[Senate Hearing 113-108, Part 3]
[From the U.S. Government Publishing Office]




                                                 S. Hrg. 113-108, Pt. 3

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2014 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1197

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2014 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               ----------                              

                                 PART 3

                    READINESS AND MANAGEMENT SUPPORT

                               ----------                              

                         APRIL 18 AND 24, 2013


         Printed for the use of the Committee on Armed Services
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
   2014 AND THE FUTURE YEARS DEFENSE PROGRAM--Part 3  READINESS AND 
                           MANAGEMENT SUPPORT




                                                  S. Hrg. 113-108 Pt. 3

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2014 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1197

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2014 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               __________

                                 PART 3

                    READINESS AND MANAGEMENT SUPPORT

                               __________

                         APRIL 18 AND 24, 2013

                               __________

         Printed for the use of the Committee on Armed Services


        Available via the World Wide Web: http://www.fdsys.gov/


                                 ______

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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
BILL NELSON, Florida                 JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri           JEFF SESSIONS, Alabama
MARK UDALL, Colorado                 SAXBY CHAMBLISS, Georgia
KAY R. HAGAN, North Carolina         ROGER F. WICKER, Mississippi
JOE MANCHIN III, West Virginia       KELLY AYOTTE, New Hampshire
JEANNE SHAHEEN, New Hampshire        DEB FISCHER, Nebraska
KIRSTEN E. GILLIBRAND, New York      LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut      DAVID VITTER, Louisiana
JOE DONNELLY, Indiana                ROY BLUNT, Missouri
MAZIE K. HIRONO, Hawaii              MIKE LEE, Utah
TIM KAINE, Virginia                  TED CRUZ, Texas
ANGUS KING, Maine

                    Peter K. Levine, Staff Director

                John A. Bonsell, Minority Staff Director

                                 ______

            Subcommittee on Readiness and Management Support

                JEANNE SHAHEEN, New Hampshire, Chairman

CLAIRE McCASKILL, Missouri           KELLY AYOTTE, New Hampshire
MARK UDALL, Colorado                 SAXBY CHAMBLISS, Georgia
JOE MANCHIN III, West Virginia       DEB FISCHER, Nebraska
JOE DONNELLY, Indiana                ROY BLUNT, Missouri
MAZIE K. HIRONO, Hawaii              MIKE LEE, Utah
TIM KAINE, Virginia                  TED CRUZ, Texas

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                    CHRONOLOGICAL LIST OF WITNESSES
                  The Current Readiness of U.S. Forces
                             april 18, 2013

                                                                   Page

Campbell, GEN John F., USA, Vice Chief of Staff, U.S. Army.......     6
Ferguson, ADM Mark E., III, USN, Vice Chief of Naval Operations, 
  U.S. Navy......................................................    14
Paxton, Gen. John M., Jr., USMC, Assistant Commandant, U.S. 
  Marine Corps...................................................    18
Spencer, Gen. Larry O., USAF, Vice Chief of Staff, U.S. Air Force    27

    Military Construction, Environmental, and Base Closure Programs
                             april 24, 2013

Conger, John C., Acting Deputy Under Secretary of Defense, 
  Installations and Environment..................................   112
Hammack, Hon. Katherine G., Assistant Secretary of the Army, 
  Installations, Energy, and Environment.........................   126
Natsuhara, Roger M., Principal Deputy Assistant Secretary of the 
  Navy, Energy, Installations, and Environment...................   135
Ferguson, Kathleen I., Acting Assistant Secretary of the Air 
  Force, Installations, Environment, and Logistics...............   144

                                 (iii)


 DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR 
               2014 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                        THURSDAY, APRIL 18, 2013

                           U.S. Senate,    
                  Subcommittee on Readiness
                            and Management Support,
                               Committee on Armed Services,
                                                    Washington, DC.

                  THE CURRENT READINESS OF U.S. FORCES

    The subcommittee met, pursuant to notice, at 2:38 p.m. in 
room SR-222, Russell Senate Office Building, Senator Jeanne 
Shaheen (chairman of the subcommittee) presiding.
    Committee members present: Senators Shaheen, Donnelly, 
Kaine, and Ayotte.
    Majority staff members present: Jason W. Maroney, counsel; 
Mariah K. McNamara, special assistant to the staff director; 
Michael J. Noblet, professional staff member; and John H. Quirk 
V, professional staff member.
    Minority staff member present: Lucian L. Niemeyer, 
professional staff member.
    Staff assistant present: John L. Principato.
    Committee members' assistants present: Jason Rauch, 
assistant to Senator McCaskill; Chad Kreikemeier, assistant to 
Senator Shaheen; Marta McLellan Ross, assistant to Senator 
Donnelly; Karen Courington, assistant to Senator Kaine; and 
Brad Bowman, assistant to Senator Ayotte.

     OPENING STATEMENT OF SENATOR JEANNE SHAHEEN, CHAIRMAN

    Senator Shaheen. Good afternoon, everyone. Welcome. I'm 
sorry to be a little late; I'm not quite on military time yet, 
so you have to bear with me.
    At this point, I'd like to call the hearing to order and 
point out that this is this subcommittee's first hearing of the 
year. I'm very pleased to be taking over as chair of the 
Readiness and Management Support Subcommittee and sharing the 
leadership with my colleague from New Hampshire, Senator 
Ayotte. I hope--and I'm confident--that we'll continue to lead 
the subcommittee in the strong bipartisan way in which she and 
Senator McCaskill did when Senator McCaskill chaired the 
subcommittee. I'm sure you will be pleased to know that we will 
bring you, from time to time, concerns we have from the Granite 
State of New Hampshire. [Laughter.]
    So, that, I'm sure, won't come as any surprise to any of 
you.
    I think it's also important to note that we are continuing 
the successful partnership of having the chair and ranking 
member of this subcommittee both be women. I think that's 
fitting, since New Hampshire is the first State to send an all-
female delegation to Washington.
    So, we're very pleased to be joined this afternoon by 
General John F. Campbell, USA, Vice Chief of Staff for the 
Army; Admiral Mark E. Ferguson III, USN, Vice Chief of Naval 
Operations; General John M. Paxton, Jr., USMC, Assistant 
Commandant of the Marine Corps; and General Larry O. Spencer, 
USAF, Vice Chief of Staff for the Air Force.
    So, gentlemen, we very much thank you for coming this 
afternoon, and look forward to a fruitful discussion. I should 
say at the start that we also thank you very much for your 
service to this country and for the job that you do for the men 
and women who serve under you. Thank you.
    The Readiness and Management Support Subcommittee meets 
today at a pivotal moment to discuss the current readiness of 
our forces. Our men and women in uniform continue to be 
burdened by sequestration cuts enacted by the Budget Control 
Act (BCA) of 2011, which, if they remain in place, as I'm sure 
you all will testify today, will significantly impact the 
Services' ability to conduct training and maintenance, and to 
sustain their readiness.
    Currently, the Department of Defense (DOD) will incur 
several billions of dollars in reductions to its vital 
operation and maintenance (O&M) budget accounts in fiscal year 
2013. As we've learned from our many past Readiness and 
Management Support Subcommittee hearings, for the last several 
years, readiness rates have consistently declined. However, I 
worry that this new crisis represents an even greater loss of 
surge capability, risks the grounding of pilots who may lose 
flight certification, erodes aircrew readiness, and foreshadows 
the hallmarks of a hollow force if our ground troops can't 
train above the squad level.
    It's important to note that the impact of sequestration 
will be felt, not only in our Active components, but also in 
our National Guard and Reserve.
    As we know, our uniformed personnel are not the only ones 
at risk under sequestration. DOD has announced that it will 
furlough civilian employees up to 14 days. I understand from 
the Navy that, while these furloughs may garner about $308 
million in sequestration reductions, it would also delay 
shipyard maintenance availabilities approximately 85 days and 
risk putting our ships behind schedule and possibly not 
available for deployment when we need them. Even worse, for the 
Navy, several accidents over the past year require unscheduled 
and unbudgeted repair work, such as with the USS Miami, which 
we're very familiar with because of its location at the 
Portsmouth Naval Shipyard, the Guardian, the Porter, and 
others.
    The capital investment for the modernization of our 
shipyards will likely continue to suffer over fiscal year 2013. 
I know I speak for Senator Ayotte when I say we eagerly await 
the shipyard modernization plan that we required in the 
National Defense Authorization Act for Fiscal Year 2012. We're 
interested in hearing from Admiral Ferguson on its status and 
how much risk you and all of the Vice Chiefs plan to take in 
your installation sustainment accounts.
    In addition, we'd like to hear whether or not the Navy and 
the other Services funded the 6 percent of capital investment 
program, as required by law, in the fiscal year 2014 budget 
request.
    We've recently learned that the agency responsible for 
purchasing fuel for DOD, the Defense Logistics Agency, will 
increase the price of fuel on May 1 from $156.66 per barrel to 
$198.24 per barrel. This fuel bill will cost DOD an additional 
$1.8 billion. The fact remains that fossil fuels continue to be 
a strategic and financial vulnerability, not only to the DOD, 
but also to our Nation.
    Perhaps the most overlooked aspect of sequestration is that 
the cuts are not short-term savings for DOD, nor are they 
realized savings for the taxpayers. In reality, sequestration 
merely increases operational and strategic risk by deferring 
vital maintenance and canceling necessary training. I believe 
the consequences of sequestration will, unfortunately, end up 
costing us more in the long run. I remember the testimony of 
Deputy Secretary of Defense Ash Carter, when he talked about 
the fact that the unit cost of everything we purchase through 
DOD will go up as the result of sequestration. We are 
unnecessarily making it harder on our forces to prepare for 
deployment by reducing flying hours for our squadrons, delaying 
maintenance, and reducing training.
    I understand that there are no easy tradeoffs for the 
witnesses here today. Chasing resources to meet military 
requirements is nothing new. I'm not advocating that it's 
financially responsible to have unlimited military spending. 
But, as we all know, sequestration was designed to be onerous 
because it was never supposed to get enacted. We should solve 
the problem now, before we reach a time when our ships, 
aircraft, troops, and equipment can no longer train or deploy.
    However, I know there's also hope. There are always ways to 
improve the way we operate, and there are many initiatives that 
continue to succeed. For example, the continued commitment to 
pursue greater energy efficiencies and renewable energy sources 
offers an enhanced combat capability to the DOD. I had the 
opportunity to see some of the efforts that are underway--the 
more efficient generators, the solar blankets, the installation 
energy investments--last year, when I conducted a hearing down 
at Norfolk on the USS Kearsarge. It was really impressive what 
all of you are doing in each branch of our military to save on 
energy and to move to alternative sources of energy. I think 
that these energy policies should not be partisan. They reduce 
the burden upon those in combat. I thank you, General Campbell, 
for all of the great work that the Army is doing, along with 
all of the other branches, in this regard.
    So, even in these challenging times, I remain confident and 
encouraged that we still have the most resilient fighting force 
in the world today. I remain optimistic, because, even after a 
decade of war and the severe stress from all angles, each of 
you find ongoing ways to improve how you operate. For the past 
11 years, our military has consumed readiness as quickly as 
they've been able to create readiness. We're beginning to see 
some operational relief as we draw down from Afghanistan.
    I thank all of you, particularly the Army and the Marine 
Corps, for recommitting to training for the full spectrum of 
operations in your fiscal year 2014 budget request.
    Again, I sincerely thank each of you for being here. I 
thank your hardworking staffs for taking time to join us in 
this critical readiness discussion. We ask that you include 
your full statements for the record and, if you would, 
summarize what you have to say, hopefully within a 7-minute 
timeframe, so we can have more time for discussion.
    So, thank you all very much. I'll turn the discussion over 
to my colleague, Senator Ayotte.

               STATEMENT OF SENATOR KELLY AYOTTE

    Senator Ayotte. Thank you very much, Madam Chairman. It was 
really truly an honor to be in the leadership of this committee 
with you and to serve with you on behalf of the people of New 
Hampshire. I very much look forward to working with you to make 
sure that we work together to do the very best for our men and 
women in uniform to ensure their readiness in very challenging 
times.
    This has always been one of the things I truly enjoy about 
the Senate Armed Services Committee--the strong bipartisan 
support and work that we do together. I look forward to doing 
that, certainly, with you, Senator Shaheen. So, thank you so 
much.
    I also want to thank very much our witnesses for your 
dedication and your distinguished service to our Nation. 
Despite these difficult times and all that we have asked of our 
servicemembers, recruiting and retention remains strong, and 
our units continue to accomplish their missions. This is a 
testament to the quality of our men and women in uniform, but 
it is also a testament to your leadership. So, thank you very, 
very much.
    The tragic events in Boston this week remind us that, 
despite the heroic efforts of our military forces and also 
efforts on our homeland security over the past 12 years, our 
country still remains vulnerable to terrorist attacks. We 
heard, this morning, from Director of National Intelligence 
James Clapper, that, ``national security threats are more 
diverse, interconnected, and viral than at any time in 
history.'' When faced with this ever-increasing range of 
threats, our Nation expects that our men and women in uniform 
will have the very best equipment and training that they need 
to protect our Nation. When our loved ones and fellow citizens 
step forward to serve, raise their right hand, and agree to 
deploy and face danger to protect the rest of us, we owe it to 
them to give them the very best support they can to accomplish 
their mission and to come home safely. When we fail to provide 
our servicemembers the very best training and equipment, we 
neglect our most fundamental constitutional duties as a 
Congress: to provide for the defense of this Nation.
    Allies, rivals, and potential enemies around the world are 
watching. When we allow our military readiness to deteriorate, 
friends and potential foes, alike, begin to question our 
resolve and capability, reducing the credibility of our 
deterrent. Potential enemies need to know that we have the 
capability to decisively respond to any attack on our Nation 
and on our citizens.
    To solidify this deterrence, we need our military forces to 
be constantly ready to defend and protect our interests and 
those of our allies. Our military remains the very best in the 
world, and we are so proud of our military. But, as General 
Dempsey testified yesterday, ``When budget uncertainty is 
combined with the mechanism and magnitude of sequestration, the 
consequences could lead to a security gap, vulnerability 
against future threats to our national security interests.''
    That is exactly what my concerns are, and I echo the 
concerns that were discussed by the chairman about the impact 
of sequestration.
    In January 2013, the Marine Corps reported that over 50 
percent of its nondeployed combat units were rated with 
degraded readiness, while the Army is reporting that over 70 
percent of those same forces have significantly degraded 
readiness. The Air Force has reported that less than half of 
its combat forces are ready, and there is a significant risk in 
its ability to meet contingency requirements. General Spencer, 
when we met the other day you talked about the impact of 
sequestration in 2013 as being an 18 percent reduction in 
sorties, that's really jaw-dropping.
    By the end of October, a majority of the Navy's nondeployed 
ships and aviation squadrons, nearly two-thirds of the fleet, 
will be less than fully mission-capable and not certified for 
major combat operations.
    These are alarming trends for our force readiness, given 
the threats we confront around the world and given the 
challenges that we have asked our men and women to do in 
conflicts we've been involved in, both in Iraq and Afghanistan 
and other conflicts we've supported around the world. They've 
done their very best. But, of course, that has taken a toll on 
our readiness, and we need to reset.
    Yet, here we are, faced with sequestration, which is 
devastating cuts to--we just talked about flying hours, 
steaming days, and other core training requirements, as well as 
reduced maintenance for military systems and equipments that 
will result in declining readiness.
    As the prepared statements of our witnesses today describe, 
the military is increasingly consuming readiness faster than it 
is being produced, resulting in a declining margin of safety 
for the American people and also, of course, our men and women 
in uniform. We are standing down flying units, canceling major 
unit rotations and carrier group deployments, deferring depot 
and shipyard work, curtailing facility repairs, and extracting 
limited savings from the paychecks of dedicated DOD civilians 
through furloughs. We all know that it's not just our men and 
women in uniform, but those who work in the civilian sector 
have a critical role in supporting our men and women in 
uniform.
    We are creating a bow wave of reduced readiness and 
increased risk that will take years to recover. We cannot 
continue to accept this. The ultimate price for reduced 
readiness will be paid by the men and women serving on the 
front lines for our country around the world.
    I want to close by quoting General Dempsey from a hearing 
the full committee recently held in an attempt to shed light on 
the devastating impacts of sequestration to our national 
security and the real prospect of a hollow force. He said, 
``Sequestration will redefine our military security role in the 
world. It will reduce our influence and our ability to secure 
our national interests. The erosion in military capacity will 
be manifested in our ability to deter adversaries, assure 
allies and partners, sustain global presence, and surge for 
contingencies.''
    Madam Chairman, I share the concerns you have echoed about 
our military's readiness trends, particularly in light of 
sequestration. I look forward to our witnesses this afternoon 
providing a candid and specific assessment as to the damage to 
their Services' readiness being caused by budget uncertainty 
and sequestration. I hope this hearing will demonstrate to 
Congress and the American people the urgent need to craft a 
bipartisan compromise this year, to identify alternative 
spending reductions that will allow us to eliminate Defense 
sequestration, and provide our men and women in uniform the 
certainty and support that they deserve.
    I thank you so much for holding this important hearing, 
Madam Chairman.
    Senator Shaheen. Thank you very much, Senator Ayotte.
    We're going to begin with you, General Campbell, and go to 
your left. I misspoke earlier when I said you had 7 minutes. I 
think you only have 6 minutes. The 7-minute round is for our 
questions. [Laughter.]
    As it should be. So, thank you, General----
    General Campbell. I can beat that standard, ma'am.

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

    General Campbell. Madam Chairman Shaheen, Ranking Member 
Ayotte, distinguished members of the subcommittee, thank you 
very much for the opportunity to appear before you today to 
discuss the readiness of your U.S. Army.
    On behalf of Army Secretary John McHugh and the Army Chief 
of Staff Ray Odierno, I would also like to take this 
opportunity to thank all of you for your support and your 
demonstrated commitment to our soldiers, our Army civilians, 
and our families.
    I have submitted my written testimony for the record, and I 
will keep my opening remarks here very brief, and look forward 
to answering, candidly, the questions that you will ask us 
today on readiness.
    We certainly do appreciate the continued support from 
Congress by the enactment, last month, of the fiscal year 2013 
DOD appropriations bill. Although these measures provided DOD 
some transfer authority to mitigate the risk to readiness and 
alleviate nearly $6 billion of the Army's O&M account shortfall 
for fiscal year 2013, it doesn't resolve the remaining Overseas 
Contingency Operations (OCO) account shortfall that the Army 
has. That is very, very significant, and I can talk through 
that as we go through the questions.
    With the events in the world today, with Korea, Syria, 
Iran, the continued fight in Afghanistan--ma'am, as you said, 
in Boston--a discussion on readiness could not come at a more 
critical time. I've only been the vice chief for a little over 
a month, but I was the Army's G-3, the operations officer, for 
18 months prior to that, and I was a division commander in 
Afghanistan with the 101st for a year. So readiness is always 
on my mind.
    For combat experience, the Army remains the world's best-
trained and -equipped land force in the world. However, as you 
said, our Army is currently experiencing severe fiscal 
challenges that have serious implications for our ability to 
provide trained and ready forces for our combatant commanders 
and for our Nation.
    The reality is that, if sequestration continues as it is 
and does not change between fiscal year 2014 through fiscal 
year 2021, the Army will simply not have the resources to 
support the current Defense Strategic Guidance, and we risk 
becoming a hollow force.
    Maintaining a ready Army is not cheap, and we realize that, 
and we're not looking for more readiness than we need or that 
we can afford. But, we cannot afford, from a national security 
perspective, an Army that is unable to deploy, fight, and win 
our Nation's wars. Here are just a few examples of how 
sequestration is impacting your Army today:
    The Army will reduce its force by 89,000 Active soldiers 
through fiscal year 2017. This is in accordance with the fiscal 
year 2011 BCA. Full sequestration will result in the 
significant loss of additional soldiers from the Active, the 
National Guard, and the Army Reserve.
    [The information referred to follows:]

    The Army will reduce its force by 80,000 Active soldiers through 
fiscal year 2017.

