRAC. It is not appropriate to identify
specific facilities to be closed until this process has been completed,
but we are patterning the effort after the rounds in 1993 and 1995. We
know that BRAC, while it saves substantial sums in the long run,
requires upfront funding. To pay related costs, we have added $2.4
billion to the out-years of this budget in fiscal years 2016 through
2018.
    We are also looking at a restructuring of the military healthcare
system in order to address some significant underutilization in
military treatment facilities. Our past efforts to control healthcare
costs have met with some success, but we need to do more.
    These two initiatives--BRAC and healthcare restructuring--are
important for restructuring the civilian workforce. We anticipate a
total civilian reduction of between 4 and 5 percent, or as many as
34,000 positions.
    Other stewardship efforts in fiscal year 2014 also include
initiatives to terminate or restructure additional weapons systems.
Specifics include termination of the precision tracking satellite
system in favor of additional research on interceptor capability, and
restructuring the SM-3IIB missile system in favor of warhead
improvements.
    In addition, we are undertaking additional efforts to slow the
growth in military compensation, while continuing to provide strong
support for the All-Volunteer Force. The requested budget includes a
modest slowing of the growth of military pay by implementing a 1-
percent pay raise in fiscal year 2014, instead of the 1.8-percent
increase authorized in law.
    Our request also includes additional changes to the TRICARE program
in the fiscal year 2014 budget to bring the beneficiary's cost-share
closer to the levels envisioned when the program was implemented--
particularly for working age retirees. This change in healthcare cost-
share, along with our pay raise proposal, will save $1.4 billion in
2014 and $12.8 billion through fiscal year 2018, which helps the
Department avoid cuts in end strength, or in training and
modernization, beyond those already planned.
                    aligning with strategic guidance
    After efficiencies, our second guiding principle in developing the
proposed budget is to implement and deepen program alignment with the
President's new Strategic Guidance that was introduced last year. That
strategy envisions a smaller, leaner force. As a result, we are
continuing to draw down ground forces. By the end of fiscal year 2014,
we will be about two-thirds of the way toward an end strength target of
490,000 for the Army and 182,100 for the Marine Corps.
    We also proposed a number of ship retirements last year in line
with strategic needs. Congress rejected those proposals and provided
funds to operate those ships through 2014. However, because these are
costly but lower priority vessels, we plan to retire the ships after
fiscal year 2014. We did reach agreement with Congress on aircraft
retirements, and we are moving ahead on those.
    The President's strategy also involves a rebalance toward the Asia-
Pacific region while sustaining a presence in the Middle East. Our
proposed budget reflects these goals. We are moving our most capable
forces forward--F-22s are now in Kadena and Okinawa and, by 2020, we'll
have 60 percent of our Navy forces in the Pacific region. We are also
working to expand access and cooperation in the region. That includes
establishing a rotational Marine Corps presence in Australia and
deploying ships to Singapore. We also envision a continued strong
presence in the Middle East, aimed at providing stability in the region
in part by deterring Iranian aggression.
    Building alliances is a critical aspect of this strategy. We
already have authority for the Global Security Contingency Fund (GSCF),
a fund that DOD and the State Department can use jointly to aid allies.
In fiscal year 2014, for the first time, we are asking for dedicated
funding of $75 million for the GSCF.
    Alignment with the new Strategic Guidance also involves protecting
and investing in new capabilities and technology to sustain our role as
the world's preeminent military force. Highlights include investments
in fiscal year 2014 in missile defense, upgrades to our carriers,
enhanced long-range strike, a new tanker, the joint strike fighter,
more and better precision-guided munitions, procurement of an
additional Virginia-class submarine, and an increase in funds for
cybersecurity.
                         seeking a ready force
    Besides stewardship and alignment with the President's Strategic
Guidance, the Department's fiscal year 2014 budget request seeks to
ensure and maintain a ready force. Over the last decade, our emphasis
has been on counterinsurgency and counterterrorism. This budget
emphasizes a return to full-spectrum operations and training across the
Services.
    For example, the marines are shifting from what has been almost
exclusively a land mission to their historic specialty in amphibious
expeditionary warfare. We also hope to invest more in steaming and
flying hours, reversing the severe limitations imposed by the present
sequestration. Special Operations Command will return to its earlier
status as a global force rather than concentrating on Afghanistan.
    Unfortunately, our efforts to seek a ready force are being
undermined by sequestration and wartime budget shortfalls. The
resulting large shortfalls in our operating accounts have driven us to
cuts in training that are having devastating effects on military
readiness. The Army, for example, has canceled seven combat training
center rotations--ending this experience as a culminating training
event for numerous units. As a result, by year's end many Army units
will be below acceptable readiness levels. The Air Force has stopped
flying at about one-third of its active combat-coded squadrons. This
decision, and other reductions in flying hours, will limit the
Service's ability to support combatant commanders. The Navy has cut
back on deployments and also on training. All the Services have cut
fiscal year 2013 maintenance funding, which will adversely affect
future readiness.
    These unfortunate decisions not only seriously damage readiness in
fiscal year 2013. They will also damage military capability beyond this
fiscal year.
                           people are central
    The fiscal year 2014 budget also seeks to maintain a vital emphasis
on people in Defense. That is the fourth principle behind our budget
request. It means, for example, that the Department continues to ensure
that our budget in fiscal year 2014 reflects our commitment and support
for wounded warriors and military families.
    As with readiness, our goal to make people central is being
undermined by the budgetary chaos in fiscal year 2013. Our civilians,
who have suffered numerous pay freezes, may now face furloughs.
Secretary Hagel is currently evaluating whether DOD should impose
furloughs. Even our military personnel, whose funding is exempt from
sequestration, are being hurt by resulting budget cuts because some can
no longer train and stay ready to protect our Nation's security--which
is one reason they joined the military. Indeed, today's sequestration
problem may become tomorrow's retention problem.
                military construction and family housing
    Mr. Chairman, that provides a brief summary of our proposed budget
for 2014 and the basis for the proposal. It also provides a context for
the Military Construction request that we are here to discuss today.
    For fiscal year 2014, we are asking $9.5 billion for Military
Construction, which is roughly equal to the President's request of $9.6
billion for fiscal year 2013. Our current request will provide $3.3
billion to support operational and training facilities, $0.9 billion to
modernize medical facilities, and $0.8 billion for 17 Dependents
Schools projects. The request also includes $1.3 billion for
maintenance and production facilities and $0.5 billion for BRAC-related
expenses, primarily to cover environmental and caretaker costs for
property not yet conveyed. The remaining $2.7 billion of the request
provides for research and development, supply, administrative and
utility facilities, troop housing, the NATO Security Investment
Program, the Energy Conservation Investment Program, minor construction
and planning and design.
    In addition, we are asking for $1.5 billion for the Family Housing
program, which will help to provide and maintain quality, affordable
housing for military personnel and their families in locations that
lack adequate rental housing.
                            selected issues
    Let me turn to several specific issues, starting with the effects
of sequestration on Military Construction funding in fiscal year 2013.
Many Military Construction accounts will not experience sequestration
cuts because of crediting provisions in the current law. Our initial
assessment is that, for those accounts that are cut by sequestration,
we can absorb most of the sequestration with available bid savings.
Emphasis will be placed on completing on-going construction projects
(including incrementally funded projects). We do not intend to reduce
the scope of any construction projects. Our plan is to minimize the
number of projects deferred or canceled as a result of sequestration.
However, since sequestration of affected accounts affects projects with
unobligated balances, a large number of reprogramming actions will
likely be required to execute the projects. Managing sequestration at
the project level has been very difficult and will cost the Department
many man hours to manage and implement.
    Turning to the fiscal year 2014 request, I want to highlight the
importance of our request for funding in support of Global Defense
Posture initiatives. In addition to the $1.4 billion investment planned
for overseas military facility investments, we are asking for another
$0.5 billion to continue strengthening forward capabilities and to
ensure support for allies. Included are funds:
  --To continue working with Japan to achieve an end state Marine
        presence in Okinawa consistent with the April 2012 joint
        statement on planned force posture;
  --To enhance the ability of forces in the Asia-Pacific region to
        survive in potential future conflicts;
  --For CV-22 support facilities in the United Kingdom; and
  --For continued construction of AEGIS Ashore mission facilities in
        Romania.
    In the Asia-Pacific region, investment is needed to establish a
more enduring U.S. role in advancing security and prosperity in the
region. This includes funds for the development of Guam as a strategic
hub in the Western Pacific and to relocate marines from Okinawa. These
initiatives are particularly important because of our strategic goal to
rebalance our forces toward the Asia-Pacific region.
    I also want to highlight our efforts to reduce overseas
infrastructure. For years we have been pursuing an aggressive program.
Since 2003, the Department has returned more than 100 sites in Europe
to their respective host nations, and we have reduced our personnel by
one-third. The Army plans to close 33 additional sites between fiscal
year 2013 and fiscal year 2016, including those associated with the
announced decision to reduce our presence from four to two brigade
combat teams.
    Still, given recent announcements to further reduce our forces in
Europe, we decided it was appropriate to build on our past successes in
BRAC and use a similar approach to review our European infrastructure.
We have initiated a comprehensive infrastructure analysis effort that
will identify potential closures and consolidations. We are developing
business case analyses for this task, taking into consideration
operational impacts, return on investment, and military value. By the
end of this year, we plan to produce a fully vetted list of options
from which the Secretary can make strategic investment decisions.
    As we reduce our footprint overseas, we also need to consolidate
infrastructure in the United States. The only effective and fair way to
do that is BRAC. And, contrary to some assertions, BRAC does save
money. Today we are saving $12 billion every year because of changes
made during past BRAC rounds. We need to consolidate infrastructure
now, and that statement will be even more true if Congress decides to
continue cuts in defense funding. We must have your help to permit us
to make cuts in infrastructure so that we can maintain a fighting force
that is ready and modern. In short, we need your support for a BRAC
round in 2015.
                               conclusion
    In conclusion, I believe that the fiscal year 2014 budget request
is appropriate given the needs of the Armed Forces and the current
fiscal reality. In particular, the budget supports a reasonable
Military Construction and Family Housing program. We seek your support
for our request. We also ask your help, and the help of others in
Congress, to take actions to repeal sequestration and end its mindless
and disastrous effects on our military forces.
    Mr. Chairman, members of the subcommittee, thank you again for your
support for the Department of Defense and especially the men and women
who wear America's uniform as well as the civilians who support them.
That concludes my statement. I welcome your questions.

    Senator Johnson. Thank you, Mr. Secretary.
    Mr. Conger.

                        STATEMENT OF JOHN CONGER

    Mr. Conger. Thank you, Mr. Chairman. Chairman Johnson,
Ranking Member Kirk, Senator Collins, I appreciate the
opportunity to appear before you to discuss the Department's
fiscal year 2014 budget request for installations and
environment. The testimony that I have submitted for the record
describes the $11 billion that we are requesting for military
construction, the $10.9 billion more that we are investing in
sustaining and restoring our facilities, and the $3.8 billion
that we are seeking for environmental compliance and cleanup.
    As Mr. Hale mentioned, these numbers are not significantly
lower than those we requested in fiscal year 2013 and, in fact,
they represent a slight increase from what was appropriated
this year. That's because the President's budget request
replaces the across-the-board sequester cuts, as Mr. Hale
mentioned. The fiscal year 2014 budget request allows us to
continue a prudent investment in our infrastructure.
    I did want to mention two quick points in my opening
statement. First, I wanted to talk a little bit more about the
sequestration impact not to military construction, where the
impact will be minor, but on facilities sustainment and
restoration accounts. Because operation and maintenance (O&M)
dollars or more discretionary and thus more flexible, the
operational accounts were given more protection and facilities
sustainment was cut more deeply to make up the difference. In
fiscal year 2013, we are deferring all but the most critical
repairs, we are deferring routine maintenance, we are holding
off on major purchases and accepting risk by looking for
building equipment to hold out longer.
    Frankly, we can accommodate this for a short period of
time, but facilities will break if we short-change these
accounts for multiple years. Building systems will begin to
fail. The cost to repair broken systems is much higher than
that to maintain them, just like changing the oil in your car.
Keep in mind, this car is actually a real property portfolio of
more than 500,000 facilities and a plant replacement value of
more than $800 billion. If we don't invest in keeping it up, it
will deteriorate and we will end up with a steady increase in
failing or unusable facilities.
    Finally, let me say a word or two about BRAC. As you know,
the administration is requesting a BRAC round in 2015. The
Department is facing a serious problem created by the tension
caused by constrained budgets, reductions in force structure,
and limited flexibility to adapt to the first two. We need to
find a way to strike the right balance so infrastructure does
not drain too many resources from the warfighter.
    Without question, installations are critical components of
our ability to fight and win wars, whether that installation is
a forward operating location or a training center in the United
States. Our warfighters can't do their jobs without bases from
which to fight, on which to train, or in which to live when
they are not deployed.
    However, we need to be cognizant of the fact that
maintaining more infrastructure than we need taxes other
resources that the warfighter needs as well, from depot
maintenance to training to bullets and bombs. We are
continually looking for ways to reduce the cost of doing
business, from looking for ways to reduce the cost of military
construction to investing in energy efficiency that pays us
back in lower operating costs. BRAC is another very clear way
for us to reduce the infrastructure costs to the Department,
and the previous five rounds of BRAC are providing us with the
recurring savings of $12 million that Mr. Hale mentioned. These
savings come from the elimination of excess, so they don't
result in decreased capability.
    I am well aware of the skepticism that many in Congress
have about the need for BRAC, and that seems to be based on the
fact that we spent more than originally advertised during the
2005 round. To be clear, BRAC 2015 will not look like BRAC
2005. BRAC 2005 was conducted, one, while force structure was
growing; two, while budgets were growing; and three, under
leadership that directed the use of that authority to
accomplish transformative change, not just the elimination of
excess.
    Let me talk about that last point for just a second. Keep
in mind that under the law, the only way to move functions of
any significant size from base to base, simply to manage them,
is through BRAC. In BRAC 2005, 33 out of the 222
recommendations had no recurring savings. There were 70 more
recommendations that took over 7 years to pay back. This wasn't
a mistake. It was a conscious choice to use BRAC authority to
better manage the enterprise. But even with BRAC 2005
significant expenditure on transformation, it's generating $4
billion in recurring savings. With no more investment in BRAC
2005, we're going to save those $4 billion a year in
perpetuity.
    Today's situation is dramatically different than 2005. The
force structure is shrinking, the budget is shrinking, and we
are firmly focused on reducing our future costs. That
description characterizes the first four rounds of BRAC as
well. Frankly, it also characterizes the other one-half of the
recommendations that have fast payback from the 2005 round. The
119 recommendations that did have fast payback from the 2005
round cost us $6 billion and paid back $3 billion of the $4
billion in recurring savings. So there were savings that
occurred in the 2005 round.

                           PREPARED STATEMENT

    That concludes my opening statement. I appreciate the
opportunity to testify this afternoon. It is a pleasure to be
here, and I look forward to your questions.
    [The statement follows:]
                   Prepared Statement of John Conger
                              introduction
    Chairman Johnson, Ranking Member Kirk and distinguished members of
the subcommittee: Thank you for the opportunity to present the
President's fiscal year 2014 budget request for the Department of
Defense programs supporting installations, facilities energy and the
environment.
    It would be an understatement to say these are challenging times
for the DOD budget. The impact of sequestration on our installations
budgets in fiscal year 2013, combined with the uncertain budget context
it poses for the next decade, requires us to change the way we think
about our installations and the funds we will allocate to maintain
them. We are still evaluating the impact the fiscal year 2013 cuts have
had and will have on our various installations accounts, but we must
consider every day how we can drive efficiencies and do more with less.
    While budgets are constrained and force structure shrinks, our
infrastructure is being held constant. Our portfolio of approximately
550,000 buildings and structures, 2.3 billion square feet, and a
replacement value of $848 billion will be recapitalized and maintained
in fiscal year 2014 through our request of $11 billion for military
construction and family housing and $10.85 billion in Operations and
Maintenance (O&M) for sustainment, restoration and modernization.
    This budget request represents a prudent investment in
recapitalizing and maintaining our facilities. Installations are
critical components of our ability to fight and win wars. Whether that
installation is a forward operating location or a training center in
the United States, our warfighters cannot do their job without bases
from which to fight, on which to train, or in which to live when they
are not deployed. The bottom line is that installations support our
military readiness, and we must ensure they continue to do so.
    Moreover, the environment in which our forces and their families
live has an impact on their ability to do their job, and the
Department's ability to retain those troops. Quality of life--to
include not only the physical condition of the facilities in which our
servicemen and servicewomen and their families live and work, but
whether or not there is a safe, healthy environment around and within
those facilities--is also critical to the readiness of the force. This
request reflects that priority.
    Still, while we prioritize readiness and protect quality of life,
we must be constantly seeking efficiencies in the budget. We are
exploring ways to lower the cost of military construction as well as
the cost of operating our facilities into the future. We are also
cognizant that maintaining more infrastructure than we need taxes other
resources that the warfighter needs--from depot maintenance to training
to bullets and bombs. That is why the President's budget request for
fiscal year 2014 also requests authority to conduct a round of Base
Realignment and Closure (BRAC) in 2015.
    My testimony will outline the fiscal year 2014 budget request and
highlight a handful of top priority issues--namely, the
administration's request for BRAC authority, European consolidation
efforts, status of the plan to move marines from Okinawa to Guam, an
overview of our energy programs, and the request to renew or expand our
land withdrawals at several critical installations.
   fiscal year 2014 budget request--military construction and family
                                housing
    The President's fiscal year 2014 Military Construction (MILCON) and
Family Housing appropriation request totals $11.0 billion, a decrease
of approximately $211.1 million from the fiscal year 2013 budget
request. Our MILCON and Family Housing budget will allow the Department
to respond rapidly to warfighter requirements, enhance mission
readiness, and provide essential services for its personnel and their
families, while better balancing available resources and our security
needs.

            TABLE 1.--MILCON AND FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2013 VS. FISCAL YEAR 2014
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from fiscal year 2013
                                                   Fiscal year     Fiscal year  --------------------------------
                                                  2013 request    2014 request       Funding          Percent
----------------------------------------------------------------------------------------------------------------
Military Construction..........................        $8,540.7        $8,505.3          $(35.3)          (0.4)%
Base Realignment and Closure...................           476.0           451.4           (24.7)           (5.2)
Family Housing.................................         1,650.8         1,542.7          (108.0)           (6.5)
Chemical Demilitarization......................           151.0           122.5           (28.5)          (18.9)
Energy Conservation Investment Program.........           150.0           150.0  ...............  ..............
NATO Security Investment Program...............           254.2           239.7           (14.5)           (5.7)
                                                ----------------------------------------------------------------
      Total....................................        11,222.7        11,011.6          (211.7)           (1.9)
----------------------------------------------------------------------------------------------------------------
Numbers may not add due to rounding.

                     military construction (milcon)
    We are requesting $9.0 billion for military construction (Military
Construction, Chemical Demilitarization, Energy Conservation Investment
Program and NATO Security Investment Program). This request addresses
routine needs for construction at enduring installations stateside and
overseas, and for specific programs such as the NATO Security
Investment Program and the Energy Conservation Investment Program. In
addition, we are targeting MILCON investments in three key areas:
    First and foremost, our MILCON request supports the Department's
operational missions. MILCON is key to initiatives such as the Nuclear
Weapon Security Deviation Elimination Initiative and the Army
Stationing Initiative, as well as the President's timeline for the
European Phased Adaptive Approach (EPAA), and for projects that support
enhanced homeland defense capabilities. Our fiscal year 2014 budget
includes $3.26 billion to support operations and training requirements,
including: range and training facilities for ground forces at several
Army and USMC installations; a third increment of the Naval Explosives
Handling Wharf at Kitsap, Washington; Air Force infrastructure to bed-
down the initial delivery of the KC-46A tankers; communications
facilities in California and Japan to support operations in the Pacific
region; and training and support facilities for Special Operations
Forces.
    Second, our fiscal year 2014 budget request includes $797.8 million
to replace or modernize 17 DOD Education Activity (DODEA) schools that
are in poor or failing physical condition. These projects, most of
which are at enduring locations overseas, support the Department's plan
to replace or recapitalize more than half of DODEA's 194 schools over
the next several years. The recapitalized or renovated facilities,
intended to be models of sustainability, will provide a modern teaching
environment for the children of our military members.
    Third, the fiscal year 2014 budget request includes $1.2 billion
for 11 projects to upgrade our medical infrastructure, including $151.5
million for the third increment of funding to replace the Landstuhl
Regional Medical Center at the Rhine Ordnance Barracks in Germany, a
critical facility supporting our wounded warriors. Our budget addresses
medical infrastructure projects that directly impact patient care, and
enhance our efforts to recruit and retain personnel. These projects are
crucial for ensuring that we can deliver the quality healthcare our
servicemembers and their families deserve, especially during overseas
tours.
                family housing and unaccompanied housing
    A principal priority of the Department is to support military
personnel and their families and improve their quality of life by
ensuring access to suitable, affordable housing. Servicemembers are
engaged in the front lines of protecting our national security and they
deserve the best possible living and working conditions. Sustaining the
quality of life of our people is crucial to recruitment, retention,
readiness, and morale.
    Our $11.0 billion MILCON request includes $1.5 billion to fund
construction, operation, and maintenance of Government-owned family
housing worldwide. Most Government-owned family housing is on enduring
bases in foreign countries, since the Department has privatized the
vast majority of its family housing in the continental United States.
The requested funding will ensure that we can continue to provide
quality, affordable housing to U.S. military personnel and their
families.
    The Department is committed to improving housing for our
unaccompanied personnel as well. In recent years, we have invested
heavily in unaccompanied personnel housing to support initiatives such
as BRAC, global re-stationing, force structure modernization and
Homeport Ashore--a Navy program to move sailors from their ships to
shore-based housing when they are at their homeport. The fiscal year
2014 MILCON budget request includes $423 million for 11 construction
and renovation projects that will improve living conditions for more
than 2,000 unaccompanied personnel.
    The Services rely largely on privatization to provide family
housing on U.S. installations. As you've heard from my predecessors,
privatization of family housing--where the Services partner with the
private sector to generate housing built to market standards--is the
single most effective reform my office has carried out. Prior to
privatization, the Services' chronic underinvestment in their
facilities had created a crisis, with almost 200,000 of the
Department's family housing units rated ``inadequate.'' Privatization
leverages the power of the commercial market to serve our needs. With
an investment of approximately $3.6 billion, the Services have
generated $29.7 billion in construction to build new and renovate
existing family housing units. The Services also transferred
responsibility for maintenance, operation and recapitalization for 50
years to private entities that have an incentive to maintain the
housing so as to attract and retain military tenants.

                 TABLE 2.--FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2013 VS. FISCAL YEAR 2014
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                  Change from fiscal year 2013
                                                  Fiscal year     Fiscal year  ---------------------------------
                                                 2013 request    2014 request       Funding          Percent
----------------------------------------------------------------------------------------------------------------
Family Housing Construction/Improvements......          $190.6          $193.8            $3.1             1.6%
Family Housing Operations & Maintenance.......         1,458.3         1,347.2          (111.2)            (7.6)
Family Housing Improvement Fund...............             1.8             1.8  ...............            (0.3)
                                               -----------------------------------------------------------------
      Total...................................         1,650.8         1,542.7          (108.1)            (6.5)
----------------------------------------------------------------------------------------------------------------
Numbers may not add due to rounding.

      facilities sustainment, restoration and modernization (fsrm)
    In addition to investing in new construction, we must maintain,
repair, and recapitalize our existing facilities. The Department's
Sustainment and Recapitalization programs strive to keep our inventory
of facilities mission capable and in good working order. Facility
recapitalization is the funding that is used to improve a facility's
condition through repair (restoration and modernization) or replacement
(military construction (MILCON)). Sustainment represents the
Department's single most important investment in the health of its
facilities. It includes regularly scheduled maintenance and repair or
replacement of facility components--the periodic, predictable
investments an owner should make across the service life of a facility
to slow its deterioration and optimize the owner's investment.
Sustainment prevents deterioration, maintains safety, and preserves
performance over the life of a facility, and helps improve the
productivity and quality of life of our personnel.
    For fiscal year 2014, the Department's Operations and Maintenance
(O&M) request for Facility Sustainment, Restoration and Modernization
(FSRM) includes $8.0 billion for sustainment, $2.7 billion for
restoration and modernization (recapitalization), and $145 million for
demolition. The total FSRM O&M funding ($10.85 billion) reflects a 0.3-
percent increase from the fiscal year 2013 President's budget (PB)
request ($10.81 billion). While the Department's goal is to fund
sustainment at 90 percent of modeled requirements, due to budget
challenges, the Army, Navy, and Air Force have taken risk in
maintaining and recapitalizing existing facilities. These Services
continue to budget to fund sustainment at between 80 percent and 85
percent of the modeled requirement, whereas the Marine Corps and most
Defense Agencies achieve or exceed the 90 percent goal.
    Continued deferred sustainment of existing facilities will present
the Department with larger bills in the outyears to replace facilities
that deteriorate prematurely due to underfunding.

 TABLE 3.--FACILITY SUSTAINMENT, RESTORATION AND MODERNIZATION BUDGET REQUEST, FISCAL YEAR 2013 VS. FISCAL YEAR
                                                      2014
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                  Change from fiscal year 2013
                                                  Fiscal year     Fiscal year  ---------------------------------
                                                 2013 request    2014 request       Funding          Percent
----------------------------------------------------------------------------------------------------------------
Sustainment...................................        $7,895.0        $8,040.0          $145.0              1.8
Restoration and Modernization.................         2,794.0         2,666.0          (128.0)            (4.6)
Demolition....................................           125.0           145.0            20.0             16.0
                                               -----------------------------------------------------------------
      Total FSRM..............................        10,814.0        10,851.0            37.0              0.3
----------------------------------------------------------------------------------------------------------------

    Our fiscal year 2014 budget also includes $2.7 billion in O&M funds
for recapitalization, reflecting a decrease of 4.6 percent from the
fiscal year 2013 PB request. This decrease largely results from the
Services' decision to defer renovations at locations that may be
impacted by changes in force structure. This constrained funding
follows significant reductions in energy conservation investments from
Sequestration reductions in fiscal year 2013, which will make
achievement of DOD's statutory energy intensity goals impossible to
attain for the foreseeable future.
    A final category of investment is demolition, which allows the
Services to eliminate facilities that are excess to need or no longer
cost-effective to operate. Our fiscal year 2014 budget request includes
$145 million in operations and maintenance funding, a net increase of
$20 million (16 percent) over the fiscal year 2013 request. This
funding will allow us to demolish approximately 5 million square feet
of facilities. Demolition is also accomplished as part of many of our
military construction projects, and with both sources of funding, we
anticipate eliminating over 62 million square feet of space between
fiscal year 2008 and fiscal year 2014. Demolition is an important task
in completing an asset's lifecycle. In most of cases, it removes
eyesores and hazards from our installations and opens land for other
uses.
         ongoing initiatives to reduce costs and improve value
    Finally, I would like to mention several ongoing initiatives
designed to improve the Department's management of our infrastructure.
    Clarifying Anti-Terrorism/Force Protection (AT) Standards.--On
December 7, 2012, the Deputy Secretary issued policy for DOD to begin
using the antiterrorism standards developed by the Federal Interagency
Security Committee (ISC) for DOD leased space in buildings, in lieu of
continuing the use of DOD-developed standards. The revised policy will
put DOD in line with other Federal agencies when determining security
requirements for leased facilities, thereby promoting efficiencies with
leasing arrangements through General Services Administration,
particularly in buildings with multiple Federal tenants, as commonly
found in urban areas. Additionally, because the ISC standards will
allow DOD to better align organization missions to threats and risk
mitigation, the Department can realize cost-savings through decreased
relocation, rent, and retrofit costs. We will also be reviewing our on-
base processes for applying antiterrorism standards to determine if the
ISC or similar processes and standards are more appropriate given the
vast spectrum of missions that occur on military installations.
    Improving Facility Assessments.--In order to understand the effect
of investments on our infrastructure, we need a reliable process for
measuring the condition of those assets. Accurate and consistent
Facility Condition Index (FCI) data, expressed in terms of the
relationship between what it would cost to repair a facility to a like-
new condition and what it would cost to replace that facility, are
essential for leadership to make informed decisions that target scarce
resources to those facilities in most need of recapitalization, or to
identify those assets that should be demolished. The Department is
developing policy to reinvigorate and standardize our inspection and
reporting processes, to include qualified professionals conducting the
inspections. To make the results of these inspections relevant, we
intend on using the FCIs as a centerpiece for a new recapitalization
program that better considers facility conditions when prioritizing
asset investments.
    Improving Asset Investments Planning and Programming.--Budgets
associated with sustaining, renovating and modernizing DOD facilities
are dropping at a disproportional rate compared to the size of our
existing inventory. The facility investments made over the last decade,
as a result of Grow the Forces, BRAC 2005, and Army Modularity
initiatives, can easily be undermined with sharp reductions in future
maintenance budgets. The Department is nearing completion on
establishing a facility recapitalization program that focuses on the
use of FCIs, which makes having an accurate and consistent facility
inspection program essential. The recapitalization program will contain
elements that look broadly across DOD's facility inventory as well as
target specific facilities that fall below a minimum FCI. The former
element provides the DOD components with flexibility in prioritizing
which assets best support their operational priorities and maintaining
appropriate levels for quality of life. For assets that fall below an
acceptable FCI, the DOD components will be charged with determining
whether that asset should be repaired, replaced or demolished. The
concept is to only retain and sustain those facilities that contribute
to our military readiness and are in a condition that will not
jeopardize life, health, and safety of DOD personnel, weapon systems,
or equipment.
    Reducing the Federal Premium.--My office continues to interact with
industry and academia to explore innovation and efficiency in military
construction projects, as part of our focus on Better Buying Power
initiatives. We are completing a study on military construction unit
costs compared with commercial unit costs for similar facilities. We
are evaluating medical facilities, unaccompanied housing,
administrative buildings, child care centers, and schools for
differences in constructed features and costs, as well as other
process-based differences and their impacts on costs. The insight
gained from this study should allow us to identify potential cost-
saving measures in DOD-based processes or requirements, as well as
cost-saving opportunities in statutory requirements that we will work
with Congress to address.
    Reducing Lifecycle Costs While Minimizing Impacts to First Costs.--
In March, the Department published its new construction standard
(Unified Facilities Criteria), governing the construction of all new
buildings and major renovations. The new standard incorporates the most
cost-effective elements of consensus-based green building standards
like those managed by the American Society of Heating Refrigeration and
Air Conditioning Engineers (ASHRAE) to help accelerate DOD's move
toward more efficient, sustainable facilities that cost less to own and
operate. This new standard is consistent with recommendations made by
the National Research Council following their evaluation of the cost-
effectiveness of commercial green building standards and rating
systems.
        fiscal year 2014 budget request--environmental programs
    The Department has long made it a priority to protect the
environment on our installations, not only to preserve irreplaceable
resources for future generations, but to ensure that we have the land,
water and airspace we need to sustain military readiness. To achieve
this objective, the Department has made a commitment to continuous
improvement, pursuit of greater efficiency and adoption of new
technology. In the President's fiscal year 2014 budget, we are
requesting $3.83 billion to continue the legacy of excellence in our
environmental programs. While this is below the fiscal year 2013
request, the reduction reflects improved technologies and processes
rather than any decline in effort.
    The table below outlines the entirety of the DOD's environmental
program, but I would like to highlight a few key elements where we are
demonstrating significant progress--specifically, our environmental
restoration program, our efforts to leverage technology to reduce the
cost of cleanup, and the Readiness and Environmental Protection
Initiative (REPI).

              TABLE 4.--ENVIRONMENTAL PROGRAM BUDGET REQUEST, FISCAL YEAR 2014 VS. FISCAL YEAR 2013
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                  Change from fiscal year 2013
                                                  Fiscal year     Fiscal year  ---------------------------------
                                                 2013 request    2014 request       Funding          Percent
----------------------------------------------------------------------------------------------------------------
Environmental Restoration.....................          $1,424          $1,303           -$121             -8.5
Environmental Compliance......................           1,449           1,460             +11             +0.8
Environmental Conservation....................             378             363             -15             -4.0
Pollution Prevention..........................             111             106              -5             -4.5
Environmental Technology......................             220             214              -6             -2.7
Legacy BRAC Environmental.....................             318         379 \1\             -12             -3.1
BRAC 2005 Environmental.......................              73         379 \1\             -12             -3.1
                                               -----------------------------------------------------------------
      TOTAL...................................           3,974           3,826            -148             -3.7
----------------------------------------------------------------------------------------------------------------
\1\ BRAC accounts were combined in fiscal year 2013 NDAA.

                       environmental restoration
    We are requesting $1.7 billion to continue cleanup efforts at
remaining Installation Restoration Program (IRP--focused on cleanup of
hazardous substances, pollutants and contaminants) and Military
Munitions Response Program (MMRP--focused on the removal of unexploded
ordinance and discarded munitions) sites. This includes $1.3 billion
for ``Environmental Restoration,'' which encompasses active
installations and Formerly Used Defense Sites (FUDS) locations and $379
million for ``BRAC Environmental.'' DOD is making steady progress,
moving sites through the cleanup process towards achieving program
goals. While the fiscal year 2014 request for environmental restoration
is down 8.5 percent, that reduction is because DOD has nearly finished
investigating our sites and is bounding the problem.

                                   TABLE 5.--PROGRESS TOWARD CLEANUP GOALS \1\
----------------------------------------------------------------------------------------------------------------
                                                                   Status as of      Projected       Projected
                                                                    the end of     status at the   status at the
                                                                    fiscal year    end of fiscal   end of fiscal
                                                                       2012          year 2018       year 2021
                                                                     (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Army............................................................              88              97              98
Navy............................................................              72              89              95
Air Force.......................................................              68              89              94
DLA.............................................................              88              91              91
FUDS............................................................              75              90              94
                                                                 -----------------------------------------------
      Total.....................................................              77              92              96
----------------------------------------------------------------------------------------------------------------
\1\ Goal: Achieve Response Complete at 90 percent and 95 percent of active and BRAC IRP and MMRP sites, and FUDS
  IRP sites, by fiscal year 2018 and fiscal year 2021, respectively.