    General Campbell. To meet the sequester targets to protect 
warfighter funding in fiscal year 2013, we're currently 
curtailing training for 80 percent of our ground forces for the 
next fiscal year. We've canceled six combat maneuver training 
exercises at the National Training Center, in the Joint 
Readiness Training Center, and this impacts our readiness. 
We're focusing only on those that go to Afghanistan, those that 
follow them, the forces in Korea, and then homeland defense.
    Sequestration will also result in delays to every 1 of our 
10 major modernization programs, including Ground Combat 
Vehicle, the Network, and the Joint Light Tactical Vehicle. In 
most cases, this will increase their costs. It will create an 
inability to reset our equipment after 12 years of war. We've 
also canceled the majority of our third- and fourth-quarter 
depot maintenance. This will result in the termination of 
employees and a significant delay in equipment readiness for 6 
of our 10 Active divisions.
    Finally, while the Army will make every effort to protect 
critical Army family programs, they will be unavoidably 
affected by workforce reductions, cuts to base sustainment 
funding, the elimination of contracts, and the widespread use 
of soldiers in base support tasks. This will also detract from 
training from our wartime mission. This will further complicate 
our efforts for the requirement that the Army has to operate 
for long stretches underneath a Continuing Resolution (CR). To 
a limited extent, the impact of spending reductions can be 
mitigated a little if funding remains timely and predictable, 
enabling the Army to plan, resource, and manage programs that 
yield a ready force.
    As always the Army will do our utmost to efficiently 
utilize the resources that Congress has appropriated for the 
remainder of fiscal year 2013.
    If I sound concerned, it is because we live in a world 
where strategic uncertainty is increasing. Ma'am, you heard 
that today in the hearings. With that in mind, and knowing that 
the United States will have interests in a range of conflicts, 
I am certain that our soldiers will be called upon to deploy 
and fight in the future. The lessons of history on this point 
are very compelling.
    While we recognize there will be tough choices and 
necessary sacrifices in the days ahead, we also recognize that 
we must act responsibly in order to ensure that what remains is 
a capable force successfully meeting our national security 
requirements. Whatever its size, our Army must remain highly 
trained, equipped, and ready.
    Maintaining credibility based on capability, readiness, and 
modernization is essential to averting miscalculations by 
potential adversaries. Our Nation can accept nothing less.
    Yesterday, General Dempsey stated, ``There are plenty of 
constituents for infrastructure, compensation, and weapons, but 
not readiness.'' The members of this subcommittee, you really 
understand readiness, and we appreciate you taking the time to 
ensure that readiness remains a priority for our Nation.
    Chairman, Senator Ayotte, and the members of the 
subcommittee, I thank you again for your steadfast support of 
your Army, of our outstanding men and women, Army civilians, 
and our families. I look forward to your questions.
    Thank you.
    [The prepared statement of General Campbell follows:]

            Prepared Statement by GEN John F. Campbell, USA

    Chairman Shaheen, Ranking Member Ayotte, distinguished members of 
the subcommittee, thank you for the opportunity to appear before you 
today to discuss the readiness of your U.S. Army.
    On behalf of our Secretary--the Honorable John McHugh and our Chief 
of Staff General Ray Odierno, I would also like to take this 
opportunity to thank you for your support and demonstrated commitment 
to our soldiers, Army civilians, and families.
    This discussion of readiness could not come at a better time. Our 
battle-tested Army remains the world's best trained, led, and equipped 
land force in the world. However, the Army is currently experiencing 
severe fiscal challenges which have serious implications to our ability 
to provide trained and ready forces for the Nation. Here is the reality 
we face: If the reductions to discretionary caps as outlined in current 
law are implemented for fiscal year 2014 through fiscal year 2021, the 
Army may not be able to support the current Defense Strategic Guidance 
and we risk becoming a hollow force.
    What do I mean by a hollow force? A hollow force occurs when the 
three critical areas of end strength, readiness, and modernization are 
out of balance. If we under-resource any one area, the Army will not be 
ready when called upon. For example, a large Army that lacks training 
and modernized equipment is not an Army we would want to send into 
battle. It might look good on paper, but it would be hollow. Here are 
just a few examples of how sequestration is impacting the force:
    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.
    To meet sequester targets and protect warfighter funding in fiscal 
year 2013, we curtailed collective training for 80 percent of our 
ground forces for the rest of the fiscal year. This will impact unit 
basic warfighting skills, induce shortfalls across critical 
specialties, including aviation, intelligence, engineering, and even 
our ability to recruit new soldiers into the Army. For example, we have 
canceled six Maneuver Combat Training Exercises at the National 
Training Center and the Joint Readiness Training Center combat 
training, which impacts the future readiness of our force.
    Sequestration will result in impacts to every 1 of our 10 major 
modernization programs including the Ground Combat Vehicle, the 
Network, and the Joint Light Tactical Vehicle. Potential impacts 
include delays in fielding and increased unit costs. Given the timing 
of the fiscal year 2013 cuts, the uncertainty of how they will be 
applied in fiscal year 2014 and the 10 year span of reductions, we 
continue to assess the magnitude of the impacts to all of our programs. 
It will also create an inability to Reset our equipment employed during 
years of war. In the third and fourth quarters of fiscal year 2013, we 
have canceled the majority of depot maintenance, which will result in 
the termination of an estimated 5,000 employees, a significant delay in 
equipment readiness for 6 divisions and an estimated $3.36 billion 
impact to the surrounding communities.
    Finally, while the Army will make every effort to protect critical 
Army family programs, they will be unavoidably affected by workforce 
reductions, cuts to base sustainment funding, the elimination of 
contracts and the widespread use of soldiers in base support tasks that 
detract from training for wartime missions. This could have a negative 
impact on recruiting and retention, which would degrade readiness. 
Similarly, our Department of the Army civilians face the prospect of 
furloughs which, once implemented, will certainly disrupt thousands of 
activities and have a negative impact on our missions and morale of the 
force around the world.
    To a limited extent, the impact of spending reductions can be 
mitigated if funding remains timely and predictable, enabling the Army 
to plan, resource, and manage programs that yield a ready force. The 
Army will do our utmost to efficiently utilize the resources enacted in 
the fiscal year 2013 Consolidated Appropriations and Further Continuing 
Appropriations Act in the remaining time for this fiscal year.
    In the future, the Nation will once again call upon the Army to 
deploy, fight, and win in support of vital national interests and the 
American people will expect the Army to be ready. We must avoid defense 
cuts that will ultimately have a long-term negative effect on 
readiness, increase the level of risk to our soldiers, and cause us to 
relook whether we can accomplish what is required under the national 
security strategy.

          STRATEGIC CONTEXT AND THE DEMAND FOR U.S. LANDPOWER

    In addition to the fiscal constraints, we must also account for a 
second, equally difficult challenge: strategic uncertainty. The United 
States will undoubtedly have interests in a range of conflicts in the 
years ahead to include deterrence, humanitarian crises, terrorism, 
regional crises, and other potential conflicts. The world we live in is 
increasingly dangerous and complex. Our charge then is to ensure we 
maintain a range of options, and that we remain prepared and ready to 
respond in support of Global Combatant Command requirements.
    Maintaining a ready Army is not cheap--we realize that. However, 
the cost of a ready Army is miniscule in comparison to the cost in 
terms of national treasure and global prestige of committing an unready 
Army in the future. We are not looking for more readiness than we need 
or can afford--but we cannot afford, from a national security 
perspective, an Army that is unable to fight and win the Nation's wars.
Support to the Current Fight
    The strategic transition in Afghanistan continues to prove 
challenging. Building the capacity and self-sufficiency of Afghan 
forces is critical to the transition. To meet combatant command 
requirements, the Army provides specifically-focused advisor training 
for deploying units to advise and assist the Afghan security forces. I 
am confident in the Army's role in support of equipment retrograde 
while concurrently conducting security force assistance and combat 
operations. Although the operational campaign plan drives the pace of 
retrograde operations, our goal remains to have all non-enduring 
equipment out of Afghanistan by the end of 2014.
    Although we have the policies, authorities, and processes in place 
to support retrograde goals, appropriate funding levels are required to 
maintain operational flexibility during retrograde. The Army faces up 
to a $7.8 billion shortfall in emerging warfighter requirements in 
Operations and Maintenance, Army (OMA) funding within our Overseas 
Contingency Operations (OCO) account for fiscal year 2013. This impacts 
the preparation of units about to deploy, current operations in support 
of Operation Enduring Freedom (OEF), and our ability to reset equipment 
and personnel. In order to ensure our soldiers are prepared, we have 
paid and will continue to pay operation and maintenance requirements 
out of base funding for next deployers when not covered by OCO funds. 
This erodes necessary funding from our base budget that guarantees our 
future readiness.
    The recently enacted Consolidated and Further Continuing 
Appropriations Act of 2013 provides the Department of Defense some 
transfer authority to mitigate the risks to readiness; this action does 
not solve the entirety of the OCO shortfall.

Current Readiness
    The Army's readiness continues to center on supporting soldiers 
committed to operations around the world. At no other time in history 
has our Nation committed soldiers to war for as long. Our battle-tested 
All-Volunteer Army remains the world's best-trained, led, and equipped 
land force in the world. However, sequestration in fiscal year 2013 has 
a cascading effect on the readiness of our next-to-deploy forces and 
the forces behind them in the queue for operational employment. If 
further reductions are implemented for fiscal year 2014 through fiscal 
year 2021, the Army may not have the resources to support the current 
Defense Strategic Guidance without assuming greater risk.
    As I appear before you today, your Army is a ready and capable 
force. Our priority is to support the 60,000 soldiers in Afghanistan 
and those next to deploy. We will focus on ensuring that they are 
properly equipped, prepared, and ready for the missions they face. We 
will also continue to provide for high levels of readiness for our 
forces in Korea. The latest tensions reinforce the importance of 
maintaining a ready and vigilant deterrence. We will do our best to 
prioritize training and equipping for the Army's Global Response Force, 
which is the Nation's rapid response, forcible entry capability for 
unforeseen contingencies. Finally, the Army is prepared to defend the 
Homeland and routinely conducts critical Defense Support of Civil 

Authorities operations.
    For the vast majority of the rest of the force--those not scheduled 
for an Afghanistan rotation, supporting Korea or part of the Global 
Response Force--we will simply have to curtail, delay, or cancel 
training. This will have a negative effect on both unit and basic 
warfighting skills and may result in 80 percent of Brigade Combat Teams 
(BCTs) funded only to train to squad level proficiency. This level of 
funding prevents collective training above squad level. Some specialty 
skills may be especially hard-hit due to the length of time required to 
recoup lost skills. This atrophy will begin as soon as the fourth 
quarter of fiscal year 2013 and, once underway, the Army will have to 
redouble its efforts in order to regain rapidly lost readiness.

Regionally Aligned Forces
    In order to elevate the overall level of Army readiness, be more 
responsive to our geographic combatant commanders and better enable our 
joint, interagency, intergovernmental and multinational partners, the 
Army is regionally aligning its forces to provide tailored 
capabilities. Joint exercises and operations with partners and allies 
are paramount to Secretary McHugh and General Odierno's vision of the 
Army's role in protecting American interests at home and abroad. 
Soldiers who receive regionally-specific training and equipment and 
participate in regionally-focused missions will effectively contribute 
to the shaping of the security environments. Adequate resources are 
required to ensure that as missions evolve and new threats emerge, 
aligned forces are trained, ready, and tailored to support the required 
mission.

Future Force Generation
    Army Force Generation (ARFORGEN) put the Army on a rotational 
readiness cycle, which enabled us to provide cohesive units to 
combatant commanders for the enduring missions in Iraq and Afghanistan. 
We adjusted the training, equipping, and manning of our units to suit 
the requirements of emerging missions. Over the past several years as 
we have transitioned from Iraq and prepare to do the same in 
Afghanistan, the Army is applying lessons learned to develop an 
ARFORGEN model that reflects the current defense strategy and future 
missions.
    The Army is in the final stages of modifying its ARFORGEN model and 
realigning our institutional systems. The new model will prioritize 
training for the future complex environment with a focus on combined 
arms maneuver. Combined arms maneuver training is essential after a 
prolonged period of focus on counterinsurgency operations and remains 
key and essential to Army capability. The Future Force Generation model 
intends to apply scarce resources and project manpower at the correct 
time and place to minimize risk, ensure readiness, and specifically 
identify those capabilities critical to meeting strategic requirements. 
The Army can only focus resources on those units deployed, deploying, 
or with critical contingency response missions.

Total Army Force Policy
    The Army is committed to both the Army Total Force Policy as 
approved by the Secretary of the Army and the Chief of Staff of the 
Army and to the proper force mix to support the National Security 
Strategy. Our Total Army Force derives from the integration of Active, 
Reserve, and National Guard capabilities. The past 12 years of war have 
resulted in many experienced Army National Guard and Army Reserve 
formations which proved effective in combat, especially in Combat 
Support and Combat Service Support roles.
    Now, after 12 years of persistent conflict, the Army must tailor 
its Force Generation requirements and deployments to meet the new 
budget realities and ensure we provide the optimal force required by 
the combatant commanders in support of the National Defense Strategy. 
To shape the force requires extensive analysis consisting of cost 
modeling and war gaming informed by our combat experiences to match 
specific timelines and readiness-capability levels.
    For war plans and other demands that need more immediate, 
responsive forces for complex, combined arms maneuver, we rely on 
Active component (AC) BCTs and a mix of AC and RC enablers. For 
requirements that do not have the same immediacy or high difficulty 
from a collective training level, we rely on the RC for much of that 
capability. The added time provides the opportunity to invest 
additional money and training time to increase a RC unit's capability 
prior to deployment. Therefore, most RC forces are not kept at the same 
level of capability because they are not needed as quickly; this 
optimizes cost for the Nation.
    All three components have important and distinct functions and have 
to be manned, trained, and equipped appropriately to meet those 
demands.

              ESSENTIAL INVESTMENTS: PEOPLE AND EQUIPMENT

    The Army of 2013 is the most experienced force in a half century 
and is immeasurably stronger than the Army of 2001. Not since the 1950s 
has the Army had a cadre of noncommissioned officers (NCO) and officers 
with an equivalent depth of combat experience. However, our Nation has 
been at this crossroads before. In the late 1940s, the early 1970s and 
early 1990s, the decision to draw down the Army resulted in a hollow 
force. In the latter two cases, the hollowness wasn't exposed in a 
war--but cost the Nation billions of dollars to return the Army to a 
readiness posture necessary to meet the security strategy of the time. 
In the first case, the Korean War exposed an Army that was unready by 
any measurable standard. The result was the unnecessary loss of life--
and the near loss of the war. As the Army draws down this time, it is 
imperative that we do so in a way that preserves human capital and 
modernization to acceptable standards.

Soldiers, Families, and Army Civilians
    We are focused on the many challenges and opportunities resulting 
from combat deployments. These include preserving and sustaining the 
health of the force--addressing issues, to include behavioral health 
injuries, suicide, the disability evaluation system, and transition 
services. The reality is the demand on our people and equipment has 
been tremendous. We are taking the steps necessary to address the full 
range of health and discipline issues to include strengthening 
soldiers' resiliency and coping skills through our Ready and Resilient 
Campaign that guides the full range of our support efforts. This 
campaign will aim to change and modify Army culture over the long term 
and we remain committed to helping soldiers and families better deal 
with the stressors and challenges they face in the current operational 
environment. Soldiers and their families deserve a quality of life 
commensurate with their service.
    Ultimately, our goal is to sustain the high quality of our All-
Volunteer Force--Active, Guard, and Reserve--in order to defend the 
United States and its interests. This we will do while reshaping our 
Force to prepare for a wider range of contingencies in the complex and 
unpredictable environments we find ourselves in today and for the 
foreseeable future. We also recognize we must accomplish all of these 
various tasks with significantly fewer resources and less people.
    Throughout the past 12 years, Army families and Department of the 
Army civilians have likewise served and sacrificed. I note with pride 
for the profession of arms that children of soldiers have grown up to 
serve in our ranks as well. In spite of the heavy demands placed on 
them, our Force is remarkably resilient. As a brigade commander, deputy 
commanding general, and division commander in combat, I can attest to 
the expertise and maturity of the soldiers, and junior and senior 
leaders I've been honored to serve with, who routinely adapt to 
complete any mission given them. This resilience is evident in the 
current strength of the All-Volunteer Force with high re-enlistment 
rates and the quality of soldiers recruited. It is evident in the 
increasing numbers of soldiers that voice concerns over their 
behavioral health with confidence that their chain of command and our 
medical system will stand by them.

Equipment Reset
    Equipment Reset is defined as actions taken to restore equipment to 
an acceptable level of readiness through a combination of repair, 
replacement, recapitalization, and transition. Reset is a vital means 
for maintaining Army equipment readiness in order to sustain a force 
that is ready for any contingency. In order to return the force to 
required readiness levels, funding must continue as long as we have 
forces deployed and for 3 years after the last piece of equipment 
returns from Afghanistan to ensure readiness for the future. The 
analysis of retrograde timelines, capacity at industrial facilities, 
carry-over work and Reset actions to date supports the need for Reset 
funds for 3 years after the last piece of equipment leaves theater.
    A fully-funded Reset program ensures that equipment worn by 
prolonged use in harsh environments is returned to a fully ready state, 
mitigating the effects of delayed desert damage. In the forecast for 
fiscal year 2013, the Army expects to Reset (repair) approximately 
100,000 items at its industrial facilities, in addition to over 
600,000 pieces of equipment on site where units are stationed 
(including over 400 aircraft). However, fiscal year 2013 budget 
reductions have already forced the cancellation of significant amounts 
of depot maintenance which will delay repairs and upgrades. Due to 
sequestration, we have lowered our level of maintenance for ground 
equipment from 10/20 standards to fully mission capable maintenance 
standards and additional safety standards.

Modernization
    A key part of the Army's current and future readiness is our 
equipment modernization strategy. The Secretary of the Army and Chief 
of Staff, Army recently published an updated modernization strategy 
that focuses our efforts on empowering our soldiers and small unit 
formations, while maintaining the capacity to deter and defeat 
potential adversaries by: (1) identifying achievable requirements; 
applying best practices in acquisition and sustainment; seeking 
incremental improvements; and harnessing network enabled capabilities 
to solve near-term capability gaps, while (2) investing in military-
unique revolutionary and evolutionary technologies to solve future 
capability gaps.
    The centerpiece of our equipment modernization program is the 
soldier and the squad. Our investment plan provides our small units 
with a range of equipment including individual and crew-served weapons, 
next generation optics and night vision devices, body armor and 
advanced individual protection equipment, providing lethality and force 
protection to the soldier on the ground. Tactical overmatch will be 
facilitated by a suite of small-unit systems including unmanned 
aircraft systems, ground-based robots, counter-IED devices, and the 
latest surveillance systems.
    To deliver the Network capabilities to the soldier, we will 
continue to invest in Warfighter Information Network-Tactical; 
Distributed Common Ground System-Army; the Family of Networked Tactical 
Radios; Nett Warrior; and Joint Battle Command-Platform. Finally, we 
will provide increased lethality and mobility, while optimizing 
survivability through the use of incremental improvements and mature 
technologies in developing the Ground Combat Vehicle, the Joint Light 
Tactical Vehicle, Armored Multi-Purpose Vehicle and Paladin Integrated 
Management Artillery system and upgrading our aviation fleet.

Army Organic Industrial Base
    During time of war, the Army requires the Organic Industrial Base 
to repair and manufacture equipment as quickly and efficiently as 
possible to ensure it is available to train and support next deployers 
as well as those deployed. The Army Organic Industrial Base (AOIB) 
Depots and Arsenals surged to double, and in some cases, triple our 
pre-war output. As the AOIB transitions from wartime production to 
peacetime requirements, we must ensure it remains effective, efficient, 
and capable of meeting future Army contingency requirements. Last year, 
the Army published an updated AOIB Strategic Plan to help us make 
informed decisions on these issues. This plan provides the strategy and 
management framework needed to ensure that the AOIB remains viable, 
effective, and efficient. The current fiscal uncertainty could 
drastically impact our strategy and threatens retaining an AOIB that is 
a modern, reliable, cost effective, and highly responsive enterprise 
which meets both wartime and peacetime requirements, while maintaining 
the ability to surge during contingency operations.
    Canceled maintenance repairs will remain reversible; however, the 
work that is not accomplished before the end of the fiscal year will 
result in increased carryover. Deferring maintenance could also cause 
production gaps in the industrial base and supply chain requiring 2-3 
years to recover. These gaps greatly impact equipment readiness, 
industrial partnerships, and sub-vendors supporting the supply chain.
    Given our budget uncertainty, we must ensure that we are using 
appropriated resources legally, effectively, and efficiently. Our audit 
readiness efforts focus on our responsibility to be good stewards of 
the funds appropriated to us. We are making great progress in audit 
readiness, to include implementing auditable enterprise-wide resources 
planning systems. In addition to improving systems and controls, 
compliance is monitored via a Commander's Checklist. As our funding 
decreases, it is critical that we improve the effective and efficient 
use of funds, so that readiness is properly resourced.