    By the end of 2012, the Department, in cooperation with State
agencies and the Environmental Protection Agency, completed cleanup
activities at 77 percent of active and BRAC IRP and MMRP sites, and
FUDS IRP sites, and is now monitoring the results. During fiscal year
2012 alone, the Department completed cleanup at over 900 sites. Of the
more than 38,000 restoration sites, over 29,000 are now in monitoring
status or cleanup completed. We are currently on track to exceed our
program goals--anticipating complete cleanup at 96 percent of active
and BRAC IRP and MMRP sites, and FUDS IRP sites, by the end of 2021.
    Our focus remains on continuous improvement in the restoration
program: minimizing overhead; developing new technologies to reduce
cost and accelerate cleanup; and refining and standardizing our cost
estimating. All of these initiatives help ensure that we make the best
use of our available resources to complete cleanup.
    Note in particular that we are cleaning up sites on our active
installations in parallel with those on bases closed in previous BRAC
rounds--cleanup is not something that DOD pursues only when a base is
closed. In fact, the significant progress we have made over the last 20
years cleaning up contaminated sites on active DOD installations is
expected to reduce the residual environmental liability.
                        environmental technology
    A key part of DOD's approach to meeting its environmental
management obligations and improving its performance is its pursuit of
advances in science and technology. The Department has a long record of
success when it comes to developing innovative environmental
technologies and getting them transferred out of the laboratory and
into actual use on our remediation sites, installations, ranges, depots
and other industrial facilities. These same technologies are also now
widely used at non-Defense sites helping the Nation as a whole.
    While the fiscal year 2014 budget request for Environmental
Technology overall is $214 million, our core efforts are conducted and
coordinated through two key programs--the Strategic Environmental
Research and Development Program (SERDP--focused on basic research) and
the Environmental Security Technology Certification Program (ESTCP--
which validates more mature technologies to transition them to
widespread use). The fiscal year 2014 budget request includes $72.3
million for SERDP and $39.5 million for ESTCP for environmental
technology demonstrations. (The budget request for ESTCP includes an
additional $32.0 million for energy technology demonstrations.)
    These programs have already achieved demonstrable results and have
the potential to reduce the environmental liability and costs of the
Department--developing new ways of treating groundwater contamination,
reducing the lifecycle costs of multiple weapons systems, and most
recently, developing technology that allows us to discriminate between
hazardous unexploded ordnance and harmless scrap metal without digging
up an object. This last development promises to reduce the liability of
the MMRP program by billions of dollars and accelerate the current
cleanup timelines for sites within the program--without it, we
experience a 99.99-percent false positive rate and are compelled to dig
up hundreds of thousands of harmless objects on every MMRP site. We are
proceeding deliberately and extremely successfully with a testing and
outreach program designed to validate the technology while ensuring
cleanup contractors, State and Federal regulators, and local
communities are comfortable with the new approach. We are already
beginning to use this new tool at a few locations, but hope to achieve
more widespread use within the next few years.
         environmental conservation and compatible development
    In order to maintain access to the land, water and airspace needed
to support our mission needs, the Department continues to manage
successfully the natural resources entrusted to us--including
protection of the many threatened and endangered species found on our
lands. DOD manages over 28 million acres containing some 420 federally
listed threatened or endangered species, more than 520 species-at-risk,
and many high-quality habitats. A surprising number of these species
are endemic to military lands--that is, they are found nowhere else in
the world--including more than 10 listed species and at least 75
species-at-risk.
    While we make investments across our enterprise focused on
threatened or endangered species, wetland protection, or protection of
other natural, cultural and historical resources, I wanted to highlight
one particularly successful and innovative program--the Readiness and
Environmental Protection Initiative (REPI)--for which we are requesting
$50.6 million in fiscal year 2014.
    REPI is a key tool for combating the encroachment that can limit or
restrict military test and training. Under REPI, DOD partners with
conservation organizations and State and local governments to preserve
buffer land near installations and ranges. Preserving these areas
allows DOD to avoid much more costly alternatives, such as workarounds,
segmentation or investments to replace existing test and training
capability, while securing habitat off of our installations and taking
pressure off of the base to restrict activities. REPI supports the
warfighter and protects the taxpayer because it multiplies the
Department's investments with its unique cost-sharing agreements. Even
in these difficult economic times for States, local governments and
private land trusts, REPI partners continue to directly leverage the
Department's investments one-to-one. In other words, we are securing
this buffer around our installations for half-price.
    In 10 years of the program, REPI partnerships have protected more
than 270,000 acres of land around 64 installations in 24 States. This
land protection has resulted in tangible benefits to test and training,
and also significant contribution to biodiversity and endangered
species recovery actions. For example, the U.S. Fish and Wildlife
Service recently found it was not warranted to list a butterfly species
as endangered in Washington State, citing the ``high level of
protection against further losses of habitat or populations'' from
Joint Base Lewis-McChord's REPI investment on private prairie lands in
the region. In California, the U.S. Fish and Wildlife Service exempted
Marine Corps Base Camp Pendleton populations of Riverside fair shrimp
from critical habitat designation because of ongoing base management
activities and also off-post buffer protection. Both of these actions
allow significant maneuver areas to remain available and unconstrained
for active and intense military use at both locations.
                           highlighted issues
    In addition to the budget request, there are several legislative
requests and other initiatives that have received interest from
Congress. In the sections that follow, I highlight five specific items
of interest:
  --Base realignment and closure;
  --European basing consolidation;
  --Rebasing of marines from Okinawa to Guam;
  --DOD facilities energy programs; and
  --Request for legislative land withdrawals.
Base Realignment and Closure (BRAC)
    The administration is requesting authority from Congress to conduct
a BRAC round in 2015.
    The Department is facing a serious problem created by the tension
caused by declining budgets, reductions in force structure, and limited
flexibility to adapt our infrastructure accordingly. We need to find a
way to strike the right balance, so infrastructure does not drain
resources from the warfighter. Without question, installations are
critical components of our ability to fight and win wars. Whether that
installation is a forward operating location or a training center in
the United States, our warfighters can't do their job without bases
from which to fight, on which to train, or in which to live when they
are not deployed. However, we need to be cognizant that maintaining
more infrastructure than we need taxes other resources that the
warfighter needs--from depot maintenance to training to bullets and
bombs.
    While the primary function of BRAC is to match infrastructure to
missions, it is also about trimming excess so that resources otherwise
wasted on unnecessary facilities can be reapplied to higher priorities.
Savings from BRAC are substantial. The first four rounds of BRAC (1988,
1991, 1993, and 1995) are producing a total of about $8 billion in
annual, recurring savings, and BRAC 2005 is producing an additional $4
billion in annual, recurring savings. This $12 billion total represents
the savings that the Department realizes each and every year as a
result of the avoided costs for base operating support, personnel and
leasing costs that BRAC actions have made possible.
    An additional savings benefit of BRAC is that it enables the
Department to execute the civilian workforce efficiencies plan required
by the fiscal year 2013 National Defense Authorization Act. BRAC 2005
eliminated 13,000 civilian positions associated with closed
installations and reorganized common business oriented support
functions. The BRAC 1993/95 rounds averaged 36,000 eliminations per
round. Congress has already demanded these civilian personnel cuts, and
if they are not made through BRAC, they will need to be made elsewhere.
    We believe the opportunity for greater efficiencies is clear, based
on three basic facts:
  --In 2004, DOD conducted a capacity assessment that indicated it had
        24 percent aggregate excess capacity;
  --In BRAC 2005, the Department reduced only 3.4 percent of its
        infrastructure, as measured in Plant Replacement Value--far
        short of the aggregate excess indicated in the 2004 study;
  --Force structure reductions--particularly Army personnel (from
        570,000 to 490,000), Marine Corps personnel (from 202,000 to
        182,000) and Air Force force structure (reduced by 500
        aircraft)--subsequent to that analysis point to additional
        excess.
    The fundamental rationale for using the BRAC process to achieve
these efficiencies is to enable DOD, an independent commission, the
public, and Congress to engage in a comprehensive and transparent
process to facilitate the proper alignment of our infrastructure with
our mission. As we witnessed last year, piecemeal attempts to improve
the alignment of installations to mission are generally met with
skepticism and resistance from Congress and State and local officials
who question DOD's rationale to the extent that the proposed changes
are effectively stopped. Indeed, recent statutory changes have further
restricted the Department's ability to realign its installations.
Absent BRAC, the Department is effectively locked into a status quo
configuration. BRAC, therefore, should be an essential part of any
overall reshaping strategy.
    BRAC provides us with a sound analytical process that is proven. It
has at its foundation a 20-year force structure plan developed by the
Joint Staff; a comprehensive installation inventory to ensure a
thorough capacity analysis; and defined selection criteria that place
priority on military value (with the flexibility to express that in
both a quantitative and qualitative way).
    The BRAC process is comprehensive and thorough. Examining all
installations and conducting thorough capacity and military value
analyses using certified data enable rationalization of our
infrastructure in alignment with the strategic imperatives detailed in
the 20-year force structure plan. The merits of such an approach are
twofold. First, a comprehensive analysis ensures that the Department
considers a broad spectrum of approaches beyond the existing
configuration to increase military value and align with our strategy.
Second, the process is auditable and logical which enables independent
review by the commission and affected communities. In its 2013 report,
GAO stated, ``We have reported that DOD's process for conducting its
BRAC 2005 analysis was generally logical, reasoned and well documented
and we continue to believe the process remains fundamentally sound.''
    Additionally, and of primary importance, is the BRAC requirement
for an ``All or None'' review by the President and Congress, which
prevents either from picking and choosing between the Commission's
recommendations. Together with the provision for an independent
commission, this all-or-none element is what insulates BRAC from
politics, removing both partisan and parochial influence, and
demonstrating that all installations were treated equally and fairly.
It is worth noting that the process validates the importance of those
bases that remain and are then deserving of continued investment of
scarce taxpayer resources.
    The Department's legal obligation to close and realign
installations as recommended by the Commission by a date certain,
ensures that all actions will be carried out instead of being endlessly
reconsidered. That certainty also facilitates economic reuse planning
by impacted communities.
    Finally, after closure, the Department has a sophisticated and
collaborative process to transition the property for reuse. The
Department is mindful of the significant toll BRAC has on our host
locations. Our Office of Economic Adjustment (OEA) provides technical
and financial support to help these communities through closure,
disposal, and redevelopment with a program tailored to their specific
planning and implementation requirements. The former installation is
often the single greatest asset for impacted communities to redevelop
and restore a lessened tax base and the lost jobs from closure. One of
the most important disposal authorities available to help impacted
communities with job creation is the Economic Development Conveyance
(EDC). The Department is using the full breadth of this authority to
structure conveyances into win-win agreements wherein communities can
create jobs and bolster their local tax base, and the Department sees
increased savings through reduced property maintenance costs and
participation in the cash flows from successful local redevelopment
efforts.
    The Department anticipates approximately 13,000 jobs will be
generated by eight EDCs for real and related personal property at the
following BRAC 2005 locations: Kansas Army Ammunition Plant, Kansas;
Lone Star/Red River Army Depot, Texas; Naval Air Station Brunswick,
Maine; Newport Chemical Depot, Indiana; Buckley Annex, Colorado; Fort
Monmouth, New Jersey; Pascagoula Naval Station, Mississippi; and
Ingleside Naval Station, Texas. The Department anticipates approving
additional EDCs in fiscal years 2013 and 2014.
European Basing Consolidation
    In response to last year's request for BRAC authority, many in
Congress asserted that we should look first at our overseas
infrastructure for reductions. Even though we have already made
substantial reductions over the last several years in our European-
based personnel and infrastructure, upcoming force structure changes
and a focus on greater joint utilization of assets should produce
additional opportunities for reducing infrastructure while preserving
required capabilities.
    To that end, on January 25, then Secretary Panetta directed the
Department to initiate a review of our European footprint, stating:
``Consolidation of our footprint in Europe will take into account the
shift in strategic focus to the Pacific; the planned inactivation of
two brigade combat teams and associated support forces; reductions in
Air Force units; and decreasing requirements for support to the ongoing
conflict in Afghanistan.''
    In response, we have initiated a comprehensive infrastructure
analysis effort that will identify potential closure/consolidation
scenarios. We are developing business case analyses for this task,
taking operational impacts, return on investment, and military value
into consideration. By the end of this year we plan to conclude with a
fully vetted list of options from which the Secretary can make
strategic investment decisions.
    Through this process we seek to create long-term savings by
eliminating excess infrastructure, recapitalizing astutely to create
excess for elimination, and closing and/or consolidating sites. The
results will ultimately validate our enduring European infrastructure
requirements, providing an analytical basis to support sustainment
funding and future recapitalization.
Rebasing of Marines to Guam
    One important rebasing initiative that has received continued
attention from Congress is our plan to realign several thousand marines
from Okinawa to Guam. The Government of Japan has welcomed the U.S.
strategy to rebalance defense priorities toward the Asia-Pacific region
and U.S. efforts to advance its diplomatic engagement in the region. To
achieve the goals of the shared partnership between the two countries,
the United States-Japan Security Consultative Committee (SCC) decided
to adjust the plans outlined in the original 2006 ``Realignment
Roadmap''.
    On April 27, 2012, the SCC issued a joint statement detailing
changes to the plans. Specifically, the United States and Japan
separated the requirement of tangible progress on the construction of
the Futenma Replacement Facility (FRF) before the movement of marines
to Guam, from other Marine restationing efforts on Okinawa to return
lands to local communities. Also, while the overall number of marines
planned to leave Okinawa remained essentially the same (approximately
9,000), the new distributed laydown will result in fewer marines (and
accompanying family members) being re-stationed to Guam (approximately
5,000) with the remainder of the forces moving to Hawaii and the
continental United States.
    The revised laydown, commonly referred to as the ``distributed
laydown'' establishes fully capable MAGTFs (maritime, air, ground,
logistics, and associated lift) in Okinawa, Guam (5,000), Australia
(2,500 through a rotational deployment) and Hawaii (2,700) and ensures
that individual MAGTFs can respond rapidly to low-end contingencies
(e.g., humanitarian assistance/disaster relief, counter-piracy, etc.)
while also ensuring that the force can aggregate quickly to respond to
high-end contingencies. Additionally, the revised laydown increases our
ability over time to train and exercise with allies and partners
throughout the region.
    The President's fiscal year 2014 budget request includes $85
million for construction of an aircraft hangar at the north ramp of
Andersen Air Force Base. In addition to supporting the Marine Corps
Aviation Combat Element relocation to Guam, this facility can also be
utilized to meet current operational requirements of Marine units in
the Pacific. Our request includes another $273.3 million for non-
military assistance to address Guam water and wastewater improvements.
As a result of the fragile state of Guam's water and wastewater
infrastructure, remedies and new infrastructure are required to support
existing military missions, as well as potential growth associated with
the Department's rebalance to the Asia-Pacific region. Numerous Federal
agencies, including the Environmental Protection Agency (EPA), worked
with the Department and validated these water and wastewater
requirements, concluding significant capital improvements were
necessary.
    Finally, as a result of the adjustments to the laydown of marines
on Guam, the Department must conduct a Supplemental Environmental
Impact Study (SEIS). This SEIS supersedes and expands on the previously
initiated Live Fire Training Range Complex (LFTRC) SEIS by
incorporating the requirement for a new Marine Corps cantonment area on
Guam. With the reduction in the size of future Marine forces in Guam,
the National Environmental Policy Act requirements are being combined
in order to determine the optimal locations for the range complex,
cantonment and housing relative to each other and the Record of
Decision is anticipated in February 2015.
DOD Facilities Energy Programs
    The Department has focused on facilities energy for three key
reasons: to reduce costs; improve the energy security of our fixed
installations; and achieve DOD's statutory energy goals. Energy bills
are the largest single cost in our facilities operations accounts, and
any effort to reduce the cost of installations must include efforts to
reduce them. Moreover, given the reach of our installations to provide
direct support to operational forces, we must reduce the vulnerability
of our installations to possible outages of the electric grid. DOD has
statutory energy goals for energy intensity and renewable energy among
other statutory goals.
    Our approach to achieving these goals has four elements: reduce the
demand for traditional energy through conservation and improved energy
efficiency; expand the supply of renewable and other distributed (on-
site) generation sources; enhance the energy security of our
installations directly (as well as indirectly, through the first two
elements); and leverage advanced technology.
            Reduce Demand
    From DOD's new energy budget data system within the Department's
fiscal year 2014 budget request, there are approximately $1 billion in
energy conservation investments, mostly for investments in repair and
upgrading systems in existing buildings. The preponderance of these
investments are within the Facilities Sustainment, Restoration and
Modernization accounts along with other necessary investments in
maintaining our existing real property. As mentioned in that section
above, this constrained funding follows significant reductions in
energy conservation investments from sequestration reductions in fiscal
year 2013, which will make achievement of DOD's statutory energy
intensity goals impossible to attain for the foreseeable future. One
account that is singled out is the Energy Conservation Investment
Program (ECIP), a military construction appropriation for which we are
requesting $150 million. DOD also is investing more than $2 billion in
energy conservation projects for Operational Energy, including aviation
and other transportation fuels that are used on DOD bases.
    The Services also use third-party financing tools, such as Energy
Savings Performance Contracts (ESPCs) and Utility Energy Service
Contracts (UESCs), to improve the energy efficiency of their existing
buildings. While such performance-based contracts have long been part
of the Department's energy strategy, in fiscal year 2012 the DOD
committed to award nearly $1.2 billion in performance-based contracts
by the end of 2013, or soon thereafter, in response to the President's
December 2, 2011, commitment ($2 billion in such contracts Federal
Government-wide). To date, the Department has awarded 39 contracts
worth $362 million with another $930 million in contracts under
development.
    In addition to retrofitting existing buildings, we are taking
advantage of new construction to incorporate more energy-efficient
designs, material and equipment into our inventory. This past March, I
issued a new construction standard for high-performance, sustainable
buildings, which will govern all new construction, major renovations
and leased space acquisition. This new standard, which incorporates the
most cost-effective elements of commercial standards like ASHRAE 189.1,
will accelerate DOD's move toward efficient, sustainable facilities
that cost less to own and operate, leave a smaller environmental
footprint and improve employee productivity.
    Collection of accurate, real-time facility energy information
remains a priority. My office continues to lead the development of an
Enterprise Energy Information Management System (EEIM) that will
collect facility energy data in a systematic way. The EEIM will also
provide advanced analytical tools that allow energy professionals at
all levels of the Department both to improve existing operations and to
identify cost-effective investments. In order to make EEIM a reality,
the Department must vastly increase the deployment of advanced energy
meters, capable of automatically collecting energy use information.
            Expand Supply of On-Site Energy
    DOD is increasing the supply of renewable and other distributed
(on-site) sources of energy on our installations. On-site energy is
critical to making our bases more energy secure. The Military
Departments have each established a goal to develop 1 gigawatt (GW) of
renewable energy (RE) by 2025. Almost all projects will be third-party
financed, using existing authorities (e.g., 10 U.S.C. section 2922a and
enhanced use leases).
    The Army issued a Multiple Award Task Order Contract (MATOC)
Request for Proposal for $7 billion in total contract capacity for RE.
Army projects currently underway include Fort Bliss, Texas (1 MW Solar
PV), White Sands Missile Range, New Mexico (4.5 MW Solar PV), and Fort
Carson, Colorado (2 MW Solar PV). The Navy has a goal to produce at
least 50 percent of the Navy's shore-based energy requirements from
renewable sources by 2020. Projects currently underway include Marine
Corps Air Station, Miramar, California (3 MW Landfill Gas), Marine
Corps Logistics Base, Barstow, California (1.5 MW Solar PV), Naval Air
Weapons Station China Lake, California (13.8 MW Solar PV), and Marine
Corps Air Ground Combat Center Twentynine Palms, California (1.2 MW
Solar PV). Air Force is using existing authority to lease non-excess
land for the development of large-scale RE projects, the first of which
is under negotiation at Edwards AFB, California (200 MW Solar PV
projected to come on line in 2016).
    Where renewable energy development is compatible with the military
mission, certain public lands that have been withdrawn for military
purposes offer a significant opportunity to improve our energy security
while lowering the cost of energy. My office continues to work closely
with the Department of the Interior (DOI) to identify and overcome
impediments to the execution of renewable energy projects on such
lands.
            Enhance Security
    The DOD is focusing on a diverse set of solutions to enhance
facility energy security. These include prioritization agreements with
utilities, addressing operations and maintenance of current back-up
generators, microgrids, fuel supply and storage, and ensuring reliable
access to fuel in the case of emergencies (e.g., Hurricane Sandy--DLA-
Energy and FEMA interagency partnership). Multiple demonstration
projects are currently underway to assess the benefits and risks of
alternative advanced microgrid and storage technologies.
            Leverage Advanced Technology
    DOD's Installation Energy Test Bed Program was established to
demonstrate new energy technologies in a real-world, integrated
building environment so as to reduce risk, overcome barriers to
deployment and facilitate widespread commercialization. DOD is
partnering with the DOE and reaching out directly to the private sector
to identify those energy technologies that meet DOD's needs. The fiscal
year 2014 budget request includes $32 million for the test bed under
the Environmental Security Technology Certification Program (ESTCP).
    The test bed has >85 projects underway in five broad areas:
advanced microgrid and storage technologies; advanced component
technologies to improve building energy efficiency, such as advanced
lighting controls, high performance cooling systems and technologies
for waste heat recovery; advanced building energy management and
control technologies; tools and processes for design, assessment and
decisionmaking on energy use and management; and on-site energy
generation, including waste-to-energy and building integrated systems.
The rigorous Installation Energy Test Bed Program provides an
opportunity for domestic manufacturers to demonstrate the technical and
economic feasibility of implementing their innovative products. These
demonstrations provide the credible evidence needed by investors to
commercialize emerging technologies to serve the DOD and broader
markets.
            A Note on Renewable Energy Siting
    While the DOD has embraced renewable energy projects that improve
energy security and reduce cost, and each service has established 1
gigawatt goals for the production of renewable energy on their
installations, we are also responsible for evaluating the impact of
these projects on our mission and objecting where there is unacceptable
risk to national security. While most transmission and renewable energy
projects are compatible, some can interfere with test, training and
operational activities. The DOD created the Siting Clearinghouse to
serve as the single point of contact for energy and transmission
infrastructure issues at the DOD level. The goal of this body is to
facilitate timely, consistent and transparent energy siting decisions,
while protecting test, training, and operational assets vital to the
national defense.
    During 2012, the Clearinghouse oversaw the evaluation by technical
experts of 1,769 proposed energy projects; 1,730 of these commercial
projects, or 98 percent, were cleared (assessed to have little or no
impact to DOD test, training or operational missions). These 1,730
projects represent 38 gigawatts of potential renewable energy
generation. The 39 projects that have not been cleared are undergoing
further study, and the Clearinghouse is working with industry, State,
tribal, and local governments, and Federal permitting and regulatory
agencies to identify and implement mitigation measures wherever
possible.
    In addition to reviewing projects, the Clearinghouse has conducted
aggressive outreach to energy developers, environmental and
conservation groups, State and local governments, and other Federal
agencies. By encouraging developers to share project information, we
hope to avert potential problems early in the process. We are being
proactive as well by looking at regions where renewable projects could
threaten valuable test and training ranges.\1\ The Clearinghouse is
working with DOE, DHS, and the Federal Aviation Administration to model
the impact of turbines on surveillance radars, evaluate alternative
mitigation technologies, and expedite fielding of validated solutions.
---------------------------------------------------------------------------
    \1\ DOD is conducting a study to identify areas of likely adverse
mission impact in the region that is home to China Lake and Edwards Air
Force Base in California, and Nellis Air Force Base and the Nevada Test
and Training Range in Nevada. These installations are the Department's
premier sites for test and evaluation and require a pristine
environment clear of interference. The results of the study can be used
by developers as a risk-management tool.
---------------------------------------------------------------------------
    Finally, the Clearinghouse is taking advantage of section 358 of
the Fiscal Year 2011 NDAA, which allows DOD to accept voluntary
contributions from developers to pay for mitigation. For example, the
Clearinghouse and the Navy have negotiated two agreements that provide
for developer contributions for mitigation measures to protect the
precision approach radar at the Naval Air Station (NAS) Kingsville,
Texas, from wind turbine impacts. The agreements facilitate the
continued growth of wind energy generation along the Texas Coastal
Plain while providing for the safety of student pilots at NAS
Kingsville and NAS Corpus Christi. We believe there will be other
situations where developers will wish to contribute funds toward
mitigation measures in order to realize a much larger return on a
project; section 358 is an extremely useful, market-based tool that
allows us to negotiate these win-win deals.
BLM Land Withdrawals
    The Department has a number of installations, training areas and
ranges that are located partially or wholly on public lands temporarily
or permanently withdrawn from public use. Public lands are managed by
the Department of the Interior through the Bureau of Land Management
(BLM). Withdrawals of public lands for military use require joint
actions by the Department of Defense and the Department of the
Interior. Withdrawals exceeding 5,000 acres must be authorized by
congressional legislation. Depending on the terms of the prior
legislation, some withdrawals must be renewed by legislative action
every 20-25 years.
    Presently, withdrawals for Naval Air Weapons Station (NAWS), China
Lake, California, and the Chocolate Mountain Aerial Gunnery Range
(CMAGR), California, expire on October 31, 2014. Additionally, the Army
needs to convert its use of public lands at the Montana Army National
Guard, Limestone Hills Training Area, from a BLM issued right-of-way to
a legislative withdrawal. Finally, the Marine Corps seeks a new
withdrawal of public lands at Marine Corps Air Ground Combat Center
(MCAGCC) Twentynine Palms, California, to expand its training areas to
support increased requirements.
    NAWS China Lake.--NAWS China Lake consists of over 1.1 million
acres of land of which 92 percent are withdrawn public lands. The
current legislative withdrawal, expiring in 2014, is for a 20-year
term. Under a memorandum of understanding between the Department of the
Navy and the Department of the Interior, the Commanding Officer of NAWS
China Lake is responsible for managing the withdrawn land. The
installation is home to approximately 4,300 DOD personnel and its
primary tenant is the Naval Air Warfare Center Weapons Division.
    Chocolate Mountain AGR.--The Chocolate Mountain range was
established in 1941. The range consists of about 459,000 acres of which
approximately 227,000 acres are withdrawn public lands under the co-
management of the Marine Corps and Bureau of Land Management. The
current 20-year withdrawal is set to expire on October 31, 2014. Its
primary uses are aviation weapons training, including, precision guided
munitions, and Naval Special Warfare (SEAL) training ranges. It is the
only Marine Corps aviation range that is capable of accommodating
training with precision guided munitions. Failure to renew the
legislative withdrawal will have the practical effect of shutting the
entire range down because it is an unusual checkerboard configuration
of several hundred parcels of alternating fee-owned DOD land and
withdrawn public lands.
    Limestone Hills Training Area.--The Limestone Hills Training Area
consists of 18,644 acres of land in Broadwater County, Montana, that
has been used for military training since the 1950s. In 1984, the BLM
issued the Army a right-of-way formally permitting use of the training
area for military purposes. The current right-of-way expires on March
26, 2014. The Montana Army National Guard is the primary DOD user of
the training area but it is also used by Reserve and Active components
from all branches of the military services for live-fire, mounted and
dismounted maneuver training and aviation training. The legislative
withdrawal of the Limestone Hills Training area is necessary because
the BLM has determined that it no longer has the authority to permit
the use of the property for military use under a right-of way
instrument. If the legislative withdrawal is not enacted, the use of
the training area will be suspended and the Department will lose access
to valuable training areas, operational readiness will be negatively
impacted and training costs will increase.
    MCAGCC Twentynine Palms.--At MCAGCC Twentynine Palms, the
Department proposes to withdraw approximately 154,000 acres of public
lands adjacent to the Combat Center. The added training lands would
create a training area of sufficient size with characteristics suitable
for the Marine Corps to conduct Marine Expeditionary Brigade (MEB)
level training. MEB training requires sustained, combined-arms, live-
fire and maneuver training of three Marine battalions with all of their
associated equipment moving simultaneously towards a single objective
over a 72-hour period. The Department has no other training area within
its inventory, including the National Training Center at Fort Irwin,
California, where it can conduct such training.
    The Department has worked since 2007 with the Department of the
Interior, the BLM, and the Federal Aviation Administration in
preparation for the withdrawal. During that period, the Department of
the Navy has received numerous comments concerning the potential loss
of use of the proposed withdrawal property to off-road recreational
vehicle use. The Department's proposed withdrawal provides for
continued access by off-road recreational vehicles to just under half
of the Johnson Valley Off-Highway Vehicle (OHV) area. About 43,000
acres of the withdrawn lands will be open to year-round OHV use and an
additional 43,000 acres of the withdrawn lands will be available to OHV
use for 10 months out of the year provided there is no active military
training. Without the legislative withdrawal of these lands, the Marine
Corps will be unable to train its premier forcible entry force, Marine
Expeditionary Brigades, to deploy and perform the missions and
operations that the Department requires of them.
    Because of the looming expiration dates of the current withdrawals
for NAWS China Lake and CMAGR and the BLM issued right-of-way for the
Limestone Hills Training Area, as well as the continuing Marine Corps
training requirement shortfalls, DOD, with DOI's concurrence and
cooperation, is leading the renewal process and proposes that the
withdrawals be enacted with the fiscal year 2014 National Defense
Authorization Act. This is somewhat different, in that in past
withdrawals, the Department of the Interior typically introduced the
withdrawal proposals to its congressional committees. However, the
Department opted to combine these four withdrawals into a single
legislative proposal. Unlike prior legislative withdrawals which were
uncodified, stand-alone provisions of law, DOD is proposing that these
withdrawals be made in a new chapter of title 10, United States Code.
This would allow commonality among the withdrawal provisions, place
them in a location that is easy to find and refer to, and, if used for
future withdrawals, reduce the need to reconsider and revise provisions
on responsibilities, rights and requirements with each proposal. An
important objective of the consolidated approach is to make the
withdrawal process substantially more efficient.
    The need to enact legislation and authorize these four withdrawals
is urgent. The consequences of failing to enact withdrawal legislation
could, in some of these instances, cause severe impacts on the
Department if it is forced to stop training and operations. In all
cases, the Department has a compelling need for the withdrawn land in
order for it to successfully conduct its training, missions and
operations with the capabilities and competence that it must maintain.

    Senator Johnson. Thank you.
    For the information of Senators, we will begin with a 7-
minute round of questions. We will use the early bird rule, and
I will recognize members from alternating sides in the order in
which they arrive.

                       PRESSURES ON MILCON BUDGET

    Secretary Hale, as I mentioned in my opening statement, I
am concerned that MILCON will have a place at the table when
upcoming decisions are made in light of the overall constraints
on the DOD budget. I fully understand the priority of
operational readiness, but I also understand that MILCON plays
an important role in readiness, not only in providing mission-
critical training and operational facilities, but also in
providing for military families during wartime operations.
    Last year, the Air Force took what it called a strategic
pause in MILCON to fund higher priorities. Sustainment,
Restoration, and Maintenance (SRM) is being underfunded by all
of the services in both fiscal years 2013 and 2014 due to
budget constraints. I worry that MILCON, especially quality of
life MILCON, will fall victim to budget pressures. Could you
comment on that?
    Mr. Hale. Well, Mr. Chairman, I think there is a risk.
First, let's hope that we can reach a broad budget agreement,
that the Congress can work with the administration, and we can
go back to the levels that appear in both the House and Senate
budget resolutions for fiscal year 2014 for Defense. They are
all pretty consistent with the President's budget request. So
if there were a broad budget deal, it seems to us we will get
back to the level that both the President and the Secretary of
Defense believe is appropriate.
    But if we find ourselves taking $52 billion out of that
request, as would be required if there is no changes in the
Budget Control Act, then the suddenness of that decline will
cause serious problems. You would need to cut force structure,
and we will if we are allowed. But you generate very little
savings in the first year because it takes a while for people
to leave. Modernization will certainly have to be cut severely,
but there is only so much you can do. I think in that case,
there will be a risk to military construction.
    We want a balanced drawdown. That is the right way to do
this. What we need is some time to do that and a ramp down if
we're going to go to a lower level rather than falling off a
cliff. So let's hope that either we can stay at the level that
we believe is the right one, or we can drawdown gradually. If
we fall off the cliff, I think there is a risk. I hope I
haven't been too blunt.
    Senator Johnson. Yes. You are not.
    Secretary Hale, I understand that OSD and the services
believe they can deal with the fiscal year 2013 MILCON
sequestration without major problems by applying funds from bid
savings to backfill any project shortfalls. However, if bid
savings continue to be used to backfill current projects, this
ability will likely diminish. Does OSD have a plan B for
executing the fiscal year 2014 MILCON under a sequester if
future bid savings are not sufficient?
    Mr. Hale. Well, I wish you had said plan B and stopped
there rather than under sequestration. My preferred plan B, as
I have said, would be a broad budget deal that avoids
sequestration. If it happens, I think you are right. I mean, we
still may see some bid savings as the economy recovers, but I
suspect you are right, that they will get smaller, and I think
we will be forced in that case into changes we don't want to
make in the scope and timing of these projects. Let's hope not.
    As you said, we will avoid most of them this year. We are
still looking at some of the details. I don't want to sit here
and tell you there won't be effects, but we don't believe there
will be significant ones in 2013. I think there is more risk in
2014.

                        QUALITY OF LIFE PROJECTS

    Senator Johnson. Secretary Hale, do OSD and the services
have prioritization guidelines if necessary for fiscal year
2014, and where do quality of life projects fall on that
priority list?
    Mr. Hale. Well, I assume you are asking about the
guidelines in the event of a big cut, right? We are working on
that now. We still support the President's budget and I want to
emphasize that point. As I said in my testimony, we are hopeful
that there will be a budget deal that allows the Congress to
support that level.
    We recognize that we may have to make changes, and so the
Secretary has initiated his strategic choices and management
review, which is looking at those priorities. So I think the
answer to your question, Mr. Chairman, is we understand that we
need to maintain our facilities. I was in the Air Force in the
1990s. We struggled. All of DOD did. We were under-investing
significantly in facilities sustainment, restoration and
modernization, and in MILCON as well. I think we have gotten
well to some extent in the subsequent decade, but I do fear
that we may be going back down that path again. I mean, it is
certainly a risk, and if I am at the Pentagon at that point, I
will be mindful of that risk.
    Senator Johnson. Mr. Conger, DOD is currently working on
the European basin setting report that will align the master
plan for the future force laydown in Europe. The report is
currently scheduled to be released in December 2013. However,
we hope to conference and pass the fiscal year 2014 MILCON bill
before then.