                      WHERE WE NEED CONGRESS' HELP

    Critical to our success will be Congress' continued support of 
operations ongoing in theater. As we learned in Iraq, the costs 
associated with transition and retrograde, to include closing bases and 
transferring equipment, are not directly proportional to unit 
redeployment. In many cases, as our forces leave, costs will increase. 
Our need to Reset does not end when troops leave the theater of 
operations. In fact, it will likely continue for 3 years after our 
troops return home to ensure equipment readiness is restored for future 
contingencies. Reset is an inherent cost of war.
    The lack of predictability in recent budget cycles and continuing 
uncertainty about the outyear reductions associated with sequestration-
related provisions adds significant stress on our ability to mitigate 
cuts. The Army will certainly do its part to mitigate the effects of 
the sequestration, but to be clear, we are now facing dramatic cuts to 
personnel, readiness, and its modernization processes and programs.
    Our Chief of Staff General Odierno has said, ``We cannot take the 
readiness of our force for granted. We cannot send our soldiers into 
combat unprepared. If we don't have the resources to ensure their 
readiness, our soldiers will be the ones who pay the price. It is 
inconceivable to me that we will put this burden on the shoulders of 
those who have sacrificed so much during nearly 12 years at war.''

                               CONCLUSION

    With Congress' support, we have built a remarkable force that has 
performed magnificently under a sustained high operations tempo for the 
past 12 years of war. It is better trained and equipped and our young 
leaders are better prepared than at any other time in history. Your 
Army, together with our Joint partners, will continue to serve as a 
rampart against the compounding risks inherent in an uncertain and 
rapidly changing world. Leaders throughout our Army remain focused on 
effectively addressing current challenges, particularly with respect to 
fiscal demands and health of the Force, while also determining the 
needs of the Force for the future.
    Until recent years, the Army's view of readiness has focused on the 
application of resources at the unit level to produce ready forces. The 
Army is expanding our view of Service Readiness beyond the traditional 
aggregation of tactical to include metrics and indicators that enable a 
strategic assessment of the total force and nominate a strategic action 
to mitigate future impacts. This process will allow us to see ourselves 
in a more holistic manner. Our strategic view will include past trends 
and current status, analyzed to project impacts of current resourcing 
decisions on our production of ready forces in future years.
    The Army understands the fiscal landscape and is committed to doing 
its part to limit expenditures. While we recognize there will be tough 
choices and necessary sacrifices in the days ahead, we also recognize 
that we must do so responsibly in order to ensure that what remains is 
a force capable of successfully meeting our national security 
requirements. Whatever its size, our Army must remain highly-trained, 
equipped, and ready to meet the needs of the National Defense Strategy. 
Maintaining credibility based on capacity, readiness, and modernization 
is essential to averting miscalculations by potential adversaries. Our 
Nation can accept nothing less.
    Madam Chairman Shaheen, Ranking Member Ayotte, and members of the 
subcommittee, I thank you again for your steadfast and generous support 
of the outstanding men and women of the U.S. Army, our Army civilians, 
and their families.

    Senator Shaheen. Thank you very much, General Campbell.
    Admiral Ferguson.

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

    Admiral Ferguson. Madam Chairman, Senator Ayotte, and 
distinguished members of the subcommittee, I appreciate the 
opportunity to testify today on Navy readiness and our fiscal 
year 2014 budget request. It's my great honor to represent the 
men and women of the U.S. Navy.
    With the high global demand for naval forces, we are 
appreciative of the support of Congress in passing a fiscal 
year 2013 appropriations bill. This legislation provided us the 
necessary authorities and reduced the shortfall in our 
readiness accounts from $8.6 billion to $4.1 billion for this 
fiscal year.
    As we reconcile our spending plan for the remainder of this 
fiscal year, it is clear that sequestration has impacted our 
ability to train our people, maintain our existing force 
structure, and invest in future capability and capacity. By the 
end of this fiscal year, two-thirds of our nondeployed ships 
and aviation squadrons will be less than fully mission capable 
and not certified for major combat operations. Due to 
sequestration, we reduced funding in fiscal year 2013 for our 
investment accounts by $6.1 billion. This will mean reducing 
quantities of procurement, delaying the introduction of new 
systems into the fleet, and incurring increased costs to 
complete systems development.
    At our shore bases, we have deferred about 16 percent of 
our planned facilities sustainment and upgrades, about $1 
billion worth of base operating support and improvements. We 
continue to reduce expenditures in other areas, as well. In 
coordination with the combatant commanders, the Secretary of 
Defense has approved selected deployment delays and 
cancellations to conserve operating funds. Civic outreach 
efforts, such as the Blue Angels and U.S. port visits, have 
been canceled to preserve funds for our deployed and next-to-
deploy units.
    As we address the shortfalls in fiscal year 2013, we intend 
to address them with the following priorities. We have to fund 
our must-pay bills, such as utilities and leases; fund fleet 
operations to meet the adjudicated combatant command 
requirements; provide fleet training, maintenance, and 
certification for next-to-deploy forces; and fund necessary 
base operations and renovation projects to support training, 
operations, and our sailors and their families.
    Our fiscal year 2014 request continues the Chief of Naval 
Operations' readiness priorities of warfighting first, 
operating forward, and being ready, and is especially focused 
on supporting our shift to the Pacific and supplying ready 
forces for the combatant commanders. To meet our full readiness 
requirements, we are dependent upon the baseline budget, as 
well as supplemental funding. With fiscal year 2014 OCO 
funding, we anticipate meeting our projected operational 
requirements, and we will make every effort to recover the 
deferred maintenance on our ships and aircraft. Our budget 
request, with OCO, will allow the Navy to retain the ability to 
train, certify, and deploy two carrier strike groups and two 
amphibious ready groups, fully mission capable and certified 
for major combat operations. We will also retain an additional 
carrier strike group and amphibious ready group, fully mission 
capable and available for surge response.
    If agreement is not reached to avoid the BCA reductions, 
our fiscal year 2014 obligation authority could be reduced by 
$10 to $14 billion, with approximately $5 to $6 billion coming 
from our readiness accounts. This would compel the Navy to 
again dramatically reduce operations, maintenance, and 
procurement, preventing us from meeting combatant command 
requirements, and negatively impacting our industrial base.
    As exemplified by recent events in the Middle East and 
Western Pacific, our Navy must continue to operate where it 
matters, when it matters, to conduct the missions our Nation 
expects of us. We see no lessening of combatant commander 
requirements in the future.
    We look forward, Madam Chairman and Senator Ayotte, to 
working with the committee as we advance through the budget 
process to ensure our Navy stands ready to protect and defend 
America's interests at sea. On behalf of all our men and 
women--Active, Reserve, and civilian--I thank you for your 
support, and I look forward to your questions.
    Thank you.
    [The prepared statement of Admiral Ferguson follows:]

          Prepared Statement by ADM Mark E. Ferguson III, USN

    Madam Chairman Shaheen, Senator Ayotte, and distinguished members 
of the Senate Armed Services Subcommittee on Readiness and Management 
Support, I appreciate the opportunity to testify on the current state 
of Navy readiness and our fiscal year 2014 budget request for 
Operations and Maintenance (Navy) (O&M(N)).
    My testimony before the Senate Armed Services Committee on February 
12th addressed the potential readiness impacts due to the combined 
effects of emergent requirements and fuel price increases, a year-long 
Continuing Resolution, and sequestration. With the passage of 
Consolidated and Further Continuing Appropriations Act of 2013 (Public 
Law 113-6), Congress restored $4.5 billion of the projected $8.6 
billion shortfall to our O&M(N) account and enacted authorities 
necessary to execute our fiscal year 2013 appropriations. We appreciate 
congressional support for the readiness of our force.
    My testimony today will focus on the current readiness of the force 
as we complete fiscal year 2013 and our readiness budget request for 
fiscal year 2014.

                             OUR NAVY TODAY

    With the passage of Public Law 113-6, our Navy has sufficient 
funding to meet the requirements of the adjudicated fiscal year 2013 
Global Force Management Allocation Plan (GFMAP). We will train those 
forces required for operational deployments in fiscal year 2014, while 
accepting some risk in nondeployed forces and infrastructure. When 
compared to the President's 2013 budget request, our appropriated 
funding represents a $4.1 billion reduction in our O&M(N) account. This 
reduction, when combined with emergent requirements and fuel price 
increases, necessitated we take a thoughtful and prudent approach to 
readiness accounts for the remainder of the fiscal year. We have 
therefore established the following priorities: retain adequate funding 
for mandatory reimbursable accounts; sustain the readiness of forces to 
meet the adjudicated fiscal year 2013 GFMAP; prepare forces to meet the 
projected fiscal year 2014 combatant commander requirements; sustain 
base infrastructure and operations that support deployed forces and 
those preparing to deploy; and maintain an appropriate level of funding 
for critical sailor and family support programs.
    Sequestration will result in lower readiness levels in the fleet 
and ashore. We have reduced training and steaming days for nondeployed 
surface ships and flying hours for nondeployed aviation squadrons. In 
fiscal year 2013, we will reduce intermediate-level ship maintenance, 
defer an additional 84 aircraft and 184 engines for depot maintenance, 
and defer 8 of 33 planned depot-level surface ship maintenance 
availabilities. At our shore bases, we have deferred about 16 percent 
of our planned fiscal year 2013 shore facility sustainment and 
upgrades, about $1 billion worth of work.
    We continue to reduce O&M(N) expenditures in other areas. We have 
reduced our civic outreach efforts, such as the Blue Angels and U.S. 
port visits. In coordination with the combatant commanders, the 
Secretary of Defense has approved selected deployment delays and 
cancellations to conserve operating funds.
    By the end of fiscal year 2013, a majority of our nondeployed ships 
and aviation squadrons--nearly two thirds of the fleet--will be less 
than fully mission capable and not certified for Major Combat 
Operations. Until we restore the readiness of forces impacted in this 
fiscal year, we will see reduced availability of forces for full 
spectrum operations in fiscal year 2014 and beyond.
    Furloughs of our civilian workforce will impact our ability to 
generate ready aircraft carriers (CVNs), ballistic missile submarines 
(SSBNs), guided-missile submarines (SSGNs), and attack submarines 
(SSNs) through fiscal year 2014 by slowing completion of maintenance in 
public shipyards. The lost work due to furloughs would also create a 
``domino'' effect to maintenance schedules for the next several years 
that could impact ship and aircraft availability. The Department of the 
Navy is exploring options to minimize these impacts.
    We have focused our base operating funds on delivering required 
services for Fleet port and air operations with restricted operating 
hours. In the event of a furlough, we will have no choice but to make 
additional restrictions in the support of Fleet operations.

                           OUR NAVY TOMORROW

    Our fiscal year 2014 budget request continues the CNO's readiness 
priorities of Warfighting First, Operate Forward, and Be Ready, which 
are specifically focused on ensuring the readiness of the Navy. Our 
budget, with continued OCO funding, meets projected operational 
requirements and builds future capabilities, while sustaining the 
readiness of our ships and aircraft over the course of their expected 
service lives. It continues to support the Defense Strategic Guidance, 
expands forward presence through both traditional and innovative 
approaches, and ensures the Fleet is where it matters, when it matters, 
to achieve the security interests of the Nation.
    The Navy will retain the ability to support the fiscal year 2014 
GFMAP with two carrier strike groups (CSG) and two amphibious ready 
groups (ARG) fully mission-capable and certified for Major Combat 
Operations. We will also retain one additional CSG and ARG in the 
United States that are fully mission capable, certified for Major 
Combat Operations and available for surge within 1 to 2 weeks. We 
anticipate sustaining a 1.0 carrier presence in the U.S. Central 
Command (CENTCOM) Area of Responsibility (AOR) and slightly less in 
U.S. Pacific Command. Our submarine force will continue to meet 
adjudicated combatant commander requirements. Until we restore the 
readiness of those nondeployed forces impacted by fiscal year 2013 
reductions, we will be limited in our ability to respond for full 
spectrum operations.

Generating the Force
    Navy manages force generation using the Fleet Response Plan (FRP). 
This plan establishes a sustainable cycle of maintenance, training, and 
operations for both individual units and task groups. With this 
process, Navy generates the ready forces required to meet global 
presence requirements and also develops the capacity for surge response 
for contingencies and homeland defense. The plan operates as a cycle, 
so that forces undergo maintenance, training, and then deployment/
sustained surge readiness in defined periods. The flexibility of this 
approach enables Navy to develop greater surge capacity in response to 
contingencies than did earlier approaches to force generation.
    For over 10 years, Navy forces have been operating at a war-time 
pace, essentially expending our surge capacity. We are evaluating 
enhancements to the FRP to meet higher levels of operational 
availability within the operating cycle. We are mindful that operating 
the fleet at a sustained high tempo could reduce the service life of 
our platforms and place a high level of stress on our sailors and their 
families.

Ship Operations
    The baseline Ship Operations request for fiscal year 2014 supports 
the highest priority presence requirements of the combatant commanders. 
Our budget request supports generating 2.0 global presence for carrier 
strike groups, 2.4 amphibious ready groups and an acceptable number of 
deployed submarines. The baseline request provides for 45 days of 
deployed operations per quarter and 20 days of non-deployed operations 
per quarter.
    It will be necessary to direct funding to recover the readiness of 
nondeployed forces impacted by funding reductions in fiscal year 2013 
to meet surge requirements in fiscal year 2014.

Air Operations (Flying Hour Program)
    The Flying Hour Program (FHP) funds operations, maintenance, and 
training for 10 Navy carrier air wings, 3 Marine Corps air wings, Fleet 
Air Support aircraft, training squadrons, Reserve Forces and various 
enabling activities. The fiscal year 2014 baseline FHP meets funding to 
maintain required levels of readiness for deployment or surge 
operations, enabling the Navy and Marine Corps aviation forces to 
perform their primary missions as well as funding the enduring T2.5/
T2.0 USN/USMC readiness requirement in the base budget.

Fleet Training, Training Ranges and Targets
    We are sustaining investments in key training capabilities, 
including Fleet Synthetic Training, Threat Simulation Systems, and the 
Tactical Combat Training System. Our request continues procurement of 
high speed, maneuverable surface targets to provide live fire training 
for operator proficiency.

Readiness Investments Required to Sustain the Force--Ship and Aircraft 
        Maintenance
    Our fiscal year 2014 budget request seeks a balance between 
maintenance requirements and our investment accounts. The request is 
built upon our proven sustainment models for nuclear aircraft carriers 
and submarines, our ongoing investment in the readiness of our surface 
combatants, and plans for the integration of new capabilities into 
naval aviation.
    Surface ship maintenance is executed in both public and private 
sector shipyards. We have instituted the same processes used for many 
years for aircraft carriers and submarines into our surface ship depot 
availabilities in fiscal year 2014. In this updated process, 
availability planning, execution, and certification are codified; all 
required maintenance actions are tracked to completion; and all 
proposed maintenance deferrals are formally reviewed. This 
comprehensive process ensures adjudication by the appropriate technical 
authority and rescheduling in a follow-on availability or other 
appropriate maintenance opportunity.
    In fiscal year 2014, the budget request, with anticipated 
supplemental funding, will meet Navy readiness requirements for 
aircraft carrier, ship, submarine, and aircraft maintenance. 
Additionally, our revised surface force maintenance process has 
identified the backlog of maintenance in these ships resulting from the 
recent years of high operational tempo and deferred maintenance. These 
requirements are now incorporated into our maintenance plans.

Supporting Reset of the Joint Force
    Navy expeditionary forces support enduring global missions by 
deploying security, construction, explosive ordnance disposal, 
logistics and training units operating with ground combat units of the 
other Services. Our baseline funding request in fiscal year 2014 
represents 43 percent of the enduring requirement, while supplemental 
funding must be applied to meet the full requirement. As U.S. Force 
Management Levels (FML) in Afghanistan reduce and infantry units return 
home, Navy Seabees and EOD operators will be instrumental in the 
retrograde and reset of equipment and personnel, providing engineering 
and maneuver support to the joint ground combat elements.

Readiness Investments Required to Sustain the Force--Shore 
        Infrastructure
    The Navy's shore infrastructure--both in the United States and 
overseas--provides essential support to our Fleet. In addition to 
supporting operational and combat readiness, it is also a critical 
element in the quality of life and quality of work for our sailors, 
Navy civilians, and their families.
    Our planned fiscal year 2014 investment of $425 million in our 
naval shipyards, Fleet Readiness Centers, and Marine Corps depots 
complies with the 2012 National Defense Authorization Act requirement 
for 6 percent investment infrastructure. We continue to sustain and 
recapitalize our shipyards within today's fiscally constrained 
environment, focusing on mission-critical facilities such as production 
shops, piers, wharves, and dry docks. We mitigate the level of 
deliberate risk we take in the sustainment of our infrastructure by 
prioritizing projects for repair.

                        OUR NAVY INTO THE FUTURE

    As we look to the future, we see theaters of operation around the 
world increasingly assume a maritime focus. Our naval presence is 
important to regional stability in the deterrence of aggression and the 
assurance of our allies. Over the last year, we have responded to 
demand for naval forces in both the Middle East and in the Pacific. Our 
Navy is operating where it matters, when it matters--and we see no 
lessening of requirements to do so in the future. As a result, the 
demand for ready forces will not abate in the near future.
    Our sailors are the highest quality, most diverse force in our 
history and continue to make us the finest Navy in the world. On behalf 
of all these men and women of the U.S. Navy--Active, Reserve, and 
civilian--thank you for your continued support.

    Senator Shaheen. Thank you very much.
    General Paxton.

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

    General Paxton. Good afternoon, Madam Chairman Shaheen, 
Ranking Member Ayotte, and the members of the subcommittee. 
Thank you for the opportunity to report on the readiness of 
your U.S. Marine Corps.
    Right now, more than 23,000 marines are forward deployed 
and forward engaged. More than 9,000 are in Afghanistan, while 
others, partnered with our closest joint partner, the U.S. 
Navy, are globally deployed, protecting influence, deterring 
aggression, building partner capacity, and poised for crisis 
response.
    With the submission of the President's budget, your Corps' 
next deployers--those who are due to leave between June and 
October to Operation Enduring Freedom, on our Marine 
Expeditionary Units (MEU), on our Unit Deployment Program, and 
for tactical aviation integration--those next deployers will 
remain fully trained, equipped, and ready. We anticipate the 
same for the deployers due to leave after that, between 
November and February. However, after that point, we are less 
confident about our sustained readiness.
    With the onset of sequestration in March, we commenced a 
deliberate, yet unfortunately unplanned and uncoordinated 
series of cuts to Defense programs and capabilities. The 
Secretary of Defense, both the current and the former, and the 
Chairman of the Joint Chiefs of Staff, our Commandant, and my 
own predecessor, have repeatedly counseled that sequestration 
effects will be quick, stark, often unanticipated, and 
potentially devastating in the long term. As we have scrubbed 
our operations, sustainment, and modernization plans over the 
past 3 to 4 months, I can assure you that the effects of 
sequester will be serious, prolonged, and difficult to quickly 
reverse or repair.
    Some of these sequestration impacts are in areas neither 
Congress nor DOD would have liked to have had adversely 
impacted--most notably, on the forward deployment of 
individuals and units ready for combat. I look forward to 
explaining examples of anticipated adverse impacts on our 
training proficiency, on equipment maintenance, and on unit 
readiness. In all of these areas, the impacts will be slow to 
predict, difficult to localize, and challenging to reverse.
    As we navigate the current fiscal environment, we will 
strive to maintain balance across the five pillars of readiness 
for your U.S. Marine Corps:
    Pillar number one is to recruit and retain the highest 
quality people. Pillar two is to maintain a high state of unit 
readiness. Pillar three is the ability to meet combatant 
commanders' requirements with marines. Pillar four is to ensure 
that we maintain appropriate infrastructure investment. Pillar 
five is to keep an eye towards the future by investing in the 
capabilities we'll need for tomorrow's challenges--
modernization.
    As we begin this hearing, I would like to highlight a few 
points from my written statement.
    With regard to high-quality people, your U.S. Marine Corps 
continues to achieve 100 percent of its officer and enlisted 
recruiting goals for both the Active and the Reserve 
components, while exceeding DOD quality standards for high 
school graduates and mental categories.
    Within the ranks of our civilian marines, an integral part 
of our force, they face potential readiness and human impacts 
associated with potential furloughs.
    With regard to the second pillar, unit readiness, the 
Marine Corps has, and always will, sourced the best-trained, 
most ready forces to meet combatant commander requirements. 
Equipment readiness of our nondeployed units is of great 
concern to us. We have taxed our home station units as the 
billpayer to ensure that marines in Afghanistan and in our MEUs 
have everything that they need. As a result, the majority of 
our nondeployed forces are reporting degraded material 
readiness levels.
    Additionally, the tempo of operations and the harsh 
environments in which we have been operating over the past 
decade has accelerated the wear and tear on our equipment. 
Money to reset and rebuild the Marine Corps will be required 
for several additional years after the end of the war. This 
will have the added impact of delaying our rebalance to the 
Pacific until well after the 2017 projections.
    Finally, we continue to proudly support the DOD colleagues 
at 152 embassies and consulates around the world. Our fiscal 
year 2014 budget request funds 1,635 marines for this program. 
In the aftermath of events at some of our diplomatic missions, 
and as requested by Congress, we are working with the 
Department of State, DOD, and the Joint Staff, and we seek your 
continued support as we determine the need for additional 
manning of approximately 1,000 marines, and the associated 
funding to support them. We will report back to you and the 
committee by October 1 on this initiative.
    I thank each of you for your faithfulness and your 
bipartisan support to our Nation's military. I request that my 
written testimony be accepted for the record.
    Your Corps remains committed to providing a Nation--the 
Nation a ready force capable of handling today's crisis today.
    I look forward to your questions. Thank you very much.
    [The prepared statement of General Paxton follows:]

          Prepared Statement by Gen. John M. Paxton, Jr., USMC

    Today's marines are thoroughly trained, combat proven and are 
meeting all Operation Enduring Freedom (OEF) and combatant commander 
requirements. The approximately 7,400 marines deployed in Helmand 
Province under Regional Command South-West remain our top priority. 
Rotation after rotation, their professionalism, training, and morale 
remain high. In the last several years they have successfully created 
the conditions for the Afghan National Security Forces to grow and 
mature, and they have given the Afghan people an opportunity for a 
better future.
    Outside of Afghanistan, marines have participated in more than 120 
security cooperation engagements (in 2012), developing partner nation 
capabilities and building up stores of goodwill among our global 
neighbors. Additionally, our forces at home and abroad have been ready 
and able to respond to a range of incidents from natural disasters to 
civil uprisings. Marines were sent to Libya in the wake of the 
assassination of our Ambassador and other U.S. personnel. Marines 
deployed to reinforce the security of our embassies in Egypt and Yemen 
following the attempted breach of the embassy walls by protestors. 
Marines supported Hurricane Sandy relief efforts here in our Northeast 
and super typhoon Pablo relief efforts in the Philippines. In short, 
marines stand ready and able to respond to future incidents that 
threaten our Nation's interests regardless of the location or the 
nature of the occurrence.

                           CURRENT READINESS

    The readiness of our force is integral to our ethos; it's a state 
of conditioning that marines work hard to maintain. Our crisis response 
mission is incompatible with tiered readiness. Marines don't get ready 
when a crisis occurs, we must be forward deployed and ready to respond 
immediately; that's the most important aspect of who we are and what we 
do.
    Readiness comes at a cost and the high readiness of the deployed 
forces comes at the expense of our nondeployed units' readiness. The 
Marine Corps can sustain its current operational requirements on an 
enduring basis; however, to maintain the high readiness of our forward 
deployed units, we have globally sourced equipment and personnel for 
Afghanistan and other emerging threats from our nondeployed units. The 
nondeployed forces' principal readiness detractor is the reduced 
availability of equipment at home stations with which to outfit and 
train units. Currently, slightly more than half of nondeployed units 
are experiencing degraded readiness due to portions of their equipment 
being redistributed to support units deployed forward. The manning of 
our home station units also suffers due to the need to meet the 
personnel requirements for deploying units, Individual Augments and 
Security Force Assistance Teams. The primary concern with the out-of-
balance readiness of our operating forces is the increased risk in the 
timely response to unexpected crises or large-scale contingencies, 
since the nondeployed forces likely would be the responders. Efforts to 
maintain the readiness of the deployed force and correct the readiness 
imbalance of the nondeployed forces could be further exacerbated by 
sequestration if our Operations and Maintenance (O&M) account is 
diminished.
    In addition to ensuring units are properly manned and marines are 
properly equipped, training of marines is an equally important 
component of readiness. As part of ensuring marines are appropriately 
trained and are able to maintain currency in their required skills, we 
must ensure training ranges are available and suitable to meet those 
needs. In the near term, that means ensuring the plans to expand our 
Marine Corps Air Ground Combat Center under the Twentynine Palms Land 
Expansion initiative are executed.

                          RESETTING THE FORCE

    Reset is a subset of reconstitution and comprises the actions taken 
to restore units to a desired level of combat capability commensurate 
with the units' future missions. After more than a decade of combat, 
this will require an unprecedented level of effort. The Marine Corps is 
resetting its forces ``in stride'' while fighting the war in 
Afghanistan and transitioning to the new Defense Strategic Guidance. 
Unlike previous post-conflict periods, such as after Operation Desert 
Storm, we do not anticipate taking an ``operational pause'' to reset as 
we transition from OEF.
    The Marine Corps' Operation Enduring Freedom Ground Equipment Reset 
Strategy, released in January 2012, serves to identify the equipment we 
will reset or divest. The reset strategy prioritizes investment and 
modernization decisions to develop our middleweight force. Last year 
our reset liability was approximately $3.2 billion. We estimate it will 
be something less, however; we are unsure exactly what that number is 
until we can get a better picture on both the totality of the costs 
associated with returning our equipment from Afghanistan and the 
detailed costs associated with resetting our gear after 10 years of 
combat.\1\ This revised forecast is primarily based on the replacement 
of combat losses, the restoration of items to serviceable condition, 
and the extension in service life of selected items. The liability 
accounts for execution of reset dollars provided in fiscal year 2012 
and the first quarter of fiscal year 2013 and the establishment of the 
Marine Corps' enduring Mine Resistant Armored Protected (MRAP) vehicle 
requirement of 1,231.
---------------------------------------------------------------------------
    \1\ This reset liability is our ``strategic'' reset liability; or 
simply, the cost to reset our Afghanistan equipment set to a like new 
condition. In addition to strategic reset, we have requested $1.3 
billion in OCO in fiscal year 2013, primarily to cover cost of war 
issues, but some of which is slated for strategic maintenance for 
reset. How much of the $1.3 billion will be used for reset is dependent 
on both the quantity of equipment that flows out of Afghanistan and our 
depot capacity.
---------------------------------------------------------------------------
    The Marine Corps 1,231 enduring MRAP requirement strikes the right 
balance between capabilities immediately available to the operating 
forces, those geographically positioned for crisis response and MRAPs 
placed in a cost-effective long-term storage capacity for enduring 
conflict. The 609 MRAPs in short-term storage within our strategic 
prepositioning stocks afloat, in Norway and Kuwait will be maintained 
at a heightened state of readiness; available for crisis response with 
little notice. Four hundred and sixty-three MRAPs will move into long-
term storage at our organic depot facility in Barstow, CA. The 
remaining 159 MRAPs will reside within our operating forces and 
supporting establishment; available for training and immediate 
response.
    The Retrograde and Redeployment in support of Reset and 
Reconstitution Operational Group (R4OG) is a vital element to the 
Marine Corps' responsible drawdown from Afghanistan and the successful 
execution of the Ground Equipment Reset Strategy. The R4OG which began 
in May 2012 is the Marine Corps' component to the U.S. Central Command 
Materiel Recovery Element and is tasked with preserving the operational 
capacity of combat units shouldering the load of clearing the battle 
space of equipment, supplies, and sustainment stocks. The R4OG is 
focused on accountability and efficiency within the redeployment and 
retrograde process. This process includes retrograding more than $324 
million of equipment, repairing more than 1,200 shipping containers, 
and processing more than 230,000 pounds (net explosive weight) of 
ammunition, and has overseen the retrograde of more than 4.5 million 
square feet of aviation AM2 matting and more than 5,700 equipment 
items. The Marine Corps has retrograded 60 percent of its equipment 
items; 70 percent of the supplies, repair parts, and ammunition; and 85 
percent of its AM2 matting in Afghanistan. Additionally, the R4OG 
brings discipline to the retrograde process ensuring Marine Corps 
combat units can dutifully withdraw from Afghanistan concurrent with 
the directed redeployment of Marine Corps forces.

                             DEPOT CAPACITY

    The bulk of reset execution occurs in our depots. The continued 
availability of our ground equipment depot capacity at both Barstow, CA 
and Albany, GA is essential for reset for our ability to both self-
generate readiness and surge in response to demand. As the Marine Corps 
shifts from OEF sustainment to execution of our reset strategy, more 
equipment is returning to the depot in battle worn condition and 
requiring of extensive and overdue depot maintenance repairs. Based on 
the current funding levels provided by Congress in H.R. 933 we will be 
able to remain on schedule with our reset plan in fiscal year 2013, 
however; the long-term impacts of reductions on reset may result in 
cuts to depot maintenance and procurement accounts, which may hinder 
the Marine Corps' ability to reconstitute in stride by fiscal year 
2017.
    If planned funding is reduced, a ``Depot Lag'' or a backlog of 
equipment requiring depot maintenance is expected to occur. Due to the 
reset workload, depot maintenance requirements--both sustainment and 
reset requirements--are at peak levels for fiscal year 2014 and fiscal 
year 2015. In these times, we require maximum throughput of our organic 
depot capability and also rely on other sources of repair to include 
other service depots and commercial options. Reduced funding defers the 
maintenance requirements to out-years, thus increasing the backlog of 
equipment requiring service. Sustained funding reductions cause a 
ripple effect eventually leading to a backlog that will adversely 
affect near- and long-term readiness. Compounding this problem, depot 
capability could be impacted by permanent workforce furloughs.
    The long-term impact of sequestration is deferred maintenance. We 
will have to closely scrutinize and determine equipment maintenance 
priorities, assume risk in mission-essential weapon system readiness, 
delay normal depot sustainment, and, as stated, delay reset operations. 
For example, the Marine Corps will have 44 scheduled aircraft depot 
inductions across all type/model/series that will not occur as a result 
of sequestration reduction to the fiscal year 2013 budget. Of the 44 
aircraft, 23 are F/A-18A-D aircraft. This will result in less aircraft 
available for assignment to Marine F/A-18 squadrons and reduce the 
assets available for training and operational support. Each operational 
F/A-18 squadron should be equipped with 12 aircraft. Of the 12 USMC F/
A-18 squadrons, 5 are deployed--4 Unit Deployment Program/Request for 
Forces (UDP/RFF) and 1 carrier air wing (CVW). The 4 UDP/RFF squadrons 
have 12 aircraft and the 1 CVW squadron has 10 aircraft. The reductions 
to depot throughput will cause the 7 nondeployed squadrons to each have 
6 aircraft available. The long-term effect on nondeployed F/A-18 
squadrons is the inability of the unit to achieve and maintain minimum 
combat readiness required for follow-on deployments. The training 
squadron will be maintained constant at 33 aircraft to meet training 
requirements for Navy and Marine Corps F/A-18 A, C, and D pilots and 
Weapons System Operators.

                             RECONSTITUTION

    The Marine Corps has a strategic trajectory to reconstitute to a 
ready force by fiscal year 2017. Our reconstitution efforts will 
restore and upgrade our combat capability and will ensure our units are 
ready for operations across the range of military operations. 
Additionally, reconstitution will rebalance and sustain home station 
readiness so that our units are ready to deploy on short notice. To 
ensure we are organizing for the emerging security environment and its 
inherent and implied challenges, the Commandant directed a Total Force 
Structure Review in 2010. This review aligned our force to meet the 
needs of the Nation and took into consideration the realities of 
constrained spending levels; the Defense Strategic Guidance; and the 
lessons learned from 10 years of war, particularly the requirements to 
conduct distributed operations. Then in 2012, the Commandant directed 
another internal-look, a Force Optimization Review, to prioritize 
potential future cuts.
    To meet the Defense Strategic Guidance within the fiscal realities, 
we are decreasing our active duty end strength. From a wartime-high 
force level of 202,100 we are conducting a drawdown to 182,100 by the 
end of fiscal year 2016. We are currently at approximately 194,280 
marines. We will retain our Reserve component at 39,600 marines. The 
active duty end strength reductions will occur at the rate of no more 
than 5,000 per year. We have no plan to conduct a reduction-in-force. 
These end strengths will retain our capacity and capability to support 
steady state and crisis response operations; while the pace of the 
reductions will account for the completion of our mission in 
Afghanistan, provide the resiliency that comes with sufficient dwell 
times, and keep faith with our marines. Reshaping the Active Duty 
component to 182,100 marines will entail some risk relative to present 
and future capacity requirements; but it's manageable, particularly as 
we maintain the Reserve component's operational capability. Further 
force level reductions would cause us to reevaluate the Marine Corps' 
role in the National Defense Strategy.

                         FIVE READINESS PILLARS

    To achieve institutional readiness, sustain operational 
requirements, and be prepared for crisis and contingency response, we 
must restore and maintain a balance for our Marine Corps across five 
pillars:

         High quality people
         Unit readiness
         Capacity to meet combatant commander requirements
         Infrastructure sustainment
         Equipment modernization

                          HIGH QUALITY PEOPLE

    The recruiting and retention of high quality people remain 
essential to attain a highly ready and professional force. We need the 
right quantities and occupational specialties to fulfill our role as an 
expeditionary force in readiness. In fiscal year 2012, the Corps 
achieved 100 percent of its officer and recruiting goals for the Active 
and Reserve components, while exceeding DOD quality standards for Tier 
1 High School Graduates and Mental Categories I-IIIa. We expect to 
achieve the same in fiscal year 2013. The Marine Corps also achieved 
its retention mission in fiscal year 2012 and anticipates doing so 
again in fiscal year 2013. A critical enabler of recruiting and 
retaining a high quality force is appropriate compensation and 
benefits; we thank Congress for its focus on this issue through the 
decade of war. We rely on Congress' continued support of pay and 
benefits, incentive pays, and selective reenlistment bonuses to meet 
future recruiting challenges, position the force for the impending 
drawdown, and shape the All-Volunteer Force to meet the new defense 
strategy.
    Civilian marines are an integral part of our Total Force, 
supporting the Corps' mission and daily functions. Marine civilians are 
a ``best value'' for the defense dollar, are shaped to support the 
Corps into the future, and are the leanest appropriated funded civilian 
workforce within DOD, with only 1 civilian for every 10 marines. Fewer 
than 5 percent work in the Pentagon. The vast majority of our civilian 
marines, more than 95 percent, work at our installations and depots. 
Sixty-eight percent are veterans who have chosen to continue their 
service to our Nation. If furloughed, our civilian marines could lose a 
substantial amount of pay during the last quarter of fiscal year 2013. 
The potential readiness and human impacts associated with furloughing 
our civilian marines are significant. While we would like to believe 
that a discontinuous furlough will reduce the impact on our employees, 
most will not be able to easily absorb the loss of income, even over a 
14-week period should it come to that.
    The Marine Corps' Wounded Warrior Regiment (WWR) is a fundamental 
component of the Marine Corps' pledge to ``keep faith'' with those who 
have served. The WWR supports marines wounded in combat, those who fall 
severely ill, and those injured in the line of duty. The regiment 
administers the Marine Corps' Recovery Coordination Program that 
ensures medical and nonmedical needs fully integrate with programs such 
as the Warrior Athlete Reconditioning Program. Facilities such as our 
new Warrior Hope and Care Centers provide necessary specialized 
facilities allowing us to support our wounded warriors and their 
families.
    Key to this care is ensuring marines execute recovery plans that 
enable their successful return to duty or reintegration to their 
civilian communities. Around the country we have established District 
Injured Support Coordinators whose duty is to assist marines 
transitioning from active duty to veteran status. Our WWR Medical Staff 
provides medical subject matter expertise, advocacy, and liaison to the 
medical community. The Sergeant Merlin German Wounded Warrior Call 
Center conducts an average of 7,000 outreach calls per month and 
receives calls for assistance 24 hours a day from both active-duty and 
veteran marines. Our contact centers also conduct outreach to marines 
who remain with their parent command to ensure their needs are met. 
Depending upon the individual marine's requirements, these programs and 
services are coordinated for optimal care delivery, proving that 
Wounded Warrior care is not a process, but a persistent relationship 
between the Marine Corps and our marines.
    The Marine Corps is greatly concerned about the long-term care and 
support for our wounded veterans. Many of our young men and women have 
sustained injuries that will require support for the remainder of their 
lives. Given the youthfulness of this wounded population, this 
represents a debt to our Nation's warriors that will have to be paid 
for several decades. Our wounded warrior capabilities are an enduring 
measure of our commitment to keep faith with our young men and women, 
and we expect this capability will continue well beyond our return from 
Afghanistan.

                             UNIT READINESS

    This pillar upholds maintaining and shaping the readiness of the 
operating forces, to include the necessary O&M funding to train to core 
missions and maintain equipment. The Marine Corps has, and always will, 
source our best trained, most ready forces to meet combatant commander 
requirements. The challenge is to maintain the readiness of the 
nondeployed forces so they can respond to crises and contingencies with 
the proper balance of equipping, manning, and training.
    As our forces return from Afghanistan, our focus will be on 
training to our core expeditionary and amphibious mission capabilities. 
We anticipate incremental increases in the core training readiness of 
units as marines and equipment flow back from Afghanistan over the next 
12-24 months.
    After the drawdown from Afghanistan, we expect to be increasingly 
engaged around the world--training, engaging, deterring, and responding 
to all manner of crises and contingencies. O&M funding is essential for 
our readiness to conduct steady state operations, including amphibious 
and Maritime Prepositioning Ships Squadron (MPSRON) operations, provide 
support to the combatant commanders, and provide for our supporting 
establishment's sustainment for the operating forces. The battlefields 
of today and tomorrow necessitate more distributed operations and 
decentralized command--both of which will drive training costs higher. 
We know that these future requirements to maintain readiness will 
increase demand on O&M funding.
    Also, sufficient O&M funding is essential in the Pacific to support 
our unit deployment program in Japan; provide rotational forces in 
Australia and Guam; and engage throughout the region. It is also needed 
to cover the transportation costs for bringing together the widely 
dispersed Marine Expeditionary Brigade and Marine Expeditionary Force 
elements for training and exercises.