                         EUROPEAN BASIN REPORT

    Can the European basin report be expedited so that the
subcommittee can review it, or at least its interim findings,
prior to conferencing with the House this autumn?
    Mr. Conger. I think the short answer is that we are
certainly going to keep the subcommittee informed, and we are
hopeful that we can provide some early information that will
inform your process. The original schedule was to start in
January, kicked off by the Secretary's memo, to finish with
some results in December. Mr. Kendall, the leader of the
process--he chairs the senior steering group that governs it--
has asked us to accelerate that as well, and he is looking for
answers in October.
    There is a concentrated amount of effort that we are going
to have to do in order to do this work. We will try to get some
preliminary answers on that schedule. We are certainly going to
work toward that end. Because this is not BRAC but rather BRAC-
like, we have more freedom to talk to the Congress about
interim results, to tell you guys where we are going, to give
insight into which bases might very well be the enduring ones
in advance of the final product. In BRAC, that wouldn't be
possible. In this analysis, it would be.
    Senator Johnson. One last question. In the 2014 budget,
there are numerous requests for projects located in Europe. How
can this subcommittee be assured that the fiscal year 2014
project requested in Europe will be supported by the findings
of the pending report?
    Mr. Conger. It's a fair question. Recall back when we have
conducted BRAC rounds before, we didn't have any sort of a
MILCON pause then. We are not intending to have a MILCON pause
in Europe while we are doing this analysis. However, our goal
is to be sure to inform the subcommittee as results become
apparent so that we don't make investments in places that we
don't expect to be enduring. I think the plan that you have in
front of you actually has construction at locations we expect
to hold onto. That said, we will commit to have a regular
conversation with this subcommittee so that we can inform your
process as you go forward.
    Senator Johnson. Senator Kirk.
    Senator Kirk. Thank you, Mr. Chairman. I have one strategic
question. More and more, I am worried about MILCON and Guam,
and I want to make sure we can eventually defend that
investment, no matter what, for the United States, since the
President has outlined the importance of the Pacific. My hope
is that you guys could come forward with us for making
permanent the THAAD deployment there, and that we can build a
structure around that to preserve that asset out of MILCON. For
lack of a better term, I will call it a THAAD-in-the-box just
to pop out and make sure we defend our enormous investment in
Guam so that that entire infrastructure is always there when we
need it.
    Mr. Hale. Well, I think I need to--I don't know if I can
make any full commitments, Senator Kirk. We have the fat over
there for obvious reasons in connection with North Korea, and
it's an important deployment, and I think we will be looking
carefully at our next steps. But I am not going to sit here and
tell you I have a firm answer to your question.

                           INVESTMENT IN GUAM

    Mr. Conger. I think that we are certainly committed to
moving forces to Guam into the plan moving forward, and the
Navy panel that is coming up behind me is going to be able to
answer these questions to a larger degree. So rather than dance
up here and come up with an incomplete answer, I think that we
might defer the questions to them.
    Senator Johnson. Senator Udall.
    Senator Udall. Thank you, Chairman Johnson and Ranking
Member Kirk. And I want to thank everyone on the panel. Thank
you for your service, and thank you for being here with us
today.
    As you know, in New Mexico, military construction is very
important to our bases. They are important for providing
important mission capabilities to our soldiers, and also
important for ensuring that there is adequate quality of life
for both servicemembers and their families. I am supportive of
the President's request for military construction in New
Mexico. Thank you for working to ensure that our soldiers,
sailors, airmen, and marines have the facilities they need to
train, operate, and carry out their missions.
    However, I have to tell you, I am also skeptical about the
need for another BRAC. We need to know a lot more from DOD
before we move forward and authorize another round of BRAC.

                    WHITE SANDS MISSILE RANGE (WSMR)

    Now to questions, Mr. Conger. I want to thank you for the
time you have spent with the New Mexico delegation and
addressing the important issues posed by the Sunzia
transmission project and the White Sands Missile Range (WSMR).
My understanding is that a technical working group has been
formed by the Department of Defense to explore options to
mitigate against any impacts the transmission line might have
on WSMR's national security missions. The New Mexico delegation
has encouraged the projects sponsor to minimize any impacts to
WSMR, but also believes that transmission infrastructure is
very important to tap New Mexico's vast renewable energy
resources. I am urging DOD and the Bureau of Land Management
(BLM) to continue to work together to resolve these difficult
issues.
    Along those lines, I would like to ask about possible DOD
mitigation options. Has DOD examined modification to military
tasks and evaluation activities, military training routes or
military training procedures, or the acquisition of new systems
by the DOD and other departments and agencies of the Federal
Government as a possible way to mitigate against the preferred
route?
    Mr. Conger. The short answer is yes. We have looked at a
variety of impacts, and we certainly don't want to highlight
problems when we can simply get around them. There are
problems. If the line does go in without any sort of
mitigation, it will impact test programs that are going to be
difficult to replicate and are difficult to change. I certainly
would be happy to offer you a briefing on more specifics on
that particular program that might get into the classified
arena.
    That said, we are working with BLM to identify mitigations
if the line goes in along that route. The possible mitigations
could include specific siting to minimize impacts, burial of
portions of the route. There are a variety of items that we
have outlined both to the developer and to BLM, and we hope to
be able to come to resolution on those.
    Senator Udall. Thank you for doing that. Has DOD considered
the cost of military construction for constructing a new launch
facility south of the current desert ship which could meet
mission needs? And if not, when does DOD plan on determining if
such a facility is a feasible mitigation option?
    Mr. Conger. I would like to defer that specific question
for the record because I think that we are going to need to
talk to the specific program manager to get you the details on
that. But the short answer is that desert ship is close to the
southern edge of the installation, and as it has been outlined
to me, there is not a whole lot of room for it to move, even if
we were going to invest the money to use that as an
accommodation for this particular situation.
    Senator Udall. Thank you, and we would be happy to take you
up on the briefing that you mentioned.
    In 2011, the Congress appropriated military construction
funds for barracks at White Sands Missile Range. To date, we
have only heard excuse after excuse why this project has not
broken ground. Our soldiers at White Sands Missile Range
deserve better, and I believe that it is about time that DOD
and the Army carried out this appropriation. What can you tell
me about the status of the barracks, and when will we be able
to see this project get started at White Sands Missile Range?
    Mr. Conger. I have to admit, I am not familiar with the
particular project. We will get you an answer for the record.
    [The information follows:]

    An fiscal year 2011 MILCON project was authorized and appropriated
to replace the existing barracks at White Sands Missile Range. The
project was designed and advertised for construction award, but was
placed on hold pending final decisions in force structure. If the final
decision in force structure continues the requirement to station the
2nd EN BN at White Sands Missile Range, the replacement of the barracks
may be prudent. The existing barracks meet Army standards and currently
have an occupancy rate of 79 percent. The Army will continue to provide
routine maintenance and repair of the existing barracks until a
decision to proceed is made.

    Senator Udall. Okay, thank you.

                         HIGH-SPEED TEST TRACK

    The Central Test and Evaluation Investment Program has been
a crucial program for defense testing, including testing done
at Holloman Air Force Base's high-speed test track. The track
is a cost-effective alternative for reducing expensive air
vehicle testing. The current track, however, is limited to
useful speeds up to Mach 1, and DOD is currently working on
programs which far exceed this capacity.
    Is DOD still committed to the high-speed test track? Would
DOD support updating this technology to allow vibration-free
testing up to Mach 3 in order to expand ground-based testing at
reduced cost compared to airborne testing?
    Mr. Hale. I think we'll have to take that one for the
record, too. I apologize. Maybe some of our subsequent
witnesses can help you. I'm sorry.
    [The information follows:]

    Question. Is DOD still committed to the high-speed test track?
    Answer. Yes. The Holloman High Speed Test Track (HHSTT) is
recognized as a national test and evaluation (T&E) asset and included
as a component part of the DOD's designated Major Range and Test
Facility Base. The test capabilities resident at the HHSTT are viewed
as important elements that fill the gap between laboratory
investigations and full-scale flight tests.
    As a point of clarification, the HHSTT is currently capable of
operations exceeding Mach 9. The technology referenced in the question
is most probably the Holloman Magnetic Levitation Track (MAGLEV)
currently being developed to provide a low vibration environment for
payloads on rocket-propelled sleds for speeds from subsonic to Mach+.
The MAGLEV can now achieve Mach 1 speed and future plans increase this
capability to Mach 3.
    Question. Would DOD support updating this technology to allow
vibration-free testing up to Mach 3 in order to expand ground-based
testing at reduced cost compared to airborne testing?
    Answer. Yes, but there is concern that the technology may not be
mature enough for full-scale development at this time. The suggested
update to technology might be a candidate for either an Air Force
budgeted capability improvement or possibly as a Service proposed
Central Test and Evaluation Investment Program (CTEIP) project. CTEIP
competitively evaluates proposed projects that best align with the
objectives of the Strategic Plan for DOD Test and Evaluation Resources
and provide enterprise solutions that benefit the Department as a
whole.

    Senator Udall. Okay. Just as a final comment here and
focusing back on BRAC, it seems to me that with the large
numbers of foreign bases we have, that that is the first place
we ought to be looking. I know from your comments that we have
made some progress there, and you have listed this out, that
you have turned 100 sites in Europe back to their respective
host nations and that the Army is planning to close 33
additional sites between 2013 and 2016. But I think it is
important that we see the overall plan and understand the
savings, how much has been done there. I would just like a lot
more transparency on that front to know that you have done a
thorough analysis, that you have really looked hard at that and
you have squeezed out the savings that can be had there before
we look at a domestic BRAC.
    So with that, I really appreciate your service.
    Mr. Hale. May I just respond briefly?
    Senator Udall. Yes, please.
    Mr. Chairman, I'm out of my time.
    Mr. Hale. All right. Well, I will be very brief.

                            BASING DECISIONS

    You know, we face some really serious budget problems, and
I would urge you to let us proceed concurrently. We know that
we are going to be able to make changes in our European basing,
but we also need to make changes in the continental United
States, and we can only do those effectively and fairly with
BRAC. It takes several years for a BRAC to come into being.
    So I believe we need to get started, and we will obviously
provide you every bit of information we can along the way about
the European efforts. But I would hope you wouldn't delay this
request. We are costing the American taxpayers more money.
    Senator Udall. Well, when I talk about overseas bases, I am
talking about our bases all over the world. I highlighted the
European because that is in your statement, but I think you
need an overall analysis of all of those bases and tell us what
the plan is, tell us how much the savings is so that we can see
you have really done the analysis and done the work.
    Sorry, Mr. Chairman, for going over. Thank you very much.
    Senator Johnson. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.

                    FURLOUGHS OF CIVILIAN EMPLOYEES

    Secretary Hale, I met this morning with a group of
supervisors from the Portsmouth Naval Shipyard in Kittering,
Maine, and they were extremely persuasive in presenting me with
additional data to supplement that which I have already brought
to your attention and to the Secretary's attention, along with
my colleague Senator King, that suggests that if you impose a
disruption on a ship's maintenance or modernization schedule at
one of our public shipyards--and Kettering, as you know,
overhauls submarines--that you end up paying more in the long
run than if you had kept on schedule, not to mention the fact
that the submarines are going to be delayed in being returned
to the fleet and the obvious impact on readiness that that has.
    Yesterday, Assistant Secretary of the Navy, Sean Stackley,
testified before an Armed Services Sea Powers Subcommittee
hearing that there is going to be more than a one-for-one
impact if you furlough civilian employees at one of our public
shipyards, and he went on to say, ``Everyone understands that
the shipyards are a special case in terms of direct impact on
readiness,'' and he said that the shipyards are ``in the mix
for possible exceptions to the Department-wide furloughs.''
    The fact is that if we furlough these employees and then
you have not budgeted for increased costs in fiscal year 2014,
the costs are very real. They are going to occur to both the
taxpayer and the military. That's why the Navy has come up with
an alternative approach that still meets the budget targets but
does so without resorting to furloughs.
    So I would like you to give me your view on whether we
should be accepting the Navy plan, as I believe we should, to
avoid these higher costs and these adverse impacts.
    Mr. Hale. Well, Senator Collins, Secretary Hagel hasn't
made a decision yet, so I am not going to get ahead of my boss.
But let me tell you, we are faced with a truly nasty set of
choices. I mean, the United States Air Force has stopped flying
in 12 combat-coded squadrons. The Army has stopped all of its
combat training center rotations for the rest of the year. Many
of our units in the Army and the Navy will be below acceptable
readiness levels by the end of the year if the sequestration
continues.
    We are actively looking at ways to mitigate those problems,
and we are faced with some truly nasty choices, like will you
take an action over here that you know is stupid--furloughs are
a bad idea for everybody--in order to avoid an action even more
stupid over here? Like I said, I am not enjoying this job right
now. But we haven't made a final decision, and we are well
aware, the Navy has made this abundantly clear, their feelings
on this issue. We haven't made a final decision, so I can't
give you that decision.
    Senator Collins. Well, it just seems to me that if a
service can come up with an alternative way of meeting the
budget target, that that ought to be accepted, embraced, and
applauded.
    Mr. Hale. Well, perhaps we should move that money if
something over here in the Air Force and the Army is even more
stupid. I mean, that is the dilemma we face. It's a really
nasty set of choices.
    Senator Collins. Well, it seems to me each service is
responsible for coming up with its own plan, and has done so.
The National Guard also has a plan to avoid furloughs and still
meet the targets. I'm just perplexed by the reluctance here.
    I want to bring up a related issue, and that is, according
to the most recent figures from your office, the shortfall in
the military readiness accounts is not due solely to
sequestration, and let me go on record again. I agree with you
that sequestration is an extraordinarily poor policy, and it
makes no sense not to set priorities. But that's what the Navy
is trying to do, is set priorities. It shouldn't be blocked
from doing so.
    But the fact is that a portion of the shortfall in the
readiness accounts, about 25 percent, maybe even a little more,
is not due to sequestration. It's due to unanticipated costs
related to the wars.
    So is the Department going to submit a supplemental request
to cover these unanticipated war costs? It's not fair to
furlough employees when the Department understandably did not
anticipate correctly what the war costs would be. You should be
coming to us for additional funds for the war costs.
    Mr. Hale. Well, I don't think we will submit a supplemental
request. I mean, in this environment, I think it would be a
fool's errand. But we will submit a reprogramming request. Now,
unfortunately, Congress also limits the amount of transfer
authority we have, and although we asked for an increase, it
was not granted. So we won't be able to meet all of the wartime
shortfalls. But we will very soon, I hope, submit a large
reprogramming request to try to move money from investments and
military personnel accounts into the operation and maintenance
accounts to significantly reduce that wartime shortfall or meet
much of that gap.
    Senator Collins. Well, I personally think that it's not
fair for the Department to blame the readiness crisis entirely
on sequestration, even though I am totally opposed to
sequestration, when in fact at least one-quarter of it is due
to unanticipated war costs.
    Mr. Hale. I agree with that. Whenever I speak, I always say
it's not just sequestration, there are problems with the
wartime costs. It's also our choice, which we thought we had to
make to protect the wartime operating costs. We are not going
to leave General Rumford and his troops over there without the
resources they need, and that means more money out of the base
budgets. So that is another problem.
    Senator Collins. Which is why I would urge you to submit a
supplemental for those unanticipated war costs.
    Just one more point, if I may, Mr. Chairman. Since so many
of us mentioned the proposal for another round of BRAC, I just
want to remind all of us what the results of the 2005 BRAC
round cost data were, and it's why you see such skepticism
among so many members of this subcommittee.
    The Government Accountability Office (GAO) did an analysis
which was released in June of last year and found that the one-
time cost grew from $21 billion, estimated by DOD, to $35
billion. That was a 67-percent increase. Overall, the military
construction costs increased 86 percent from the original
estimate, $13.2 billion to $24.5 billion. And the 20-year net
present value savings expected to be reaped by the Department
of Defense decreased by 72 percent. I'm not saying that there
aren't annual recurring savings, but the fact is the Department
was way off in its estimates, and from my perspective we lost
some valuable assets in this country.
    I can't tell you how many very high-ranking naval officers
have told me what a mistake it was to close the Brunswick Naval
Air Station, the last Active Duty air station in the Northeast,
and now the P-3s have to come from Jacksonville, Florida, to
patrol the North Atlantic shipping lanes, and we've lost a lot
of other advantages as well. So I just want to go on record as
sharing the skepticism of my colleagues about having another
BRAC round.
    Thank you, Mr. Chairman.
    Senator Johnson. Senator Begich.
    Senator Begich. Thank you very much, Mr. Chairman. Let me
follow up and associate at least some of my comments with
Senator Collins on the issue of furlough, if I can just ask
this question. Have you received, you or your office or other
offices, from the Navy or Air Force other proposals to save the
money rather than furloughs?
    Mr. Hale. Yes.
    Senator Begich. Can you share that with the subcommittee?
    Mr. Hale. I think we probably already have in testimony.
But I can tell you what they are. We started in January with a
whole set of initiatives including hiring freezes, and reducing
facilities, sustainment, restoration and modernization. As
discussed today, we also cutback in base operating costs. All
of the services did that. The next step, which you will see
soon, is a reprogramming effort to transfer money to offset the
shortfalls, mainly the wartime shortfalls. That was all we
could do within the constraints of the law other than cutting
training and maintenance, and we have made far-reaching cuts--
--
    Senator Begich. Can you----
    Mr. Hale. So furloughs are the last issue. The question is
do we cut more training and maintenance, or do we move to
furlough?
    Senator Begich. Just on those two departments, I would like
to, even if you have--I don't have them right here, so I would
like it if you would submit----
    Mr. Hale. Sure, we'd be happy to get you that information.
    [The information follows:]

    To buy back civilian furloughs, the Navy would defer 50 percent of
its fiscal year 2013 restoration and modernization program for reducing
Q4 barracks. This could delay the Department's goal of maintaining all
barracks at Q1 and Q2 condition by fiscal year 2022, but is a lower
overall readiness impact than civilian furlough. Additionally, Navy
would slightly reduce funding for fleet operating targets for ship
repair parts/consumables/repairables and other administrative
requirements.
    To buy back civilian furloughs, the Marine Corps would defer $58.3
million of facility sustainment, restoration and modernization projects
planned to improve the habitability at headquarters elements and bases
and stations across the Marine Corps. This action could result in
falling short of the facility sustainment goal, but balances overall
readiness impacts and recognizes the critical work performed by
civilian marines.
    To enable the buyback of civilian furloughs, the Air Force must
have full support of its $1.8 billion emergency reprogramming request
and, even then, the absence of furloughs would end any chance of
restarting much-needed flying operations. Buying back 11 days of
civilian furloughs would cost approximately $220 million, which is
roughly equivalent to the cost of flying hours necessary to return at
least 10 currently stood down active combat coded fighter and bomber
squadrons to combat mission ready flying rates; as well as associated
funding for ranges and a portion of training forces. Training forces
include aggressor and weapons squadrons, as well as their deferred
weapons system sustainment.
    While these specific buyback proposals have been received,
furloughs must be considered in view of the Department's overall fiscal
situation. The Army is having significant problems meeting wartime
needs. Part of the solution is to transfer funds from the Navy to Army,
as has been requested in the current reprogramming action. Furloughs
help make this possible. As noted above, Air Force furloughs may help
restart some flight training.

    Senator Begich. That would be great.

                        UNANTICIPATED WAR COSTS

    And on the unanticipated war costs, again, it may be in the
mill here, but I know you're not going to request that, but can
you give me something that just says here's what the
unanticipated war costs were, even though you're not asking for
it, to say what that number is?
    Mr. Hale. Sure. I can tell it to you, too. It ranges from
$7 billion to $10 billion. Most of it is the Army, primarily
two things.
    Senator Begich. Is it mostly transferring of goods back?
    Mr. Hale. Two things. That's part of it, but that's a
smaller part of it. We didn't anticipate the closure of the
ground lines of communication in Pakistan, obviously, and the
sluggish reopening of them, which has raised our transportation
costs. But the bigger part of it is higher than expected
operating tempo, and it's not just the Army. It occurred in the
Air Force and to a lesser extent in the Navy, as well. But,
yes, I can give you the numbers.
    Senator Begich. That would be great. I'm just trying to
watch my time here. So let me, if I can, last year, when we did
the annual authorization bill, one of the pieces we changed in
the law in DOD, the ability to realign, to limit DOD's ability
to realign enclosed bases, like section 993 and 268 of title
10, which I worked on when I was on the Armed Services
Committee to strengthen that. The idea was to ensure that there
wouldn't be a backdoor BRAC process, and I want to make sure--
I'm going to be very specific here.

                         EIELSON AIR FORCE BASE

    As you know, Eielson Air Force Base was slowly being
stripped away or proposed to be stripped away, and other bases
were being affected around the country. I want to make sure you
concur with the understanding that Congress has on this, that
you would not propose, like last year, when the Air Force tried
to backdoor an effort, especially on Eielson Air Force Base, do
you concur with the language and what its intent is?
    Mr. Hale. Well, we certainly concur. We're going to obey
the law.
    Senator Begich. Good. That's the first question. Good.
    Mr. Hale. Right.
    Senator Begich. So the second question is do you also agree
that the Air Force, again because of the changes, they must
seek congressional approval before proposing any significant
realignments at Eielson or any other installation, based on the
law?
    Mr. Conger. Let me take that one. The language, as far as
realignments go, requires notification to Congress, and that is
still the law. We are still going to follow the law.
    Senator Begich. You acknowledge that's the rule.
    Mr. Conger. The second piece of the puzzle, though, if I
recall, if I am getting the reference that you made for a
backdoor BRAC, the rule said you can't make transfers that
lowers the number below the threshold of 300 and then say, oh,
it's below 300, we can close the base.
    Senator Begich. Correct.
    Mr. Conger. We acknowledge the new rule and the constraint
that that places on us.
    Senator Begich. Very good. I'm doing that because I can
tell you in Fairbanks, Alaska, where Eielson touches, you hear
rumblings all the time, and I want to make sure it's clear, and
this is a great place to do it, to make sure it's on the record
and that it's very clear how this process works, because that's
what was happening last year. So we appreciate that kind of
acknowledgment.
    Mr. Conger. So the question then becomes is what the Air
Force proposed a backdoor closure?
    Senator Begich. Last year it was.
    Mr. Conger. The idea that was the base going to be closed
or kept at sort of a more empty----
    Senator Begich. Stripped down.
    Mr. Conger. And a stripped-down base is not a closed base.
    Senator Begich. Well, I'll tell you, to the Fairbanks
economy, it sure as heck is.
    Mr. Conger. I understand that as well, and I don't mean to
debate that point. I just want to be clear that the impact of
the legislation said you can't close the base. Well, actually,
it said you have to wait a certain amount of time.
    Senator Begich. Right. But you understand that the new
piece of the puzzle was the 300 threshold, because what was
slowly happening was it was being picked away. You're right, we
don't want to debate this because we agree on the law. I just
remember when I was mayor of Anchorage and they would say, my
guys would say in transit, well, this bus service isn't getting
a lot of riders. And I would say, well, what's the frequency?
They'd say, well, it's only once a day. And I'd say, well, of
course. And then they'd say, well, we should close it because
there's not a lot of riders, right? But if they did it five
times a day, they'd have a lot more riders, a lot more use. So
I just want to make sure that we are clear that the threshold
is there and that you understand and concur with the law, and
it sounds like the answer is yes.
    Mr. Conger. Of course, we're going to obey the law.
    Senator Begich. Let me go to the broader BRAC, if I can,
because I think, again, I associate my comments with many
people here. I know before I got here, Senator Kirk made some
additional comments on it. I agree with him, we should be
continuing to look overseas and seeing where we can and squeeze
down where we can there.
    On the $12 billion or so that you estimate that you are
saving on the last BRAC per year----
    Mr. Conger. The last five.
    Senator Begich. The last five, can you give me the detail
of how those savings are associated, where they come from, and
then what other agencies unrelated to the Air Force--oh, I'm
sorry--to the DOD that may be recurring costs but are not
included in your analysis, if any?

              BASE REALIGNMENT AND CLOSURE (BRAC) SAVINGS

    Mr. Conger. I'm not sure how we would calculate how much
additional cost a different agency incurs with the BRAC
decision.
    Senator Begich. Let me do it a different way, then. Can you
just indicate what agencies may be affected? And then we'll
talk to the agencies. Like the Department of Education was
probably affected to some degree, right? Because you had
education facilities.
    Mr. Hale. This goes back to the 1980s.
    Senator Begich. Well, do what you can, okay?
    The other, if I can, we've asked--I sent a letter last
week, but this has been a pending request by the Army, to go
look at Eielson Air Force Base for some of the work they are
going to do on unmanned aircraft, because they see opportunity
to maximize some of the use of that facility there for saving
money, which I think we are all into that. They have had this
request sitting at the Air Force side for months, almost 5
months, with no answer. It makes no sense, what I'm about to
say to you. The Air Force will say to the Army, hey, sure, no
problem, go look at our assets up there and determine if that
fits into your plan, because if it does, with unmanned
aircraft, with unmanned aircraft utilization, then let's
consider it. But the Air Force has been sitting on that request
by the Army for 5 months, and I just sent a letter last week
trying to jack that loose. Can you look at that? I don't
understand why----
    Mr. Hale. I'm not familiar with the details.
    Senator Begich. It seems so simple, a base that has
opportunities. So if you could do that, I'd greatly, greatly
appreciate it.
    Mr. Conger. Sure.
    [The information follows:]

    There are several ways in which the costs associated with
constructing a facility by DOD differ from the private sector. While
there were no details provided on the $40 million and $14 million
school projects, in general, differences in the costs can be attributed
to whether any support facilities are included in the private sector
project, how the educational requirements are factored in each project,
and the specific Federal statutes and regulations that apply to DOD.
    Specific to school designs, DOD costs are higher because designs
reflect costs of adopting 21st Century Education Specifications
developed by the DOD Education Activity. These specifications reflect
lower student/teacher ratios, thereby requiring more classrooms and
teachers for a given number of students. Most public school districts
have not adopted these standards.
    More generally, the Department recently completed a study to
identify and quantify factors that contribute to cost differences
between DOD and private sector construction projects. The study
concluded that statutes, regulations, and policies that apply to the
DOD and not to the private sector create a cost premium the study
estimated that DOD has to pay 20-30 percent more for the same building
type than it would cost for an equivalent private sector facility.
    Driving factors include: the application of prevailing labor wages
required under the Davis-Bacon Act; DOD's internal design practices
that differ from the private sector; anti-terrorism and force
protection standards; Federal sustainability and energy-conservation
standards; safety standards and enforcement; and base access
restrictions for construction personnel and material delivery. DOD is
looking further at the factors contributing to higher construction
costs to determine where we can make changes that continue to provide
quality facilities at a lower cost.

    Senator Begich. Thank you all very much.
    Thank you, Mr. Chairman.

                           SCHOOL RENOVATION

    Senator Johnson. Senator Kirk and I have one last question.
Mr. Conger, the fiscal year 2014 budget request includes $798
million to renovate 17 DOD schools. Seven of these projects are
elementary school replacements in the United States. It costs
around $40 million each. However, the National Clearinghouse
for Educational Facilities places the average national cost of
a comparable private-sector 600-student elementary school at
$14.8 million. What are the reasons for this dramatic cost
difference between DOD schools and the equivalent private-
sector schools? Are there ways that the DOD can maintain high
standards while getting closer to private-sector costs?
    Mr. Conger. Let me answer that question in two parts. We
are fully cognizant of the fact that it costs more money to
build the same building on a base with military construction
than it does for the commercial sector to build a similar
building off base. We have been exploring the reasons for that
and studying it, and there are a few things that bubble up as
to the rationale.
    There are Federal rules. When you spend Federal money,
there is additional regulation that is imposed, prevailing wage
rates, et cetera. There are military requirements on how one
can construct the building. There are anti-terrorism force
protection requirements that aren't required off base. There
are additional costs to construction when one has to get
through security. Just the access to the site adds cost.
    That cost delta is significant but not on the scale that
you just described. The information that we've got implies
something on the order of a 30-percent premium that we pay. We
are looking at those rules to find out what is in our control
and what we can change in order to create a more balanced
number, something that has less of a premium. We want to get
the same building for less, we really do.
    The second piece of this is the school-specific piece. In
order to figure out why a $40 million school, on the one hand,
has a comparable analog of $14 million--I think those were the
numbers you cited--that we are going to have to dig into a
little bit more because I wasn't familiar with that order-of-
magnitude difference.
    [The information follows:]

    On May 28, 2013, the Secretary of the Air Force approved the Army's
request to conduct a site survey of Eielson to assess its potential to
host a MQ-1C Gray Eagle company. Once all the site surveys are
complete, the results will be evaluated and a recommendation presented
for decision. This decision is expected to occur later this summer.

    Senator Johnson. It's somewhat the same with the Indian
country schools. I've been mystified, and as soon as you can
come up with an answer, that is welcome.
    Senator Kirk.
    Senator Kirk. Mr. Chairman, I will turn to the Pacific,
which I think I completely agree with the President on. I
understand that we deployed B-2s to Anderson in Guam, but they
do not have hardened facilities. I want to make sure that it is
typhoon hardened as well and we don't lose an asset like the B-
2 that is essential to our diplomacy to calm the Koreans down.
    Mr. Conger. I know that we are investing a significant
amount of funds in Guam for resiliency and hardening. The
specific typhoon hardening that you are referring to, we can
find out if the specs meet that requirement.
    Senator Kirk. Over to you, Mr. Chairman.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Johnson. This panel is excused.
    [The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
               Questions Submitted to Hon. Robert F. Hale
              Questions Submitted by Senator Mark L. Pryor
    Question. There are three fiscal year 2013 military construction
projects in Arkansas: $6.8 million for Field Maintenance Shop, Army
Guard, Searcy; $4.17 million for C-130J Flight Simulator Addition, AF
Active Duty, LRAFB; and $26 million for C-130J Fuel Systems Maintenance
Hangar, AF Active Duty, LRAFB.
    Have these projects been cut or delayed as a result of
sequestration?
    Answer. The two fiscal year 2013 Air Force military construction
projects (C-130J Flight Simulator Addition project and C-130J Fuel
Systems Maintenance Hangar project) located at Little Rock Air Force
Base, Arkansas, were not cut or delayed as a result of sequestration.
The Air Force military construction account did not experience
sequestration cuts because of crediting provisions in the current law.
    The Field Maintenance Shop project located at Searcy, Arkansas, and
funded in the Military Construction, Army National Guard appropriation
has been reduced by $214,000 due to sequestration. A below threshold
reprogramming will be able to restore funding if necessary.
    Question. How many military construction projects have currently
been delayed or canceled as a result of sequestration?
    Answer. At this time, our intent is to not cancel any projects and
to date, no projects have been canceled as a result of sequestration.
Due to the late receipt of fiscal year 2013 appropriations and the
subsequent sequestration, all projects have been delayed. Further
delays will be experienced for projects that will require congressional
prior approval reprogramming to restore the lost sequestration funding
to make the projects executable at full scope.
    Question. How much do you think it would cost to deal with any
necessary contract renegotiations, penalties for delays, and any
additional design, planning and engineering work needed to address a
reduced project scope for fiscal year 2013 military construction
projects?
    Answer. The Department does not plan to reduce the scope of any
projects as a result of sequestration. At this time, the Department
intends to use its reprogramming authorities to fund projects at full
scope.
    Question. Does the fiscal year 2014 budget request account for the
impacts of contract renegotiations, penalties for delays, and any
additional design, planning and engineering work as a result of a
reduced project scope for fiscal year 2013 military construction
projects caused by sequestration?
    Answer. No. Our intent is to not reduce the scope of any projects.
At this time, the Department intends to use its reprogramming
authorities to fund projects at full scope.
    Question. Has the Department of Defense already begun new contract
negotiations as a result of sequestration?
    Answer. No. Our intent is to not reduce the scope of any projects
as a result of sequestration. At this time, the Department intends to
use its reprogramming authorities to fund projects at full scope.
    Question. What is the impact on military readiness for fiscal year
2013 military construction project delays or cancellations?
    Answer. At this time, the Department does not plan to cancel any
projects as a result of sequestration. Due to the late receipt of
fiscal year 2013 appropriations and the subsequent sequestration, all
projects have been delayed. However, we do not anticipate any
degradation of military readiness as a result.
    Question. Senate Report 112-173, to accompany S. 3254, the National
Defense Authorization Act for Fiscal Year 2013, specifically addressed
the ``Critical manufacturing capabilities and capacities'' within the
defense organic industrial base. Specifically, the report states, ``the
committee directs the Secretary of Defense to identify critical
manufacturing capabilities and capacities that should be government
owned and government operated, identify the level of work needed to
sustain capabilities, and report to the congressional defense
committees on these matters no later than February 28, 2013.'' When can
Congress expect to receive this report?
    Answer. The Assistant Secretary of Defense for Logistics and
Material Readiness is completing the required report. Consistent with
the letter to you from the Under Secretary of Defense for Acquisition,
Technology, and Logistics dated April 26, 2013, the Department
anticipates providing the report by the end of June 2013.
    Question. Will the February 28, 2013, report address both the level
of work needed to sustain capabilities, and the level of work required
to remain a cost-effective production solution?
    Answer. The report required by Senate Report 112-173, which
accompanied S. 3254, directs the Secretary of Defense to, `` . . .
identify critical manufacturing capabilities and capacities that should
be government owned and operated, identify the level of work needed to
sustain capabilities and report to the congressional defense committees
on these matters no later than February 28, 2013.'' Consistent with the
letter to you from the Under Secretary of Defense for Acquisition,
Technology, and Logistics, dated April 26, 2013, the Department
anticipates providing the report by the end of June 2013.
    This report will identify workload estimates, in direct labor
hours, required to sustain critical manufacturing capabilities. The
report will not specifically address workload estimates required for a
cost-effective production solution since this direction was not
included in Senate Report 112-173. However, the Department has
initiated a study to develop a proven, repeatable methodology for the
identification of minimum sustaining workloads, economic sustaining
workloads, and surge requirements necessary to protect critical
manufacturing capabilities. The results of this study will be available
by March 2014.
    Question. In 2010, the Department of Defense established a policy
that new construction and major repair and renovation projects be
certified at least LEED-Silver, or its equivalent; however, the
Department has not clearly defined an equivalent standard. Further, it
is my understanding that the LEED standard does not accept over 75
percent of wood grown in the United States, therefore opening the door
for use of foreign wood products. Is the Department updating its
current policy and how is the Department making sure that all
certification standards are treated equally?
    Answer. The Department has published a new building standard
(Unified Facilities Criteria) that does not rely on third-party rating
systems, but instead draws from consensus green building standards like
ASHRAE 189.1. The new building standard establishes a minimum level of
performance that all new buildings and major renovations must meet.
This new standard does not articulate any preference for a third-party
certification system or for a particular kind of wood.
    Question. I am concerned that specifically naming the LEED-Silver
standard in the Department's policy creates a bias towards using the
LEED standard despite existence of other acceptable standards, and in
some cases, other standards may be more cost-effective. What are the
other acceptable green building rating systems that the Department has
determined to be equivalent to the LEED-Silver standard?
    Answer. In accordance with the Energy Independence and Security Act
(EISA) section 436, the Department of Energy determines which green
building rating systems are acceptable for use by Federal agencies.
Notwithstanding the DOE decision, DOD has published a new building
standard (Unified Facilities Criteria) that does not rely on third-
party rating systems, but instead draws from consensus green building
standards like ASHRAE 189.1. The new building standard establishes a
minimum level of performance that all new buildings and major
renovations must meet. This new standard does not articulate any
preference for a third-party certification system.
                                 ______

                Questions Submitted by Senator Mark Kirk
   base realignment and closure (brac) authorization--office of the
                          secretary of defense
    Question. While Congress is debating the new BRAC proposal, the
Department of Defense is conducting a study on European Infrastructure
Consolidations. The goal of this study is to ``reduce expenses by
eliminating excess capacity in Europe''. According to the DOD policy
guidance, the services and COCOMS are to analyze capacity and compare
the current facility inventory to the requirements of planned force
structure. Unfortunately, this study is not planned to be completed
until December 2013, well after Congress has to vote on the
authorization for a new CONUS BRAC authority. Many members want to see
what facilities will be closed in Europe and if forces will return to
the United States before they agree to another round of closures in the
United States.
    Mr. Hale, can you offer a reasonable explanation as to why we
should vote to authorize another round of U.S. base closures before the
Department completes the European Consolidation Study?
    Answer. BRAC is recognized as the only fair, objective, and proven
process for closing and realigning military installations within the
United States and its territories. Without statutory BRAC
authorization, the Department is limited in its ability to reduce
infrastructure in a comprehensive manner.
    The Department has initiated a comprehensive infrastructure
analysis to identify opportunities for consolidation in Europe, beyond
the significant reductions already accomplished in this area. This
effort, however, is not focused on relocating forces and organizations
back to the United States, but instead on trimming capacity that is
excess to what is necessary to support our enduring presence in Europe.
The process will ultimately result in a validation of those enduring
European infrastructure requirements, providing an analytical basis to
support sustainment funding and future recapitalization.
    Given the size of the current budget cuts and the uncertainty of
the Department's future fiscal circumstances, it is unrealistic to
expect all reductions to come from overseas sources. This is why the
Department has requested authority to conduct a BRAC round, which is a
critical element of our strategy to reduce infrastructure and personnel
costs.
                guam--office of the secretary of defense
    Question. The Navy is requesting $318 million for projects in Guam
while the Air Force is requesting $176 million, that's nearly a half a
billion dollars this year alone. Looking back in 2013 we appropriated
$102 million; $168 million in 2012; in 2011 we appropriated $246
million; and in 2010 we appropriated $675 million. That means in the
last 5 years alone the appropriations are nearing $2 billion. And, we
are planning over $10 billion more once we work out the issue on
transferring the marines there. That is a huge investment for one
location--granted an important strategic location--but my point is with
that investment we have not adequately planned to protect it.
    Mr. Hale, the original Guam master plan called for a missile
defense of the island. Only recently did we even put a deployable THAAD
unit on Guam. Will you comment from the OSD perspective why we have not
adequately planned on a permanent missile defense to protect such an
important yet vulnerable strategic location and will the current
Secretary revisit that decision?
    Answer. Guam is clearly an important strategic hub in the Asia-
Pacific and the facilities there play a critical role in our ability to
project power into the region. It is also a United States sovereign
territory, and accordingly, we consider the defense of Guam and other
U.S. territories against the threat of intermediate and long-range
missile strikes a priority--a position demonstrated by our decision
earlier this year to deploy a ballistic missile defense (BMD)-capable
Aegis ship and the Terminal High Altitude Area Defense (THAAD) system
to the island in response to North Korea's threat to strike U.S. bases
in the Pacific with intermediate range ballistic missiles.
    We will continue to evaluate the requirement for forward deployment
of missile defense capabilities in defense of Guam and the Commonwealth
of the Northern Mariana Islands as the situation with North Korea
unfolds. However, it's important to note that because global demand for
missile defense assets exceeds their availability, the Department of
Defense is purposefully developing an array of mobile, re-locatable
missile defense capabilities--such as the Aegis BMD and THAAD systems--
that make possible our ability to shift additional assets into an area
in times of crisis. Each of these systems is capable of providing
protection to U.S. citizens and forces forward-deployed in our
territories and foreign countries.
                         Department of the Navy

STATEMENT OF ROGER M. NATSUHARA, PRINCIPAL DEPUTY
            ASSISTANT SECRETARY OF THE NAVY (ENERGY,
            INSTALLATIONS AND ENVIRONMENT)
ACCOMPANIED BY:
        MAJOR GENERAL JAMES A. KESSLER, COMMANDER, MARINE CORPS
            INSTALLATIONS COMMAND AND ASSISTANT DEPUTY COMMANDANT FOR
            INSTALLATIONS AND LOGISTICS (FACILITIES)
        REAR ADMIRAL KEVIN SLATES, DIRECTOR, CHIEF OF NAVAL OPERATIONS,
            ENERGY AND ENVIRONMENTAL READINESS DIVISION
    Senator Johnson. Will the second panel please be seated?
    I am pleased to welcome our second panel of witnesses. Mr.
Roger Natsuhara, Principal Deputy Assistant Secretary of the
Navy for Energy, Installations and Environment; Major General
James Kessler, Commander of the Marine Corps Installations
Command and Assistant Deputy Commandant for Installations and
Logistics; and Rear Admiral Kevin Slates, Director, Chief of
Naval Operations Energy and Environmental Readiness Division.
    This year's military construction and family housing budget
request for the Navy and Marine Corps is $2.4 billion, roughly
equal to the fiscal year 2013 request. I note, however, that
the budget request for the Naval Reserve is decreased 33
percent from the fiscal year 2013 request, $33 million from $49
million. However, the Naval Reserve received a robust 88-
percent increase in fiscal year 2013. It is important that we
continue to make wise, long-term investments in Reserve and
Guard forces during this time of budget belt tightening.
    The Navy's MILCON request encompasses several important and
evolving mission requirements, including the pivot toward the
Pacific, the relocation of marines from Okinawa to Guam, and
the continued build-up of facilities in Djibouti. I look
forward to discussing these initiatives with our witnesses
today.
    I thank our witnesses for coming today, and we look forward
to your testimony.
    Mr. Natsuhara, I understand that yours will be the only
opening statement. Your full statement will be entered into the
record. Please proceed.

                SUMMARY STATEMENT OF ROGER M. NATSUHARA

    Mr. Natsuhara. Thank you, Mr. Chairman. Chairman Johnson,
Ranking Member Kirk, and member Begich, I am pleased to appear
before you today to provide an overview of the Department of
the Navy's investment in its shore infrastructure. For fiscal
year 2014, the Department is requesting over $12 billion in
various appropriation accounts to operate, maintain, and
recapitalize our shore infrastructure.
    This level of funding represents continued investment to
enhance combatant commanders' capabilities, improve
servicemembers' quality of life, and recapitalize aging
infrastructure. The fiscal year 2014 budget also demonstrates
the Department's commitment to energy security by funding cost-
effective projects that will improve our energy infrastructure
and reduce our energy consumption.
    Additionally, the budget request provides $185 million for
military construction and operation and maintenance projects to
address critical requirements at our shipyards.
    Our request includes $1.7 billion in military construction
projects supporting several key objectives of the Defense
Strategic Guidance of 2012. For instance, the Navy and Marine
Corps have programmed approximately $657 million to enhance
warfighting capabilities in the Asia-Pacific region such as the
new hangar, apron and infrastructure at Marine Corps Base
Hawaii and the Navy's warfare improvements at Naval Base Guam;
$200 million in projects such as the Broad Area Maritime
Surveillance hangars in California and Guam; and the EA-18G
Growler and P-8 Poseidon projects in Washington State that will
ensure the United States remains capable of projecting power in
anti-access and area denial environments.
    The Navy's investment in a barracks and armory at Camp
Lemonnier, Djibouti, provides supporting infrastructure
enabling Special Operations forces to carry the fight forward,
conducting stability and counterinsurgency operations for U.S.
Central and U.S. Africa Commands.
    The strength of our Navy and Marine Corps teams lies not
only in advanced weaponry and faster, stealthier ships and
aircraft. Our naval forces also derive their strength from the
sailors and marines who fire their weapons, operate and
maintain their machinery, fly the planes, and the families and
civilians supporting them. Toward this end, the Navy and Marine
Corps have programmed over $224 million in military
construction funds for operational and technical training,
professional development, and academic facilities; nearly $100
million for unaccompanied housing; $463 million to support
family housing construction and operations.
    Guam remains an essential part of the United States' larger
Asia-Pacific strategy, which includes developing the island as
a strategic hub and establishing an operational Marine Corps
presence. The Department recognizes congressional concerns
regarding execution of the Guam military realignment and is
taking steps necessary to resolve critical issues that will
resolve the construction program and move forward.
    Furthermore, the United States and Japan are continuously
looking for more efficient and effective ways to achieve the
goals of the realignment roadmap. Both countries remain
committed to maintaining and enhancing their robust security
alliance, and the United States remains committed to enhancing
the United States-Japan alliance and strengthening operational
capabilities.
    Our Nation's Navy and Marine Corps team operates globally,
having the ability to project power, effect deterrence, and
provide humanitarian aid whenever and wherever needed to
protect the interests of the United States. The Department's
fiscal year 2014 request supports critical elements of the
Defense Strategic Guidance by making needed investments in our
infrastructure and people and preserving access to training
ranges, afloat and ashore.

                           PREPARED STATEMENT

    I look forward to working with you to sustain the
warfighting readiness and quality of life for the most
formidable expeditionary fighting force in the world. Thank you
for the opportunity to testify before you today, and I welcome
your questions.
    [The statement follows:]
                Prepared Statement of Roger M. Natsuhara
    Chairman Johnson, Ranking Member Kirk, and members of the
subcommittee, I am pleased to appear before you today to provide an
overview of the Department of the Navy's investment in its shore
infrastructure.
              meeting the challenge of fiscal uncertainty
    The American public expects its military to spend wisely the
resources entrusted to us. The fiscal uncertainty we now face as a
Nation only heightens the need to make prudent investments that ensure
our Navy and Marine Corps team remains ready to respond to crises
wherever and whenever they may occur. We appreciate the support of the
Congress in passing the Defense and the Military Construction, Veterans
Affairs, and Related Agencies Appropriations Acts for fiscal year 2013.
They provide us with the critical funding necessary to repair,
maintain, and modernize our infrastructure and support new platforms as
they arrive on station. Yet, since balanced deficit reduction was not
enacted, the sequestration reductions must be taken from these funds
and applied in a manner that provides no flexibility.
    The Department continues to consider options that could mitigate
the impact of sequestration to the extent possible. With respect to
military construction, Department of the Navy's objective is to
preserve project scope and limit any project deferrals to the greatest
extent possible. The Department intends to achieve this by
reprogramming existing bid savings and any that may accrue in the
future. The Department is still in the process of evaluating the
precise impact of the sequester and will have more definitive
information when our analysis is complete.
    The effects of the fiscal year 2013 sequester will persist beyond
the current year and profoundly affect the Navy and Marine Corps'
ability to carry out their missions in today's threat environment using
the protocols and force structure that currently exist. Moreover, the
President's fiscal year 2014 budget request assumes the Congress will
reach a compromise on deficit reduction; otherwise, the programs and
projects we present today will be subject to reductions as well.
                    investing in our infrastructure
Overview
    Our installations provide the backbone of support for our maritime
forces, enabling their forward presence. The Department is requesting
over $12 billion in various appropriations accounts, a decrease of $619
million from the President's fiscal year 2013 request, to operate,
maintain and recapitalize our shore infrastructure. Figure 1 provides a
comparison between the fiscal year 2013 and fiscal year 2014 budget
request by appropriation.

                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                    Category                         PB 2013         PB 2014          Delta      Delta (percent)
----------------------------------------------------------------------------------------------------------------
Military Construction, Active and Reserve......          $1,752          $1,733            $-19            -1.1
Family Housing, Construction...................             102              73             -29           -28.4
Family Housing Operations......................             378             390              12             3.2
BRAC...........................................             165             145             -20           -12.1
Sustainment Restoration & Modernization (O&M)..           3,025           2,829            -196            -6.5
Base Operating Support.........................           7,220           6,848            -372            -5.2
Environmental Restoration, Navy................             311             316               5             1.6
                                                ----------------------------------------------------------------
      Total....................................          12,953          12,334            -619            -4.8
----------------------------------------------------------------------------------------------------------------
Figure 1: DON infrastructure funding by appropriation.

    Although smaller, the fiscal year 2014 request supports the Defense
Strategic Guidance of 2012 and represents continued investment in
enhancing Combatant Commanders' capabilities, improving servicemember
quality of life, and recapitalizing aging infrastructure. The fiscal
year 2014 budget also demonstrates the Department's commitment to
energy security by funding cost-effective projects efforts that will
improve our energy infrastructure and reduce our consumption.
Military Construction
    Our fiscal year 2014 President's budget request of $1.7 billion
keeps pace with last year's request and supports several key objectives
of the Defense Strategic Guidance of 2012. For instance, the Navy and
Marine Corps are investing approximately $657 million to enhance
warfighting capabilities in the Asia-Pacific region such as the new
hangar, apron, and infrastructure ($132.2 million) at Marine Corps
Base, Hawaii that will support the second squadron of MV-22 ``Osprey''
aircraft arriving in 2016; and Navy's wharf improvements ($53.4
million) at Naval Base Guam.
    Additionally, the Navy is investing over $200 million in projects
such as the Broad Area Maritime Surveillance Hangars in California
($17.5 million) and Guam ($61.7 million) and the EA-18G Growler ($32.5
million) and P-8 Poseidon ($85.2 million) projects in Washington State
that will ensure the United States remains capable of projecting power
in anti-access and area denial environments. The third increment of the
Explosive Handling Wharf ($24.9 million) at Naval Submarine Base
Bangor, Washington, supports the objective of maintaining a safe,
secure, and effective nuclear deterrent. The Marine Corps is investing
$84 million in a new cyber operations and headquarters facility at Fort
Meade, Maryland, that will leverage proximity to U.S. Cyber Command and
the National Security Agency to operate effectively in the cyberspace
domain. And finally, the Navy's investments in a barracks and armory
($29 million) at Camp Lemonnier, Djibouti, provides supporting
infrastructure enabling Special Operations Forces to carry the fight
forward, conducting stability and counterinsurgency operations for U.S.
Central and U.S. Africa Commands.
    The Department continues efforts to reduce our energy costs. The
fiscal year 2014 request includes nearly $70 million to decentralize
steam plants at Marine Corps Base Camp Lejeune and Marine Corps Recruit
Depot San Diego, installing new gas-fired energy-efficient space and
domestic water-heating systems. Additionally, the Department will
benefit from nearly $61 million in energy and water conservation
projects funded through the Defense-Wide Energy Conservation Investment
Program. These funds will enhance energy security at Camp Smith, Hawaii
($8 million) and Marine Corps Air Station Miramar, California ($18
million); increase sources of cost-effective renewable energy ($1.7
million); improve water conservation efforts ($2.4 million); and
increase energy efficiency in many other locations ($30.7 million).
However, the almost $600 million fiscal year 2014 reduction in SRM/O&M
and Base Operating Support (figure 1 above) in addition to the
sequester reductions in fiscal year 2013 will make the statutory energy
intensity goals more difficult to achieve. Moreover, a reduced
investments in energy projects now will result in lost opportunity for
savings in the future, higher utility costs and, ultimately, reduced
readiness as funds are diverted to pay these bills.
Facilities Sustainment, Restoration and Modernization (FSRM)
    The Department of Defense uses a Facilities Sustainment Model to
calculate lifecycle facility maintenance and repair costs. Using
industry-wide standard costs for various types of buildings and
geographic areas, the model is updated annually. Sustainment funds in
the operation and maintenance accounts are used to maintain facilities
in their current condition. The funds also pay for preventative
maintenance, emergency response to minor repairs, and major repairs or
replacement of facility components (e.g., roofs, heating and cooling
systems).
    The Navy budgeted $1.5 billion (80 percent of the model) in fiscal
year 2014 and continues to take risk in its shore infrastructure to
increase investment in afloat readiness and capabilities. It manages
this risk by prioritizing work to address mission-critical facilities
in poor condition and resolve life-safety issues. Projects not meeting
these criteria are deferred. There are, however, exceptions to the ``80
percent'' rule. Maintenance dredging, flagship educational
institutions, Camp David, and the Naval Observatory receive 100 percent
of the funding recommended by the model. Furthermore, the Navy
programmed $425.1 million to meet the 6 percent capital investment in
depots required by title 10, U.S.C. section 2476.
    The Marine Corps will continue to fund sustainment funding at 90
percent of the model ($691 million) in fiscal year 2014. Even this
strong commitment will result in some facilities degradation. The
Marine Corps will continue to prioritize and target facilities that
directly affect mission operations for full sustainment.
    Restoration and Modernization provides major upgrades of our
facilities. In fiscal year 2014, the Department of the Navy is
investing $570 million of Military Construction, and $618 million of
Operation and Maintenance funding into restoring and modernizing
existing infrastructure.
                        investing in our people
Overview
    The strength of our Navy-Marine Corps team lies not in advanced
weaponry or faster, stealthier ships and aircraft. Our naval forces
derive their strength from the sailors and marines who fire the weapon,
operate and maintain the machinery, or fly the plane, and from the
families and civilians supporting them. We continue to provide the best
education, training, and training environments available so our forces
can develop professionally and hone their martial skills. Providing
quality of life is a determining factor to recruiting and retaining a
highly professional force. To this end, we strive to give our people
access to high-quality housing, whether Government-owned, privatized,
or in the civilian community, that is suitable, affordable, and located
in a safe environment.
Training and Education
    Of the $1.7 billion request for military construction, the Navy and
Marine Corps together have programmed over $224 million in operational
and technical training, professional development, and academic
facilities. For example, the Navy, in order to accommodate an increased
student load at Nuclear Power Training Unit in South Carolina, will
expand pierside berthing for an additional moored training ship that
will provide ``hands on'' propulsion plant training in a realistic
environment ($73.9 million). The Marine Corps will consolidate its
Command and Control Training and Education Center of Excellence, Civil
Military Operations School, and Marine Air Ground Task Force Staff
Training Program into one 69,000 square foot facility ($25.7 million).
This project will allow the Marine Corps to carry out its Marine Corps
University recapitalization program.
Unaccompanied Housing
    In addition to expeditionary housing the Navy will build in
Djibouti, the fiscal year 2014 request includes two projects that will
provide accommodations for 1,220 transient and permanent party
personnel. The first project replaces outdated and deteriorating
housing for initial skills training (``A'' School) students at Naval
Station, Great Lakes ($35.9 million). The second project, at Naval Base
Ventura County, acquires and converts 300 existing leased section 801
family housing units and two supporting facilities to address pressing
billeting needs ($33.6 million).
    The Marine Corps is benefiting from prior investments in
unaccompanied housing made in support of the Commandant's Barracks
Initiative and the Grow the Force effort that increased end-strength
from 175,000 to 202,000 marines. Despite the projected decline in end-
strength, the Marine Corps is well-positioned to accommodate its
projected steady-state troop strength of 182,000 without excess
inventory, having only programmed an amount to support 90 percent of
its unaccompanied housing requirement. The results of the ongoing force
structure analysis will determine whether some locations might require
additional resources.
Family Housing
    The Department continues to rely on the private sector as the
primary source of housing for sailors, marines, and their families.
When suitable, affordable, private housing is not available in the
local community, the Department relies on Government-owned, privatized,
or leased housing. The fiscal year 2014 budget request of $463.3
million supports Navy and Marine Corps family housing operation,
maintenance, and renovation requirements.
    Both the Navy and Marine Corps have requested fiscal year 2014
funding for post-acquisition construction projects necessary to improve
existing Government-owned family housing in overseas locations. These
include projects in Japan that will revitalize 68 homes at Commander
Fleet Activities Sasebo ($21.6 million); another 50 homes at Marine
Corps Air Station Iwakuni while metering 736 units ($24.2 million); and
59 homes at Naval Base Guam ($23.1 million).
    Through the Military Housing Privatization Initiative, the
Department has virtually eliminated its entire inventory of inadequate
housing. While the Navy does not privatize any additional housing in
fiscal year 2014, the Marine Corps has awarded phase 6 of its Camp
Lejeune project this year, but is continuing to review the need for
other previously approved projects as part of an assessment of Marine
Corps-wide requirements.
    Additionally, the Navy and Marine Corps estimate spending almost
$75 million to lease over 2,500 housing units domestically (781) and
abroad (1,763). Over the past several years, the Navy has reduced its
number of foreign ``high-cost'' leases (based on thresholds contained
in U.S.C. title 10, section 2828. This past year, the Department
instituted a policy to limit the leasing of high-cost homes overseas
(based on 10 U.S.C. 2828 thresholds). We will only consider such leases
for designated high-risk billets/high-risk personnel where there are no
less costly options to provide secure housing or where it can be
demonstrated that such a lease is in the best interests of the
Government.
    Finally, the Department has programmed $287.3 million that will
provide for the daily operation, maintenance, and utilities expenses
necessary to manage its military family housing inventory. The budget
request also includes another $27.6 million to provide oversight and
portfolio management for over 63,000 privatized homes to ensure the
Government's interests remain protected and quality housing continues
to be provided to military families.
                         managing our footprint
Overview
    It is a basic tenet that the Department of Defense should own or
remove from public domain only the minimum amount of land necessary to
meet national security objectives. Coupled with the fiscal imperative
to conserve resources, especially in this era of deficit reduction, the
Department of the Navy has more than enough incentive to reduce its
footprint both at home and abroad.
European Consolidation
    To meet these twin objectives, the Department is ready to conduct a
capacity analysis that will provide the basis for consolidating
military infrastructure in Europe. It should be noted the Navy has a
limited footprint in the European theater, relocating its European
headquarters from London to Naples in 2005 and closing Naval Air
Station Keflavik in 2007 and Naval Support Activities Gaeta and La
Maddalena in 2006 and 2008, respectively. We are undertaking
preliminary capacity assessments of our remaining bases at Naval
Station Rota, Naval Air Station Sigonella, and the naval support
activities in Naples and Souda Bay that will inform a Defense-wide path
forward. Our assessment will also include, in partnership with NATO and
Norway, a review of the Marine Corps' prepositioning site in central
Norway.
Base Closure and Realignment (BRAC)
    With respect to consolidating our domestic infrastructure, the Base
Realignment and Closure process offers the best opportunity to assess
and evaluate opportunities to properly align our domestic
infrastructure with our evolving force structure and laydown. Since the
first round of BRAC in 1988, the Department has closed 186 domestic
installations and activities, including 52 major installations. Figure
2 demonstrates the evolution of the Department's force structure since
2005:

----------------------------------------------------------------------------------------------------------------
                                                                    Primary
                                                 Battle force     authorized      Personnel-
               Year and service                      ships         aircraft-        active       Installations
                                                                    active
---------------------------------------------------------------------------------------------------------------
PB 2005:
    Navy......................................             290           1,402         365,900              94
    USMC......................................  ..............             995         175,000              26
                                               -----------------------------------------------------------------
      Total...................................  ..............           2,397         540,900             120
                                               =================================================================
PB 2013:
    Navy......................................             284           2,012         322,700              83
    USMC......................................  ..............           1,041         197,300              25
                                               -----------------------------------------------------------------
      Total...................................  ..............           3,053         520,000             108
----------------------------------------------------------------------------------------------------------------
Figure 2: Force structure vs. number of installations.

    The Department has programmed $145 million to continue
environmental cleanup, caretaker operations, and meet property disposal
plan. By the end of fiscal year 2012, we had disposed 91 percent of our
excess property through a variety of conveyance mechanisms with less
than 17,000 acres remaining. Here are several examples of what we were
able to achieve in the past year.
    Since the former Naval Air Station Brunswick in Maine closed in
2011, the Navy has disposed of 79 percent of the surplus property. The
community is experiencing success in creating short-term and long-term
jobs as it continues to implement its redevelopment plan for the
property.
    In fiscal year 2012, the Navy completed the last disposal action at
the former Naval Station Ingleside, Texas, with the public sale of 155
acres on October 7, 2011, to Kiewitt Offshore Services, LTD for
approximately $2 million.
    Finally, at the end of 2012, the Navy and South Shore Tri-Town
Development Council reached agreement on an economic development
conveyance amendment that resulted in the disposal of 556 acres of the
former Naval Air Station South Weymouth in Massachusetts. This
agreement brought the total percentage disposed at South Weymouth to 93
percent, with less than 150 acres pending disposal upon completion of
environmental remediation actions.
    Overall, the Navy continues to reduce its inventory of properties
closed under BRAC. Of the original 131 installations with excess
property, the Navy only has 23 installations remaining with property to
dispose. We anticipate reducing this number by six installations this
year, with the remainder to be disposed as we complete our
environmental remediation efforts.
    Under the previous BRAC efforts, the Navy has been able to realize
approximately $4.4 billion in annual recurring savings. BRAC 2005 alone
resulted in approximately $863 million in annual recurring savings.
Although there remain cleanup and disposal challenges from prior BRAC
rounds, we continue to work with regulators and communities to tackle
complex environmental issues, such as low-level radiological
contamination, and provide creative solutions to support redevelopment
priorities, such as economic development conveyances with revenue
sharing.
Compatible Land Use
    The Department of the Navy has an aggressive program to promote
compatible use of land adjacent to our installations and ranges, with
particular focus on limiting incompatible activities that affect Navy
and Marine Corps' ability to operate and train, and protecting
important natural habitats and species. A key element of the program is
Encroachment Partnering (EP), which involves cost-sharing partnerships
with States, local governments, and conservation organizations to
acquire interests in real property adjacent and proximate to our
installations and ranges.
    The Department of Defense provides funds through the Readiness and
Environmental Protection Initiative (REPI) that are used in conjunction
with Navy and Marine Corps O&M funds to leverage acquisitions in
partnership with States, local governments and non-governmental
organizations. Figure 3 represents the activity and funding for
restrictive easements the Department acquired in fiscal year 2012:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Expenditures in fiscal year 2012 using multiple      Total expenditures from fiscal year 2005 to present
                                                             fiscal year funding                  ------------------------------------------------------
                                           -------------------------------------------------------
                                              Fiscal                                                 Total     DOD REPI   Service    Partner     Total
                                            year 2012   DOD REPI   Service    Partner     Total      acres      (O&M)      (O&M)      funds      funds
                                              acres      (O&M)      (O&M)      funds      funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Navy......................................      5,197    $14,369       $682    $15,580    $30,632     16,468    $41,840     $5,699    $53,421   $100,960
Marine Corps..............................      2,200      4,974      2,682      8,755     16,411     44,094     45,538     17,698     70,272    133,509
                                           -------------------------------------------------------------------------------------------------------------
      Totals..............................      7,398     19,343      3,365     24,335     47,043     60,562     87,378     23,397    123,693    234,469
--------------------------------------------------------------------------------------------------------------------------------------------------------
Figure 3: Restrictive easements acquired through encroachment partnering in fiscal year 2012.

    Vital to the readiness of our naval forces is unencumbered access
to critical land, water and air space adjacent to our facilities and
ranges. The Department understands that energy exploration, on land and
off-shore, plays a crucial role in our Nation's security and are
activities not necessarily mutually exclusive with military training.
However, we must ensure that obstructions to freedom of maneuver or
restrictions to tactical action in critical range space do not degrade
the ability of naval forces to achieve the highest value from training
and testing. As an active participant in the DOD Clearinghouse, the
Department of the Navy assisted in the evaluation of 1,769 proposed
energy projects submitted through the formal Federal Aviation
Administration's Obstacle Evaluation process during calendar year 2012.
Ninety-eight percent (1,730) of the projects were assessed to have
little or no impact on military operations.
    The 1,730 projects cleared by the Clearinghouse represent
potentially 38 gigawatts (GW) of renewable energy projects. The wind-
turbine developers, in particular, were responsible for a large
increase in U.S. green energy during 2012--over 13 GW of nameplate
wind-turbine capacity were completed in 2012.
Land Withdrawals
    A number of Department of Navy installations are located wholly or
partially on public lands that have been withdrawn from the public
domain. Withdrawals exceeding 5,000 acres must be authorized in
statute. As part of the National Defense Authorization Act for fiscal
year 2014, the administration requests to renew the withdrawals for
Naval Air Weapons Station, China Lake, California, and the Chocolate
Mountains Air Gunnery Range, California, managed by the U.S. Marine
Corps. The Marine Corps also seeks to withdraw an additional 154,000
acres at its Air Ground Combat Center, Twentynine Palms, California, to
support increased training requirements. These three withdrawal actions
have been combined into a single legislative proposal with the Army's
request to convert its use of public lands at the Limestone Hills
Training Area, Montana. Each of these withdrawal actions would extend
for a period of 25 years.
                       relocating marines to guam
Overview
    Guam remains an essential part of the United States' larger Asia-
Pacific strategy, which includes developing the island as a strategic
hub and establishing an operational Marine Corps presence. The
Department of Defense recognizes Congress' concerns regarding execution
of the Guam military realignment as outlined in the fiscal year 2012
and 2013 National Defense Authorization Acts (NDAA) and is taking steps
necessary to resolve critical issues that will allow the construction
program to move forward.
Moving Forward
    In April 2012, the United States-Japan Security Consultative
Committee (SCC) announced an adjustment to reduce the number of marines
relocating from Okinawa to Guam from approximately 8,600 to
approximately 5,000. In October 2012, the Department issued a new
notice of intent expanding the scope of the Supplemental Environmental
Impact Statement (SEIS) for the Live Fire Training Complex to also
evaluate alternatives for the Main Cantonment, Family Housing, and
impacts on Guam's civilian infrastructure, scaled according to this
reduction in relocating marines.
    The first military construction contracts funded by both the United
States and Government of Japan at Apra Harbor, Andersen Air Force Base
and along Marine Corps Drive (Defense Access Roads) were awarded
following the record of decision in September 2010 and are now
proceeding. These projects are not impacted by the SEIS.
    The fiscal year 2013 budget request included $26 million to
construct facilities in support of the Marine Aviation Combat Element
at the Andersen Air Force Base North Ramp on Guam. We appreciate the
support of Congress in authorizing and appropriating funds that enables
the second increment of a project providing an aircraft parking apron,
taxiways, lighting, wash racks, and supporting utilities to proceed.
    The fiscal year 2014 budget request includes $85.7 million for
construction of a type II hangar at the Anderson Air Force Base North
Ramp. To match the U.S. effort in fiscal year 2013, the Government of
Japan has agreed to reallocate $10.8 million to fund planning and
design for the second increment of North Ramp utilities and site
improvement using their Japan fiscal year 2009 funds already
transferred to the United States and for fiscal year 2014, transferring
$114.3 million of Japan fiscal year 2011 funds for the construction of
this project. None of these projects are impacted by the SEIS.
    Finally, the United States and Japan are continuously looking for
more efficient and effective ways to achieve the goals of the
Realignment Roadmap. Both countries remain committed to maintaining and
enhancing a robust security alliance, and the United States remains
committed to enhancing the United States-Japan Alliance and
strengthening operational capabilities.
                               conclusion
    Our Nation's Navy-Marine Corps team operates globally, having the
ability to project power, effect deterrence, and provide humanitarian
aid whenever and wherever needed to protect the interests of the United
States. The Department's fiscal year 2014 request supports critical
elements of the Defense Strategy of 2012 by making needed investments
in our infrastructure and people; reducing our world-wide footprint;
and preserving access to training ranges, afloat and ashore.
    Yet, unless Congress acts to enact a comprehensive and measured
approach to deficit reduction, our programs will be subject to
reductions in planned spending even larger than the ones we are
grappling with today. I look forward to working with you to sustain the
war fighting readiness and quality of life for the most formidable
expeditionary fighting force in the world.
    Thank you for the opportunity to testify before you today and I
welcome your questions.

                              GUAM BASING

    Senator Johnson. Thank you. Mr. Natsuhara, in your
testimony you noted that Guam remains an essential component of
the U.S. Pacific strategy. Last year there were significant
changes to the administration's strategic plan for the Pacific
AOR, providing for U.S. rotations of our forces in Australia,
Singapore, and the Philippines. The planned U.S. marine
presence at Guam was reduced from 8,600 to 5,000, with an
additional 2,500 marines shifted to Hawaii.
    I understand that a comprehensive basing plan for Guam may
not be finalized until 2015. Without a plan, how can we know
that the investments the Navy is making in the Pacific fit with
DOD's long-term strategy?
    Mr. Natsuhara. The current investments in Guam for the Navy
this year are for our existing missions. So our logistics force
has been stationed and operating out of Guam; our MSC ships
resupply the current fleet. So the bulk of the funds for fiscal
year 2014 for the Navy, all of the funds for Guam are for the
existing mission.
    The project we are requesting for 2014 for the Marine Corps
is to support a need for a current mission that we have in Guam
where the marines come for training. So it is for an existing
mission, and it will also be used for the upcoming new laydown
of marines as they come to Guam from Okinawa.

                          FUTENMA BASING PLANS

    Senator Johnson. General Kessler, in the 2014 budget, there
is a request for airfield security upgrades at Marine Corps Air
Station Futenma in Okinawa. However, after years of
negotiations, a timeline to relocate U.S. forces from Futenma
remains uncertain at best. How do the marines plan to balance
investments needed to maintain operations at the current
Futenma facility in the next 10 to 15 years without making an
over-commitment of resources given the policy of relocating the
base?
    General Kessler. Thank you, Mr. Chairman. That particular
project that we have in the fiscal year 2014 MILCON submission
is a $5 million project for a security fence. Over about a 3-
year period, we will have a total of about $11 million
requested for additional MILCON, and probably about $36 million
in FSRM requests. Those are all in there in order to ensure
that we maintain a level of safety and operational capability
at Futenma for as long as we will be there.
    As you stated, we expect that is going to be at least 10 to
15 years. Futenma has been looked at for closure for such a
long time that it has had some neglect over the years, that we
simply have to ensure that we take care of it to ensure its
future use.

               MARINE CORPS AIR STATION FUTENMA TIMELINE

    Senator Johnson. General Kessler, what is the timeline for
facility investment at Marine Corps Air Station Futenma to
maintain mission readiness? Are the needed projects in the
fiscal year 2014 to 2018 future years defense plan (FYDP)?
    General Kessler. Yes, sir. The timeline that we are looking
at right now, we expect that we will be at Futenma for probably
the next 10 or 15 years. You know that the Futenma replacement
facility, or the FRF, is the planned replacement for Futenma.
The prime minister recently delivered to the Governor of
Okinawa a permit for a landfill. That was delivered in March of
this year. The Governor has 1 year in which to sign that. We
expect he will take that year to do so, at which time we can
actually begin the Futenma replacement facility up in Honoko.
    So we expect, Mr. Chairman, that we are going to need to
continue to support Futenma over that 10- or 15-year period.
The investments that we do make there are going to be very
targeted and very precise investments to ensure safety and
operational capability, but not to over-invest, knowing that we
aren't going to be there forever.

                       CAMP LEMONNIER INVESTMENTS

    Senator Johnson. Admiral Slates, in the 2013 update to the
Camp Lemonnier, Djibouti master plan, the Navy knows that the
construction standards are being developed for Camp Lemonnier.
These include the minimal permanent structures, footprint and
finishes to meet the mission. Yet, the same report states that
the master plan is based on a 25-year time horizon, indicating
that Camp Lemonnier is an enduring mission, one in which we
expect to invest close to $1 billion in construction.
    With the understanding that we must seek the best value for
our investment, will the austere standards being applied at the
camp meet our long-term mission requirements at the base?
    Admiral Slates. Mr. Chairman, the answer is yes. I think we
have evaluated the construction standards for the environment
in Djibouti. When we say austere, they are standards that meet
life, safety, health construction codes for the environment,
provide a better quality of living standard than the facilities
that we have that last a 25-year life cycle. But austere means
they don't necessarily have all of the finishings and
furnishings and the nice features that we would have for a
facility here in one of our bases in the United States.
    So we have two projects in the fiscal year 2014 budget. One
is a barracks project with 60-plus rooms to be able to house up
to four people in each of those rooms. That doesn't mean we
will. Our first priority would be to get people out of tents
and to get people out of the facilities that don't have water.