           CAPACITY TO MEET COMBATANT COMMANDER REQUIREMENTS

    Force-sizing to meet geographic combatant commander (GCC) 
requirements, with the right mix of capacity and capability, is the 
essence of our third readiness pillar. The GCCs continue to register an 
increased demand for crisis response and amphibious forces in order to 
meet requirements across the range of military operations (ROMO). 
Decisions made in our Force Structure Review and Force Optimization 
Review will provide a better breadth and depth of Marine forces capable 
of executing a regional major contingency operation and optimized for 
current operations and crisis/contingency response. The capacities of 
our organic intelligence, surveillance, and reconnaissance; command and 
control; and unmanned aircraft systems will be increased.
    Our critical capacity versus requirement concerns include: shifting 
forces to III Marine Expeditionary Force in the Pacific, ensuring we 
retain a global crisis response capability, and ensuring the 
availability and readiness of amphibious shipping and maritime 
prepositioned assets to meet increased training and contingency 
requirements. The primary challenge of the Marine Corps from a 
logistics standpoint is the ``tyranny of distance'' inherent in the 
laydown of forces across the Pacific covering an area thousands of 
miles wide and linkable only by airlift and sealift. To sustain our 
forces in the Pacific and mitigate gaps, we will rely on our own 
organic capabilities and external support from other Services, the 
Defense Logistics Agency, and U.S. Transportation Command. This 
combination of support will provide flexibility, agility, and 
responsive support to the operating forces.
    Marine Expeditionary Units (MEUs), coupled with their Amphibious 
Ready Group (ARG) partners, continue to remain one of the key means by 
which the Marine Corps provides rapid response to emerging global 
crises. Their composition and capabilities see them frequently 
requested by combatant commanders to fulfill various theater 
engagements; most often they support Central Command and Pacific 
Command requirements. We have assumed some risk in the Mediterranean 
but do still maintain the capability to respond to crises in European 
Command and Africa Command (the Mediterranean). This response 
capability also includes our Fleet Anti-Terrorism Support Teams (FAST) 
from Marine Corps Security Forces Regiment deployed to Rota, Spain and 
Special Purpose Marine Air Ground Task Force-Africa stationed in 
Sigonella, Italy. In order to further mitigate the risk and in response 
to the ``new normal'' of an enhanced baseline of security at U.S. 
diplomatic facilities, we are looking to form a crisis response force 
whose primary duty will be to cover that region. This force will be 
specifically designed to provide embassy reinforcement and fixed site 
security in addition to other limited crisis response capabilities. As 
with all our MAGTFs it will be forward deployed; rotational; and be 
self-contained with inherent ground, aviation, logistics, and command 
and control capabilities. This capability does not replace a MEU but 
serves to provide presence where MEUs are not currently located.

                       INFRASTRUCTURE SUSTAINMENT

    Infrastructure sustainment, our fourth readiness pillar, is the 
investment in real property, facilities maintenance, and base 
infrastructure to support the missions and readiness of our operating 
forces and other tenant commands. The quality of life for our marines, 
sailors, and families is measurably impacted by the condition of our 
facilities. As such, the Marine Corps is committed to the proper 
stewardship of our bases and stations to include the natural resources 
they encompass. We must adequately resource their sustainment to 
maintain our physical infrastructure and the complimentary ability to 
train and deploy highly ready forces. Additionally, as we rebalance 
toward the Pacific, we will strive to make the proper investments in 
ranges and facilities to maintain the training readiness of deployed 
forces to and within that area of operations.
    Funding for our facilities sustainment, recapitalization, and 
modernization, as well as military construction and operations is 
required to provide and maintain quality infrastructure for our future 
force. We request Congress' continued support for facilities 
sustainment and demolition, family housing, environmental management, 
energy conservation and essential MILCON funding to support critical 
programs, units and institutions such as the Joint Strike Fighter, MV-
22, Marine Corps Security Forces, Marine Corps University, Marine Cyber 
Forces, and the Townsend Bombing Range.

                        EQUIPMENT MODERNIZATION

    In this austere fiscal environment, we are conducting only 
essential modernization, focusing especially on those areas that 
underpin our core competencies. We are mitigating costs by prioritizing 
and sequencing our equipment modernization and sustainment programs to 
maintain their readiness in a fiscally responsible manner. To maintain 
operational capabilities and readiness, modernization is critical in 
the areas of ground combat tactical vehicles; aviation; amphibious and 
pre-positioning ships along with their associated connectors; 
expeditionary energy; and intelligence, surveillance, and 
reconnaissance. Our modern expeditionary force will require fixed wing 
aircraft capable of flexible basing ashore or at sea in support of our 
Marine units. The Joint Strike Fighter is the best aircraft to provide 
that support today and well into the future. Likewise, a core 
capability of our expeditionary forces is the ability to project forces 
ashore from amphibious platforms and to maneuver once ashore. We remain 
committed to developing and fielding an Amphibious Combat Vehicle that 
meets this critical need.
    While we have not cancelled or extended any programs as a result of 
the fiscal year 2013 budget decisions, the uncertainty associated with 
fiscal year 2014 and out-year budgets could require us to continually 
review and adjust our program plans consistent with the changing budget 
environment. Decreasing budgets within ongoing acquisition programs 
would necessarily lead to a review of the programs' ability to execute 
approved cost, schedule, and performance parameters. Our HMMWV, AAV, 
LAV, and tank modification programs, which are critical to maintaining 
the operational availability of these vehicles, would likely be slowed 
significantly yet remain essential to our medium- and long-term 
operational readiness. Critical survivability and mobility upgrades to 
the AAV and LAV fleets would be delayed. These delays would ultimately 
impact our ability to support our forward and deployed marines with 
ready, relevant, and capable combat systems. We request Congress' 
continued support for modernization to maintain the high level of 
future readiness our Nation will need.

        PREPARED TO SUPPORT THE DEFENSE STRATEGIC GUIDANCE (DSG)

    Last month, Secretary Hagel launched a Strategic Choices and 
Management Review to help define the major decisions that must be made 
in the decade ahead to preserve and adapt defense strategy and 
management under a range of future strategic and budgetary scenarios. 
We are confident the Navy-Marine Corps team and our inherent naval 
forward basing, crisis response capabilities and theater engagement 
capacity make us ideally suited to support the current strategic 
guidance and any future reiteration of it, particularly any focus on 
the Pacific Command region. The Marine Corps will rebalance its unit 
deployment program to 2001 levels during fiscal year 2013 and fiscal 
year 2014. Last year we deployed a company of marines from Hawaii to 
Australia to usher in a rotational presence that will grow to a Marine 
Expeditionary Unit sized Marine Air Ground Task Force, with associated 
units and equipment, during fiscal year 2016 to fiscal year 2017. Our 
rotational presence throughout Asia serves to reassure our allies, 
strengthen our ties, and demonstrate our commitment to the region. The 
sea-basing capability provided by our MPSRONs provides the flexibility 
to deploy forces anywhere, without reliance on mature infrastructure 
such as ports and airfields. Simply, sea-basing is uniquely suited to 
this theater where a vast amount of the area is water and does not have 
readily available port infrastructure to support a less expeditionary 
capability.
    Our prepositioning programs are a unique strategic capability, 
giving us the ability to quickly respond to a wide scale of global 
crises and contingencies.
    The MPSRONs are an afloat asset capable of providing global support 
to operational forces across the entire spectrum of military 
operations. A MPSRON provides an increased sustainment capacity and 
also supports the establishment of a Marine Expeditionary Brigade 
(MEB). Increasing strategic flexibility, the MPSRONs provide near 
immediate closure of equipment and supplies to the combatant commander 
to meet any contingency from combat operations to humanitarian 
assistance and disaster relief. This strategic program will require 
continued congressional support. In order for sea-basing to be 
effective, using both amphibious ships and MPSRONs, the amphibious 
ship-to-shore connectors will also require modernization.
    The Marine Corps Prepositioning Program-Norway prepositions 
equipment and supplies ashore in caves. While available for global 
employment, they are particularly important assets for use in the 
European and African theaters. In a cost-sharing partnership with the 
Norwegian Ministry of Defense, we have built a viable capability that 
has been used in recent years to support theater security cooperation 
as well as several humanitarian relief efforts. Originally designed to 
hold the equipment and supplies to support a MEB, we are reorganizing 
the program to maintain its relevancy. Of note, we are adding 
communications and ordnance assets not previously prepositioned.

                        PARTNERED WITH THE NAVY

    Sea-based and forward-deployed naval forces provide day-to-day 
engagement, crisis response, and assured access for the joint force in 
a contingency. Partnered with the Navy, we will continue to pursue 
innovative concepts for maritime expeditionary operations with 
platforms such as the Joint High Speed Vessel (JHSV) and the Mobile 
Landing Platform. As new maritime prepositioning force ships are 
integrated into the MPSRONs, they will provide additional operational 
benefits to the combatant commanders, such as an over-the-horizon 
surface connector capability and better selective access to equipment 
and supplies.
    A critical component in building, training, and maintaining an 
expeditionary forward presence is the availability and readiness of 
amphibious ships. The combat readiness of our amphibious ships is a 
foundational requirement for expeditionary force presence, and when 
required, amphibious force projection. As such, the Navy has 
acknowledged that low amphibious ship availability and readiness can 
present a significant challenge to the training readiness of our Naval 
Expeditionary Forces and is addressing maintenance readiness 
shortfalls. Since 2010, the average deployment length for a West Coast 
and East Coast Amphibious Ready Group/Marine Expeditionary Unit has 
been 219 days and 292 days respectively. The increased duration of 
deployment combined with a high operational tempo, reduced ship 
inventory, and deferred/compressed maintenance periods demonstrates the 
imperative to maintain planned/scheduled maintenance cycles and to 
build to adequate inventory. This has a direct impact on the readiness 
of the amphibious fleet and on ensuring the ships reach their service 
life. Continued congressional support for the Navy's shipbuilding and 
surface ship-to-shore connector plans is vital to the Nation's ability 
to retain and maintain an adequate fleet of modern combat-ready 
amphibious ships, which can provide continuous naval expeditionary 
presence and project power across the globe whenever and wherever 
needed.
    Providing our Nation's leaders with ``offshore options'', naval 
aviation enables global reach and access regardless of changing 
circumstances. Through our partnership with the Navy, Marine Corps 
aviation continues to transition from 13 to 6 aircraft with current 
deployed forces successfully utilizing transition aircraft: the MV-22, 
AH-1Z, and UH-1Y. Top priorities for naval aviation include investing 
in fifth generation strike fighter capability (F-35B/C); persistent 
multi-role intelligence, surveillance, and reconnaissance; supporting 
capabilities such as electronic attack and vertical lift; robust strike 
weapons programs; and targeted modernization of the force for relevance 
and sustainability.

                         ADDITIONAL COMMITMENTS

    In addition to providing the Nation well-trained, forward-deployed, 
and forward-engaged units of marines, the Marine Corps supports other 
national imperatives. In Indian Head, MD, the Marine Corps maintains a 
nationally engaged and pre-eminent Chemical Biological Incident 
Response Force capable of responding to chemical, biological, 
radiological, nuclear, or high yield explosive incidents.
    Around the clock, our Marine Corps Security Forces Regiment marines 
guard a substantial portion of America's strategic arsenal. Marine 
Security Forces also encompass the deployment of Fleet Antiterrorism 
Support Teams to the Commanders of Pacific Command, European Command, 
and Central Command. These teams serve as a crisis-response force and 
guard high value American assets.
    We are reshaping organizations, capabilities, and capacities to 
increase aggregate utility and flexibility across the range of military 
operations, to include enhanced support to U.S. Special Operations and 
Cyber Commands. We now have 759 Marine Special Operators and 549 Marine 
Critical Skills Special Operators of the 3,171 total Active Force 
marines, sailors, and civilians currently serving at Marine Corps 
Forces Special Operations Command (MARSOC), U.S. Special Operations 
Command (SOCOM). We will continue to complete our build of MARSOC, 
reaching full operating capability in fiscal year 2016 with an active-
duty end strength of 3,113. Additionally, we currently have 308 marines 
assigned to Headquarters, SOCOM and its subordinate joint commands. 
From training, command and control and operational employment, all of 
these marines provide a critical role in realizing geographical 
combatant commander requirements in support of our National Security 
Strategy
    At Cyber Command we have created an assigned company of marines. 
The mission of this company, Company L, is to plan and execute 
cyberspace operations in order to support joint and Marine Corps 
requirements. Company L is planned to grow significantly to meet Marine 
Corps Forces Cyberspace Command requirements by 2016.
    Finally, Marine Corps Embassy Security Guards support 152 U.S. 
embassies and consulates around the globe and our fiscal year 2014 
budget request funds 1,635 marines for this program. As requested by 
Congress, we are working with the Department of State to determine the 
appropriate number of marines and will report to Congress by October 1, 
2013.

                                SUMMARY

    On behalf of the marines and sailors who provide this Nation with 
its versatile, reliable, middleweight force in readiness, I thank 
Congress for your constant interest in and recognition of our 
challenges. Readiness contains a temporal aspect and with 32,000 to 
38,000 new regular accessions a year, currency in our readiness is a 
state we continuously work to maintain. Without the ability to transfer 
money among accounts and the restricted ability to make choices 
regarding where to take cuts, the impact of reduced funding will end up 
disproportionally affecting our five pillars of readiness. Your 
continued support is requested to provide a balance across the five 
readiness pillars so that we can maintain our institutional readiness 
and, as you charged more than 60 years ago, ``be most ready when our 
Nation is least ready''.

    Senator Shaheen. Thank you.
    General Spencer.

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

    General Spencer. Good afternoon, Madam Chairman, Ranking 
Member Ayotte, and distinguished members of the subcommittee. 
Thank you for the opportunity to share the Air Force's current 
readiness posture.
    The cornerstone of our airmen's ability to provide airpower 
for the Nation at a moment's notice anywhere in the world is 
their readiness. Today, we are concerned about readiness for 
two reasons. First, 2 decades of sustained combat operations in 
missions around the world have stressed our force, decreased 
our readiness, and limited our ability to train for the full 
spectrum of missions our combatant commanders might call upon 
us to provide. Second, just as we were about to take a step 
forward in our fiscal year 2014 President's budget submission 
to arrest that decline in training and return to full-spectrum 
readiness, sequestration took us several steps back, and its 
impacts are not only affecting us now, but will continue to do 
so in the future.
    You have already heard that sequestration will force us to 
induct 60 less airplanes and 35 less engines into our depots. 
This will have a direct impact on the aircraft available for 
our missions.
    You may also be aware that sequestration has forced us to 
reduce approximately 200,000 flying hours in the last 6 months 
of the year. This reduction in flying hours and related support 
forced us to recently standdown nine fighter squadrons and 
three bomber squadrons. These standdowns are a direct hit to 
our readiness posture.
    To put a face on this, last week I spoke with the wing 
commander at one of our three F-15E Wings. In addition to 
having two combat-coded fighter squadrons, one of which has 
been stood down, she also has two squadrons which are part of 
the Formal Training Unit (FTU) that trains new F-15E pilots and 
weapons systems operators. Since the remaining F-15E squadrons 
in the Air Force are either stood down or preparing to deploy, 
she has the only remaining squadron that is currently flying to 
full combat readiness.
    Graduating from FTU is the final step before our young F-
15E pilots and weapons systems operators move on to one of our 
three wings to begin their career in the jet that they dreamed 
of it is the reason they joined the Air Force. The commander 
worries about the morale of her fighter pilots and weapons 
systems operators with no jets to fly. Depending on how long 
the jets remain stood down, she worries about how she and her 
fellow wing commanders will get their pilots and weapons 
systems operators requalified.
    Before I completed my college degree and became a 
commissioned officer, I spent 8 years in the Air Force as an 
enlisted member. I can tell you first hand that all my fellow 
airmen and myself wanted was to ensure we could launch and 
maintain airplanes and space satellites so that we can fly, 
fight, and win as our Nation expects us to do. Whether we guard 
at the front gate, worked in finance, maintained the base 
infrastructure, or turned a wrench on an aircraft, we all got 
goosebumps when the Earth seemed to shake beneath a space 
vehicle launch or the roar of a jet engine, something we refer 
to as the ``sound of freedom.''
    While our focus today is on readiness, we cannot forget 
that a ready force also needs to be modern and technologically 
advanced. Not modernizing our force in a timely manner will 
likely increase unit costs and drive inefficiencies for our 
long-term programs, like the F-35, KC-46, and long-range strike 
bomber, that are so critical to our continued ability to hold 
targets at risk around the globe.
    Nearer term, modernization is also necessary to conduct our 
core missions. For example, we must modernize our fourth-
generation F-15s and F-16s until we have sufficient fifth-
generation aircraft to continue to provide the joint team with 
the air superiority on which they and America rely.
    Madam Chairman and committee members, our Nation is 
fortunate to have world-class people who work hard to produce 
world-class airpower every day. Despite the current challenges 
we face, our airmen are the finest in the world, and they 
have--throughout our history, are stepping up to the challenge 
to deliver global vigilance, global reach, and global power for 
America.
    The Air Force supports combatant command missions that 
require 24/7 availability and attention. Many of our high-
priority missions cannot be done adequately, and in some cases 
cannot be done safely, at low readiness levels. Allowing the 
Air Force to slip to a lower state of readiness that requires a 
subsequent long buildup to full combat effectiveness will 
negate the essential strategic advantages of airpower and put 
the joint forces at increased risk.
    America's Air Force remains the most capable in the world, 
but we cannot allow readiness levels to decline further, and 
modernization cannot wait for the next cycle of increased 
defense spending.
    The U.S. Air Force and our sister Services comprise the 
premier fighting force on the planet, and our Air Force 
leadership team is fully committed to ensuring that we remain 
so.
    Thank you, and I look forward to your questions.
    [The prepared statement of General Spencer follows:]

           Prepared Statement by Gen. Larry O. Spencer, USAF

                              INTRODUCTION

    America's Air Force has conducted 22 years of sustained combat 
operations and is continuing to meet high operational tempo demands to 
support today's fight. This has inevitably taken a toll on our weapons 
systems and people, and since 2003 has strained and degraded the 
overall readiness of the force. The Air Force fiscal year 2014 budget 
request attempts to align resources to slow our readiness decline and 
set the stage for restoring full-spectrum readiness. However, the 
current fiscal environment threatens to derail these efforts and put 
into jeopardy the Air Force's ability to meet combatant commander 
requirements. The rebalance to the Asia-Pacific and our continued 
presence in the Middle East and Africa indicate that the demand for Air 
Force capabilities will remain constant, or perhaps even rise, over the 
next decade. To ensure that our airmen can continue to contribute our 
five enduring core missions to the joint team, our readiness must 
improve.

                               READINESS

    The Air Force provides Global Vigilance, Global Reach, and Global 
Power for America through its five core missions of air and space 
superiority, intelligence, surveillance, and reconnaissance (ISR), 
rapid global mobility, global strike, and command and control. By 
integrating capabilities across these core missions, we bring a unique 
set of options to deter war, deliver rapid, lifesaving responses to 
threatened areas anywhere on the planet, and strike hard and precisely 
wherever and whenever the national interest demands.
    The cornerstone of our airmen's ability to provide airpower to the 
Nation and contribute our core missions to the joint team is their 
readiness. ``Readiness'' is the ability of a unit to provide its 
designed operational capabilities within the required timeframe. It is 
comprised of personnel requirements, training (to include flying 
hours), weapon system sustainment, facilities, and installations. A 
responsive readiness posture depends on good health in all of these key 
areas. While protecting future readiness includes modernizing weapons 
systems and equipment, creating combat readiness in the near-term is a 
complex task involving the intersection of personnel, materiel, and 
training. It includes balancing time between operational and training 
commitments, funding from multiple sources, informed levels of risk, 
and effectively managing resources to achieve the desired state of 
readiness.
    Mitigating the risk associated with a smaller military requires a 
ready force. If we attempt to sustain current force levels while 
personnel and operational costs rise, there will be progressively fewer 
resources available to support our current number of installations, 
maintain existing aircraft inventories, vital equipment and weapons, 
and invest in future capabilities--the definition of a hollow force.
    The Air Force supports combatant command missions that require 24/7 
availability. Space operations, command and control, cyber defense, 
ISR, special operations, personnel recovery, and nuclear deterrence are 
all high priority missions that cannot be done adequately, and in some 
cases cannot be done safely, at low readiness levels. In support of 
U.S. defense strategy, our air forces must be capable of quickly 
responding and shifting between theaters of operation. Allowing the Air 
Force to slip to a lower state of readiness that requires a long 
buildup to full combat effectiveness negates the essential strategic 
advantages of airpower and puts joint forces at increased risk.
    The Consolidated and Further Continuing Appropriations Act, 2013, 
combined with sequestration reductions, results in approximately $4.4 
billion less than our request from our operations and maintenance 
accounts from which we fund some of our foundational readiness 
programs, including weapons system sustainment (WSS) and our flying 
hour program (FHP). We project that sequestration will reduce WSS and 
FHP by about $2.1 billion from our original fiscal year 2013 budget 
request. These cuts will affect fiscal year 2014 and beyond by driving 
down aircraft availability rates, and potentially preventing our 
ability to fly additional hours even if funded.
    The President's budget includes balanced deficit reduction 
proposals that would allow Congress to replace and repeal sequestration 
in fiscal year 2013 and the associated cap reductions in fiscal year 
2014-2021. If sequestration is not replaced, the Air Force will have to 
rebuild degraded unit readiness, accept further delays to 
modernization, absorb the backlog in depot maintenance inductions, and 
invest additional funding to restore infrastructure. However, because 
sequestration impacts are already occurring, even if our readiness 
programs are funded to the levels requested in the fiscal year 2014 
President's budget (PB), our readiness levels may still not recover to 
pre-sequester levels in fiscal year 2014. If the post-sequester Budget 
Control Act funding caps remain in effect, the Air Force will be unable 
to reinvigorate readiness and align with the Defense Strategic 
Guidance. In both the short- and long-term, sequestration will have 
devastating impacts to readiness, will significantly affect our 
modernization programs, and may cause further force structure 
reductions.