                         PACIFIC LAYDOWN PLANS

    The other project is a secure armory facility, which is
basically just a facility intended to consolidate all of the
units and their weapons storage and their weapons maintenance
and cleaning into one secure structure instead of having them
dispersed in temporary facilities around the base.
    Senator Johnson. Senator Kirk.
    Senator Kirk. I would just say that I am hoping for all of
you, on the implementation of the sequester, that we move away
from what I would call the insidious implementation of the
sequester, meant to harm the Nation to make a political point,
to blame the Congress, on the eve of a potential conflict with
Korea. I think it is completely reprehensible to have an Air
Force that doesn't fly and a Navy that doesn't sail and an Army
that doesn't train.
    I'm going to follow up on something totally different. My
understanding is in the future-year program, you have three
$200 million plugs for the Pacific laydown. As I best remember
it, the President announced the deployment of roughly a platoon
of marines to Darwin, Australia. That kind of works out to $200
million, $220 million per marine. I'm sure those guys would
love accommodations like that.
    So my question is for further detail on those $200 million
plugs on the Pacific laydown.

                     TRAINING FACILITIES IN ALASKA

    Mr. Natsuhara. Sir, we continue to work with our colleagues
both in DOD and in DON and our international partners, and part
of that is working through and finalizing the laydown, but also
working with our international partners on how much they will
be contributing to the move, in Australia in particular. We are
not there yet. It is a joint discussion between OSD policy,
State Department, and the Australians. So we are aware of that.
We will try to get the answer as quickly as possible.
    Senator Johnson. Senator Begich.
    Senator Begich. Thank you, Mr. Chairman.
    First off, this is a comment and a question. I really
appreciate the work you all have been doing to enhance the
training facility in Alaska for SEALS. We know it is a great
place to do training because the weather conditions are tough,
and we appreciate that. I think a couple of years ago there was
project, maybe $18 million or so, give or take, and I think
they broke ground last year, or maybe they are doing it this
year. I just would love to get an update. If you don't have
that now, for the record, how that project is going.
    And then also, as you continue to develop it, as I
understand, at some point in the training for the SEALS, they
are going to go to Alaska. Everyone goes there at some point.
Are there additional things that you may need in the future
that you should let us know about? I don't know if anyone wants
to answer that first.
    Mr. Natsuhara. Sir, I will have to take that for the
record.
    Senator Begich. Okay.
    Mr. Natsuhara. I believe that is actually funded through
SOCOM.
    Senator Begich. Okay.
    Mr. Natsuhara. I don't think that's a Navy project, but we
will verify that and we will take that for the record, sir.
    [The information was not available at press time.]
    Senator Begich. Sure, that would be great. Also, just a
side note again, to the Navy and marines, we just did the
ceremony in Alaska on the USS Anchorage, a great ceremony, an
incredible facility. Seeing the marines and the Navy there,
Anchorage loved it, incredible technology on that ship, and
impressive to talk to the manufacturers of that facility, as
well as meeting some of the crew and the folks. So I just want
to tell you that that was a real uplift for the community.
Hopefully, the folks that were there felt it, too. But we
really appreciated the work on that. That was a fantastic
ceremony and a fantastic ship to add to the fleet.
    Let me ask you two things, maybe three. One is on energy
security. Obviously, I come from an energy State. I know the
DOD has been under attack in the past for some of the
technology developments because of fuel costs per gallon. I am
not one of those. I think it's like when we first bought our
first flat screen TV, we mortgaged our house to get it. When we
got our first cell phone, now they give them free. Technologies
around energy will cost a lot on the front end as you develop
it, but the critical need is down the road if you can have
multiple sources.

                        ENERGY SECURITY PLANNING

    Can you just give me an indication of are you, in the
development of energy security, what kind of relationships you
have with the private sector and the partnerships that you're
developing on these new technologies? And I know there is a lot
of different stuff in the mill. Can you give me just any
general comments from whoever feels comfortable to do that?
    Mr. Natsuhara. Overall, we in the Department established a
new deputy assistant secretary for energy to focus just on
that.
    Senator Begich. Which we've had in Alaska, which we are
very happy about that.
    Mr. Natsuhara. And we are happy to see that the other
services have also established a counterpart. So Mr. Hicks, Tom
Hicks, is our----
    Senator Begich. And there is one for the whole DOD, if I
remember right.
    Mr. Natsuhara. Correct. Ms. Burke----
    Senator Begich. Yes, that's who we had, yes.
    Mr. Natsuhara [continuing]. Is the operational energy
assistant secretary. So as a Department, we have a structure
now to do that, and particularly for the Department of the
Navy. Mr. Hicks, along with the Navy team and the Marine Corps
energy team, have worked very closely with industry in all
forms, the biofuels energies, all the operational energy. The
Marine Corps holds energy forums. Essentially, they call it
Experimental Forward Operating Base (ExFOB), where they bring
industry out and let them show their technologies that the
marines have taken to the battlefield very quickly.
    Senator Begich. I have seen some of the solar energy that
the marines have utilized in the Forward Operating Bases
(FOBs), and it is unbelievable. I didn't mean to interrupt you,
but I know the marines don't want to be humping batteries all
around. They want to have their weapons and bullets, and to
know that you went from a big facility down to a much smaller,
that has to be life-saving, energy-saving, and operational
saving. Is that a fair statement?
    Mr. Natsuhara. Yes.
    General Kessler. Yes, sir, it certainly is. The Marine
Corps has taken a very holistic approach, I think, to energy in
general. The Commandant published his energy policy called
Bases to Battlefields. The part that you saw, sir, is our
expeditionary energy, and we really truly can translate some of
those activities into saved lives. It means fewer convoys on
the road, less exposure to our marines and sailors that are out
in harm's way.
    Along with that, though, I would say the other part of
energy is the installation side, and putting those two
together, we have developed what we are calling an energy
ethos. That is, while we practice those things to save lives on
the battlefield, we want to carry those same energy-minded
efficient practices to our installations as well. So it really
is a very concerted effort both on the installations and
expeditionary side.
    Senator Begich. Very good.
    Admiral.
    Admiral Slates. Sir, if I might, I think from the Navy
perspective, we have really two focus areas. One is the shore
side, and the other is the operational. On the shore side, our
real focus to date has been on consumption reduction. The
kilowatt hour or the barrel of oil we don't use is one we save
forever and ever. So that has been the primary focus.
Renewables, where they make sense, and they make sense in a lot
of places, and then also instead of maybe energy security,
energy resilience. We need to make sure that key facilities and
infrastructure on our bases can continue to operate and to
support the fleet as it goes forward.
    On the operational side, it may be a little more complex
than in the Marine Corps because we are talking very big
systems, ships and aircraft primarily. The focus has been on
how do we get additional efficiencies out of those platforms
that we have for 30 to 40 years so that we can have additional
capability for the commander who operates that.
    So we see that efficiency on the operational side basically
goes hand-in-hand with enhanced combat capability in the
future.

                          SERVICE PARTNERSHIPS

    Senator Begich. Let me say one piece, and I know it is a
sister agency, the Coast Guard, who is on the water too. They
are doing some great stuff I know in Alaska with biomass and
their Sitka operation, and now looking at their Kodiak
operation. It's going to save them unbelievable amounts of
money in the operational onshore. So my guess is you are
watching all these as they are being developed to see how you
can integrate these into your own operation. Is that a fair
statement?
    Admiral Slates. Yes, sir. It is a pretty good partnership
between all the services, including the Coast Guard, on our
energy initiatives.
    Senator Begich. Very good.
    Last question, Mr. Chairman, if I could, and that is I know
the Navy has been a lead on this, and that is with Task Force
Climate Change, the work you have recognized. I know that
people don't want to say the words ``climate change.'' They all
flip out. They want to talk about the science. But I know from
you guys, you have had an extra effort because of the impacts
it could have.

                       TASK FORCE CLIMATE CHANGE

    Have you done an analysis on the construction needs of the
future that may be required because of changing water depths
with so much of your infrastructure? And I don't know who wants
to answer that, but Alaska is Ground Zero when it comes to
climate change. We are losing shoreline. You name it, we are
impacted. So we live it every day.
    But I'm wondering, I know you have Climate Change Task
Force. It has been very successful with a lot of information,
but I know it gets controversial because they wonder why the
military is even talking about climate change. Well, because
you've got infrastructure, and it's lots of money.
    Have you done an analysis of the cost of what this would
require with changing water depths?
    Mr. Natsuhara. We have not done an analysis of that yet. We
are aware of that. We have started some studies on trying to
identify some of the impacts. We will be working with OSD and
our interagency counterparts because we believe this is much
bigger than the Navy and bigger than DOD. So we have started
some analysis, but we don't have any costs right now.
    Senator Begich. I'll leave it on that and just say I look
forward to further discussion on this because I think we have
to be real about what these costs will be, because they will
not be in the thousands, they will not be in the millions. They
will be in the billions because of the amount of shore
requirements, just what we saw with the climate change that
created the storm in the Northeast. It impacted everybody. So I
would be interested as you progress on that.
    Thank you, Mr. Chairman.

                      CAMP LEMONNIER RESTRICTIONS

    Senator Johnson. One last question for Mr. Natsuhara. The
mission requirements at Camp Lemonnier have shifted over the
past several years, impacting the types of MILCON projects that
DOD has taken at the base. Last year, however, the Government
of Djibouti demanded that the United States move drone
operations from Djibouti International Airport to a French-
operated airfield which is well outside the perimeter of Camp
Lemonnier.
    Are there indications that the Djibouti Government will
impose additional limitations on operations and our
construction at Camp Lemonnier? And if so, how does that impact
our MILCON strategy at that location?
    Mr. Natsuhara. We continue to monitor the situation at Camp
Lemonnier with the Djiboutians. As of a couple of weeks ago,
and I believe still to date, we have not shifted our RPAs,
remotely piloted aircraft, to the outlying field at Chebelley.
    The Djiboutians continue to challenge us. We have a great
team there that continues to work with them through these
challenges. Right now, our construction is going fairly well.
We continue to monitor it. We work with the State Department on
that and the Ambassador on the ground. It will continue to be a
challenge, but our team continues to work through those.
    Senator Johnson. I thank all of our witnesses for appearing
before the subcommittee today. We look forward to working with
you this year.

                     ADDITIONAL COMMITTEE QUESTIONS

    For the information of members, questions for the record
should be submitted by the close of business on May 14.
    [The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
               Questions Submitted to Roger M. Natsuhara
                Question Submitted by Senator Jon Tester
    Question. On September 27, 2012, I sent a letter to Navy Secretary
Mabus requesting the Navy name its newest Virginia-class submarine, the
USS Montana. In response, Secretary Mabus shared that the Navy would
keep my request under consideration as opportunities presented
themselves. In this context, can you provide a list of the most recent
naval vessels that have been named, and when each occurred?
Additionally, can you provide a list of naval vessels that have yet to
be named, as well as expectations for when that will happen?
    Answer. The Secretary of the Navy is responsible for ship naming
and receives recommendations from many sources. Members of Congress,
business and community leaders, military personnel, naval historians,
and private citizens are among those who suggest names for ships. All
recommendations are carefully considered and hundreds of possible names
are reviewed by the Secretary of the Navy during the naming process.
Naming conventions for recently named ships are:
  --JHSV--Joint High Speed Vessels named for small American cities and
        counties.
  --LPD--Amphibious Transport Dock ships named for major American
        cities and communities attacked on 9/11.
  --LCS--Littoral Combat Ships named for regionally important American
        cities and communities.
  --AGOR--Auxiliary General Oceanographic Research vessels named for
        nationally recognized leaders in exploration and science.
  --DDG--Guided Missile Destroyers named for deceased members of the
        Navy, Marine Corps and Coast Guard, including Secretaries of
        the Navy.
  --SSN--Virginia-class attack submarines are named for States.
    In April 2013, seven ships were announced:
  --USNS Trenton (NJ)--JHSV 5.
  --USNS Brunswick (GA)--JHSV 6.
  --USNS Carson City (NV)--JHSV 7.
  --USS Portland (OR)--LPD 27.
  --USS Wichita (KS)--LCS 13.
  --USS Manchester (NH)--LCS 14.
  --R/V Sally Ride--AGOR 28.
    In May 2013, the following were announced:
  --USS Paul Ignatius--DDG 117.
  --USS Daniel Inouye--DDG 118.
    Congress was recently notified of the Secretary of the Navy's
intent to name the following ships:
  --USNS Yuma (AZ)--JHSV 8.
  --USNS Bismarck (ND)--JHSV 9.
  --USNS Burlington (VT)--JHSV 10.
  --USS Billings (MT)--LCS 15.
  --USS Tulsa (OK)--LCS 16.
    In view of ship naming conventions, the most appropriate vessel
type to bear the name of a State would be a submarine.
    In 2012, six submarines were named:
  --USS Illinois--SSN 786.
  --USS Washington--SSN 787.
  --USS Colorado--SSN 788.
  --USS Indiana--SSN 789.
  --USS South Dakota--SSN 790.
  --USS Delaware--SSN 791.
    A block of four submarines will be under contract around October
2013 and the name ``Montana'' will be given strong consideration.
                                 ______

                Questions Submitted by Senator Mark Kirk
    Question. Background: For the second year in a row the Navy's
Future Years Defense Plan contains very specific ``Pacific Engagement
Wedges,'' with no explanation or backup justification. The wedges are:
  --2015--$44,000,000;
  --2016--$49,900,000; and
  --2016--$101,300,000.
    Mr. Natsuhara, last year we asked to see some planning
justification for the Pacific Engagement wedges but nothing was
provided. This year's FYDP still contains the wedges with no
justification. When will you be able to share this planning data?
    Answer. The Department of the Navy is committed to supporting the
Department of Defense's emphasis on the Asia-Pacific region. So, for
programming considerations, we included ``wedges'' for ``Pacific
Engagement'' in fiscal year 2015 and fiscal year 2016 to accommodate
possible infrastructure costs once basing decisions are made. We will
include specific data in future budget submissions as we finalize the
strategic laydown, infrastructure requirements and availability of host
nation support in the Pacific.
    Question. Background: I understand the Department of Navy has done
an outstanding job advocating energy-efficient and alternative energy
projects, but there is one aspect of the new energy program that I am
concerned about and that is energy security. Our power grids are
indispensable to the operational missions of our bases and a cyber
attack on a grid that makes the base go dark could prove disastrous. I
applaud the focus on renewable sources of energy but I do not see the
same focus on energy security.
    Is the focus on renewable energy more of a priority that energy
security?
    Answer. The centerpiece to the Department of the Navy's shore
energy program is energy security. The Navy is committed to enhancing
combat capability, reducing total ownership costs, and ensuring energy
security through investments directed toward efficiency to reduce
overall energy demand, while optimizing the use of renewable energy
where financially viable, and improving the resilience to grid
failures.
    Question. There are several microgrid demonstration projects
underway at this time and the marines are requesting funds for two
microgrid projects. I would like to know if you plan to incorporate
more microgrid technology into your energy programs to ensure greater
energy security.
    Answer. The Department of Navy is committed to smart grid and
microgrid technologies where it is viable from a mission, technical and
financial perspective.
    Question. What are you doing to ensure energy security,
particularly cybersecurity, is part of the plan for energy projects?
    Answer. The Department of the Navy ensures that our energy projects
are appropriately secure from a cybersecurity perspective. For example,
the Navy's smart grid demonstration integrates Advanced Metering
Infrastructure (AMI) and Industrial Control Systems (ICS) into a cyber-
secure, NETWARCOM-accredited base network.
                                 ______

              Questions Submitted by Senator Daniel Coats
    Question. What is the future of the National Museum of the United
States Navy? Does the U.S. Navy intend to have a world-class museum
like the U.S. Marine Corps?
    Answer. The Navy does intend to have a world-class museum and will
consider all options, including relocation off the Washington Navy
Yard, to promote the protection and preservation of the collection of
art, artifacts, and records contained in the National Museum of the
United States Navy and to make the collection more accessible to the
public.
    The Navy plans to take more concrete steps toward this vision in
the future as the fiscal climate allows.
    Question. The Naval Inspector General found in their December 2011
report that the, ``Naval History & Heritage Command (NHHC) facilities
and offices at the Washington Navy Yard are inadequate to support the
command's mission of historic preservation and the administrative
requirements of the staff. NHHC facilities do not meet temperature and
humidity control requirements to preserve the Navy's historical
archives and artifacts.'' What initiatives are being taken by Navy to
ensure that their facilities are being upgraded to meet the proper
temperature and humidity levels required for the long term preservation
of art, artifacts, and archival documents?
    Answer. Navy is currently pursuing completion of the NHHC Global
Strategic Infrastructure Plan, NHHC Facilities Design Standards, and
NHHC Commemorative Facilities Study. When completed, these planning
efforts will support an integrated set of facility requirements to
support critical operations and enable targeted facility project
planning for best use of limited available funding.
    In 2012, Navy executed a repair project for the HVAC and mechanical
systems of the Navy Historical Center at the Washington Navy Yard at a
cost of $8.1 million.
    Question. What resources is Navy placing against this requirement?
    Answer. Navy funded $954,000 for development of the three planning
measures identified above in addition to the $8.1 million repair
project.
    Question. What is the projected completion date for all required
facilities renovations or construction?
    Answer. The results of the planning effort are needed in order to
develop the proper renovation and/or construction requirements.
    Question. Has the Navy reviewed the Army support facility at Fort
Belvoir?
    Answer. The Navy has made numerous visits to the site to assess
suitability for storage and the possibility of partnering with the
Army. The site is not adequately zoned internally to house collections
for artifacts requiring separate environmental conditions. In addition,
available storage space at this facility is quickly becoming limited as
Army collections continue to arrive for caretaking.
    Question. Does the Navy have any plans to replicate this facility
for Navy artifacts, art, and documents?
    Answer. The Navy is currently conducting an infrastructure review
which will balance required capabilities with existing assets. Upon
completion of that study at the end of fiscal year 2013, the Navy will
better understand if a similar facility is required. In addition,
aspects of the design criteria used at the Army support facility will
be incorporated into the new NHHC facilities design criteria.
                                 ______

              Questions Submitted by Senator Thad Cochran
    Question. The minor MILCON authority for Defense Laboratories
(section 2805(d)) empowers laboratory directors with the authority to
fund unspecified military construction projects up to $4 million with
the caveat that the Congress must be notified on projects over $2
million. Can you identify projects that your lab directors are trying
to accomplish this year or are considering in the near future using
this authority?
    Answer. At this time, there is only one proposed project, which
seeks to accomplish work in excess of $35 million to revitalize the
Electronics and Technology Lab at the Naval Research Lab, Washington,
DC. The current scope of the project exceeds the authorities provided
under section 2805(d). We are reviewing changes to scope and other
funding alternatives for pursuing this requirement.
    Question. I understand that the Navy Research Laboratory Director
may have projects that could use help getting out of the Pentagon. Will
you check into this and ensure the committee that the approval process
for Navy Laboratory Revitalization projects is operating efficiently?
    Answer. The Department of the Navy is continuing to work with the
appropriate stakeholders to identify opportunities and find an
effective means to use the 2805(d) authority and other mechanisms to
address laboratory revitalization.

                          SUBCOMMITTEE RECESS

    Senator Johnson. This subcommittee will reconvene on
Wednesday, May 15, at 10 a.m. to hear testimony from the
Departments of the Army and the Air Force.
    This hearing is recessed.
    [Whereupon, at 3:55 p.m., Thursday, May 9, the subcommittee
was recessed, to reconvene at 10 a.m., Wednesday, May 15.]

 
   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                  APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                        WEDNESDAY, MAY 15, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Tim Johnson (chairman) presiding.
    Present: Senators Johnson, Udall, Kirk, and Collins.

                         DEPARTMENT OF DEFENSE

                         Department of the Army

STATEMENT OF HON. KATHERINE G. HAMMACK, ASSISTANT
            SECRETARY OF THE ARMY, INSTALLATIONS,
            ENERGY, AND ENVIRONMENT
ACCOMPANIED BY:
        LIEUTENANT GENERAL MICHAEL FERRITER, ASSISTANT CHIEF OF STAFF
            FOR INSTALLATION MANAGEMENT
        BRIGADIER GENERAL WALTER E. FOUNTAIN, ACTING DEPUTY DIRECTOR,
            ARMY NATIONAL GUARD
        ADDISON D. DAVIS, IV, COMMAND EXECUTIVE OFFICER, ARMY RESERVE
            COMMAND

                OPENING STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Good morning. I welcome everyone to
today's hearing to discuss the President's fiscal year 2014
budget request for Military Construction (MILCON) and Family
Housing for the Departments of the Army and the Air Force.
    We will have two panels of witnesses today. The first panel
representing the Army includes Ms. Katherine Hammack, Assistant
Secretary of the Army for Installations. She is accompanied by
Lieutenant General Michael Ferriter, Assistant Chief of Staff
for Installations Management; Brigadier General Walter
Fountain, Deputy Director of the Army National Guard; and Mr.
Addison Davis, Army Reserve Command Executive Officer.
    We welcome you all to this hearing, and we look forward to
your testimony. The Senate has a series of votes this morning,
scheduled to begin at 10:30. I do not want to inconvenience our
witnesses, so I suggest that we dispense with opening
statements and ask our witnesses to limit their opening
remarks, so that we can get directly to questions.
    Your full statements will be placed in the record.
    Senator Kirk, is that acceptable to you?
    Senator Kirk. Yes.
    Senator Johnson. Secretary Hammack, please proceed.

             SUMMARY STATEMENT OF HON. KATHERINE G. HAMMACK

    Ms. Hammack. Thank you very much, Chairman Johnson, Ranking
Member Kirk, and members of the subcommittee. On behalf of
soldiers, families, and civilians of the United States Army, I
want to thank you for the opportunity to present our fiscal
year 2014 military construction budget.
    For fiscal year 2014, the Army requests $2.4 billion for
Military Construction, Family Housing, and the Army's share of
the Department of Defense (DOD) base closure account. This
represents a 34-percent reduction from our fiscal year 2013
MILCON request and is equitably distributed among the Active
Army, Army National Guard, and Army Reserve.
    The $2.4 billion request includes $1.6 billion for Military
Construction for the Active Army--or, $1.6 billion for Military
Construction for the whole Army. And of that, $1.12 billion is
for the Active Army, $321 million for the National Guard, and
$174 million for the Army Reserve.
    Of the $2.4 billion, a half billion is for Army family
housing and $180 million is for the base closure account.
    As you know, the Army is reducing its end strength and
force structure by about 14 percent, or 80,000 soldiers. We are
in the process of completing a force structure realignment
analysis, which will be released next month, and announce the
impacted brigade combat teams.
    The resulting force structure reduction to 490,000 in the
Active Army will create excess capacity at several
installations.
    In line with force structure reductions in Europe, the Army
is already downsizing our infrastructure there. With a 45-
percent reduction in force structure in Europe, the Army is
implementing a 51-percent reduction in infrastructure, a 58-
percent reduction in civilian staffing, and a 57-percent
reduction in base operating costs.
    We are working closely with the Office of the Secretary of
Defense to examine whether there are additional opportunities
for consolidation in Europe through joint or multiservice
consolidation.
    A future round of base realignment or closure, or BRAC, in
the United States is essential to identify and reduce excess
Army infrastructure and prudently align our civilian staffing
with reduced uniform force structure.
    If Army force structure declines but facility overhead and
civilian support staff remain constant, our ability to invest
in equipment, training, and maintenance will be reduced.
    I ask for the subcommittee's continued commitment to our
soldiers, families, and civilians in support of the Army's
MILCON and installations programs. The Army's fiscal 2014
installation management budget request is a program that
supports the Army's needs while recognizing the current fiscal
conditions.
    The Army fully supports the President's request for
authority from Congress to conduct a BRAC round in 2015. The
Army's strength is its soldiers, families, and Army civilians
who support them. They are and will continue to be the
centerpiece for the Army.

                           PREPARED STATEMENT

    Thank you for your attention. I look forward to your
questions, as do the other panelists here representing the
Active Army, the Army Reserve, and the Army National Guard.
    [The statement follows:]
  Prepared Statement of Hon. Katherine G. Hammack, Lieutenant General
Michael Ferriter, Brigadier General Walter E. Fountain, and Addison D.
                               Davis, IV
                              introduction
    Chairman Johnson, Ranking Member Kirk, and members of the
subcommittee, on behalf of the soldiers, families, and civilians of the
United States Army, I want to thank you for the opportunity to present
the Army's fiscal year 2014 Military Construction (MILCON) and Family
Housing budget request.
    The Army's fiscal year 2014 MILCON budget request supports the
Chief of Staff of the Army (CSA) priority of developing the force of
the future, Army 2020 as part of the Joint Force 2020--a versatile mix
of capabilities, formations, and equipment. Within the current fiscal
climate, the Army Installation Management Community is focusing its
resources to sustain, restore, and modernize facilities to support the
CSA's Army Facility Strategy 2020 and Facility Investment Strategy
priorities. The Installation Management Community is focused on
providing the facilities necessary to enable the world's best trained
and ready land force of the future.
    We ask for the subcommittee's continued commitment to our soldiers,
families, and civilians and support of the Army's MILCON and
installations programs. The Army's strength is its soldiers and the
families and Army civilians who support them. They are and will
continue to be the centerpiece of our Army. America's Army is the
strength of the Nation.
                                overview
    The Army's fiscal year 2014 President's budget requests $2.35
billion for MILCON, Army Family Housing (AFH), and the Army's share of
the Department of Defense Base Closure Account (BCA). The request
represents 1.8 percent of the total Army budget and a 34-percent
reduction from the fiscal year 2013 request. The $2.35 billion request
includes $1.12 billion for the Active Army, $321 million for the Army
National Guard, $174 million for the Army Reserve, $557 million for
AFH, and $180 million for Base Realignment and Closure (BRAC) to
address environmental and caretaker requirements at previously closed
BRAC sites. In addition and in support of Army installations and
facilities, the President's budget request includes $1.7 billion for
installation energy, $789 million for environmental programs, $3.8
billion for Facilities Sustainment/Restoration and Modernization
(FSRM), and $8.9 billion for Base Operations Support (BOS).
    The budget request reflects a return to pre-fiscal year 2000
spending levels for the MILCON accounts. From fiscal year 2001 through
fiscal year 2011, the MILCON program grew rapidly to support the
changes required of the Army at that time. The Army supported combat
operations in two theaters, increasing end strength, the Global Defense
Posture Realignment (GDPR), the operationalization of the Reserve
components, and transformation of the Army infrastructure through Base
Realignment and Closure (BRAC) 2005. With the fiscal reality that we
are facing as a Nation, in addition to the reductions of the Budget
Control Act of 2011, the Army closely reviewed its facility investments
necessary to support the force with versatile facility capabilities.
This MILCON budget request reflects the necessary focused investments
in training, maintenance, and operations to enable the future force of
the All-Volunteer Army of 2020 in a constrained fiscal environment.
                       army 2020 force structure
    The Army is in the process of reducing its end strength and force
structure. We are steadily consolidating and reducing our overseas
force structure. In fiscal year 2013, the Army announced that two
brigades in Europe would be deactivated, and that V Corps would not be
returning to Europe upon the completion of its deployment to
Afghanistan. In coordination with the Office of the Secretary of
Defense, the Army is examining cost-effective opportunities to
facilitate joint and/or multi-service infrastructure consolidation at
our overseas installations, with a specific focus in Europe.
    On January 19, 2013, the Army published a Programmatic
Environmental Assessment (PEA), which was prepared in accordance with
the National Environmental Policy Act (NEPA). The PEA analyzes the
environmental and socioeconomic impacts associated with two alternative
approaches to reducing our force structure. In the PEA, the Army set a
``stop loss'' threshold so that no multi-Brigade Combat Team (BCT)
installation would lose more than two BCTs, or 8,000 total military and
civilian employee personnel, under the worst case scenario.
    The force structure reduction is likely to create excess capacity
at several installations. If an installation's assigned military forces
are reduced significantly, it logically follows that some number of
civilian personnel functions may no longer be required to support our
soldiers and families. The Army has not yet initiated any capacity
analysis to determine the level of excess infrastructure.
    In line with the Budget Control Act of 2011 and the new defense
strategy announced in January 2012, the fiscal year 2013 budget
significantly reduced the Army's future funding projections. Along with
the end of the wars in Iraq and Afghanistan, these changes have put the
Army on a path to shrink its Active Duty end strength from its peak of
570,000 in fiscal year 2010, to 490,000 by fiscal year 2017. This is a
reduction of 80,000 soldiers, or approximately 14 percent, from the
Active component. As former Defense Secretary Leon Panetta stated about
force reductions, ``you can't have a huge infrastructure supporting a
reduced force.'' These reductions will affect every installation in the
Army. Further, these reductions are already programmed into the Army
budget baseline.
    Additional cuts to the Army's budget, of the magnitude associated
with sequestration, may drive our Active component end strength down
below 490,000. If the Army is forced to take additional cuts due to the
reduction in the outyear discretionary caps, we would need to reduce
further the number of soldiers out of the Active component, National
Guard, and U.S. Army Reserve. This would create even greater pressure
to bring infrastructure and civilian staffing into proper alignment
with force structure demands.
                  base realignment and closure (brac)
    If Army force structure declines, but the facility overhead and
civilian support staff remain constant, then our investments in
equipment, training, and maintenance will become distorted.
    The supporting infrastructure, as well as the civilian positions at
our installations, should be reviewed to determine whether they are in
line with reductions in end strength and force structure. The
alternative is an installations budget that spends tens or even
hundreds of millions of dollars to maintain unused facilities. This
scenario would divert the Army's shrinking resources away from much
needed investments in readiness, equipment, and training. Failure to
properly resource programs supporting Army families and soldier
readiness will lead to an all-volunteer military that is hollowed out
and weakened.
    At our installations, excess infrastructure, if unaddressed, will
force the Army to spread its remaining resources so thinly that the
ability of our installation services to support the force will suffer.
We will have more buildings in our inventory that require maintenance
than we have force structure to validate a requirement. Eventually,
excess infrastructure and staff overhead will increase the risk of
either spending a disproportionate share of scarce budget resources on
sustainment, or not being able to perform the most basic services
correctly. For instance, Army civilian and contractor staff that run
our digitized training ranges could be spread so thinly that the
scheduling and throughput of training events at home station could
suffer. As these negative effects accumulate, the remaining soldiers
and families will be more likely to vote with their feet and leave the
Army in an unplanned manner.
    Four of the prior rounds of BRAC were implemented as the cold war
was winding down and the Army's force structure was rapidly declining.
The combined 1988, 1991, 1993, and 1995 rounds (i.e., ``prior BRAC'')
produced 21 major base closures, 27 significant realignments, $5
billion in implementation costs, with over $3 billion in one-time
savings, and almost $1 billion in annual reoccurring savings. Among
them was the closure of Fort Ord, California. Fort Ord was the first
and only divisional post closed under BRAC, which reflected the Army's
reduction of its Active component strength from 12 to 10 divisions.
    BRAC 2005 generated $4.8 billion in one-time savings and provides
over $1 billion in net annual recurring savings for the Army. These
savings were generated with an implementation period investment of
about $18 billion. The Army accounted for BRAC savings when developing
its fiscal year 2007 and subsequent budget requests. This downward
budget adjustment was beneficial to the installation program overall;
it resulted in real savings.
    We are requesting authority from Congress to conduct a BRAC round
in 2015.
                      army 2020 facility strategy
    As we shape the Army of 2020 through a series of strategic choices
over the coming months and years, the Installation Management Community
looks to implement its Army Facility Strategy 2020 (AFS 2020) to
provide quality, energy-efficient facilities in support of the Force
and the CSA priorities.
    AFS 2020 provides a strategic framework that synchronizes the Army
Campaign Plan, the Total Army Analysis, and Army Leadership priorities
in determining the appropriate funding to apply in the capital
investment of Army facilities at Army installations and joint service
bases across the country. AFS 2020 is a cost-effective and efficient
approach to facility investments that reduces unneeded footprint, saves
energy by preserving and encouraging more efficient facilities,
consolidates functions for efficient space utilization, demolishes
failing buildings, and uses appropriate excess facilities as lease
alternatives in support of the Army of 2020.
    AFS 2020 incorporates a Facility Investment Strategy (FIS) that
contains four components executed with MILCON and/or Operations and
Maintenance (O&M) funding. FIS includes sustaining/maintaining required
facilities; disposing of identified excess facilities by 2020;
improving existing facility quality; and building out critical facility
shortfalls to include combat aviation brigades, initial entry training
barracks, maintenance facilities, ranges, and training facilities.
      fiscal year 2014 budget request--military construction, army
    The fiscal year 2014 Military Construction, Army (MCA) budget
requests an authorization of $978 million and appropriations for $1,120
million. The difference between the authorization and the
appropriations requests is the $42 million to fund the second increment
of the Cadet Barracks at the United States Military Academy and $99.6
million for Planning and Design (P&D), Unspecified Minor Military
Construction (UMMC), and host nation support. The cadet barracks was
fully authorized in the fiscal year 2013 National Defense Authorization
Act (NDAA). This MCA budget request supports the MILCON categories of
Barracks, Modularity, Redeployment/Force Structure, Revitalization, and
Ranges and Training Facilities.
    Barracks ($239 Million/21 Percent).--The fiscal year 2014 budget
request will provide for 1,800 new initial entry training barracks
spaces at three installations replacing current housing in relocatable
and temporary buildings. The locations of these replacement projects
are: Fort Gordon, Georgia; Fort Leonard Wood, Missouri; and Joint Base
Langley-Eustis, Virginia. The final project in this category is $42
million for the second increment of the Cadet Barracks at the United
States Military Academy, which was fully authorized in fiscal year
2013.
    Modularity ($322 Million/29 Percent).--The Army will invest $247
million at Joint Base Lewis McChord, Washington, and Fort Wainwright,
Alaska, to construct facilities for the 16th Combat Aviation Brigade
(CAB). These facilities provide critical Army aviation combat
capability and Joint Force support and include aviation battalion
complexes, an airfield operations complex, and an aircraft maintenance
and aircraft storage hangars. The Army will construct a $75 million
command and control facility at Fort Shafter, Hawaii, for United States
Army Pacific.
    Redeployment/Force Structure ($337 Million/30 Percent).--The Army
will invest $242.2 million for seven facilities to support the 13th CAB
at Fort Carson, Colorado. The facilities include two aircraft
maintenance hangars, a runway, a headquarters building, simulator
buildings, a fire station, and a central energy plant. Fort Bliss,
Texas, will receive $36 million to construct a complex to support the
activation of a Gray Eagle Company (Unmanned Aerial System) in support
of the 1st Armor Division headquarters. A $4.8 million battlefield
weather facility will support the airfield operations of the CABs at
Fort Campbell, Kentucky. The Army will construct a company operations
complex and an operations and maintenance facility for a total of $54
million at unspecified worldwide locations as directed by the
Department of Defense (DOD).
    Revitalization ($86.8 Million/8 Percent).--As part of the facility
investment strategy of AFS 2020, the Army will invest in five projects
to correct significant facility deficiencies or facility shortfalls to
meet the requirements of the units and/or organization mission
requirements. Projects included are the $63 million pier replacement
and modernization at Kwajalein Atoll, a $2.5 million entry control
building and a $4.6 million hazardous material storage facility for the
National Interagency Bio-defense Campus at Fort Detrick, Maryland; a
$5.9 million command and control operations facility at Fort Bragg,
North Carolina, and a $10.8 million air traffic control tower at Biggs
Army Airfield, Fort Bliss, Texas.
    Ranges and Training Facilities ($35.5 Million/3 Percent).--The
fiscal year 2014 budget request includes $35.5 million to construct
ranges and simulation training facilities to maintain readiness of
units and soldiers. The program will provide for a $17 million regional
simulation center at Fort Leavenworth, Kansas, and a $4.7 million
weapons simulation center in support of enlisted initial entry
training, and officer and non-commissioned officer career courses at
Fort Leonard Wood, Missouri. The Army will construct a $4.7 million
automated sniper field fire range for special operations forces
training at Eglin Air Force Base, Florida, and a $9.1 million multi-
purpose machine gun range at Yakima Firing Center, Washington, in
support of Active and Reserve component unit training in the area.
    Other Support Programs ($99.6 Million/9 Percent).--The fiscal year
2014 budget request includes $41.6 million for planning and design of
MCA projects and $33 million for the oversight of design and
construction of projects funded by host nations. As executive agent,
the Army provides oversight of host nation funded construction in
Japan, Korea, and Europe for all facilities sustainments. The fiscal
year 2014 budget also requests $25 million for unspecified minor
construction.
               military construction, army national guard
    The fiscal year 2014 Military Construction, National Guard (MCNG)
budget requests an authorization of and an appropriation for
$320,815,000. The MCNG program is focused on the MILCON categories of
Modularity, Revitalization, and Ranges and Training Facilities.
    Modularity ($121 Million/37 Percent).--The fiscal year 2014 budget
request is comprised of seven projects, which include five readiness
centers/armed forces reserve centers in Illinois, Minnesota,
Mississippi, New York, and South Carolina. This request also includes
one vehicle maintenance shop in South Carolina, and one Army aviation
support facility in Illinois.
    Revitalization ($138 Million/43 Percent).--The Army National Guard
budget funds 12 projects to replace failing and inefficient facilities.
There is a maneuver area training and equipment site in the
Commonwealth of Puerto Rico, readiness centers in Alabama and Wyoming,
an armed forces reserve center in Texas, enlisted transient training
barracks in Michigan and Massachusetts, a vehicle maintenance shop and
aircraft maintenance hangar in Missouri, a civil support team ready
building in Florida, an aviation training/maintenance facility in
Pennsylvania, and two water utilities projects in Mississippi and Ohio.
These projects will provide modernized facilities and infrastructure to
enhance the Guard's operational readiness.
    Ranges and Training Facilities ($21 Million/7 Percent).--The fiscal
year 2014 budget request includes a scout reconnaissance range gunnery
complex in Fort Chaffee, Arkansas.
    Other Support Programs ($41.2 Million/13 Percent).--The fiscal year
2014 Army National Guard budget request includes $29 million for
Planning and Design of Future Projects and $12.2 million for
Unspecified Minor Military Construction.
                  military construction, army reserve
    The fiscal year 2014 Military Construction, Army Reserve (MCAR)
budget requests an authorization of $158,100,000 and an appropriation
for $174,060,000. The MCAR program is focused on the MILCON categories
of Revitalization and Ranges and Training Facilities. The difference
between the authorization and appropriation requests funds P&D and
UMMC.
    Revitalization ($143.2 Million/82 Percent).--The fiscal year 2014
Army Reserve budget request includes nine projects that build out
critical facility shortages and consolidate multiple failing and
inefficient facilities with new operations and energy-efficient
facilities. The Army Reserve will construct four new Reserve centers in
California, Maryland, North Carolina, and New York that will provide
modern training classrooms, simulations capabilities, and maintenance
platforms that support the Army force generation cycle and the ability
of the Army Reserve to provide trained and ready soldiers for Army
missions when called. The request includes a new access control point/
mail/freight center and NCO Academy dining facility at Fort McCoy,
Wisconsin. At Joint Base McGuire-Dix-Lakehurst, New Jersey, the Army
Reserve will construct a consolidated dining facility and central issue
facility and eliminate four failing, Korean War era, buildings. Lastly,
the request will provide a modern total Army school system training
center at Fort Hunter-Liggett, California, in support of all Army units
and soldiers.
    Ranges and Training Facilities ($15 Million/9 Percent).--The budget
request includes two ranges that will build out a shortage of
automated, multipurpose machinegun ranges and modified record fire
ranges at Joint Base McGuire-Dix-Lakehurst, New Jersey. The ranges will
enable Active and Reserve component soldiers in the northeastern part
of the country to hone their combat skills.
    Other Support Programs ($16 Million/9 Percent).--The fiscal year
2014 Army Reserve budget request includes $14.2 million for Planning
and Design of Future Year Projects and $1.7 million for Unspecified
Minor Military Construction.
             family housing operation and maintenance, army
    The fiscal year 2014 budget request includes $512.8 million to
support the Army's Military Family Housing in the following areas:
operations, utilities, maintenance, and repair; leased family housing;
and oversight management of privatized housing. This request funds over
16,000 Army-owned homes in the United States and overseas, almost 6,500
leased residences worldwide, and Government oversight of more than
86,000 privatized homes.
    Operations ($101.7 Million).--The Operations account includes four
subaccounts: management, services, furnishings, and a small
miscellaneous account. All operations subaccounts are considered ``must
pay accounts'' based on actual bills that must be paid to manage and
operate the AFH-owned inventory. Within the management subaccount,
Installations Housing Service Offices provide referral services for
off-post housing for 67 percent of the Army families that reside in the
local communities.
    Utilities ($96.9 Million).--The Utilities account includes the cost
of delivering heat, air conditioning, electricity, water, and
wastewater support for owned or leased (not privatized) family housing
units.
    Maintenance and Repair ($107.6 Million).--The Maintenance and
Repair account supports annual recurring projects to maintain and
revitalize AFH real property assets. This funding ensures that we
appropriately maintain the 16,000 Army-owned housing facilities so that
we do not adversely impact soldier and family quality of life.
    Leasing ($180.9 Million).--The Army Leasing program is another way
to provide soldiers and their families with adequate housing. The
fiscal year 2014 budget request includes funding for 1,369 temporary
domestic leases in the United States, and 5,064 leased units overseas.
The overseas leases include support for NATO housing in Belgium and
SOCOM housing in the Dominican Republic, Jamaica, Colombia, and Miami.
    Privatization ($25.7 Million).--The Privatization account provides
operating funds for portfolio and asset management and strategic
oversight of privatized military family housing and it pays for
civilian pay at 44 locations; travel; contracts for environmental and
real estate functions, training, and real estate development and
financial consultant services. The need to provide oversight over the
privatization program and projects is reinforced in the fiscal year
2013 NDAA which requires more oversight to monitor compliance, reviews
and reporting performance of the overall privatized housing portfolio
and individual projects.
    In 1999, the Army began privatizing family housing assets under the
Residential Communities Initiative (RCI). The RCI program continues to
provide quality housing that soldiers and their families and senior
single soldiers can proudly call home. All scheduled installations have
been privatized through RCI. RCI has met its goal to eliminate those
houses originally identified as inadequate and built new homes where
deficits existed. RCI family housing is at 44 locations and is
projected to eventually represent 98 percent of the on-post family
housing inventory inside the United States. Initial construction and
renovation investment at these 44 installations is estimated at $13.2
billion over a 3- to 14-year initial development period (IDP), which
includes an Army contribution of close to $2 billion. All IDP's are
scheduled to be completed by 2018. After all IDP's are completed, the
RCI program is projecting approximately $34 billion in development
throughout the 44 locations for the next 40 to 50 years. From 1999
through 2012, our partners have constructed 29,173 new homes, and
renovated another 24,641 homes.
                   family housing construction, army
    The Army's fiscal year 2014 Family Housing Construction request is
for $39.6 million for new construction and $4.4 million for planning
and design. The Army will construct 56 single family homes at Fort
McCoy, Wisconsin, to support the senior officer and senior non-
commissioned officer and families stationed there. Additionally, the
Army will construct 29 townhouse style quarters in Grafenwoehr at
Vilseck, Germany, as part of the consolidation and closure of the
Bamberg and Schweinfurt garrisons.
                       base closure account (bca)
    BRAC property conveyance remains an Army priority. Putting excess
property back into productive re-use, which can facilitate job
creation, has never been more important than it is today.
    The fiscal year 2013 NDAA consolidated BRAC Legacy and BRAC 2005
accounts into a single DOD Base Closure Account (BCA). The Army's
portion of the fiscal year 2014 budget request is for $180,401,000. The
request includes $50.6 million for caretaker operations and program
management of remaining properties, and $129.8 million for
environmental restoration efforts. In fiscal year 2014, the Army will
continue environmental cleanup, and disposal of BRAC properties. The
funds requested are needed to keep planned cleanup efforts on track,
particularly at prior-BRAC installations including Fort Ord,
California, Fort McClellan, Alabama, Fort Wingate, New Mexico, Fort
Devens, Massachusetts, and Savanna Army Depot, Illinois. Additionally,
funds requested support environmental restoration projects at several
BRAC 2005 installations such as Lone Star Army Ammunition Plant, Texas,
Kansas Army Ammunition Plant, Kansas, and Umatilla Chemical Depot,
Oregon. Completing environmental remediation is critical to
transferring property back into productive re-use and job creation.
    In total, the Army has conveyed almost 219,000 acres (78 percent of
the total BRAC acreage disposal requirement of 279,000 acres), with
approximately 61,000 acres remaining. The current goal is for all
remaining excess property (22 percent) to be conveyed by 2021. Placing
this property into productive reuse helps communities rebuild the local
tax base, generate revenue, and replace lost jobs.
                                 energy
    The Army is moving forward to address the challenge of Energy and
Sustainability on our installations. In fiscal year 2014, the
Installation Energy budget totals $1.719 billion and includes $43
million from the DOD Defense-wide MILCON appropriation for the Energy
Conservation Investment Program (ECIP), $344 million for Energy
Program/Utilities Modernization program, $1,332 million for Utilities
Services, and $5.0 million for installation-related Science and
Technology research and development. The Army conducts financial
reviews, business case and lifecycle cost analysis, and return on
investment evaluations for all energy initiatives.
    ECIP ($43 Million).--The Army invests in energy efficiency, on-site
small-scale energy production, and grid security through the DOD's
appropriation for ECIP. In fiscal year 2014, the DOD began conducting a
project-by-project competition to determine ECIP funding distribution
to the services. The Army received $43 million for 11 projects to
include 6 energy conservation projects, 4 renewable energy projects,
and 1 energy security project.
    Energy Program/Utilities Modernization ($344 Million).--Reducing
consumption and increasing energy efficiency are among the most cost-
effective ways to improve installation energy security. The Army funds
many of its energy efficiency improvements through the Energy Program/
Utilities Modernization program account. Included in this total are
funds for energy efficiency projects, the development and construction
of renewable energy projects through the Energy Initiatives Task Force,
the Army's metering program, modernization of the Army's utilities,
energy security projects and planning and studies.
    Utilities Services ($1,332 Million).--The Utilities Services
account pays all Army utility bills including the repayment of
Utilities Privatization (UP), Energy Savings Performance Contracts
(ESPCs), and Utilities Energy Service Contracts (UESCs). Through the
authority granted by Congress, ESPCs and UESCs allow the Army to
implement energy efficiency improvements through the use of private
capital, repaying the contractor for capital investments over a number
of years out of the energy cost savings. The Army has the most robust
ESPC program in entire Federal Government. The ESPC program has more
than 170 task orders at over 70 installations representing $1.16
billion in private sector investments and over 350 UESC task orders at
43 installations, representing $543 million in utility sector
investments. We have additional ESPC projects in development, totaling
over $400 million in private investment and $100 million in development
for new UESCs. In fiscal year 2012, the Army executed more ESPCs and
UESCs in one fiscal year than any other year in the entire history of
program ($236 million).
    Installation Science and Technology Research and Development ($5.0
Million).--Installation Science and Technology programs investigate and
evaluate technologies and techniques to ensure sustainable, cost-
efficient and effective facilities to achieve resilient and sustainable
installation and base operations. Facility enhancement technologies
contribute to cost reductions in the Army facility lifecycle process
and the supporting installation operations.
                              environment
    The Army's fiscal year 2014 Operations and Maintenance budget
provides $788,868,000 for its Environmental Program in support of
current and future readiness. This budget ensures an adequate
environmental resource base to support mission requirements, while
maintaining a sound environmental compliance posture. Additionally, it
allows the Army to execute environmental aspects of re-stationing while
increasing programmatic efficiencies and addressing the Army's past
environmental legacy.
    As a land-based force, our compliance and stewardship sustains the
quality of our land and environment as an integral component of our
capacity to train for combat effectively. We are committed to meeting
our legal requirements to protect natural and cultural resources and
maintain air and water quality during a time of unprecedented change.
We are on target to meet DOD goals for cleaning up sites on our
installations (90 percent of non-BRAC sites will be at response
complete in fiscal year 2018 and 95 percent by fiscal year 2021), and
we continue to fulfill environmental compliance requirements despite
operating in a constrained resource environment.
       facility sustainment, restoration and modernization (fsrm)
    This year's Facility Sustainment, Restoration and Modernization
(FSRM) funding is $3,760,996,000. This request includes $3,082 million
for Sustainment (80 percent of the OSD FSM requirement, for all Army
components), $36 million for demolition, and $643 million for
Restoration and Modernization. The Army views 80 percent sustainment
funding as a necessary adjustment due to the economic impacts and the
requirements of the fiscal year 2011 Budget Control Act. FSRM funding
is an integral part of the Facility Investment Strategy (FIS) proponent
of AFS 2020. The Army is taking a slight risk in the sustainment of our
facility inventory valued at $312 billion. In keeping with the FIS, the
Army has increased its investment in facility restoration through the
O&M-R&M account. This will fully restore trainee barracks, enable
progress toward energy objectives, and provide commanders with the
means of restoring other critical facilities. Facilities are an outward
and visible sign of the Army's commitment to providing a quality of
life for our soldiers, families, and civilians that is consistent with
their commitment to our Nation's security.
                     base operations support (bos)
    The Army's fiscal year 2014 Base Operations Support (BOS) request
is $8,867,014,000, which is a slight decrease from the fiscal year 2013
request. The Army's fiscal year 2014 BOS strategy continues to
prioritize funding for Life, Health, and Safety programs and Army Force
Generation (ARFORGEN) requirements ensuring soldiers are trained and
equipped to meet demands of our Nation at war. The Army remains
committed to its investment in Army Family Programs and continues to
evaluate its services portfolio in order to maintain relevance and
effectiveness. The Army will meet the challenge of day-to-day
requirements by developing efficient service delivery or adjusting
service levels while managing customer expectations. These efforts will
encourage program proponents to evaluate policies, seek alternatives,
and find innovative solutions to meet these challenges. The Army is
committed to developing a cost culture for increasing the capabilities
of BOS programs through an enterprise approach. Additionally, the Army
will continue to review service delivery of its soldier, family, and
civilian programs to ensure the most efficient and effective means of
delivery are realized.
                               conclusion
    The Army's fiscal year 2014 installations management budget request
is a program that assists the Army as it transitions from combat. It
provides for our soldiers, families, and civilians, while recognizing
the current fiscal conditions. The Army requests the support of the
subcommittee and the Congress in its effort to implement the Army
Facility Strategy 2020 and facilities investment strategy. These
combined efforts will set the foundation for the sustainment,
restoration and modernization of the facilities necessary to enable the
future Army of 2020, a joint force with a versatile mix of
capabilities.
    The planned reduction of 14 percent of the Active Army's end
strength to 490,000 by the end of fiscal year 2017 will create excess
U.S.-based installation infrastructure. Since 2005, as we reduced
installations overseas, many units relocated back to the United States.
For example, Forts Benning, Bliss, Bragg, Carson, Knox, and Riley
received approximately 7 million square feet of additional
infrastructure to host and support these units returning home from
overseas. The additional capacity here at home was important because it
helped the Army transform from a division-based force into modular
brigade combat teams.
    With sequestration triggered, we face additional and significant
reductions in the annual funding caps limiting defense budgets for the
next 9 years; these reductions would cause reductions in military and
civilian end strength. A future round of base realignment and closure
(BRAC) is essential to identify excess Army infrastructure and
prudently align civilian staffing and infrastructure with reduced force
structure and reduced industrial base demand. BRAC allows for a
systematic review of existing DOD installations to ensure effective
joint and multi-service component utilization. If we do not make the
tough decisions necessary to identify efficiencies and eliminate unused
facilities, we will divert scarce resources away from training,
readiness, and family programs and the quality of our installation
services will suffer. We are requesting authority from Congress to
conduct a BRAC round in 2015.
    In closing, I would like to thank you again for the opportunity to
appear before you today and request your commitment to the Army's
program and the future of our soldiers, families, and civilians.

    Senator Johnson. Thank you, Secretary Hammack.
    For the information of Senators, we will limit questions to
5-minute rounds, and I ask my colleagues to be mindful of that
limit so that everyone has a chance to participate. You may, of
course, submit questions for the record.
    We will use the early bird rule, and I will recognize
members from alternating sides in the order in which they
arrive.
    Secretary Hammack, the Army is currently conducting a force
structure initiative called the Total Army Analysis review, or
TAA, to look at how to best draw down from 570,000 soldiers in
2010 to 490,000 in fiscal year 2017.
    At the same time, the Army is also involved in two basing
initiatives, OSD's European basing study that will outline a
master plan for an enduring force lay-down in Europe and a
proposed 2015 BRAC round to close bases in the United States.
    What steps is the Army taking to coordinate these different
reviews and plans? And how can this subcommittee be assured
that recommendations from the TAA will support the European
basing study or the recommendations of a future BRAC
commission?

                            ARMY INITIATIVES

    Ms. Hammack. These initiatives are very well coordinated
together. Currently, the force structure that will be
announced, as you said, is a reduction of 80,000. We have
already announced the force structure reductions coming out of
Europe to brigade combat teams, so we know what our force
structure is planned for Europe.
    In the United States, it's at least eight brigade combat
teams and maybe more with impacts of sequestration.
    When we put together our fiscal year 2014 MILCON budget, we
took into account the potential impacts of force reductions at
our bases that have significant numbers of soldiers. And so you
do not see us investing in brigade combat team headquarters;
you do not see us investing in permanent party barracks. We're
investing in training ranges; we're investing in training
barracks; and we're investing in infrastructure improvements or
fixes that do not require or will not be impacted by stationing
moves.

                     EUROPEAN MILITARY CONSTRUCTION

    Senator Johnson. The budget request includes funding for
several Army projects and for a number of DOD schools at U.S.
Army bases in Germany.
    If everything is on the table, why should Congress invest
in MILCON in Europe until the basing reviews are completed? And
if certain installations are not on the table, can you identify
those for us?
    Ms. Hammack. I believe that the OSD budget has plans for
Department of Defense Education Activity (DODEA) schools.
That's not in the Army budget. The Army budget is Army family
housing in locations that will be enduring.
    There is coordination on schools. And as part of the
European infrastructure consolidation analysis, we are looking
at the entire educational system in Europe.
    The other thing to be aware of is the DODEA schools do
support Federal agencies beyond just the military that are
stationed in Europe.
    Senator Johnson. For U.S. bases, the first part of TAA, an
environmental assessment, was recently completed. The
assessment focused on brigade combat teams and their size,
composition, and location.
    I understand that the Army is now entering the next phase
of the process, where it will begin to look at possible
stationing decisions.

                       TOTAL ARMY ANALYSIS (TAA)

    Secretary Hammack, when do you expect to complete the TAA,
and will its findings be incorporated into the fiscal year 2015
budget submission?
    Ms. Hammack. The fiscal year 2015 budget will be impacted
by the TAA, and we are looking very closely what projects to
add in that had been postponed and what projects would be
removed from the Future Years Defense Plan (FYDP).
    The Secretary of the Army and the Chief of Staff of the
Army announced that the TAA would become final in June. And I
do not know an exact date at this point in time.
    Senator Johnson. Senator Kirk.
    Senator Kirk. Thank you, Mr. Chairman. I'll try to be
pretty quick with your guidelines.
    I'd like to focus on Pacific lay-down, like the President
has been focusing on. I want to make sure our plans to harden
Army facilities in PACOM, I understand we have about $153
million in hardening plans coming up.
    Because of the potential of a Korean scenario, the B-2
deployment to Andersen in Guam concerns me, to make sure that
that asset is preserved, that we have that around.
    My only real question is that the hardening study be in
line with the PACOM, the combatant commander's wishes. I put in
a request to see him whenever he gets in, to make sure that's
also in line with PACAF and what they're looking at.
    Ms. Hammack. Sir, it's my understanding that that is
something that the Air Force is looking at, in conjunction with
the Navy on Guam. Currently, there are no Army equities there.
    Senator Kirk. Thank you.
    Senator Johnson. Senator Udall.
    Senator Udall. Thank you very much, Mr. Chairman.
    And thank you for being here and thank you for your
service.

                       WHITE SANDS MISSILE RANGE

    I asked this question last week and was not able to get a
clear answer on it, so I'm hoping you can clarify about the
status of appropriated funds for White Sands Missile Range.
    The Congress appropriated military construction funds for
barracks at White Sands Missile Range for fiscal year 2011, as
I mentioned last week. To date, we have only heard excuse after
excuse of why this project has not broken ground.
    Our soldiers at White Sands Missile Range deserve better,
and I believe it is about time that DOD and the Army carried
out this appropriation. What can you tell me about the status
of the barracks and when will we be able to see this project
get started at White Sands Missile Range?
    Ms. Hammack. Sir, the project you're talking about is a $29
million project for about 300 barracks spaces. My office put
that project on hold pending the stationing actions, which will
be announced next month.
    We do not want to build excess capacity should stationing
actions not require that facility.
    Also at White Sands Missile Range, my understanding is the
barracks occupancy currently is at 79 percent. That was as of
January 1 of this year. Because there is barracks capacity
currently at White Sands Missile Range with the stationing
actions, the project will continue to be on hold until
stationing actions indicate that there is a need for those
barracks.
    Senator Udall. When do you expect that to happen?
    Ms. Hammack. By the end of next month.
    Senator Udall. So at the end of next month, that's when
you'll have a clearer picture as to whether to move forward or
not?
    Ms. Hammack. Yes, sir.
    Senator Udall. Yes, okay. Thank you.
    White Sands Missile Range is home to one of the largest
solar photovoltaic systems in the country, and I want to thank
you for your leadership to make this a reality.
    The solar array will supply about 10 percent of the energy
for White Sands Missile Range and reduce carbon emissions by
7,400 tons per year. This is an important step toward making
our bases more energy independent, which I believe is a really
important national security issue.
    Could you talk about future plans for alternative energy
and the other programs that are in the works for White Sands,
Fort Bliss, and other military installations, and what type of
support you need from Congress to make these programs a
reality?

                            ENERGY SECURITY

    Ms. Hammack. One of the initiatives we have is to improve
energy security. We have seen between fiscal years 2011 and
2012 a fourfold increase in the number of power disruptions on
our bases. That means that we are required to provide more
generation on our bases so that we can continue our mission.
    Renewable energy like that at White Sands helps us continue
our mission with that energy security. What we are doing at
White Sands, we are looking at Fort Bliss and other bases, and
that is to leverage public-private partnerships, so that we do
not have to come to Congress to ask for the money to invest in
renewable energy, but we depend upon the private sector to
install it, to operate and maintain it. We buy energy from them
at a market or lower-than-market price.
    That helps give us stability in our energy budgets. That
also helps with the energy security and mission effectiveness.
    Senator Udall. Thank you.
    And we very much appreciate your efforts to move toward
these alternative forms of energy and put the military in a
position of energy independence, which you know has a big
impact on national security.
    I know I only have another minute. I wanted to raise the
issue of the F-16 beddown at Holloman Air Force Base, so let me
just cut quickly to that.
    I mean, how closely is the Army working with the Air Force
to help de-conflict scheduling issues and airspace coordination
to support the F-16 training mission at Holloman? And do you
believe White Sands has the facilities and personnel it needs
to manage this change in the mission in the range's airspace
and at Holloman Air Force Base?
    Ms. Hammack. Currently, sequestration is affecting all of
us. And the Secretary of Defense announced that there will be
11 furlough days for members of the Department of Defense. That
is affecting all of our testing missions at White Sands Missile
Range. It's also affecting the availability of de-conflicting
testing missions with airspace for Holloman.
    It is a challenge, and it will remain a challenge through
the summer as we have civilians on shortened work hours. We're
not allowed to work any overtime. We're not allowed to work any
weekends. And they're allowed to only work 32 hours a week. It
will impact Holloman, as it impacts the Army.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Udall. Thank you very much. We're trying to lift
that sequester and do everything we can to get you the
resources you need. Thank you.
    Senator Johnson. Thank you.
    This panel is excused.
    [The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
 Questions Submitted to Hon. Katherine G. Hammack, Lieutenant General
Michael Ferriter, Brigadier General Walter E. Fountain, and Addison D.
                               Davis, IV
               Questions Submitted by Senator Tim Johnson
                            european basing
    Question. The fiscal year 2014 budget request includes funding for
Army projects and DOD schools at Army bases in Germany. If everything
is on the table, why should Congress invest in MILCON in Europe until
the basing review is completed? If certain installations are not on the
table, can you identify those for us?
    Answer. Military construction (MILCON) in Europe is required for
Army communities where soldiers and families have been consolidated
over the last 10 years as part of DOD's Global Defense Posture plans,
EUCOM's Theater Posture Plan, and Army Transformation. In keeping with
these long-term plans, the Army in Europe has closed hundreds of
smaller, inefficient sites since 1989 and the end of the cold war.
Enduring communities like Wiesbaden, Grafenwoehr, and Kaiserslautern,
Germany, are mainstays of America's forward presence in Europe and
provide operational and quality of life support for the 30,000 soldiers
who will remain in theater.
    Construction in these locations is in line with our support efforts
and can be expected to be utilized for as long as U.S. forces remain in
the European theater. All MILCON in Europe is reviewed carefully to
ensure we do not waste taxpayer money on sites that may no longer be
needed.
    While all sites are included in the review, initial assessments
indicate that there are sites that are unlikely to be impacted by the
study. Unless all forces are withdrawn from Europe, and with that, the
United States opts to relinquish its strategic political and geographic
advantages of a forward presence, then remaining communities like
Wiesbaden, Grafenwoehr, and Kaiserslautern will require some support.
    The fiscal year 2014 submission includes DOD-level projects to
replace schools in Wiesbaden and Kaiserslautern, which have surpassed
their structural lifecycle, do not support current educational
standards, and are overcrowded. As a critical command and control main
operating base, Wiesbaden is now home to U.S. Army Europe headquarters
with its signal and military intelligence assets to be co-located
together on one site at Clay Kaserne. Kaiserslautern represents not
only a location for strategic airlift, but is also the community that
houses the Army's combat support and logistical units. Also in
Kaiserslautern is the United States' only regional medical center
between the United States and areas of persistent conflict in the
Middle East, Africa, and other trouble spots. Due to its geographic
position, this medical facility has increased Wounded Warrior treatment
and survival rates to historic highs over the past 10 years with its
combat-tested casualty evacuation system.
    Further, there are members of the DOD staffs involved in the basing
review to ensure that the Army program and DOD schools are
synchronized, as they move forward in the programming process.
    The fiscal year 2014 project for housing at South Camp Grafenwoehr
will help alleviate existing housing shortfalls in the community. With
its rural location, the Grafenwoehr community does not have sufficient
off-post housing capacity with an appropriate radius to accommodate the
numbers of soldiers stationed there. More on-post family housing is
needed to address this situation. With Grafenwoehr as our primary
training facility in Europe, the location of our largest concentration
of soldiers stationed in any European garrison, and the focal point of
the preparation for deployment of all U.S. soldiers in Europe, it
warrants our continued support.
               military construction total army analysis
    Question. Will the projects requested in fiscal year 2014 be
impacted by TAA? In other words, has Army requested projects this year
that might become unnecessary or redundant by the TAA findings and
Army's ensuing realignment plans?
    Answer. The projects submitted in the fiscal year 2014 MILCON
program are for valid and necessary requirements that will not be
affected by future decisions regarding end strength or brigade combat
team reductions. The projects support enduring requirements for combat
aviation brigade stationing, Gray Eagle stationing, initial entry
training barracks, and recapitalization of existing facility
requirements across the Army.
                       brigade movement strategy
    Question. Prior to the completion of the TAA review and OSD's
European basing review, how can the Army make the determination that
moving two of the 173rd brigade's battalions from Bamberg and
Schweinfurt to Granfenwoehr is the correct strategy to undertake?
    Answer. The DOD decision, which was announced on February 16, 2012,
to reduce the Army's European force by approximately 2,500 soldiers in
enabling units and two Brigade Combat Teams (BCT), allowed U.S. Army
Europe to adjust its stationing plans and maximize use of our
facilities in Italy and Germany.
    Placing the two battalions at Grafenwoehr eliminates additional
MILCON requirements that would otherwise be needed in Vicenza if the
units were relocated there as previously planned. Subsequent growth in
U.S. Army Africa, the 173rd IBCT (ABN), and other elements in the
community led to serious overcrowding in Vicenza. The original MILCON
request for Del Din was to accommodate some 1,830 soldiers of the 173rd
U.S. Army Europe will now use these facilities for some 2,000 173rd
soldiers, so the new facilities will be used at capacity. Relocating
the two battalions to Grafenwoehr reduces stress on community support
facilities at Ederle. Stationing the entire 173rd in Italy would
require new MILCON for barracks, schools, a CDC expansion, and more for
roughly $120 million. Alternatively, the Army will use existing modern
facilities available at Grafenwoehr.
    Locating the 1-91st Cavalry Regiment and the 4-319th Field
Artillery Battalion of the 173rd Infantry BCT (Airborne) to Grafenwoehr
places those units in a location where they can easily access our
training areas. Redirecting these two units continues the consolidation
of soldiers into remaining main operating bases. The Army was already
focusing on these main operating bases before the current basing
review. We determined it prudent to put units that can most benefit
from proximity to our training areas in Grafenwoehr.
    In Italy, soldiers will fully utilize the new facilities in Del Din
this summer, and the relocation of the 173rd BCT (Airborne) battalions
from Bamberg and Schweinfurt will enable the timely closure of those
garrisons. With 11 individual sites between the two communities,
Bamberg and Schweinfurt generated more than $160 million in base
operating costs and were identified some 10 years ago for closure.
Since Bamberg and Schweinfurt were not tagged as main operating bases
in the DOD Global Posture Plan, facilities there have been only
minimally maintained with no military construction. The two communities
have been funded only with year-of-execution dollars for the past few
years. Their closures were publicly announced as part of the DOD 2012
BCT announcement and garrison staffs, including hundreds of local
national employees, were notified, as well as German officials at the
Federal, State, and local level.
    The DOD 2012 announcement incorporated the major changes in the TAA
process, bringing the Army in Europe to some 30,000 soldiers. The TAA
process is not anticipated to generate any significant change that
could not be accommodated by this distribution of remaining forces.
                 173rd combat aviation brigade support
    Question. In the fiscal year 2014 budget, the Army has requested
$16.6 million to construct 29 family housing units in Vilseck, Germany,
to support military forces stationed at Grafenwoehr. At the same time,
the Army has decided to station two units of the 173rd Combat Aviation
Brigade at Grafenwoehr instead of moving to Italy as originally
planned.
    Is this housing required for the 173rd's move? What, if any, other
MILCON is required at Grafenwoehr to support the 173rd?
    Answer. The Army Family Housing-Construction funds are required to
meet all family housing requirements at U.S. Army Garrison Grafenwoehr,
which includes the restationing of the two battalions from the 173rd
Brigade Combat Team. The family housing requirements are based on the
total installation population found in the Army Stationing and
Installation Plan. The project will support the current and projected
Grafenwoehr military population, which includes personnel transferred
from closing garrisons throughout Germany. No additional MILCON is
needed for the 173rd battalions at Grafenwoehr.
   guard and reserve future years defense program (fydp) projections
    Question. With the understanding that the budget environment has
stressed fiscal year 2014 MILCON funding, will the Army Guard and Army
Reserve be able to meet their critical mission roles given revised out-
year FYDP projections?
    Answer. The Army remains committed to providing MILCON funding to
all components in support of their most urgent facility restoration and
modernization requirements. The Army National Guard and Army Reserve
will continue to fulfill their critical mission roles at the level of
MILCON funding in the fiscal year 2014 request. The projected out-years
in the fiscal years 2014-2018 Future Years Defense Program (FYDP)
contain some risk to meeting critical mission roles for all components.
The Army's components facilities require a sustained MILCON investment
in order to properly support unit readiness.
    The Army recognizes there are differences in the level of
investment over the past decade and has already identified National
Guard readiness centers and Army Reserve centers as a focus area in the
facility investment strategy, they are prioritized for MILCON
investment. Further, the Army is working with both components to
address their requirements by reviewing the percentage allocation of
the total obligation authority as well as continuing to support
sustainment, restoration and modernization requirements.
                    national guard readiness centers
    Question. An estimated 40 percent of National Guard readiness
centers are 50 years old or older. How is the reduction in Army Guard
funding affecting the Guard's ability to replace these aging and
inadequate buildings?
    Answer. The Army remains committed to providing Military
Construction (MILCON) funding to all components in support of our most
urgent facility restoration and modernization requirements. The Army
recognizes there are differences in the level of investment over the
past decade and has already identified National Guard readiness centers
that continue to have a critical need for MILCON investment as a focus
area in the Facility Investment Strategy. Further, the Army is working
with the Army National Guard (ARNG) to address its requirements by
reviewing the percentage allocation of the Total Obligation Authority
as well as continuing to support sustainment, restoration and
modernization requirements.
    The reduction in ARNG funding impacts the ability to replace aging
and inadequate buildings and properly support unit readiness in several
ways. First, it slows the rate at which the aging, inadequate readiness
centers can be replaced with functionally adequate facilities. Second,
inadequate facilities lead to a loss and inefficient use of training
time due to facility shortcomings. Third, many of these aging and
outdated facilities lack the space, design, information technology
requirements, and energy efficiency improvements needed to house ARNG
units.
               impact of downward trend of milcon funding
    Question. What is the impact of the downward trend of MILCON
funding on Army Reserve facilities and readiness?
    Answer. The downward trend of the MILCON funding presents no
immediate degradation of either Army Reserve facilities or the
readiness of the Army Reserve. However, the continuation of reduced
funding will have a negative impact on facility sustainment and mission
readiness. The Army Reserve will continue to prioritize its MILCON
program within available funding to resource its most critical facility
needs to fully support all known mission requirements and provide
appropriate facilities to its citizen-soldiers. However, maintaining a
reduced program over the long term will increase the average age of
Army Reserve facilities resulting in more units and soldiers training
in overcrowded and substandard facilities for an extended period of
time.
            future years defense program (fydp) projections
    Question. Is the steep drop in Army's MILCON FYDP over the past
couple of years a reflection of future needs and supported by solid
projections, or is it an indication of uncertainty regarding the
direction of the future MILCON program, particularly given that TAA
remains to be completed?
    Answer. The reduction in Army MILCON is a result of fiscal
constraints from the 2011 Budget Control Act. The uncertainty related
to pending force structure decisions did not impact the MILCON funding
levels. Furthermore, Army MILCON programs are developed to support Army
priorities that provide operational capability, prevent imminent
mission degradation or failure, and enhance soldier and family quality
of life, health, and safety. When the force structure decision is made,
the Army MILCON program will continue to support the Army's highest
priorities.
                  future years defense program (fydp)
    Question. Looking at out-year MILCON levels, will the Army's
current and future requirements be met under the program as currently
envisioned, or do you expect major revisions in the FYDP next year once
you have a better picture of the Army's future force structure and
laydown requirements?
    Answer. The Army does not anticipate major revisions in the FYDP
based on Total Army Analysis (TAA) decisions on the Army's future force
structure. The program will be re-evaluated for out-year minor
revisions and reprioritization once the Army's force structure and
stationing decisions are finalized. Army MILCON programs are developed
to support Army priorities that provide operational capability, prevent
imminent mission degradation or failure, and enhance soldier and family
quality of life, health, and safety. During the process of selecting
projects for inclusion in the fiscal years 2014-2018 FYDP, the Army
selected projects that replace existing facilities that are either
failing, inadequate for the mission requirements or neutral to pending
force structure decisions.
                              bid savings
    Question. While use of bid savings may be an effective backup plan
for funding projects in fiscal year 2013, if bid-savings diminish in
fiscal year 2014, does the Army have an alternative strategy for making
up funding shortfalls under the sequester?
    Answer. The projects presented in the fiscal year 2014 MILCON
program reflect sound cost estimates and favorable bid climates. If the
Army does not continue to garner bid savings as in the past and if
there are funding short falls under a future sequester, our only
options are to defer, reduce scope, or cancel projects prior to award.
All un-awarded projects would be subjected to a thorough revalidation
process and reprioritized based on requirements and operational risk.
                                 ______