Weapons System Sustainment
    WSS is a key component of full-spectrum readiness. Years of combat 
demands have taken a toll across many weapon systems, and we continue 
to see an increase in the costs of WSS requirements, which are driven 
by sustainment strategy, complexity of new weapon systems, operations 
tempo, force structure changes, and growth in depot work packages for 
aging, legacy aircraft. With recent force structure reductions, we must 
carefully manage how we allocate WSS in order to avoid availability 
shortfalls. We are planning to fund WSS to 81 percent of the fiscal 
year 2014 requirement using funds from the base budget as well as 
overseas contingency operations (OCO) funds.
    Sequestration has further set back our efforts to improve WSS. 
Depot delays will result in the grounding of some affected aircraft. 
The deferments mean idled production shops, a degradation of workforce 
proficiency and productivity, and corresponding future volatility and 
operational costs. It can take 2 to 3 years to recover full restoration 
of depot workforce productivity and proficiency.
    Moreover, WSS funding requirements for combat-ready air, space, and 
cyber forces have consistently increased at a rate double that of 
inflation planning factors. Although service life extension programs 
and periodic modifications have allowed our inventory to support 22 
years of unabated operations, the cost of maintenance and sustainment 
continues to rise. WSS costs still outpace inflationary growth, and in 
the current fiscal environment, our efforts to restore weapons system 
availability to required levels will be a serious challenge. Although 
the fiscal year 2014 PB adds baseline funds for WSS, we continue to 
rely on OCO funding for global contingency operations.

Flying Hour Program
    The emphasis on readiness in the Defense Strategic Guidance 
reinforced the Air Force focus on the importance of maintaining our FHP 
as part of our full-spectrum readiness. For the fiscal year 2014 budget 
request, the Air Force balanced the allocation of flying hours across 
the Total Force to maintain--and in some cases--incrementally improve 
readiness levels.
    However, as with WSS, sequestration affects our ability to improve 
readiness, and in fact, readiness levels are already declining. Lost 
flight hours will cause unit stand-downs which will result in severe, 
rapid, and long-term unit combat readiness degradation. We have already 
ceased operations for one-third of our fighter and bomber force. Within 
60 days of a stand down, the affected units will be unable to meet 
emergent or operations plans requirements. Lost currency training 
requires 6 months to a year to return to current sub-optimal levels, 
with desired flying proficiency for crewmembers requiring even longer.
    The flying hour program will continue to rely on OCO funding to 
support Operation Enduring Freedom and the redeployment of combat 
forces from Afghanistan. With the expectation of decreasing OCO flying 
hours, we have programmed increasing operations and maintenance (O&M)-
funded flying hours in fiscal year 2015 and throughout the Future Years 
Defense Program (FYDP). Beginning in fiscal year 2015, the program 
meets approximately 90 percent of the peacetime training requirement to 
attain full-spectrum readiness across the Total Force.
    The Air Force is committed to a long-term effort to increase our 
live, virtual, and constructive operational training (LVC-OT) 
capability and capacity by funding improvements in LVC-OT devices 
(e.g., simulators and virtual trainers) and networks. Adjustments to 
the flying hour program will continue to evolve as the fidelity of 
simulators and LVC-OT capabilities improve. Increasing our virtual 
capabilities will minimize fuel consumption and aircraft maintenance 
costs while ensuring high quality training for our aircrews.
    Full-spectrum training also includes the availability and 
sustainability of air-to-air and air-to-ground training ranges. Many of 
our ranges are venues for large-scale joint and coalition training 
events and are critical enablers for concepts like Air-Sea Battle. In 
fiscal year 2014, we are increasing funding to improve and sustain 
these crucial national assets to elevate flying training effectiveness 
for the joint team, which in turn improves individual and unit 
readiness levels.

Readiness and Modernization
    The decline in future budgets does not allow us to maintain force 
structure and continue all planned investment programs while also 
improving readiness. To prioritize readiness, we have made a conscious 
choice to assume additional risk in some modernization programs. 
Although we have been more effective in our use of operating resources 
and garnered savings from better business practices, the Air Force has 
been forced to terminate or restructure several programs. Program 
restructures and terminations include terminating the Space Based 
Surveillance Block 10 follow-on, freezing Gorgon Stare at Increment II, 
terminating Air Force participation in the Joint Precision Approach and 
Landing System land-based segment, and divesting the UAV (unmanned 
aerial vehicle) Battlelab. In addition, several key modernization 
priorities were deferred, including a replacement for the aging T-38 
trainer and the Joint Surveillance and Target Attack Radar System 
surveillance aircraft.
    To achieve the readiness levels we desire, the Air Force needs 
sustained modernization. For example, our legacy, or fourth generation, 
fighter fleet has secured more than 20 years of an air superiority 
advantage, but may lose its ability to operate as effectively in 
contested environments. Weapon systems like the F-22, with 
contributions from the F-35, are what will carry America's Air Force 
forward to continue to provide air superiority. During F-35 
development, it is imperative that we maintain our fourth-generation 
fighter fleet. Therefore, at least 300 F-16s will undergo a service 
life extension program and a capability enhancement called Combat 
Avionics Programmed Extension Suite, which permits them to remain 
relevant in the near-term threat environment until the F-35 is 
available in sufficient numbers. We are also upgrading the F-15 fleet's 
radar and electronic warfare capabilities that will permit it to 
operate in conjunction with fifth-generation aircraft in the future 
threat environment.
    Other top modernization programs include the KC-46A and the Long-
Range Strike Bomber (LRS-B). Because the future will likely call for us 
to provide rapid global mobility to remote, austere locations in 
contested environments, we will require a very capable tanker fleet. 
The KC-46A program will ensure that our Nation retains a tanker fleet 
able to provide crucial air refueling capacity worldwide for decades to 
come. The LRS-B is a key piece of the development of our long-range 
strike family of systems, the capabilities of which are critical to our 
ability to carry out our global strike mission.
    America's Air Force remains the most capable in the world, but we 
cannot allow readiness levels to decline further and modernization 
cannot wait for the next cycle of increased defense spending. We have 
important production lines underway and development programs that are, 
or will soon be, mature enough for production. Cancelling programs in 
anticipation of a future generation of technology would be wasteful 
and, in some cases, risk the loss of critical engineering talent and 
technological advantage. New threats and corresponding investment needs 
are not theoretical future possibilities. They are here, now. Air 
superiority and long-range strike capabilities cannot be assumed. 
Significant investment in fifth-generation platforms and munitions is 
essential to address these threats. The future success of the Nation's 
military and the joint team depends on modernizing our Air Force and 
keeping it ready to fight.

                               CONCLUSION

    The Air Force's core missions will continue to serve America's 
long-term security interests by giving our Nation and its leadership 
unmatched options against the challenges of an unpredictable future. In 
the last several decades, Air Force airpower has been an indispensable 
element of deterrence, controlled escalation, and, when so tasked by 
the Nation's leadership, destruction of an adversary's military 
capability--all accomplished with minimal casualties to U.S. service 
men and women and civilians. However, investments in Air Force 
capabilities and readiness remain essential to ensuring that the Nation 
will maintain an agile, flexible, and ready force. This force must be 
deliberately planned and consistently funded, as reconstitution of a 
highly sophisticated and capable Air Force cannot occur quickly if 
allowed to atrophy.
    Today's Air Force provides America an indispensable hedge against 
the challenges of a dangerous and uncertain future, providing viable 
foreign policy options exclusive of a large military commitment on 
foreign soil. Regardless of the future security environment, the Air 
Force must retain and maintain its unique ability to provide America 
with Global Vigilance, Global Reach, and Global Power.

    Senator Shaheen. Thank you very much, everyone.
    You've all spoken very eloquently to the potential impact 
of sequestration. One of the things that I have been struck by 
as I've listened to you and talked to other of our leaders in 
the military is that this is not just a problem for 2013, but 
it becomes an increasingly difficult problem as we go into 2014 
and beyond. So, I wonder if you could talk about what our 
forces are going to look like at the beginning of 2014 if 
sequestration remains in place. Then, assuming we can address 
it by the beginning of 2014, how long will it take us to 
restore readiness to the levels that you all would like to see?
    I don't know if someone would like to go first or--I'm 
going to ask all of you to address that.
    General Spencer. Sure, Senator, I'll start.
    First of all, we don't know what our budget is in 2014, so 
there is a lot of uncertainty there. There's the law--current 
law, which is sequestration; and there's the President's budget 
submission; and there is a House and Senate version. So, we 
don't know yet what our future is. That uncertainty is very 
unsettling.
    But, let me give it a couple of examples. If you stand--I 
mean, I--at home, I have a 1972 Chevrolet Monte Carlo. Because 
it's old, I have to start that car at least once a week to get 
the transmission and everything working, or it won't run very 
well. It gets cranky. Airplanes are similar. If you sit 
airplanes down and you don't turn the engines, they don't taxi, 
they don't takeoff, they don't work very well. So, if you stand 
down airplanes over several months, that's a problem.
    Next, obviously the aircrews are not flying those 
airplanes. So, over time, their currency degrades and 
deteriorates.
    The same with the maintenance troops that fix those 
airplanes. If they aren't fixing airplanes, if they aren't 
working on airplanes, then they are not as sharp as they need 
to be.
    So, that's airplanes. On the other--just to give you 
another example, I mentioned that we're going to send 60 fewer 
aircraft and 35 fewer engines in the depot. I used to be the 
vice commander of the depot in Oklahoma City. For a KC-135, 
which is a tanker, it takes a little over 200 days to get that 
airplane in, get it stripped down, fully redone, and out. So, 
that's 200 days for just that airplane.
    When you start backing up that line of airplanes that are 
stuck--so, first of all, you have those airplanes who can't fly 
in, so now, depending on how many hours they have on them, they 
too will be grounded and are sitting around. You have the 
civilians there who potentially could be furloughed. So--and 
you have those engines, now, that are backed up. So, you have 
this whole clogged system of airplanes and engines and people 
that need to move and need to be active to be sharp.
    So, it's almost like a weight or an anchor, if you will, 
that we're going to pull, now, from 2013 cross the 2014 line. 
So, regardless of what happens in 2014, if sequestration goes 
away and we cross that line into 2014, we still have those 
airplanes and those pilots and those maintenance people and 
those engines and those aircraft that didn't go into depot 
sitting on our doorstep. So, we have to start, first in that 
hole, to try to dig ourselves out.
    Senator Shaheen. Thank you.
    Anyone want to add to that at all?
    General Paxton. If you wanted us to go by Service, Madam 
Chairman, and--just a few things on the Marines side. I would 
echo what General Spencer said, in that, with the fiscal cuts, 
the degradation may be linear, but the restoration is not 
linear. Because once you bottom out, things don't repair that 
quickly, either the equipment or the lack of training for the 
individual or the training for the cohesed unit, if you will.
    As an example, I would take, on the Marines side, our F-16 
aircraft--our F-18 aircraft. Right now, we have 5 of our 12 
squadrons deployed, and we have another squadron that's a 
training squadron. Those are fully manned, organized, trained, 
and equipped. As I said in my written and oral statements, we 
believe that those squadrons will stay that way, not only for 
the current deployment, but at least for the next two 
deployers, the one that will go in the fall and the one that 
will go late winter, early spring.
    What that means, though, is, for the seven squadrons who 
are back at home, that they have aircraft that are not going 
into their phased maintenance, and they're what we call out-of-
cycle reporting. So, with the passage of time, those aircraft 
will stay off the line. Their gripes or their maintenance 
complaints will go up, and then the repairs will go down.
    So, what we will have is pilots who need to train on those 
aircraft who will not get their minimums. So, what--right now, 
we have 12 average aircraft per squadron, and normally we have 
about 9 or 10 that are up and ready. Our prediction is that, a 
year from now, those squadrons will only have five or six 
aircraft that are up and ready, about half of that number. The 
19 pilots who are in the queue waiting to train will then be 
vying for minimal hours on those aircraft. Plus, if you tie it 
in with the Navy, if they have reduced steaming days, some of 
those pilots will need to get night-vision operations or deck 
bounces on the aircraft. So, it's a compounding effect.
    So, the linear degradation won't get restored the same way, 
ma'am.
    Senator Shaheen. Thank you.
    Admiral?
    Admiral Ferguson. I would just add, is that, as you look at 
sequestration, the impacts on both the readiness accounts, 
where we're adjudicating $4 billion in reductions in--so, we've 
deferred some of that maintenance, and we've moved that 
training into this year. On our shore infrastructure, we've 
deferred about $1 billion worth of work, and so that will take 
about 5 years to recover. On our depot maintenance, if we get 
the fiscal year 2014 levels, we can try and eliminate or--that 
backlog in about a year or 2, on the ship side.
    But, this cumulative effect of introducing new 
capabilities, because a $6 billion reduction in investments and 
then there's another reduction next year--it's going to be very 
difficult to catch up. The effects, I would agree, are 
cumulative, particularly on the readiness side. It does take 
longer, and more expensive, for you to recover that readiness 
later.
    Senator Shaheen. Thank you.
    General Campbell. Yes, ma'am, I'd agree with all my 
colleagues, here. We're really compounding risks. So, as we 
continue to move to the right, your Army--our Brigade Combat 
Teams (BCT)--I'll use that as a measurement; easier to do 
that--if they're trained at a brigade level, which is what we 
would send them to go fight, we talked about 80 percent by the 
first quarter fiscal year 2014 being at squad level. So, that 
will take more time, more resources to get them up to a level 
to be able to deploy. It's--and it is about time, and it is 
about risk.
    An example would be if General Thurman, in Korea, had to 
deploy BCTs for an operation plan. Without going into great 
numbers, if we continue on the path we're at, he said, ``I need 
X amount of BCTs,'' probably by the first quarter of 2014, we'd 
be able to provide him the one that's already on the ground in 
Korea, because we'll continue to fund that where it is today; 
we have the global response force that we'll continue to fund; 
we may have one or two other BCTs who are at a level they can 
rapidly respond. The rest of them will take more time, more 
resources to build out of that hole. We'll continue to dig that 
hole in 2013; it'll carry over into 2014.
    On the aviation piece, as far as the Army's concerned, on 
pilots, the same issues with pilots and being able to train in 
the time. An example: 2 years ago, we had a backlog of pilots 
at Fort Rucker of about 300. It took us about 3 years to get 
them back up to speed. We're looking at now about 700 pilots, 
based on fiscal year 2013 numbers, that we're going to have to 
carry over into 2014. We anticipate probably 3 to 4 years to 
get them back up to a level they need to be.
    Senator Shaheen. Thank you. Thank you all.
    Senator Ayotte.
    Senator Ayotte. Thank you very much, Madam Chairman.
    I wanted to ask, to follow up on Senator Shaheen's question 
on sequestration, and particularly wanted to ask about the 
concept of a hollow force. Something that we've talked about, 
heard about, I think we've seen, historically--for example, the 
examples of Task Force Smith, in Korea, when we've previously 
reduced defense spending and been brought to a hollow force. 
Can you please let me know, on your testimony--probably 
starting with the--certainly, each of the branches, but 
starting with the Army, what are the indicators of a hollow 
force? What--based on those indicators, how--as we go forward 
with sequestration, how close are we to a hollow force? When 
does that risk become grave?
    General Campbell. Thank you, ma'am.
    For a hollow force, we really look at three components: end 
strength, modernization, and then readiness. As you noted Task 
Force Smith, after Korea--after every conflict, we continue to 
bring our Armed Forces down. The difference today is that we 
live probably in the most dangerous times of our life, we are 
in a continued fight for the next couple of years, and, as 
we're trying to bring down that force, we have to continue to 
supply that force.
    So, we have to balance both modernization, which we're not 
able to do, with sequestration, to the level that we think is 
required. End strength, we're already coming down 80,000 on the 
active side. At 490,000, based on the Defense guidance now, we 
believe that we can accomplish the missions that are required. 
But, with sequestration, we will definitely go below 490,000.
    For the Active and for the Guard and for the Reserve: For 
the Guard, we cut 8,000, but no end strength. For the Reserve, 
we cut 1,000, and no end strength. That was based off the BCA. 
Under sequestration, we'll have to go back to the National 
Guard and to the Reserve and take a proportional cut from those 
forces, as well.
    So, when we get end strength, the modernization, and the 
readiness out of balance--you could have a very large end 
strength, but you can't modernize, you can't get them trained--
then you become hollow.
    Senator Ayotte. Any other comments on that? [No response.]
    Just so our colleagues understand, even beyond this 
committee, isn't that--this concept of a hollow force is a 
real, tangible risk of sequestration, that, if we follow 
through with this, we could end up in this position, given, 
right now, I think, the readiness of our forces; meaning we've 
fought valiantly in Iraq and Afghanistan, and they're 
phenomenal, but this is a real risk that we face if we continue 
on this.
    Admiral Ferguson. Senator, I would just add, there's one 
other element, for us, because we're a very capital-intensive 
service. We rely on our industrial base and the ability to 
create the new weapon systems, maintain our ships and aircraft. 
That is an element, as well, in addition to the three that 
General Campbell mentioned that I agree with.
    Senator Ayotte. Admiral Ferguson, following up on that, 
where are we with our fleet size? We've said that we need, I 
believe, 306, is it, as a fleet size for the Nation to meet all 
of the requirements of our Strategic Guidance for the Nation 
and for, obviously, our shift to the Asia-Pacific region. So, 
where are we now with that, with sequestration? Where does our 
fleet end up if we continue with these cuts, going forward, 
over the--not only the Future Years Defense Program (FYDP), but 
going over to the 10-year period?
    Admiral Ferguson. Senator, I think if you--when we submit 
our 30-year shipbuilding plan with this budget, you'll see that 
we project to be at approximately 300 ships by 2019, is what 
our current projections are, assuming that level of funding. 
With sequestration, that number will have to come down to keep 
the readiness of the force in balance so that the ships we have 
are ready. We see that number in the FYDP period falling to 
about 260, I would believe; and then, over the long term, the 
fleet size would decrease even smaller than that.
    Senator Ayotte. Previously, I had heard that number of--if 
we keep going over the--to the 10-year period, that it could 
get down to 230-235. Is that true, Admiral?
    Admiral Ferguson. That is a correct number, yes, ma'am.
    Senator Ayotte. Thank you for that.
    I also wanted to understand, in thinking about the 
Virginia-class submarine program--first of all, how is that 
program performing, operationally?
    Admiral Ferguson. The Virginia-class is performing 
extraordinarily well, operationally. It's very stealthy, it's 
valuable, it contributes across a whole range of joint force 
missions. We're very happy with it. In terms of production, 
it's coming in on its cost targets, and it's even being 
produced ahead of schedule by the builders. So we're----
    Senator Ayotte. How often can we say that around here? 
That's great.
    What percentage right now of combatant commander 
requirements for attack submarines was the Navy able to support 
in fiscal year 2012?
    Admiral Ferguson. We're meeting 100 percent of what the 
Joint Staff adjudicates. But, of the actual combatant commander 
requests, it's about half of those, about 50----
    Senator Ayotte. So, half of the requested attack submarine 
support by combatant commanders is met?
    Admiral Ferguson. That's correct.
    Senator Ayotte. Obviously, if our fleet were to go down 
substantially, that would be even a more diminished number, 
based on what they think they need in the field.
    Admiral Ferguson. That's correct, Senator.
    Senator Ayotte. How important is it that we go forward with 
the Virginia payload module as it is now----
    Admiral Ferguson. Well, as you----
    Senator Ayotte.--to the attack submarine fleet?
    Admiral Ferguson.--as you look at our force structure, we 
are--the SSGN fleet will reach the end of its service life. So 
we're investing in the research, development, test, and 
evaluation project to add a Virginia-payload module, which 
would give us a strike capability from that vessel. We're 
targeting the Block 5 buy to finish the design work to make the 
decision to install it. But, we think it's important to replace 
that strike capability from the submarine force.
    Senator Ayotte. Thank you.
    General Campbell and General Paxton--so, at this point, as 
we're reducing the size of our forces--you talked about, 
General Campbell, us going to 490,000 with an 80,000 reduction 
in the Army. Are we in a place where we have to do any 
involuntary separations? As we move forward and we have to 
make--if we continue with the sequestration and have to make 
further reductions to our forces, will there have to be 
involuntary separations, which, of course, so people 
understand, we're--we would be issuing these, sometimes, to 
individuals who have served multiple tours, who have done what 
we've asked of them, and then, here we are, saying, ``We'd like 
you to go.''
    So, General, can you tell us what the possibility of that 
is?
    General Campbell. Yes, ma'am. For the 80,000 decrease we're 
going through right now, we really worked hard to get the 
personnel policies to make sure we could take care of all of 
our soldiers and families, working most of that reduction by 
regular attrition, but we will have to take down involuntary 
separations for colonels and for lieutenant colonels. We'll try 
to keep that number low. At some point, we'll probably have to 
go to the captain level and reduce some of our captains, as 
well. So, these could be young captains that served two or 
three, maybe multiple tours, either in Afghanistan and/or Iraq. 
We are working that very hard with our leadership. We will be 
very compassionate. But, again, that's 80,000. We will have to 
do some involuntary separation. We will have to do a lot more 
of those through sequestration.
    General Paxton. Yes, thank you, Senator Ayotte.
    Much in line with the Army, we have a planned reduction. 
With the--after September 11, the Marine Corps went from about 
185,000 or 186,000 up to 202,000. We're on our way down to 
186,000 now. We thought, prior to sequestration, and certainly 
in the immediate aftermath, that we may have to go down to 
about 182,000. So--General Amos has articulated that in his 
testimony. So, we have a drawdown plan, if you will, to get 
from 202,000 to 186,000 and perhaps to 182,000.
    Right now, our cohorts that have come in through entry 
level are leaving, probably, at about the rate of 3,500 to 
5,000 a year. We can manage that over the handful of the next 
couple of years.
    It's obvious that recruiting and retention at the entry 
level will not be sufficient. We have to grade-shape the force. 
This past year, for the first time in many years, we did do 
selective early retirements. So, at the lieutenant-colonel-to-
colonel and major-to-lieutenant-colonel level, those who had 
been looked at and not selected, we did do some selective early 
retirements. Very modest number, but we predict that we will 
probably have to do that again.
    We're about 65 percent first-term. So, most of the marines 
are under the age of 25. So, it becomes important, then, as we 
do what General Campbell said, which is to balance our 
readiness and our modernization, that we're going to have to 
grade-shape those who are there. Many have stayed and served 
most admirably in Iraq and Afghanistan, but at some point, some 
of the ones--whether they're a master gunnery sergeant, 
sergeant major or a lieutenant colonel/colonel, we just won't 
be able to keep them around.
    Senator Ayotte. Thank you all for being here.
    Senator Shaheen. Thank you.
    Senator Donnelly.
    Senator Donnelly. Thank you, Madam Chairman.
    Thank all of you for your efforts.
    One of the areas we've been working on is the tragedy of 
suicide in our military. I would like to thank each of the 
Services and the Veterans Administration (VA) for recognizing 
the damage that this causes. Currently our mental health system 
relies on the servicemember's or veteran's willingness to self-
report. The backup to the system is relying on peers and 
coworkers and--to make judgment calls as to the mental health 
of the servicemember.
    Suicide mental health is often considered a personnel 
issue, but I also consider it to be a readiness issue. This is 
something, when we looked--it breaks your heart that more 
committed suicide than were killed in Afghanistan last year. We 
don't want to lose anybody at any time, but you think of that 
figure, and it is staggering. As we try to solve this problem--
to each of you--what do you see as the leading cause of this 
within the military?
    Admiral Ferguson. Well, Senator, we've done a lot of work 
on that recently. We appointed a task force, headed by a two-
star, that really looked at the Navy issues, followed on the 
work of the Army and the other Services.
    Senator Donnelly. By the way, I just want to mention very 
quickly, General Chiarelli, who was formerly Vice Chief, has 
done an extraordinary job working on this. It is his passion, I 
know that.
    Admiral Ferguson. Yes. What we're seeing, it's--they're not 
Service- or Navy-unique. It's relationship problems, 
psychiatric history, discipline, legal problems, and physical 
health. We don't see a tie, in the Navy cases, to operational 
tempo (OPTEMPO), and we actually don't see a generational 
divide, in terms of millennials being more susceptible than 
other generations. They're actually not. They're bringing our 
rates down.
    We see the main risk factors of those that lose a feeling 
of belonging--to an organization or to a family. They feel 
overwhelming hopelessness, and they've overcome the fear of 
hurting themselves, to make the pain that they're experiencing 
go away. So, we think we have to address those factors as we go 
forward. That's what we see as the causes.
    General Campbell. Senator, I'd just echo that, as well. We, 
a couple of weeks ago, started our Ready and Resilient 
Campaign. Really, we have to look at it from a cultural change 
in the Army, on suicides. It is about education. You're 
absolutely right. It is all about readiness, and we have to 
make that tie. We have to continue to work to make sure that 
people understand the trends that we see out there; the same 
ones that the Navy just talked about are the same ones that we 
see.
    This is not a Service issue, this is a national issue. If 
you take a look at our Nation, I think it's one every 14 or 18 
minutes, somebody commits suicide in our Nation. If you take a 
look at the Services and look at that population of young men 
and women in the 17 to 24-25, we're probably commensurate with 
the rest of the Nation.
    But, it is a national problem. We all have to work together 
to get the mental health professionals, be able to afford that, 
get them down to the lowest level. I think, for the Army, we 
continue to work that very hard. General Chiarelli has led that 
force. He continues to do that in the civilian world now. I 
will champion that for the Army, as well as the Secretary and 
the Chief, on health of the force.
    But, financial--we have not really seen that it's 
deployments/not-deployments. It's about 50-50. There are people 
that have come into the Service, I think, that have stressors 
already, and they come in, and they lose a sense of belonging. 
We have to just continue to work that from the lowest levels. 
It's about knowing every single soldier, and it's--it is a 
command responsibility. We just have to get back into knowing 
everything we can about every single soldier, about their 
family. I think leadership will get us through this.
    General Paxton. I was going to add, Senator--thank you--
that I agree with, obviously, my two colleagues here, and I 
think all the Services have, not only service-unique, but a lot 
of the shared ideas and a lot of shared data about campaign 
plans on how to tackle this. It is about small-unit leadership. 
It's about some intrusive leadership and really getting to know 
your soldiers, your sailors, and your marines.
    I think, germane to today's testimony, in the issue of 
sequester and fiscal resources, I know, in the specific case of 
the Marine Corps, and, I believe, all the Services, we're 
committed to apply resources--fiscal resources to keep these 
programs alive. Because, for us, this is all about the most 
important thing, which is that individual soldier, sailor, 
airman, and marine, and the actual Americans that go out and 
execute these hard missions.
    Senator Donnelly. We are working on legislation to 
integrate annual mental health assessments into the 
servicemembers' overall health assessment. As you said, almost 
bringing it down to knowing your marines, knowing your airmen, 
your sailors, and your soldiers, and would appreciate it very 
much if, in the process of this, we can lean on you for your 
recommendations and for your advice in this process.
    I just want to switch, very quickly, to the National Guard. 
We just had a situation where a number of our Indiana Army 
National Guard groups were off-ramped with 6 weeks to go before 
they were to be deployed. It's been extraordinarily difficult 
on their families--on the soldiers, but also on the families, 
as well. We were just wondering, when the Army off-ramps a 
National Guard unit and moves it to the bottom of the patch 
chart, what does this do to the unit's readiness?
    General? General Campbell?
    General Campbell. Yes, sir, thanks for your question, sir.
    Both Active and National Guard and Reserve soldiers are 
being off-ramped. As the President announced a while back, 
we're going to cut 34,000 in Afghanistan, so we really depend 
on U.S. Central Command (CENTCOM) and International Security 
Assistance Force to provide us where they want to take those 
soldiers, those units out, and then we continue to work that 
piece. So, it is something that we do not want to do, 
especially to the National Guard, because of the unique nature 
that they have to be able to get ready. We try to do that and 
give them as much notice as we can. We try to work that at 
least 180 days out. In the case we're referring to, I know we 
did not do that, and that was compounded by a year or 2 ago, as 
we came out of Iraq very quickly, we had to off-ramp some 
units. When we came out of Iraq, we were able to put some folks 
in Kuwait, we were able to transfer some folks into 
Afghanistan. At this point in time, we're not able to do that.
    As we took a look at the severity of the budget impacts, we 
had to look everywhere we could. We were able to use an Active 
component, as opposed to National Guard in this case, and it 
saved us upwards of $80-plus-million to be able to do that. We 
understood the impact that that would have on the National 
Guard. It was a very, very tough decision. But, again, we're 
making those decisions, taking everything into consideration. 
Both the Active, the Reserve, and National Guard have----
    Senator Donnelly. On such a short notice, 60 days out--I 
know that has been changed to make it 120 days now--but, to 
those soldiers who in--who it did happen to, how do you ever--
what do you say to them to convince them they are still 
considered a partner and a teammate in this effort?
    General Campbell. Sir, as on the suicide piece, leadership 
can make anything happen, here. You have to get down to small-
level unit, you have to talk to them about how important they 
really are. This was a timing issue. This is nothing against 
National Guard, verse Indiana, verse another State, verse 
Active. It was all about timing. I think that the leadership 
needs to grab those soldiers, sit them down, tell them we 
appreciate what they've been doing for the past year and a half 
to get ready to go, and that we need them to continue to stay 
ready. The next time that they are asked to go, that they will 
be ready, and that they have value--that we value their 
service. But it's hard for me to do it up here. I need the 
leadership down on the ground level to grab them, look them in 
the eyes and talk about that. Again, we have to do that across 
the force.
    Senator Donnelly. Thank you all for your service.
    General Campbell. Thank you, sir.
    Senator Shaheen. Thank you, Senator Donnelly.
    Senator Kaine.
    Senator Kaine. Thank you all for being here today.
    One of the things that I've been doing to climb the 
learning curve as the new guy is--on this committee and in the 
Senate--during recess weeks, traveling around to installations 
around Virginia. I've been to, let's see, Belvoir and Lee, and 
at Oceania and Norfolk Naval Base, Quantico, Langley, Guard 
armories, VA hospitals, military contractors--to just kind of 
climb the learning curve. One of the things I think we've said 
about sequester, for example, is that the warfighter is exempt. 
We're protecting warfighting. Obviously that means that--the 
operations in Afghanistan or--and elsewhere. But, it does seem 
as I travel around to the installations and I found out what 
the actual effect is, that it's a pretty thin line. I mean, I 
think we need to say we're protecting the warfighter, and we 
are, if you define it pretty narrowly, but some of the things 
that we're allowing to degrade have a pretty direct effect on 
warfighting.
    So, for example, each of you--each of your Service branches 
makes extensive use of civilians for very important and 
critical missions. Am I right about that? You use them in 
different ways, and you have different strategies about how to 
manage things like furloughs. But, I mean, the--a civilian 
could be a nurse at an Army hospital at Fort Belvoir that's 
taking care of warfighters, that are in a Wounded Warrior 
Brigade, or it could be a maintainer of F-22s at Langley, that 
are pretty critical. So, the fact that it's--``Oh, it's just 
civilians,'' I mean, this is pretty critically related to the 
warfighting mission.
    The effect on contracting and capital--you mentioned, 
Admiral, you're pretty capital heavy on the Navy side, and the 
shipyards in Virginia, the shipyards in New Hampshire and 
Maine, and these are directly connected to our ability to 
forward-deploy force. When maintenance or other things get 
delayed, or we decide not to deploy the Truman or something, I 
mean, it has a direct impact upon the support for warfighting 
missions.
    I was wondering about this, General. You referred briefly 
to the embassy security, which, we know, in the aftermath of 
Benghazi, how important that is. I visited the Marine security 
guard training facility at Quantico, and you're in a phase-up 
there. You're both doing a--physical infrastructure phase-up, 
with a mock embassy compound. But, you're supposed to 
significantly increase the number of Marine security guards 
that you're training. Is that a warfighting mission that's 
protected from sequester, or is that something that's subject 
to sequester?
    General Paxton. No, sir. In the short term, it's not--it is 
protected, because it's the next-to-deployer. So, we will take 
a look at those classes of watch-standers and those classes of 
noncommissioned officers that are going through, and we will 
pull them out of--most of them have probably done two, three 
deployments--Afghanistan or Iraq; they've just recently 
reenlisted, or are about to; probably a corporal at the 4- or 
5-year mark. So, that's the talent pool that will go to the 
school. So, we will ask the commands, as they look at 
reenlistment stuff, to send that talent to Quantico, and we'll 
keep the next couple of classes going.
    So, in the short term, it is protected. In the long term, 
you're absolutely right, it's like everything else. What--we 
want to increase the number of Marine security guards out 
there. We have a master plan with the State Department, where I 
think we have 13 that are projected to grow, and 4 of which we 
will source by the end of this calendar year.
    But, there's a larger appetite there, a larger requirement, 
for both consulates that have not been protected or embassies 
that need additional protection, that we are--we feel obliged 
to support, that we are ready to support, operationally, but 
it's going to require extra end strength; or, if we take the 
end strength out of existing end strength, as we have on hand 
now, then those are other missions that we have not--that we 
may not be able to do.
    So, this is--it's an ongoing discussion. It's part of the 
initiative that Congress asked us to take a look at, and 
they're working with the State Department. But, we're going to 
have to carve out our way ahead, in any set of circumstances, 
and now it's aggravated by sequestration.
    Senator Kaine. The Accountability Review Board, in the 
aftermath of Benghazi, suggested not only that the Marines bulk 
up, but that the foreign affairs security training also bulk 
up, on the State Department side. The State Department had 
proposed, or were pursuing, that recommendation to do a 
significant coordinated training center. They had an 
Environmental Impact Statement out, they were about to make an 
announcement, this month, of that, down at Fort Pickett, and 
they've pulled that back in and said that we're going to have 
to delay doing this. Again, the sequester effect, either on 
your side or on the--we may be protecting the warfighter, but 
if we're not doing the--all the things we need to do to--with 
dispatch about embassy security--we know that's a 
vulnerability; we've been made painfully aware of it----
    General Paxton. We're--continue to look at it, Senator. We 
have a good model. We can predict the number of people we need. 
We can predict the facilities that we need. We can predict the 
training pipeline and everything. So, now it's a matter of the 
resources. Consequently, when you get to the resource piece and 
sequestration is in effect, how you fund that and how you take 
care of that is going to be----
    Senator Kaine. How much of the readiness in each of your 
divisions is related to the issue of the retrograding of 
equipment back from Afghanistan and then refurbishing and 
reusing that equipment? To the extent that there's delays or 
that that's a challenge, how does that affect the readiness 
issue?
    General Campbell. Sir, I think it's going to be huge. For 
the Army, we have about 80 percent of the equipment over there. 
It's about $28 billion worth of equipment. We need about $22 
billion back here to make sure that we can maintain readiness 
for our Army in the future. It's a little bit more difficult 
than Iraq. In Iraq, we could drive it out. We had Kuwait as 
sort of a catcher's mitt. Afghanistan, landlocked, the problems 
we have with Pakistan--we developed some routes through the 
Northern Distribution Network--will help. We're flying a lot 
more out, so that's much more expensive. But, the equipment 
that we have here, we can--that we have there, we cannot afford 
to just leave it there and then buy new equipment. We just 
can't do that. So, we need $22 billion worth of equipment out 
of Afghanistan, here in the next 18 or so months. So, I'm very 
concerned about that. But, we need that for the readiness of 
our Army to continue in the future.
    Senator Kaine. Just to kind of cross X or go a little 
farther, so you need to have $22 billion of that back. Then 
you've factored in--because it's been there and been in use. I 
mean, it's not just about getting it back and then you can 
immediately use it. You have to get it back, you have to then 
put some investments into making it----
    General Campbell. Yes, sir.
    Senator Kaine.--suitable for the next deployment. To the 
extent that we're delayed getting it back or the dollars for 
the investments are not there or it's delayed--you're----
    General Campbell. Sir, we've been very consistent, the last 
3 or 4 years, that we need 3 years of OCO money after the last 
piece of equipment's out of Afghanistan--3 years.
    Senator Kaine. That's largely around the equipment issue?
    General Campbell. It's around the equipment, yes, sir.
    Senator Kaine. General Paxton, were you going to----
    General Paxton. Yes, sir. Army and the Marine Corps have 
been pretty much in step on this, sir. So, it is 3 years from 
the time the last individual, last piece of equipment comes out 
of Afghanistan. That's about the time we estimate that it'll 
take to reset. The Marine bill is about $3.2 billion right now, 
sir. We also have indicated that, because we have so much of 
our--so many of our equipment sets in Afghanistan, as well, 
that, with the sequestration, that'll mean less equipment to do 
home-station lane training with here. If the depots are 
adversely impacted with sequestration, it's a slower rebuild 
and restoration of the equipment that comes back. A real issue 
to the committee and to Congress is, we have pledged to 
rebalance to the Pacific, in line with the Defense Strategic 
Guidance, and we think that that--the rebalance to the Pacific 
will now be delayed beyond 2017, unless we get all the 
equipment out and then can maintain all the equipment.
    Senator Kaine. Thank you.
    Thank you, Madam Chairman.
    Senator Shaheen. Thank you.
    Senator McCaskill.
    Senator McCaskill. Thank you.
    Thank you all for being here, and thank you for the work 
that you have done and others have done along with my 
colleagues on the Senate Armed Services Committee, some of whom 
are here today, on our effort at getting at--after sexual 
assault in the military.
    But, today I want to talk about the Distributed Common 
Ground System (DCGS). As you all know, DCGS is about a 15-year 
project from concept to today, around $4 billion. The idea was, 
we were going to integrate hardware and software, and take all 
the decision items and put them in a package that would make it 
interoperable platforms in each branch, be able to do 
everything from intelligence, communication, to weather, all in 
one package with a bow around it.
    Your lab, last year, General Campbell, said that it was not 
operationally effective, not operationally suitable, and not 
survivable. Their words. In spite of that report--its 
strongest--by the way, the strongest criticism was around the 
intelligence capability, on top secret, which obviously is 
incredibly important to our fighters, that they know what we 
know about what danger there is in any environment they're in, 
based on our intelligence. We're spending an awful lot of money 
on intelligence, and the notion that we've spent this kind of 
money on this system, and we can't get that intelligence 
information to them in an effective way is, frankly, 
unacceptable.
    What really worries me is that acquisition, technology, and 
logistics (AT&L) went ahead and approved it, in December, for 
full deployment, calling it Release 1. Obviously, a budget 
justification for this was--for DCGS--was operating a networked 
environment at multiple security levels. I'm disturbed, 
confused as to how this could be deployed at this point. 
There's $270 million in the budget for 2014 for more money for 
DCGS. I--it has been reported, and I have personal awareness 
from folks, that units have filed urgent needs--the ones who 
have gotten DCGS have filed urgent needs--these are 
warfighters--saying, ``Please give us this different program 
that has additional capability,'' and the Army has resisted 
that.
    If we--if there is a program out there that is off-the-
shelf and has this capability, in light of these programs and 
problems, shouldn't we be offering that to our units that are 
asking for it, who have used it and said, ``This is what we 
need right now''?
    General Campbell. Yes, ma'am. I mean, I've been a 
beneficiary of the operational needs statement, of rapid 
equipping fielding, as a division commander, as a brigade 
commander, and as a deputy division commander in both Iraq and 
Afghanistan. The ability to grab a piece of equipment off the 
shelf, provide that to the warfighter, is critical. So, I've 
been a beneficiary; it has saved lives.
    In the particular case you're talking about, on DCGS, on 
the TS, or the top-secret piece, that's a very, very small 
percentage of the capability of DCGS. I want to say less than 
10 percent. So having seen DCGS in combat myself as a 
commander, although I didn't make that decision with AT&L, I 
would support that 100 percent.
    The system you're talking about, I believe, is Palantir. 
DCGS takes over 500 feeds, as a system of systems, to be able 
to integrate the intel and fuse that. Palantir is just a 
complementary piece of it. It is a easy-to-read piece. If 
you're down at a small combat operating post and you just need 
a localized area, if you hook Palantir into DCGS, that'll give 
the young soldier on the ground a better picture, it will help 
him out, but he may be missing a lot of the intel feeds that 
DCGS would get him. So, if they use that by itself, you're 
going to put more people at risk. I'm telling you that, from my 
experience on the ground, that is the case.
    My son is a soldier in the 82nd. He's a specialist. He 
deployed to Afghanistan. He was one of the units that asked for 
DCGS--or his brigade did, not him, himself. All the units that 
have asked for Palantir, which is a complementary piece that 
fits into DCGS, the Army has been able to give that to them, 
and the training, for the most part. The ones that they did 
not--I believe there's about three units--there was an 
exception why they didn't, that either they didn't have enough 
time in country to get the training, they were in an area that 
it would not work, and then one I think a request was put in, 
and, again, they just couldn't get the equipment to them in 
time. But, all the units that asked for that, both the 
Secretary and the Chief wanted to make sure, if it was out 
there, we're going to give that to them, and we'll continue to 
work that piece of it.
    So, I'm a believer in DCGS. I'm a believer that Palantir 
and DCGS, if they continue to work together, that they can make 
that system more effective. But, Palantir is a very, very small 
part of DCGS. It does--you can't even compare the two; it's 
like apples and oranges.
    Senator McCaskill. Well, I'm not here to push anything.
    General Campbell. Right.
    Senator McCaskill. I'm here to get to the bottom of whether 
or not we should have a system that has been deployed without 
full capability after we spent $4 billion.
    General Campbell. Ma'am, DCGS has saved lives. I mean, 
that's----
    Senator McCaskill. I'm all for that, but I still want it to 
work and do everything that the budget justification said it 
would do.
    General Campbell. Absolutely.
    Senator McCaskill. Frankly, that intelligence piece that 
it's missing right now would also save lives.
    General Campbell. It would.
    Senator McCaskill. So that's what I'm focused on, how do we 
get to that place? What is the--what's it going to cost to get 
to that place? What is the problem? Is--was it a good idea for 
it to be pushed forward in December, even after the finding by 
your own lab that it was a problem?
    General Campbell. Ma'am, I believe it was a good decision. 
Again the top-secret piece is a very small piece. That's about 
a year-old data. Most of those corrections have been made to 
that system. I think we deploy a lot of systems into combat 
that we can incrementally improve, and we learn as they're in 
country, and we apply lessons learned, and we continue to add 
to that. If we didn't do that, we'd have people asking for 
stuff over there. If we wait for the 100 percent perfect 
solution, we'd put more lives at risk. So, I'm----
    Senator McCaskill. Is the intelligence piece fixed now?
    General Campbell. Ma'am, I don't have the exact answer of 
the particular problem you're talking about. I know we've done 
a lot of improvements on that. I can get somebody to come back 
and talk to you----
    Senator McCaskill. That'd be great.
    General Campbell.--specifically on the top-secret piece----
    Senator McCaskill. That'd be great. I'd love to learn 
more--we've had a little difficulty on this one. I wrote to 
General Odierno and Secretary McHugh about it. But, I'd really 
like to know about the integration and how the other systems--
regardless of what it is, are there other systems off-the-shelf 
that can complement, in a way that's less expensive than going 
back and doing some reconfiguration of DCGS? Because, I mean, 
here's--the good news and the bad news is, after 6 years of 
this, you guys are given a job, you figure out how to do it. 
You just do.
    General Campbell. Ma'am, we'll get the folks over----
    Senator McCaskill. That's----
    General Campbell.--to come----
    Senator McCaskill:--that's what the military does. On the 
other hand, you are so good at getting the job done, it's very 
hard sometimes for you guys to say, ``Maybe we need to stop 
here and not go further with this, because maybe we're not 
going to get it where it needs to be in a cost-effective way.'' 
In a way, I'm glad that happens, because that just means 
everybody has such a determination to get something done that 
we start, that no one wants to stop. I want to make sure that 
we're not so wedded to DCGS, that's been very expensive, that 
we're not complementing with whatever is available off-the-
shelf.
    General Campbell. Yes, ma'am. No, we're with you, ma'am.
    Senator McCaskill. Okay.
    General Campbell.--I'll make sure we get the right folks 
here----
    Senator McCaskill. Okay.
    General Campbell.--to give you a more in-detail depth of 
it.
    Senator McCaskill. Thank you all for your service.
    Senator Shaheen. General, if you could also share that with 
the rest of the subcommittee, we would appreciate that.
    General Campbell. Yes, ma'am.
    [The information referred to follows:]