                Questions Submitted by Senator Mark Kirk
                  base realignment and closure (brac)
    Question. Last week Undersecretary Hale made a plea before this
subcommittee for another round of continental United States (CONUS)
base closures. Yet, the Secretary of Defense does not need BRAC
authority to close overseas bases, but has rarely done so. DOD is doing
a European Consolidation Study which is due at the end of the year.
Given that the Army has modified its 10-year plan several times
(Heidelberg, Wiesbaden, and now Del Din, Italy).
    Ms. Hammack, a large number of members of the Senate are wondering
why we shouldn't just wait until the study is complete, see what
European bases need to be closed or realigned, decide where the troops
will move to, and then discuss the need for another round of CONUS base
closures. Would you please comment on this?
    Answer. An independent assessment of the Department's overseas
basing of military forces, as required by section 347 of the fiscal
year 2012 National Defense Authorization Act, was completed by the RAND
Corporation on December 31, 2012. The Department delivered the
assessment, and the Deputy Secretary's comments in response to the
assessment, to the congressional defense committees on April 18. It is
practical to undertake reviews of overseas and domestic infrastructure
in tandem, so each can inform the other.
    Since 2006, the Army has reduced its end strength and force
structure in Europe by over 45 percent. Correspondingly, the Army is on
a path by fiscal year 2017 to reduce its supporting infrastructure by
51 percent, civilian staffing by 58 percent, and base operations by 57
percent. The Army has already announced the elimination of two brigade
combat teams in Europe, the inactivation of V Corps, and the
inactivation of thousands of additional enabler forces.
    The story in Korea is similar. Significant declines in soldiers--
more than 10,000 removed from Korea since 2006--has supported a
consolidation of garrisons and sites.
    The consolidation of the Army's overseas footprint is a process
that is well underway and is properly sequenced before a future round
of BRAC would be executed here in the United States.
                          rock island arsenal
    Question. The Rock Island Arsenal depot expected more than $143
million in workload--much of which would be done by our public--private
ventures--yet to date they have only seen $45.6 million in workload.
    Ms. Hammack, can I have your assurances you are not trying to close
Rock Island Arsenal by the back door by making it less attractive to a
potential BRAC Commission?
    Answer. Yes, I can assure you that the Army is not trying to close
Rock Island Arsenal through any ``back door.''
    Question. Ms. Hammack, why is the work not flowing to Rock Island
Arsenal?
    Answer. Although the fiscal year 2014 budget estimate submission
for Rock Island Arsenal was $142.6 million, the revised new order
forecast is $76.8 million. While Rock Island Arsenal's Joint
Manufacturing Technology Center is the Army's Center for Industrial and
Technological Excellence for Mobile Maintenance Systems, Foundry
Operations, and Armor Development, the customer requirements and
correlating workload did not materialize as expected due to the effects
of sequestration and changes in customer requirements.
                                 ______

              Questions Submitted by Senator Thad Cochran
                       laboratory infrastructure
    Question. I am concerned that laboratories, especially in the Army
and Navy, had to take a back seat to other priorities in the MILCON
budget process over the past several years. What laboratory
infrastructure projects are currently budgeted, programmed, or are you
are considering programming in the FYDP that will help ensure our
scientists' research and development efforts have the facilities to
support the Nation's critical interests? What can we do to ensure that
scientists and engineers in the Defense laboratories will have the
facilities and equipment the Nation will need in the future?
    Answer. The Army does not have any laboratory infrastructure
projects programmed for fiscal years 2014-2018 in the Future Years
Defense Program (FYDP). In accordance with its Facility Investment
Strategy (FIS), which is designed to address facilities that are in the
highest state of disrepair first, the Army prioritized projects that
were provided by the Army commands or components as their highest
priority MILCON requirements. Few laboratory projects were submitted
for consideration during the fiscal years 2014-2018 FYDP build, and
none were selected.
    The fiscal years 2014-2018 MILCON program has been carefully
balanced and synchronized to meet FIS requirements, major Army
initiatives, statutory law, stationing decisions, and the Army Campaign
Plan. The Army will continue to encourage the commands and components
to submit their highest priority projects for consideration in future
MILCON programs. Laboratory infrastructure projects will continue to
compete for constrained MILCON funding in future years.
                      Department of the Air Force

STATEMENT OF HON. KATHLEEN I. FERGUSON, ACTING
            ASSISTANT SECRETARY OF THE AIR FORCE,
            INSTALLATIONS, ENVIRONMENT AND LOGISTICS
ACCOMPANIED BY:
        TIMOTHY BRIDGES, DEPUTY ASSISTANT SECRETARY, INSTALLATIONS
        MAJOR GENERAL TIMOTHY BYERS, AIR FORCE CIVIL ENGINEER, AIR
            FORCE
        MAJOR GENERAL RICHARD HADDAD, DEPUTY CHIEF, AIR FORCE RESERVE
        BRIGADIER GENERAL JAMES WITHAM, DEPUTY DIRECTOR, AIR NATIONAL
            GUARD
    Senator Johnson. I'm pleased to welcome our second panel of
witnesses. The panel includes Ms. Kathleen Ferguson, Acting
Assistant Secretary of the Air Force for Installations,
Environment, and Logistics; Mr. Timothy Bridges, Deputy
Assistant Secretary for Installations; Major General Timothy
Byers, Air Force Civil Engineer; Major General Richard Haddad,
Deputy Chief, Air Force Reserve; and Brigadier General James
Witham, Deputy Director, Air National Guard.
    We welcome you, and we look forward to your testimony. As I
mentioned earlier, we're limiting opening statements to spare
our witnesses the inconvenience of waiting until the Senate
completes the series of votes scheduled to begin shortly.
    I would just like to note that I'm relieved to see that the
fiscal year 2014 MILCON and family housing budget request for
the Air Force has rebounded after last year's deliberate pause
in funding. However, I'm concerned that the Air Force will have
to play catch-up ball on MILCON over the next few years to make
up for last year's pause. At a time of major reductions in the
overall defense budget, this will be a tall order for the Air
Force.
    Ms. Ferguson, we welcome you back to the subcommittee.
Before you proceed, I would like to thank General Byers for his
service to the Nation and his assistance to this subcommittee
in his role as the Air Force Civil Engineer.
    General Byers will be retiring next month, but I hope he
will continue to contribute his expertise to the many
challenges facing DOD and the Air Force today.
    Ms. Ferguson, please proceed.

             SUMMARY STATEMENT OF HON. KATHLEEN I. FERGUSON

    Ms. Ferguson. Good morning, Chairman Johnson, Ranking
Member Kirk, and distinguished members of the subcommittee.
Thank you for the opportunity to speak to you today about the
Total Force Air Force installation, military construction, and
environmental programs.
    Also, on behalf of the Secretary and the Chief of Staff,
I'd like to thank the subcommittee for your unwavering support
of our Air Force and our airmen.
    Our fiscal year 2014 budget request contains $1.3 billion
for Military Construction, $2.2 billion for Facilities
Sustainment, $813 million for Restoration and Modernization,
and $465 million for Military Family Housing. In fiscal year
2013, we took a deliberate pause in MILCON to ensure we were
making the right capital investment decisions as force
structure adjustments were being made in line with the emerging
defense strategy.
    Our fiscal year 2014 MILCON request is $900 million above
our fiscal year 2013 request and returns us to near-historic
funding levels, supports the Department's strategic priorities,
and supports our top weapons systems modernization programs.
    Ensuring component equity targets were met, approximately
$120 million and $46 million were distributed to the Guard and
Reserve components, respectively. This is an increase of $77
million for the Guard and $35 million for the Reserve between
fiscal years 2013 and 2014.
    This budget request reflects our ongoing modernization
effort. This includes critical infrastructure for the F-35 and
KC-46A, recapitalization of U.S. Strategic Command
headquarters, and construction of the new Cyber Command Joint
Operations Center.
    Included in this budget request is $265 million in
unspecified locations to support the KC-46A beddown. We will
submit site-specific military construction data request forms
in late May after preferred and reasonable alternative bases
are announced. And we respectfully request the subcommittee's
support of the substitution.
    The Air Force strongly supports the Department's request
for another round of BRAC in 2015. While we have no current
capacity analysis from which to draw, our capacity analysis
from 2004 suggested that 24 percent of basing infrastructure
was excess to needs.
    BRAC 2005 did not result in major reductions to the Air
Force. And since that time, our force structure has been cut by
more than 500 aircraft, and our Active Duty military end
strength has been reduced by nearly 8 percent.
    We continue to spend money maintaining excess
infrastructure that would be better spent on recapitalization
and sustainment. Divestiture of excess property on a grander
scale is a must.
    During this period of fiscal uncertainty, Guard, Reserve,
and Active components are ready to make the tough decisions
required to avoid mission-impacting reductions in installation
support that contribute to a hollow force.

                          PREPARED STATEMENTS

    Our fiscal year 2014 budget request addresses our most
pressing needs, seeks authorization to eliminate unnecessary
infrastructure, and it stays true to the fundamental priorities
of our Air Force.
    Thank you, and we look forward to your questions.
    [The statements follow:]
            Prepared Statement of Hon. Kathleen I. Ferguson
                              introduction
    As you are aware, the United States Air Force takes great care to
project the distinctive capabilities of airpower. From air and space
superiority--enabling joint and coalition forces to operate unhindered
in the air domain while denying our adversaries the same--to global
strike--holding any target on the planet at risk with either
conventional or nuclear forces--to rapid global mobility, global
intelligence, surveillance, and reconnaissance, and the command and
control architecture to integrate full-spectrum joint military
operations, the Nation expects our Air Force to provide and employ
these enduring contributions from a position of continuing advantage
over potential adversaries.
    Those contributions are enabled and reinforced by our global
network of Air Force installations, and managing those installations
involves understanding and balancing mission requirements, risk, market
dynamics, budgets, and the condition of our assets. Within the
portfolio of installations, environment, and energy, we continually
evaluate how to reduce costs while improving the way we manage our real
estate, housing and energy demand. We focus our investments on critical
facilities; reduce our footprint by demolishing old, energy-inefficient
buildings; upgrade heating and cooling systems and other energy-intense
building systems; leverage third-party financing through public-public
and public-private partnerships and the lease of under-utilized
portions of the portfolio, where those opportunities exist; and
continue to build on our excellence in environment, safety, and
occupational health programs.
    However, today's fiscal climate challenges our ability to maintain
our current suite of capabilities and jeopardizes our ability to
fulfill our role in executing the Nation's Defense Strategic Guidance.
With this fiscal year 2014 budget request, we took great care to align
our limited resources with our overall objectives to maintain a high
quality and ready force by investing in readiness, modernization, and
airmen and their families. Proud of our success but realizing the
fiscal challenges that lie ahead, we will continue to work hard to
identify opportunities and initiatives with high rates of return that
will maximize the impact of every dollar. We are committed to charting
a path through these challenging times that fulfills the promises made
to the American people, our Nation's leaders, and our innovative airmen
and their families. I appreciate the opportunity to provide additional
details in this testimony.
                             installations
    Ready installations are an integral part of ensuring a ready Air
Force. We consider our installations ``power projection platforms''
from which we employ our enduring airpower contributions, increase
responsiveness, and ensure global access across the full spectrum of
military operations. As such, the health of our installations directly
contributes to overall Air Force readiness. Our Air Force installation
investment strategy for fiscal year 2014 focuses on the Air Force's
enduring contributions and on building sustainable installations to
enable the Defense Strategy. We will employ a Centralized Asset
Management approach to apply our limited installation dollars to our
most critical needs. Using a ``mission-critical, worst-first''
methodology, we will minimize risk-to-mission and risk-to-airmen, and
continue to optimize our processes to increase efficiency.
Additionally, we must address the excess capacity we have identified
previously to ``right-size'' our installations footprint to a smaller,
but more flexible and agile, Air Force of the future. Continuing to
live with more capacity than we need and have resources to sustain is
akin to a ``hollow force,'' or in this case, ``hollow installations.''
    Given our strategic intent to build sustainable installations, we
established a coherent link between our major installation programs
during this year's budget formulation. After researching existing
academic studies and analyzing private sector data, we determined we
should resource maintenance and repair of our infrastructure programs
at 2 percent of our plant replacement value. As a result, we are
funding facilities sustainment to 80 percent of the Department of
Defense's facilities sustainment model, increasing restoration and
modernization investments, and increasing Military Construction
(MILCON) funding to near historic levels after our fiscal year 2013
deliberate pause. In addition, we adjusted the utilities portion of our
facilities operations account to meet 3-year historical obligation
levels and fully resourced fire and emergency services to meet
Department of Defense standards. Taken together, these investments
avoid hollowing out our installations--our power projection platforms--
in the near term.
    In total, our fiscal year 2014 President's budget request contains
$4.31 billion for Military Construction, Facility Sustainment,
Restoration and Modernization, as well as another $465 million for
Military Family Housing. For Sustainment, we request $2.2 billion; for
Restoration and Modernization, $813 million; and for Military
Construction, we request $1.3 \1\ billion, which is approximately $900
million more than our fiscal year 2013 President's budget request. As
previously stated, this MILCON increase comes just 1 year after our
deliberate pause. This is intended to bring our MILCON funding closer
to historical levels, supporting the Department's strategic priorities,
as well as the service's top weapons system modernization programs, and
distributes MILCON funding equitably between Active, Guard, and Reserve
components.
---------------------------------------------------------------------------
    \1\ $1.3 billion is total force funding request including Active,
Guard and Reserve.
---------------------------------------------------------------------------
                               readiness
    Our fiscal year 2014 President's budget request includes vital
facility and infrastructure requirements in support of Air Force
readiness and mission preparedness. Examples of this include
investments in projects which strengthen our nuclear deterrence posture
at Minot Air Force Base, North Dakota, and Kirtland Air Force Base, New
Mexico. Our budget request also supports Total Force cyberspace and
intelligence, surveillance, and reconnaissance projects at a host of
locations, including Martin State and Fort Meade, Maryland; Terre
Haute, Indiana; Birmingham, Alabama, and the Air Force Weapons School
at Nellis Air Force Base, Nevada.
    Consistent with National Military Strategy, another key focus area
for the Air Force is the Asia-Pacific theater, where we will make key
investments to ensure our ability to project power in areas in which
our access and freedom to operate are challenged, and continue efforts
to enhance resiliency. Guam remains our most vital and diplomatically
accessible location in the western Pacific. For the past 8 years, Joint
Region Marianas-Andersen Air Force Base has accommodated a continual
presence of our Nation's premier air assets, and will continue to serve
as the strategic and operational nucleus for military operations,
originating from, or transiting through, in support of a potential
spectrum of crises.
    To fully support Pacific Command's strategy, the Air Force is
committed to hardening critical infrastructure, including select
hangars, as part of Pacific Airpower Resiliency, a comprehensive
initiative that also includes dispersal and rapid recovery capabilities
after attack. Guam's location also provides ideal environments for
training and exercises. In 2014, we plan to continue the development of
the Pacific Regional Training Center (PRTC) by constructing a Silver
Flag Fire Rescue and Emergency Management training facility and a Rapid
Engineer Deployable Heavy Operational Repair Squadron Engineers (RED
HORSE) Airfield Operations facility. These facilities will enable
mandatory contingency training and enhance the operational capability
to build, maintain, operate and recover a ``bare base'' at forward-
deployed locations, and foster opportunities for partnership building
in this vitally important area of the world.
                             modernization
    The fiscal year 2014 budget request includes key infrastructure
investments to support beddown of the F-35A and KC-46. Our ability to
remain on schedule with modernizing our aging fighter and tanker
aircraft depend on meeting construction timelines for critical enabling
infrastructure--facilities such as aircraft maintenance hangars,
training and operations facilities, and apron and fuels infrastructure.
This year's President's budget request includes a $265 million at three
locations to support the KC-46A bed down. This consists of $193 million
at an unspecified location for Main Operating Base (MOB) No. 1, $63
million at an unspecified location for the Flight Training Unit (FTU),
and $9 million for land acquisition at Tinker Air Force Base, Oklahoma
for the KC-46A depot. Potential facility types at MOB No. 1 and FTU
include a flight simulator facility, 2-bay maintenance hangar, fuel
cell and corrosion control hangar, parking apron and hydrant fuel
system, flight training center, fuselage trainer, squadron operations
and aircraft maintenance unit facilities. Specific site fiscal year
2014 military construction project data forms (DD forms 1391) will be
submitted to replace the unspecified MOB No. 1 and FTU projects in May
2013 after preferred and reasonable alternative bases are announced.
Our fiscal year 2014 program also supports vital combatant commander
priorities, such as continuation of the multi-year effort to
recapitalize the U.S. Strategic Command headquarters facility at Offutt
Air Force Base, Nebraska, and construction of the new Cyber Command
Joint Operations Center at Fort Meade, Maryland.
                                 people
    Airmen are the Air Force's greatest asset. Recruitment, quality of
life, and retention rank among our highest priorities. Our devotion to
taking care of our people continues with future plans to provide
adequate housing for our airmen, and their families by budgeting to
sustain and modernize overseas housing, privatize all housing in the
United States by the end of 2013, and continue investments and
improvements in our dormitories. We are proud to say that our
persistent focus and investments in our dormitories has allowed the Air
Force to surpass the DOD goal that 90 percent of permanent party dorm
rooms for unaccompanied airmen are adequate by 2017. We request
continued support from Congress to ensure we can continue to invest in
these areas in order to provide thriving housing and dormitory
communities, and more importantly, take care of our valued people.
                       closures and realignments
    We do all of this while recognizing that we are carrying
infrastructure that is excess to our needs. While we have no recent
excess infrastructure capacity analysis from which to draw, our
capacity analysis from 2004 suggested that 24 percent of Air Force
basing infrastructure capacity was excess to our mission needs. While
Base Realignment and Closure (BRAC) 2005 did not make major reductions
to the Air Force, since that time we have reduced our force structure
by more than 500 aircraft and reduced our Active Duty military end
strength by nearly 8 percent. So, intuitively we know that we still
have excess infrastructure, while we spend considerable time optimizing
the use of our facilities and carefully and frugally managing those
facilities we know to be excess.
    Physical infrastructure is expensive. As discussed, the Air Force
spends billions of dollars each year operating, sustaining,
recapitalizing, and modernizing our physical plant. When we account for
the additional costs of running our installations, that number nearly
doubles. Since the last BRAC round, we have strived to identify new
opportunities and initiatives that enable us to maximize the impact of
every dollar we spend. Our efforts to demolish excess infrastructure,
recapitalize our family housing through privatization, unlock the
fiscal potential value of under-utilized resources through leasing, and
reduce our energy costs have paid considerable dividends.
    Since 2006, we have demolished 38.5 million square feet of aging
building space that was excess to our needs. We estimate the resultant
savings to be more than $300 million. To be more specific, we have
demolished antiquated administrative facilities, ill-suited for today's
technological age and excess to our needs. We have eliminated aircraft
operational and maintenance facilities that we no longer need based on
reductions to the size of our aircraft fleet. We have demolished old
and energy-inefficient warehouse facilities no longer needed due to
rapidly evolving supply chains that reduce the need for localized
storage.
    Like our sister services, the Air Force is committed to providing
quality housing for airmen and their families. Through housing
privatization, the Air Force has invested $500 million and, in turn,
leveraged $7.5 billion in private-sector funding to provide quality
homes for airmen much more quickly than we could have done with
traditional military construction processes. In a similar vein, we have
continually sought to improve the stewardship of our real property by
leveraging appropriated dollars for private-sector investment. With the
authorities provided to execute enhanced-use leases, we are pursuing
innovative ways to leverage our underutilized real estate to return
value to our installations. As a result of our energy conservation
efforts, we have cumulatively avoided more than $1 billion in facility
energy costs since 2003, the funds for which have been redirected to
better enable warfighters to complete their missions. We will continue
to invest in all of these strategies.
    Despite our best efforts and the innovative programs we've just
mentioned, we continue to spend money maintaining excess infrastructure
that would be better spent recapitalizing and sustaining our weapons
systems, training for readiness, and investing in the quality of life
needs of airmen. Divestiture of excess property on a grander scale is a
must.
                 european infrastructure consolidation
    Since 1990, the Air Force has reduced both aircraft and forces
stationed in Europe by 75 percent. We operate from six main operating
bases that remain critical to our NATO commitments and provide
throughput and global access for three unified combatant commands. We
recognize that in light of recent evolutions in the national security
strategy, there may be further opportunities for consolidation. The
Secretary of Defense has directed a capacity analysis to explore
additional opportunities for reducing long-term expenses through
footprint consolidation in Europe, and the Air Force fully supports
this effort. We already plan to draw down 18 Primary Aerospace Vehicle
Authorized (PAA) A-10s in Europe in fiscal year 2013 and to reduce
operations at Lajes Field, Azores, to better match infrastructure
requirements to mission demand. Through the Office of Secretary of
Defense-led study, we will look for additional opportunities for
operations and support cost savings through consolidation and closure.
               air force encroachment management program
    The Air Force needs access to airspace and ranges from its air
bases to ensure its ability to conduct test and evaluation and
operational and training missions. In some cases communities are
unaware that economic or land-use initiatives they are pursuing--such
as development right up to the base boundary or under airspace safety
zones--have the potential to limit our options for current and future
mission needs.
    As a result, we have instituted an Air Force Encroachment
Management framework to identify and address potential encroachment
issues early on. We attempt to identify, address and actively work with
community planners and conservation groups to develop compatible uses
through joint land use and airspace studies that preserve Air Force
options and those of the surrounding communities.
    To date the Air Force has worked with 32 community stakeholders in
creating Installation Complex Encroachment Management Action Plans
(ICEMAPs) as a means to identify current or potential encroachment
issues and the actions necessary to resolve these issues to our mutual
benefit. These action plans have proved so successful that the Office
of Economic Adjustment has indicated they would prefer to accomplish a
joint land use study after an ICEMAP has been completed because it
identifies stakeholders and an installation's mission footprint (land
area beyond the base boundary like military training routes, special
use airspace or drop zones) that has proven key to identifying
compatible development strategies. This may include adoption of land
use controls in accident potential zones or clear zones, acquisition of
easements or key parcels of land affecting access to our airspace and
ranges--this includes leveraging the DOD-directed Readiness
Environmental Protection Initiative (REPI); addressing line of sight
obstructions to critical microwave wireless communication and potential
mitigations; working comprehensive solutions with community
stakeholders like the Gulf Regional Airspace Strategic Initiative
(GRASI) with communities around Eglin Air Force Base or addressing
better use of water resources in areas facing shortages now or in the
future.
    We are also working with DOD on analyzing the effects of siting the
varying types of renewable energy projects and how best to work with
developers and communities to minimize or mitigate potential impacts to
our Air Force training, test and evaluation missions. Together, with
the DOD Siting Clearinghouse and other services and agencies, we have
cleared more than 1,500 projects for further development. We now have
several initiatives underway that should help developers and local
communities understand those areas near DOD installations with a high
risk of adverse impact and those more suitable for the development of
renewable energy or other economic initiatives.
               air force community partnership initiative
    The Air Force is enthusiastically exploring the potential of
installation-community partnerships as a means to reduce operating and
service costs in support of the Air Force mission while retaining or
enhancing quality. This concept is embodied in the fiscal year 2013
National Defense Authorization Act language 10 U.S.C. section 2336, and
this legislation has the potential to increase DOD and the service
departments' latitude in pursuing creative public-public and public-
private, or ``P4'', partnership initiatives.
    Currently, the Air Force is testing a prototype process through
which installation and community leaders are motivated to develop
creative ways to leverage their capabilities and resources and in the
process, reduce mutual operating costs. Through this innovative start-
up program, we have agreed to provide support to 13 locations where
installation and community leaders have fully embraced the Air Force
Community Partnership concept. We are using these prototype initiatives
to drive the development of policy, identification of an oversight
framework/governance structure and training requirements, types of
potential opportunities and requisite resource requirements and
priorities.
                               conclusion
    During this period of fiscal uncertainty, the Air Force is ready to
make the tough decisions required to avoid mission-impacting reductions
in installation support that contribute to a hollow force. We recognize
it will take strong leadership to ensure a fully trained and ready
force, along with the facilities and support to maintain the range of
capabilities required to engage a full range of contingencies and
threats, at home and abroad.
    Our fiscal year 2014 budget request addresses our most pressing
needs, and it stays true to the five fundamental priorities of our Air
Force. We continue to mature our use of centralized asset management
principles to mitigate the risk that we accept by deferring
recapitalization of current mission facilities. And, we remain
committed to caring for our airmen and their families as we strive to
eliminate inadequate housing by 2018, and to complete our privatized
housing initiative in the United States by 2013.
    While we strive toward remaining ready, capable and viable for the
numerous security challenges ahead, we must be clear--the Air Force's
fiscal year 2014 budget request represents continued risk in our
installations programs. We have made hard strategic choices during
formulation of this budget request. We needed to slow the erosion in
full-spectrum readiness as a result of over 20 years of combat in the
Middle East. We needed to sustain our legacy fleet to remain capable of
delivering the combat effects our combatant commanders require in the
near term fight. And we needed to continue modernizing our aging fleet
of fighters, bombers and refuelers that allow us to remain viable over
the long term, particularly in the high-end anti-access/area denial
environment we expect to fight in the far term. That required us to
take continued risk in areas we would choose not to take risk in, such
as our installations. We believe this risk is prudent and manageable in
the short-term, but we must continue the dialogue on right-sizing our
installations footprint for a smaller, but more capable force that sets
the proper course for enabling the Defense Strategy while addressing
our most pressing national security issue--our fiscal environment.
    Finally, we continue to carefully scrutinize every dollar that we
spend. Our commitment to continued efficiencies, a properly sized force
structure, and right-sized installations will enable us to ensure
maximum returns on the Nation's investment in her airmen, who provide
our trademark, highly valued airpower capabilities for the joint team.
                                 ______

           Prepared Statement of Major General Richard Haddad
    Chairman Johnson, Ranking Member Kirk, and distinguished members of
the subcommittee, thank you for the opportunity to appear before you
today. I'm honored to represent America's citizen airmen and discuss
the Air Force Reserve's military construction program.
    First, I wish to highlight the over 70,000 Air Force reservists who
provide our Nation's defense with operational capability, strategic
depth and surge capacity. Approximately 2,000 citizen airmen are
currently deployed and 3,000 are on Active Duty status in support of
combatant commander requirements. We are still in high demand and we
deliver a diverse portfolio of capability in title 10 status as your
Federal Reserve.
    Air Force Reserve capabilities traverse air space and cyber space.
Our ability to fly, fight, and win in these domains is dependent, in
part, upon the quality of the installations in which we reside and
operate. We are a tenant at over 50 installations, where we maximize
taxpayer dollars by sharing facilities when possible. By minimizing our
facility footprint, we further increase the cost-effectiveness of our
Reserve force.
    For fiscal year 2014, the Air Force Reserve MILCON budget request
is $45.6 million. This request funds our highest priority project, a
joint regional deployment processing center at March Air Reserve Base,
California. This facility will support the deployment needs for the Air
Force Reserve and other Government agencies, such as the First Marine
Expeditionary Force.
    This request also provides for construction of a squadron
operations facility for the 513th Air Control Group at Tinker Air Force
Base in Oklahoma and an Entry Control Complex at Homestead Air Reserve
Base in Florida. The Planning and Design funds request is $2.2 million
and $1.5 million is for Minor Construction funds used for urgent and
compelling projects of less than $2 million.
    As you consider our proposed budget, I wish to highlight that the
Air Force Reserve appreciates the return to historical MILCON funding
levels, however, the uncertainty of sequestration could negatively
impact our fiscal year 2014 program. I thank the subcommittee for your
continued support of America's citizen airmen. I stand ready to answer
any of your questions.

    Senator Johnson. Ms. Ferguson, the Office of Management and
Budget (OMB) scoring issues have delayed the award of the
Northern Group Housing Privatization project, which is very
important to Ellsworth Air Force Base. I understand that on May
3, OSD sent OMB the revised Air Force scoring report.
    What is the status of this project? And when does the Air
Force need to get the green light from OMB to keep the project
on schedule?
    Ms. Ferguson. Senator, you're correct. The revised scoring
report went back to OMB in early May. We need to get that
scoring report approved and back from OMB by the first of July
in order to close the project this fiscal year. And we're
working with OSD and OMB to try to make that happen in order to
close the project. And as you know, it has been in the works
for many, many years now.
    Senator Johnson. Do you foresee any further scoring issues
or other problems that could further delay the award of this
project?
    Ms. Ferguson. No, I do not, once we clear this. We are in
final negotiations with the developer now. We are ready to
close as soon as we get the scoring report back and make the
transfer of the dollars into the family housing improvement
fund.
    Senator Johnson. Will you please keep me informed on the
progress of this project?
    Ms. Ferguson. Will do.
    Senator Johnson. General Haddad and General Witham, the Air
National Guard and the Air Force Reserve offer this country
tremendous value for a relatively moderate investment. After a
decade of admirable wartime service, we need to continue to
make MILCON investments in the Air Guard and Reserve to
preserve their mission capability and operational readiness.
    The Air Force prides itself on operating as a total force
with the Active, Guard, and Reserve components all part of the
same team. However, when it comes to MILCON funding, the
playing field is not very level. The Air Guard share of the
fiscal year 2014 MILCON request is just over 9 percent while
the Reserve share is just 3.5 percent.
    Do you think the Air Guard and Reserve are sufficiently
funded to meet both current and emerging MILCON needs?
    General Haddad. Senator Johnson, thanks for that
categorization of the situation.
    I would submit to you that the Air Force has done a great
job in fiscal year 2014 of ensuring equity across the board.
For this particular year, the Air Force Reserve should have
about 3.4 percent, and we were given 3.5 percent of the
allotment. So we are very content with the equity that we've
received by the Air Force.
    And my hat's off to Ms. Ferguson and her staff for ensuring
that our folks are playing an equitable role within that
distribution.
    However, I would submit that sequestration, the impacts of
sequestration, they are unknown at the moment, and as a result,
we are not sure how that would impact 2014. We know in 2013, it
would be about a 10-percent cut, which we would be able to
utilize some of our bid savings to accommodate that. But in
2014, that's still unknown.
    And I would ask the subcommittee to ensure that
sequestration does not affect the MILCON budget. Thank you.
    General Witham. Chairman Johnson, thank you for the
question.
    Based on the Air National Guard's fiscal plan size, the
target percentage should have been about 8.4 percent. The
National Guard was actually provided 8.9 percent in the fiscal
year 2014 budget request. We think the Air National Guard is
being treated fairly.
    We will remain challenged in terms of bedding down new
missions, specifically the KC-46, some of the NDAA 2013 new
mission sets. These will remain challenging in terms of bedding
those down, but we have been treated fairly in this budget
request.
    Senator Johnson. Senator Kirk.
    Senator Kirk. When you mentioned the KC-46, I instantly
focus on Scott Air Force Base in Illinois. Very aware of the
global strike mission and how important it was, the B-2
deployment was, to our diplomacy in North Korea, and how
critical that system is to the United States in our ability to
reach out and touch someone.
    I would just say, I hope, since we have very high level
people here, to say to my colleague from Colorado that I was a
very minor part of the U.S. delegation to the Kyoto climate
change negotiations, where I worked with the OSD representative
at that negotiation to make sure DOD emissions were not counted
under the climate change treaty.
    So remember you guys are completely off the hook with
regard to Kyoto. In the actual treaty text, we put that in. I'm
just worried we'll return to the old Carter days of the entire
Army squinting and shivering in buildings that are dim and are
hot in the summer. And the old Carter days, I remember that
kind of being way too uncomfortable, because it was probably
affecting productivity of the office staff, since the
temperatures were not correct. And we were on a misguided
effort to actually save energy that probably hurt mission
accomplishment.
    Mr. Chairman.
    Senator Johnson. Senator Udall.
    Senator Udall. Thank you, Chairman Johnson.
    And thank you, Senator Kirk, for your comments.
    And thank you for your service, and thank you for being
here today.
    I wanted to just make an initial comment. I agree with
Chairman Johnson about the Northern Group Housing
Privatization. I'm concerned for Cannon Air Force Base. And so
I hope that we can move that along, and I hope you'll keep us
informed also, because that's very important to Cannon.
    I want to start by asking about the nuclear weapons work
entrusted to the Air Force. This is one of the most serious and
important jobs in the Air Force. As long as our Nation has
nuclear weapons, we need to do everything we can to carry out
this mission safely.
    There's no room for error with nuclear weapons. I'm
concerned about the safety of our nuclear stockpile, especially
after the recent issues at Minot Air Force Base.
    At Kirtland Air Force Base, the Air Force and DOD have
invested significant resources to strengthen the Nuclear
Weapons Center (NWC), which is tasked with ensuring safe,
secure, and reliable nuclear weapons to support the national
command structure and the Air Force warfighter.
    In addition, I would note that I'm supportive of the
President's MILCON request for NWC.
    In light of the complex issues surrounding the handling of
these weapons, does the Air Force intend to continue its
support for the mission at Kirtland Air Force Base into the
future? And how does the latest MILCON request for the Air
Force Nuclear Weapons Center sustainment center support this
goal?
    General Byers. Senator Udall, thanks so much for your great
support of your bases in New Mexico.
    And just real quick, I just returned from New Mexico.
    Senator Udall. Great.
    General Byers. And your CE squadrons at Cannon and at
Holloman Air Force Base were the Air Force's best for small and
large units. So congratulations, you have the two top CE
squadrons in the country.
    Senator Udall. Thank you for that.
    General Byers. We continue to support the nuclear war
systems. You know of phase 1 that started in fiscal year 2012.
The phase 2 is now in the fiscal year 2014 program and is fully
supported to support that second phase, an important mission
there, with also the nuclear systems wing integration. And so
those are all on target.
    That will support the consolidation of the people. It will
support the important work that they do there to the oversight
of the nuclear weapons programs.
    Senator Udall. Thank you.
    I want to thank you for your efforts regarding the F-16
transition at Holloman Air Force Base. This is an issue that's
not only important to the Alamogordo community but also for our
national security.
    The access to unencumbered airspace is second to none in
New Mexico, and I believe that airmen and airwomen training to
fly F-16s in New Mexico will benefit greatly from the move to
Holloman.
    My understanding is that the Air Force is committed to
making this happen. I have no reason to think otherwise. But is
the Air Force still committed to this transition?
    Ms. Ferguson. The Air Force is still committed to the
transition to relocate two F-16 squadrons from Luke Air Force
Base to Holloman Air Force Base. Those bed downs are on track
right now still. The first squadron of 28 aircraft is
anticipated to move in the second quarter of 2014, and the
second squadron is anticipated to move in the second quarter of
fiscal year 2015. The first one will arrive shortly after the
F-22s depart.
    General Byers. And if I may add, there are two MILCON
projects in the fiscal year 2014 program that support those
moves, and those are on target. That's the aircraft covered
wash rack and pad, and also a BAK aircraft arresting system
that will be at Fort Bliss to support the emergency airfields.
    Senator Udall. Okay, one final, quick question here. It has
to do with, as you know, we have two very capable Air Force
special operations, both the 58th Special Operations Wing and
the 27th Wing at Cannon in New Mexico. And I'm concerned about
the force protection at the Cannon base.
    The Air Force has invested a tremendous amount of MILCON to
expand the capabilities and the infrastructure at the base, but
there are still some issues regarding the safety of the
perimeter, specifically near County Road R, which runs on the
western boundary of the base.
    What are the Air Force's plans to address the force
protection issues, to protect runways and ongoing military
construction at the base? And what more can be done to work
with Curry County and the State of New Mexico to find a
workable solution?
    General Byers. Senator Udall, we take force protection very
seriously, as you know. And we've worked real close with AFSOC
on the requirements to protect that installation, that special
mission that they have. And using the concept of an outside-in,
the perimeter is very important.
    Currently, in the fiscal year 2014 Future Years Defense
Plan slated for fiscal year 2016 is a major gate project to
take care of the most serious concern. All the other
vulnerabilities have been addressed.
    In a small way, this would be one that would have to be a
MILCON correction. And we have that planned for fiscal year
2016.
    Senator Udall. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Johnson. Senator Collins. And please make it----
    Senator Collins. Very brief.
    Senator Johnson. We have a series of votes beginning at
10:30.
    Senator Collins. Thank you very much, Mr. Chairman.
    I am going to submit my questions for the record on the KC-
46A issue, which has been of great concern to me. I've raised
it at the previous hearing.
    I will just make the comment that, last month, finally the
Air Force delivered its report regarding the air-refueling
receiver demand model to the Senate Armed Services Committee.
And that report confirmed to me that the Air Force had not
adequately captured the full range of missions that will be
accomplished by the KC-46A.
    Just one very brief question, Secretary Ferguson. I was
also surprised that the National Guard is planning to request
$94 million in next year's budget, fiscal year 2015, for KC-
46A-related construction. The existence of two fully enclosed
hangars of sufficient size and dimensions accounted for 12
percent of the scoring criteria in the KC-46A basing process
for the National Guard-led main operating phase, and the hangar
requirement is for two hangars.
    My question is, is any of the $94 million planned for
fiscal year 2015 for new hangar construction?
    Ms. Ferguson. At this point in time, we have not developed
our fiscal year 2015 budget request yet. In fact, the process
for selecting the first Air National Guard location, MOB-2, for
the KC-46 is underway right now. And once that is selected,
we'll have a better idea of what would be inserted into the
fiscal year 2015 budget. And we could come back to you with
that.
    Senator Collins. So is that just a tentative figure?
    Ms. Ferguson. That would just be a tentative figure. I have
not heard that. We're still working through that process right
now.
    Senator Collins. It seems inconsistent with the criteria
that was used, but I will submit the rest of my questions for
the record in light of the votes. Thank you.
    Senator Johnson. I would like to thank all of our witnesses
for appearing before the subcommittee today. We look forward to
working with you later this year.

                     ADDITIONAL COMMITTEE QUESTIONS

    I apologize for the short work we've made of this hearing,
but I assume that numerous questions will be submitted.
    For the information of the members, questions for the
record should be submitted by the close of business on May 22.
    [The following questions were at asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
            Questions Submitted to Hon. Kathleen I. Ferguson
               Questions Submitted by Senator Tim Johnson
                         current mission needs
    Question. Nearly 80 percent of the fiscal year 2014 military
construction request is for new mission requirements or combatant
command initiatives. How does the Air Force plan to address current
mission military construction needs if it only spends a fraction of its
military construction dollars on them?
    Answer. With limited funding available and recognizing the need to
modernize our inventory of aircraft, the Air Force is continuing to
take risk in infrastructure. A significant portion of the Air Force
construction account is also being used to support several large
combatant command projects. This risk to infrastructure could be
partially mitigated with restoration and modernization funding but that
funding account is also being stressed. We will closely manage
available funding to minimize mission degradation of our most critical
facilities.
    Question. What is the current recap plan for current mission
military construction? Is 15 to 20 percent of the military construction
budget the normal ratio of current to new mission funding? Do you
foresee that ratio remaining about the same over the course of the
Future Years Defense Plan?
    Answer. The Air Force's fiscal year 2014 budget request is 24-
percent current mission, 76-percent new mission. With limited funding
available and recognizing the need to modernize our inventory of
aircraft, the Air Force is continuing to take risk in infrastructure.
During the decade 2003-2012 Air Force budget requests averaged 57-
percent current mission. We will continue to advocate for current
mission construction funding and closely manage available funding to
minimize mission degradation of our most critical facilities.
    Question. The Air Force military construction request includes
funding for several projects in Europe. Why should Congress invest in
military construction projects in Europe before seeing the results of
the European basing study?
    Answer. The MILCON projects requested in fiscal year 2014 are in
the United Kingdom and include a $22 million Guardian Angel Operations
Facility at RAF Lakenheath and a $12 million Main Gate Complex at RAF
Croughton. EUCOM/AFRICOM require an increase of USAFE Guardian Angel
personnel recovery assets to fully respond to and support simultaneous
contingency plans and operational requirements. The Main Gate Complex
project requirement is driven by Joint Staff Integrated Vulnerability
Assessment write-up, DOD2000.16, UFC 4-022-01, and Operations Order 08-
01. There are no acceptable workarounds.
    The fiscal year 2014 MILCON program was developed recognizing we
would have a European Infrastructure Consolidation. The Air Force
determined the nee ed for these projects outweighed the risk of closure
of either RAF Lakenheath or RAF Croughton. If either of these bases is
suggested for closure under the European Infrastructure Consolidation
initiative we would not execute the projects.
                  base realignment and closure (brac)
    Question. Currently, Air Force is embarked on a Total Force
initiative, while DOD is conducting a European Basing Study.
Furthermore, DOD is requesting a new BRAC round in 2015. How are all of
these efforts being coordinated to ensure that they do not conflict
with each other? For example, what assurance does the Air Force have
that its total force realignment decisions will mesh with BRAC
recommendations if another BRAC round is approved?
    Answer. The Air Force strategic basing process provides an
enterprise-wide repeatable process for decisionmaking to ensure all
basing actions involving Air Force units and missions support Air Force
mission requirements and comply with all applicable environmental
guidance.
    The strategic basing process works in concert with Total Force
Integration to ensure all levels of decisionmaking are coordinated.
    The Air Force believes the Total Force Integration and on-going
European Infrastructure Consolidation analysis are complimentary to
BRAC and the outcomes will inform the BRAC process.
    If another BRAC round is authorized, all military installations
will be reviewed, and all recommendations will be based on approved,
published selection criteria. BRAC authorization will also require
submission of a future force structure plan that incorporates previous
force realignment decisions that occurred using the strategic basing
process.
               air force community partnership initiative
    Question. What is the current status of the Air Force Community
Partnership Initiative, and how does the Air Force see this developing?
    Answer. The Air Force is fully committed to leveraging partnerships
with communities where it is mutually beneficial. This is being
accomplished through the use of in-house manpower, leveraging the
utilization of reservists throughout the United States, contract
support, and a headquarters Air Force Task Force of subject matter
experts. We currently have table top exercise processes underway that
are designed to identify potential partnership at 15 locations. These
locations are Altus, Beale, Buckley, Ellsworth, Hill, JB Andrews,
Maxwell, Moody, Nellis, Patrick, Peterson, Robins, Seymour-Johnson,
Sheppard, and Tinker Air Force Bases.
                          minot air force base
    Question. The fiscal year 2014 Air Force military construction
request includes a project to construct a new Aircraft Maintenance Unit
(AMU) facility and alter an existing AMU facility. Both AMUs would
provide space to consolidate the unit support and command sections for
the second B-52 squadron at Minot Air Force Base. The fiscal year 2014
budget also calls for the construction of four munitions storage igloos
to accommodate the increased weaponry stored at the base with the
second B-52 squadron.
    Do you anticipate these projects would be affected by
sequestration?
    Answer. The Air Force has not made any specific project decisions
in response to potential sequestration. The scope of any sequestration
cut is not known. If the Air Force receives a sequestration cut we will
at that time determine what projects will have to be deferred or
canceled.
                                 ______

               Questions Submitted by Senator Jon Tester
                     hayes military operations area
    Question. The Air Force has long considered the airspace near Great
Falls--the Hayes Military Operations Area--an important national asset.
There are few places left in the country with that amount of room to
operate over land--more than 4.5 million square acres--and a lack of
civilian over-flights. Concerns have been raised that the pending
conversion of the Montana Air National Guard from a fighter mission to
an airlift mission will leave that airspace underutilized and
ultimately place it at risk.
    In this context can you provide an assurance that this airspace
will not be underutilized and that the Air Force will keep it in mind
as it considers future requirements?
    Answer. The U.S. Air Force utilizes a variety of Special Use
Airspace (SUA) areas, which are delegated for military operations by
the Federal Aviation Administration (FAA), to separate non-hazardous
flying activities from civil aviation activities, including the Hayes
Military Operations Area (MOA). Many Air Force bases have SUA areas
which are designed to meet their unique training and readiness mission
requirements. In response to the second part of your question, the
Hayes MOA does have positive attributes which make it suitable for
certain Air Force operations.
    As good stewards of SUA, the Air Force must ensure the efficient
and effective use of airspace granted by the FAA. If any SUA becomes
underutilized due to base realignment or mission changes, etc., it is
reviewed, and if determined to be excess to Air Force need, offered to
the Department of Defense for another Service to assume scheduling
authority to meet their requirements. If no other Department of Defense
requirement is found, the SUA must be returned to the FAA for use
system-wide in the U.S. National Airspace System public domain. There
has been no determination made at this time regarding potential long-
term usage of the Hayes MOA.
                                 ______

                Questions Submitted by Senator Mark Kirk
                  u.s. strategic command headquarters
    Question. The Air Force is requesting two hardening projects in
Guam but has as of today; PACAF is still working on a Pacific
Resiliency Study.
    Will the PACAF Resiliency Plan be incorporated into an overall
PACOM resiliency plan? If not, why not?
    Before the study is complete how do we know these two hardening
projects in Guam will be the top PACAF or PACOM priorities?
    By getting ahead of the resiliency study is this the best use
scarce funds?
    Answer. Yes, any resiliency plans developed by PACAF will support
an overall joint resiliency plan endorsed by PACOM. In fact, in
December 2011, the commanders of both PACAF and PACFLT developed an
integrated list of resiliency requirements in anticipation of an
integrated PACOM resiliency plan. The commanders recommended four
distinct methods of mitigating risk to include: selective hardening,
redundancy, rapid repair, and dispersal. In many cases, they
recommended a hybrid solution that incorporates two or more of the
mitigation measures.
    While the PACOM resiliency study is still on-going (to be complete
mid-2013), the study assumes that the two hardened hangars on Guam will
be constructed. All major stakeholders agreed on the importance of
these two structures since the fiscal year 2012 President's budget
submittal. In addition, these two hangars ranked within the top 10 on
PACOM's joint resiliency requirements and both were within the top 5
for the Air Force. The United States has done virtually no hardening
for some 30 years. Without selective hardening of key infrastructure,
our commitment to overall Defense Strategy in the Asia-Pacific theater
could be called into question by our partners and allies as well as our
potential adversaries. Furthermore, the study will recommend several
other methods of mitigating risk to include: improved indications and
warning, active defense (e.g., THAAD, PAC-3), redundancy to single
points of failure, enhanced rapid repair capabilities, tactical and
theater-level dispersal, etc. We do not believe we are getting ahead of
the resiliency study; rather, we have developed our installation
investment strategy in concert with the strategy as it has matured over
the past several years.
         military construction projects at scott air force base
    Question. Ms. Ferguson, Scott Air Force Base's mid-country location
makes it strategically situated to be a prime location for basing the
KC-46 tanker. While Scott Air Force Base had significant scoring
shortfalls for the new initial basing of the new KC-46 tanker, the base
had several infrastructure-related challenges such as runway strength
and condition that contributed to this. I appreciate the Air Force's
past investment at Scott Air Force Base and I hope we can work together
to identify infrastructure needs that could enhance Scott's candidacy
for future KC-46 basing rounds.
    Do you have any plans or recommendations concerning operational
infrastructure that would enhance Scott's ability to compete for future
basing rounds?
    Answer. On April 20, 2012, the Secretary of the Air Force approved
KC-46A basing criteria that evaluated 54 Air Force installations'
ability to support the KC-46A training requirements, available
infrastructure, environmental concerns and area construction and
locality costs. Any additional infrastructure upgrades for a possible
KC-46A mission would have to be part of the Air Force Strategic Basing
process.
    However, the Air Force is making every attempt to place our most
urgent MILCON requirements in the Future Years Defense Program (FYDP).
While there is obviously a need for major construction projects at
Scott Air Force Base to support Scott Air Force Base's current mission,
there simply is not enough funding to accommodate all of the Air
Force's most urgent requirements within the current Air Force budget.
    We will make every effort to consider these projects in a future
President's budget request if funds are available. We look forward to
your continued support for military construction projects and other
critical Air Force priorities through the fiscal year 2014 budget
cycle.
                                 ______

               Questions Submitted by Senator John Hoeven
                          minot air force base
    Question. The fiscal year 2014 Air Force military construction
request includes a project to construct a new Aircraft Maintenance Unit
(AMU) facility and alter an existing AMU facility. Both AMUs would
provide space to consolidate the unit support and command sections for
the second B-52 squadron at Minot Air Force Base. The fiscal year 2014
budget also calls for the construction of four munitions storage igloos
to accommodate the increased weaponry stored at the base with the
second B-52 squadron.
    Answer. The second B-52 squadron was activated at Minot Air Force
Base in 2009.
    Question. How many additional personnel were required to activate
that squadron?
    Answer. A total of 798 positions were added at Minot Air Force Base
to activate the additional bomb squadron in order to support
operations, maintenance and support.
    Question. Where are they working without the upgraded AMU
facilities in this budget request?
    Answer. They are working in seven geographically separated flight
line facilities. In one instance, a modular office space was added
inside to provide working space.
    Question. The fiscal year 2014 Air Force military construction
request includes a project to construct a new Aircraft Maintenance Unit
(AMU) facility and alter an existing AMU facility. Both AMUs would
provide space to consolidate the unit support and command sections for
the second B-52 squadron at Minot Air Force Base. The fiscal year 2014
budget also calls for the construction of four munitions storage igloos
to accommodate the increased weaponry stored at the base with the
second B-52 squadron.
    How have we been storing weapons for the second B-52 squadron
without the additional storage igloos?
    Answer. Minot Air Force Base can currently store its War Reserve
Material (WRM) allocations for both squadrons but is short space to
store approximately 40 percent of required Aircrew Training Munitions
levels. The four new igloos will alleviate storage shortfall to permit
required training and war readiness reserve munitions required to meet
OPLAN and DOC statements.
    The current work around is staggering munitions deliveries
throughout year based on the storage space available to sustain weapons
training.
    Question. There is also a project to replace some old fuel lines at
Minot Air Force Base between now and 2016. Do you anticipate that would
have any impact on B-52 operations at Minot over those years?
    Answer. There will be no operational impact. This project replaces
the line from the bulk fuel tanks to the operating storage tanks of the
hydrant fuels system. The concept for replacement uses a different
route for the lines, thus permitting the existing lines to be used
while the new ones are being installed. There may be a short down time
while the new lines are tied in, but the operating storage is
sufficient to accommodate the down time. In the event the tie in takes
longer than expected, truck refueling from the fuel stand at bulk fuel
will be used; however, this is highly unlikely.
                           enhanced use lease
    Question. There are no military construction projects planned for
Grand Forks Air Force Base in the fiscal year 2014 request, but there
are a number of critical initiatives that concern the installation.
Enhanced Use Lease--The proposed Enhanced Use Lease (EUL) will bring
significant investment to Grand Forks Air Force Base and provide
benefits both to the local community and to the Air Force.
    Can you provide an update on the Air Force's efforts to develop an
EUL for Grand Forks Air Force Base?
    Answer. The Air Force has received a proposal from Grand Forks
County (GFC) for the possible lease and development of an Aviation
Business Park on approximately 217 acres at Grand Forks Air Force Base
(GRAFB). Negotiations are currently ongoing with the two sides working
towards agreement on a term sheet which outlines the basic business
terms of the lease. Concurrently, all necessary environmental work is
being completed and GFC is working towards securing an initial tenant
and the necessary financing for the first phase of development. The Air
Force anticipates notifying Congress in August 2013 with a target date
of October 2013 for lease signing.
                                 ______

              Questions Submitted by Senator Mike Johanns
                  u.s. strategic command headquarters
    Question. The fiscal year 2014 budget request includes $136 million
for Increment 3 of the U.S. Strategic Command headquarters replacement
facility. I fully support this request and ask my colleagues to do the
same. Additionally, it has come to my attention that the fiscal year
2014 request does not adequately address the fit-out or procurement
funding requirements for the building. These funds were to be used to
install an Uninterruptible Power Source (UPS) for the facility. I am
told that if these funds are not executed in fiscal year 2014, the cost
to the Government could increase by 79 percent and could delay the
occupancy of the facility, at a minimum, by 7 months.
    Could you detail this funding issue and the impacts that it could
have on the construction of the new STRATCOM headquarters building?
    Answer. This project has a 4-year construction duration, with
specific portions of the project completed and turned over to the
Federal Government prior to final contract completion. The first
contractual Early Beneficial Occupancy Date (EBOD 1) in January 2016
requires installation of a centralized UPS system to protect equipment
and circuits from damage by power surges or loss. The UPS provides
back-up and conditioned power for both military construction and
information technology contractors to install command and control
systems, technical control facility, telecommunications rooms and data
centers.
    The $136 million in the fiscal year 2014 budget provides needed
funding for the military construction portion of the facility and is
needed in full to meet contractual placement schedules.
    Equipment fit-out is a separate fiscal year 2014 requirement to be
funded from other equipment (3080) in the defense appropriations bill.
In May 2012, Congress marked USSTRATCOM's fiscal year 2013 $25 million
fit-out procurement request as ``early-to-need'' and zeroed it out.
This was done prior to contract award in August 2012. To address this,
the Air Force is maintaining an fiscal year 2014 unfunded requirement
for $21.3 million to procure the UPS, which will continue to be
evaluated by the Air Force Corporate Structure for funding. The least
preferred alternative is to pursue funding in the Air Force Fiscal Year
2015 Program Objective Memorandum, for the reasons outlined below.
Additionally, there is $502 million in remaining requirements for
equipment and furnishings currently programmed in the fiscal years
2014-2018 Future Years Defense Program.
    Procurement, installation and testing of UPS equipment will take a
minimum of 15 months once a contract is awarded. To meet the EBOD 1
date, award is required by June 2014. Further delay of funding to
fiscal year 2015 would slip the award to May 2015, with installation
occurring after much of the interior construction is complete,
requiring the dismantlement/rebuilding of equipment racks, risking
damaging completed interiors, and incurring significantly higher costs.
This is estimated to cause an overall schedule slip of 10 months for
EBOD 1, from January 2016 to November 2016, and result in up to 79
percent increased costs to the Federal Government.
                                 ______

         Questions Submitted to Brigadier General James Witham
               Questions Submitted by Senator John Hoeven
                      hector international airport
    Question. There is a $4.8 million military construction request for
intelligence targeting facilities located at Hector International
Airport in Fargo, North Dakota. It appears these funds are projected
for the fiscal year 2016 budget in support of the new Cyber Targeting
Group mission coming there.
    Can you provide detail on what facilities are planned for that new
mission?
    Answer. The Site Activation Task Force is scheduled for the week of
July 9, 2013, at which time specific details on what facilities and how
they are utilized will be determined. In general, it is anticipated
that existing under-utilized facilities will need to be converted and
may require the use of military construction funds.

                         CONCLUSION OF HEARINGS

    Senator Johnson. This hearing is recessed.
    [Whereupon, at 10:38 a.m., Wednesday, May 15, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]

 
       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------
                                                                   Page

Begich, Senator Mark, U.S. Senator From Alaska, Questions
  Submitted by



Bridges, Timothy, Deputy Assistant Secretary, Installations,
  Department of the Air Force, Department of Defense.............   169
Byers, Major General Timothy, Air Force Civil Engineer,
  Department of the Air Force, Department of Defense.............   169

Coats, Senator Daniel, U.S. Senator From Indiana, Questions
  Submitted by



Cochran, Senator Thad, U.S. Senator From Mississippi, Questions
  Submitted by



Collins, Senator Susan M., U.S. Senator From Maine, Questions
  Submitted by...................................................    86
Conger, John, Acting Deputy Under Secretary of Defense
  (Installations and Environment), Office of the Secretary of
  Defense, Department of Defense.................................    93
    Prepared Statement of........................................   102
    Statement of.................................................   100

Daigh, Jr., M.D., John David, Assistant Inspector General for
  Healthcare Inspections, Office of Inspector General, Department
  of Veterans Affairs............................................    39
Davis, IV, Addison D., Command Executive Officer, Army Reserve
  Command, Department of the Army, Department of Defense.........   151
    Prepared Statement of........................................   153
    Questions Submitted to.......................................   164

Ferguson, Hon. Kathleen I., Acting Assistant Secretary of the Air
  Force, Installations, Environment and Logistics, Department of
  the Air Force, Department of Defense...........................   169
    Prepared Statement of........................................   171
    Questions Submitted to.......................................   180
    Summary Statement of.........................................   169
Ferriter, Lieutenant General Michael, Assistant Chief of Staff
  for Installation Management, Department of the Army, Department
  of Defense.....................................................   151
    Prepared Statement of........................................   153
    Questions Submitted to.......................................   164
Fountain, Brigadier General Walter E., Acting Deputy Director,
  Army National Guard, Department of the Army, Department of
  Defense........................................................   151
    Prepared Statement of........................................   153
    Questions Submitted to.......................................   164

Grams, W. Todd, Executive in Charge, Office of Management and
  Chief Financial Officer, Department of Veterans Affairs........     1
Griffin, Richard J., Deputy Inspector General, Office of
  Inspector General, Department of Veterans Affairs..............    39
    Prepared Statement of........................................    41
    Questions Submitted to.......................................    91
    Summary Statement of.........................................    39

Haddad, Major General Richard, Deputy Chief, Air Force Reserve,
  Department of the Air Force, Department of Defense.............   169
    Prepared Statement of........................................   175
Hale, Hon. Robert F., Under Secretary of Defense (Comptroller)
  and Chief Financial Officer, Office of the Secretary of
  Defense, Department of Defense.................................    93
    Prepared Statement of........................................    96
    Questions Submitted to.......................................   128
    Summary Statement of.........................................    94
Halliday, Linda, Assistant Inspector General for Audits and
  Evaluations, Office of Inspector General, Department of
  Veterans Affairs...............................................    39
Hammack, Hon. Katherine G., Assistant Secretary of the Army,
  Installations, Energy, and Environment, Department of the Army,
  Department of Defense..........................................   151
    Prepared Statement of........................................   153
    Questions Submitted to.......................................   164
    Summary Statement of.........................................   152
Hickey, Hon. Allison, Under Secretary for Benefits, Department of
  Veterans Affairs...............................................     1
Hoeven, Senator John, U.S. Senator From North Dakota, Questions
  Submitted by




Johanns, Senator Mike, U.S. Senator From Nebraska, Questions
  Submitted by...................................................   184
Johnson, Senator Tim, U.S. Senator From South Dakota:
    Opening Statements of




    Questions Submitted by






Kessler, Major General James A., Commander, Marine Corps
  Installations Command and Assistant Deputy Commandant for
  Installations and Logistics (Facilities), Department of the
  Navy...........................................................   131
Kirk, Senator Mark, U.S. Senator From Illinois:
    Prepared Statement of........................................     3
    Questions Submitted by






    Statements of




McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions
  Submitted by...................................................    78
Muro, Hon. Steve L., Under Secretary for Memorial Affairs,
  Department of Veterans Affairs.................................     1

Natsuhara, Roger M., Principal Deputy Assistant Secretary of the
  Navy (Energy, Installations and Environment), Department of the
  Navy...........................................................   131
    Prepared Statement of........................................   133
    Questions Submitted to.......................................   146
    Summary Statement of.........................................   131

Petzel, M.D., Hon. Robert A., Under Secretary for Health,
  Department of Veterans Affairs.................................     1
Pryor, Senator Mark L., U.S. Senator From Arkansas, Questions
  Submitted by




Shinseki, Hon. Eric K., Secretary of Veterans Affairs, Department
  of Veterans Affairs............................................     1
    Prepared Statement of........................................     6
    Questions Submitted to.......................................    56
    Summary Statement of.........................................     4
Slates, Rear Admiral Kevin Director, Chief of Naval Operations,
  Energy and Environmental Readiness Division, Department of the
  Navy...........................................................   131

Tester, Senator Jon, U.S. Senator From Montana, Questions
  Submitted by




Udall, Senator Tom, U.S. Senator From New Mexico, Questions
  Submitted by...................................................    66

Warren, Stephen, Acting Assistant Secretary for Information and
  Technology, Department of Veterans Affairs.....................     1
Witham, Brigadier General James, Deputy Director, Air National
  Guard, Department of the Air Force, Department of Defense......   169
    Questions Submitted to.......................................   185

 
                             SUBJECT INDEX

                              ----------

                         DEPARTMENT OF DEFENSE

                      Department of the Air Force

                                                                   Page

Additional Committee Questions...................................   180
Air Force:
    Community Partnership Initiative



    Encroachment Management Program..............................   174
Base Realignment and Closure (BRAC)..............................   181
Closures and Realignments........................................   173
Current Mission Needs............................................   180
Enhanced Use Lease...............................................   183
European Infrastructure Consolidation............................   173
Hayes Military Operations Area...................................   181
Hector International Airport.....................................   184
Installations....................................................   171
Military Construction (MILCON) Projects at Scott Air Force Base..   182
Minot Air Force Base



Modernization....................................................   172
People...........................................................   173
Readiness........................................................   172
Scott Air Force Base, Military Construction (MILCON) Projects at.   182
U.S. Strategic Command Headquarters




                         Department of the Army

Additional Committee Questions...................................   163
Army:
    2020:
        Facility Strategy........................................   155
        Force Structure..........................................   153
    Initiatives..................................................   160
Base:
    Closure Account (BCA)........................................   158
    Operations Support (BOS).....................................   159
    Realignment and Closure (BRAC)



Bid Savings......................................................   167
Brigade Movement Strategy........................................   164
Budget Request--Military Construction, Army, Fiscal Year 2014....   155
Energy...........................................................   158
    Security.....................................................   163
Environment......................................................   159
European:
    Basing.......................................................   164
    Military Construction........................................   161
Facility Sustainment, Restoration and Modernization (FSRM).......   159
Family Housing:
    Construction, Army...........................................   157
    Operation and Maintenance, Army..............................   157
Future Years Defense Program (FYDP)..............................   166
    Projections..................................................   166
        Guard and Reserve........................................   165
Laboratory Infrastructure........................................   168
Military Construction (MILCON):
    Army National Guard..........................................   156
    Army Reserve.................................................   156
    Funding, Impact of Downward Trend of.........................   166
    Total Army Analysis..........................................   164
National Guard Readiness Centers.................................   166
173rd Combat Aviation Brigade Support............................   165
Rock Island Arsenal..............................................   167
Total Army Analysis (TAA)........................................   161
    Military Construction........................................   164
White Sands Missile Range........................................   162

                         Department of the Navy

Additional Committee Questions...................................   146
Camp Lemonnier:
    Investments..................................................   141
    Restrictions.................................................   145
Energy Security Planning.........................................   143
Fiscal Uncertainty, Meeting the Challenge of.....................   133
Futenma Basing Plans.............................................   140
Guam Basing......................................................   140
Investing in Our:
    Infrastructure...............................................   133
    People.......................................................   135
Managing Our Footprint...........................................   136
Marine Corps Air Station Futenma Timeline........................   141
Pacific Laydown Plans............................................   142
Relocating Marines to Guam.......................................   139
Service Partnerships.............................................   144
Task Force Climate Change........................................   145
Training Facilities in Alaska....................................   142

                   Office of the Secretary of Defense

Additional Committee Questions...................................   128
Aligning With Strategic Guidance.................................    97
Base Realignment and Closure (BRAC):
    Authorization--Office of the Secretary of Defense............   129
    Savings......................................................   126
Basing Decisions.................................................   120
Budget Request:
    Base.........................................................    96
    Environmental Programs, Fiscal Year 2014.....................   106
    Military Construction and Family Housing, Fiscal Year 2014...   102
Eielson Air Force Base...........................................   124
Environmental:
    Conservation and Compatible Development......................   108
    Restoration..................................................   107
    Technology...................................................   107
European Basin Report............................................   116
Facilities Sustainment, Restoration and Modernization (FSRM).....   104
Family Housing and Unaccompanied Housing.........................   103
Furloughs of Civilian Employees..................................   121
Guam--Office of the Secretary of Defense.........................   130
Highlighted Issues...............................................   108
High-Speed Test Track............................................   119
Investment in Guam...............................................   117
Military Construction (MILCON)...................................   103
    And Family Housing...........................................    98
    Budget, Pressures on.........................................   115
Ongoing Initiatives To Reduce Costs and Improve Value............   105
People Are Central...............................................    98
Quality of Life Projects.........................................   116
School Renovation................................................   127
Seeking a Ready Force............................................    98
Selected Issues..................................................    99
Stewardship......................................................    97
Unanticipated War Costs..........................................   124
White Sands Missile Range (WSMR).................................   118

                     DEPARTMENT OF VETERANS AFFAIRS

Access to VA.....................................................    19
Additional Committee Questions...................................    56
Amyotrophic Lateral Sclerosis (ALS)..............................    34
Baltimore Regional Office........................................    22
Black Hills......................................................    18
    Health Care System (BHHCS)...................................    59
Board of Veterans Appeals........................................    57
Capital Infrastructure...........................................    17
Claims:
    Backlog......................................................    20
    Exam.........................................................    27
    Processing




Collaborations...................................................    23
Construction.....................................................    77
Eliminating the Claims Backlog...................................     8
Ending Veteran Homelessness......................................    11
Expanding Access to Benefits and Services........................    10
Grant and Per Diem (GPD) Program.................................    64
Health Care for Homeless Veterans Contract Residential Treatment
  Pro-
  gram...........................................................    65
Healthcare



    Efforts, Additional..........................................    80
Integrated:
    Disability Evaluation System (IDES)..........................    26
    Electronic Health Record (iEHR)




Lease(s)




Legislation......................................................    17
Mandatory Funding................................................    76
Medical:
    Care Program.................................................    13
    Research.....................................................    15
Mental:
    Health.......................................................    78
        Inspector General Report and Continuity of Care..........    59
    Healthcare Professionals.....................................    60
Multiyear Plan for Medical Care Budget...........................    12
National Cemetery Administration (NCA)...........................    16
Outreach.........................................................    29
Overmedication...................................................    35
Patient Centered Community Care (PCCC) Program...................    90
Priority Goals...................................................     6
Project ARCH.....................................................    36
Roundtable.......................................................    24
Rural VA Clinics.................................................    30
Security.........................................................    70
Stewardship of Resources.........................................     6
Suicide:
    Data Report, 2012............................................    63
    Prevention...................................................    28
Supportive Services for Veteran Families Program.................    64
Technology.......................................................     7
Transition Assistance



Transportation...................................................    32
Tribal Veteran Representatives...................................    69
Veteran Education Benefits.......................................    65
Veterans:
    Benefits:
        Administration (VBA).....................................    15
        Management System (VBMS).................................    18
    Homelessness.................................................    64
    Retraining Assistance Program................................    70

                      Office of Inspector General

Access to:
    Mental Health Services.......................................    43
    VA Medical Care..............................................    51
Additional Committee Questions...................................    91
Anchorage VA Regional Office Inspection..........................    52
Backlog of Claims................................................    50
Beneficiary Travel Fraud.........................................    49
Fiduciary Fraud..................................................    49
Medical Examinations and Disability Benefits Questionnaires......    42
Mental Health Care in Rural Areas................................    92
New OIG Initiatives..............................................    49
Non-VA Fee Care Programs.........................................    44
Office of Inspector General (OIG) Investigative Work.............    48
Physician Staffing Standards for Specialty Care Services.........    45
Prosthetics Management...........................................    46
Service-Disabled Veteran-Owned Small Business Program............    49
Temporary 100:
    Disability Evaluations.......................................    42
    Percent Ratings..............................................    53
Threats and Assaults.............................................    49
VA:
    Conferences..................................................    48
    DOD Cooperation..............................................    91
Veteran Homelessness.............................................    48
Veterans:
    Benefits:
        Administration (VBA).....................................    41
        Management System Development............................    41
    Health Administration (VHA)..................................    43
    Integrated Service Network (VISN):
        Management...............................................    47
        Procurement Practices....................................    47
Women's Health Issues............................................    45

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