    The Distributed Common Ground System-Army (DCGS-A) is the Army's 
system for tasking, processing, exploiting, and disseminating 
intelligence at Coalition Releasable, Secret, and the Top Secret/
Sensitive Compartmentalized Information (TS/SCI) levels. The DCGS-A 
program currently connects the Army to the Intelligence Community at 
the TS/SCI classification level through multiple fielded systems, 
including the Analysis and Control Element Block II, DCGS-A Enabled 
Tactical Exploitation System, DCGS-A Fixed sites, and the Guardrail 
Integrated Processing Facility. Consequently, there is no TS/SCI 
capability gap.
    However, the use of multiple programs to search across a wide range 
of intelligence information at the TS/SCI level is extremely 
inefficient and time-consuming. Moreover, the Secret and TS/SCI systems 
do not currently cross-talk, which further adds to a labor intensive 
process. The next release of the program, DCGS-A Release 2, will 
address this inefficiency by integrating intelligence from multiple 
sources and will be interoperable with the DCGS-A Release 1 software, 
currently operating successfully at the Secret level. Moreover, the 
common software platform in the DCGS-A program will simplify the 
necessary training and associated learning curve as analysts use the 
system.
    The DCGS-A software baseline 1.0 initial testing in May through 
June 2012 was not successful. However, it is important to note that the 
majority of the issues identified were within the TS/SCI software 
domain. Ninety-five percent of our operations in Operation Enduring 
Freedom are conducted below TS/SCI, where DCGS-A Release 1 successfully 
operates.
    Following this initial testing, the DCGS-A program moved rapidly to 
correct and retest each major issue prior to the December 2012 review, 
and deferred incorporation of the TS/SCI capability to the next release 
(Release 2). The Army also reconfigured the program to fully address 
other risks identified during the earlier testing. The Director, 
Operational Test and Evaluation (DOT&E) tested this modified 
configuration and concluded that the system would provide users 
capabilities at least as good as those provided by the versions of 
DCGS-A utilized by deployed units. This assessment, coupled with the 
Army's inclusion of a number of incremental upgrades within the 
modified configuration, led the DOT&E to concur with the Army's Full 
Deployment Decision (FDD). Furthermore, the Office of the Under 
Secretary of Defense (Acquisition, Technology and Logistics) reviewed 
the program on December 7, 2012, and approved DCGS-A for its FDD. The 
cost to conduct the additional testing ($2.3 million) was offset by 
program efficiencies.
    The DCGS-A acquisition strategy has always planned for an iterative 
delivery of software, and had already included plans to enhance the TS/
SCI capability originally included within Release 1 through an improved 
version in Release 2. The deferral of all TS/SCI software 
implementation to Release 2 results in minimal impact to the DCGS-A 
program and long-term fielding approach. An operational test of Release 
2, to include planned full TS/SCI capability, will be conducted in the 
second quarter of fiscal year 2014. Release 2 will begin fielding in 
the fourth quarter of fiscal year 2014. The cost to develop, test, and 
integrate Release 2 is $38.9 million.

    Senator Shaheen. I want to follow up--we're going to do at 
least one more round. I have some additional questions. I'm 
sure that others here do, as well. But, I want to follow up on 
the issue that Senator Kaine was raising about furloughs, 
because--General Campbell, I was struck, in your testimony, 
when you talk about canceling the majority of depot 
maintenance, that--for third and fourth quarters--that that 
will result in the termination of an estimated 5,000 employees 
and a--not only a delay in equipment readiness for 6 divisions, 
but also an estimated $3.36 billion impact to the surrounding 
communities. Now, given what everyone has said about the 
potential for furloughs and--I'm assuming that we can multiply 
that impact across the Services and see that that will have a 
significant impact on the civilians that we count on to keep 
our forces ready and also the communities in which they work. I 
know it's an issue at the Portsmouth Naval Shipyard, because 
I've heard from shipyard workers there.
    So, I wonder if you all could talk about any mitigation 
plans that you have in place to prevent the furlough of 
civilian workers, and how hopeful you are that those will be 
successful.
    General Campbell. I'll go first, ma'am. Again, we value our 
great civilians; I know all the Services do. We could not do 
what we do every single day without their great support. I 
understand the uncertainty, the stress of furlough/no-furlough, 
21 days, 14 days, will put on them and their families. I would 
hope that we wouldn't have to put them through that.
    For the Army--and I think it's different for each Service, 
but for the Army, our biggest issue--we have a huge, huge hole, 
and it comes from our OCO piece, and it's about $2.8 billion 
after--if we get all the reprogramming that we think we may 
get. So, if you look at a $2.8-billion hole that we do not know 
how we're going to fill, and then you rank-order everything out 
there and kind of create a one-to-end list, and furloughs is on 
there, and you take a look and prioritize, again, to the 
warfight, to Korea, to global response force, where furloughs 
come, and it's below providing to the warfight. We just have to 
rack and stack that way.
    Out of our O&M account, it's a little over $500--about $530 
million for the Army. There's some RDA piece here, based on 
some other furloughs, that take it up into the neighborhood of 
$700-plus million for the Army. So, if we were to buy back $700 
million on furloughs, we would, again, eat up $700 million of 
readiness, potentially for next deployers going into 
Afghanistan, because that's why the Army really is looking at 
that very hard. We're working through the Service Secretaries 
and through the Joint Staff at the Office of the Secretary of 
Defense (OSD). This is not a place we want to go, but it's a 
place that we really have to look hard at based on the 
prioritization of everything else we have out there.
    Senator Shaheen. Well, based on some of the testimony, are 
you not concerned, all of you, that, in the short term, the 
savings from those furloughs are going to get added on in the 
long term because we're going to lose those skills and 
capabilities? Then, of course, the impact on maintenance from 
the equipment that's going--that's not going to get done? Is--
have you figured out the long-term impact of that?
    General Campbell. Again, ma'am, we don't know what our 
budget is for 2014, as was discussed earlier by General 
Spencer, but we have, we've looked at all that. Again, we 
have--it's about prioritization, it's about risk, and so, we've 
taken a hard look at that. Right now, the decision--there has 
not been a decision made. I think this will be a department-
level decision, not a Service decision. We do realize and 
understand that morale, productivity, all those things will 
continue to go down. It's not a decision that we'll take 
lightly.
    Senator Shaheen. Thank you.
    Admiral?
    Admiral Ferguson. Senator, I would say that we're--all of 
us are involved in a very productive dialogue with OSD on this 
issue. Secretary Hagel's made it clear that if we can do 
better, we will do better.
    From our perspective, furloughs impact mission readiness, 
and it's especially critical in our shipyards. It is critical 
as we look at the nuclear repair work that's done on our 
submarines and our aircraft carriers. There's a cascading 
effect that takes place that will reduce operational 
availability of those forces in the future. Second, if we 
attempt to recover later, there's a higher cost through the use 
of overtime and other means, at that point, to try and recover 
it.
    It directly affects several carrier availabilities in the 
Norfolk Naval Shipyard and submarine work up at Portsmouth. For 
us, we recognize each Service is in a different place, and we 
have to make--and we're compelled to consider the furloughs, 
because of the O&M reductions that we're seeing under 
sequestration. So we're looking at a range of options because 
of the impact on readiness that we see.
    Senator Shaheen. Are there other efforts that you all are 
undertaking, General Paxton, General Spencer?
    General Paxton. Senator, I think the other efforts--as 
General Campbell alluded to, this is--it's an issue of 
prioritization and rank order. None of these are palatable----
    Senator Shaheen. Right.
    General Paxton.--solutions. We would prefer not to do any 
of them. But, as you and Senator Ayotte brought up earlier, 
none of us, by our DNA--we're not in the business of saying no. 
So, we're going to, unfortunately, mortgage long-term readiness 
to guarantee short-term readiness, because we really think 
that's what we're in the business to do for the Nation, to be 
ready if the balloon went up tomorrow, each Service to a 
different degree.
    Admiral Ferguson brought up a great point; that when you 
look at CRs, sequestration, and OCO, each of the four Services 
is really in a unique place. We're not radically different, but 
the impacts of those three different fiscal constraints affect 
each Service differently. So, you're not going to get a one-
size-fits-all. In the issue of furloughs, you won't get a one-
size-fits-all. I think both the Chairman and the Secretary 
talked yesterday about the trade space they're trying to carve 
out between short-term fiscal gain, the long-term fiscal 
problem, and what's good for both the performance and sometimes 
good for the optics for the team. So, these are just tough 
decisions, ma'am.
    Senator Shaheen. Thank you.
    General Spencer?
    General Spencer. Senator, I really appreciate your 
question, because I think all the Services are in a similar 
place, in that 80 to 90 percent of our civilians don't work in 
the Pentagon, they work out in the field. I'm not sure 
everybody quite understands that.
    As an example, at our training bases, where we train pilots 
to--for pilot training--at several of our bases--I'll just pick 
one: Laughlin Air Force Base, in Texas--100 percent of the 
maintenance on those airplanes is performed by Civil Service 
civilians. So, if you talk about a furlough--I mean, that's a 
direct cut to the amount of airplanes they can provide and the 
amount of pilots we can train.
    I think--and, on top of that, if you add onto that--we've 
stopped overtime. We have a hiring freeze on. So, it's really a 
bad problem. We all are in a little bit different place. But, I 
think, as Admiral Ferguson said, we are trying to work through 
this as best we can with OSD to see what is possible. We're at 
a point where we're looking at our checkbook, if you will, and 
we have flying hours, furlough, depots--we're trying to balance 
all of that. The issue is--and I don't, frankly, separate--I 
don't draw any distinction between Civil Service--we call them 
civilian airmen--I don't draw any distinction between civilian 
airmen and readiness, because they are so key to readiness.
    So, trying to balance all that is really pretty difficult 
and is something that we're fighting every day.
    Senator Shaheen. Thank you.
    Senator Ayotte.
    Senator Ayotte. Thank you very much.
    I just wanted to follow up briefly, General Campbell, just 
to clarify one point that you made earlier. I think you said, 
at one point, the Army faces a $2.8 billion shortfall in O&M 
funds without OCO for 2013. Is it actually $7.8 billion? I just 
want to make sure that we get all the----
    General Campbell. It's $7.8 right now. Yes, ma'am.
    Senator Ayotte. Okay.
    General Campbell. It's fluctuating a little bit. We're 
looking, hopefully, to maybe get some reprogramming, 
potentially at $5 billion. That would put it at $2.8. That's 
not guaranteed at all. So, $7.8 is really the OCO shortfall.
    Senator Ayotte. Okay. I just wanted to make sure. Thank 
you.
    In fact, as we look at the testimony, certainly both of 
you, General Paxton and General Campbell, you've both testified 
that DOD will need 3 years of OCO funding post the last piece 
of equipment from Afghanistan. One of the things that I worry 
about is that--I sit on other committees here, and there have 
been a lot of people trying to claim that OCO money for other 
purposes. So it may be news to some people around here, outside 
of the Senate Armed Services Committee, that you're going to 
continue to need the OCO money for the reset, the 3 years.
    So, is it clear, the 3--I assume that the 3-years reset 
requirement, that's been made clear to OSD. So just making sure 
that everyone here within Congress understands that so that we 
don't try to designate that money for other purposes. This is 
absolutely critical to our readiness, not something we can 
skimp on or use for other purposes.
    General Campbell. Ma'am, I think we've been very 
consistent. I would tell you, I was a colonel, executive 
officer to the--our Chief of Staff, Pete Schoomaker, in 2003, 
2004, 2005. At that time, we were saying we needed OCO reset, 2 
to 3 years. As we've looked at it over the last several years, 
we've moved toward 3 years, as that equipment has been in 
country much longer than people may have thought, years ago.
    We've been able to mitigate a lot of that, based on the 
great support we've had from this committee and Congress with 
the OCO, to reset in theater, reset back here. As kind of--
people think, as you bring down the number of forces, that the 
OCO should come down. If you take a look at Iraq, at the end of 
that, we came down very quickly. The price of bringing soldiers 
out increased.
    We've closed all of the small combat operation posts, all 
of those. The ones we have left to do to get out by the end of 
2014 are the big ones--the Bagrams, the Shanks--those type of 
things. It's going to cost a lot more. We expect that has to 
come out of OCO. What we're doing right now, because we already 
have an OCO shortfall, is, we're taking from our base to pay 
some of those bills, putting us farther into the hole.
    But, 3 years OCO for reset, yes, ma'am.
    Senator Ayotte. Could I follow up, as well, on this OCO 
issue, going forward, with respect to the Navy and the Air 
Force? Because I certainly understand you have some of the same 
issues with OCO, as I understand it. So, if you could make sure 
that that's clear to all of us.
    Admiral Ferguson. If you look at our base budget 
submission, compared to the OCO submission, we require, 
absolutely, the OCO funds both to sustain operations forward as 
well as depot maintenance during depot maintenance 
requirements. So, about 20 percent of the depot maintenance on 
aircraft and ships is funded in OCO for us. So, we're 
absolutely dependent on it.
    Senator Ayotte. Admiral, as we think about winding down in 
Afghanistan--obviously, but with what else is happening in the 
world--that 20 percent, is that something that we're going to 
have to incorporate in the base for the Navy going forward or 
is there a period of time? We've heard obviously from the 
Marine Corps and the Army, the 3-year period.
    Admiral Ferguson. Right. We've been on a path to reduce our 
dependence on OCO for that enduring maintenance. You've seen 
reductions in that from 2011 to 2013. We are going to need some 
period of transition as we come out of Afghanistan for us to 
make that migration, or an increase in the top line for the 
readiness accounts, for us to accommodate it.
    General Spencer. Senator, we're about in the same place as 
the Navy. We have a lot of our weapon systems support, depot 
support, if you will, in OCO that would, at some point, have to 
roll to the base. We also have about a 2- to 3-year--we think--
about a 3-year period after we draw down Afghanistan, for 
reset, as well.
    Senator Ayotte. Well, I appreciate it--and that's certainly 
something we want to work on with you, because that is a core 
part of readiness. When we have a conflict, we're involved, the 
OCO piece goes well beyond just the immediate conflict, because 
we have to reset. Sir, I appreciate that and your giving us 
that.
    When you think about where we are right now--and I'm just 
going to ask you all a very straightforward question. What is 
it that most keeps you up at night with your responsibilities 
and the challenges you've faced?
    General Campbell. We have no certainty on where we're going 
with the budget. As we talked about earlier, you have three of 
them out there. You're going to ask us which one we would give 
you prioritization on. It's hard for us to answer that. We have 
great planners who'll continue to work it. As you said, it's 
not in our DNA. We're going to do the best we can. The problem 
we have is, we never say no. At some point, we're going to have 
to tell you, ``We can't do that. We can't continue to do more 
with less,'' and--or else we're going to put soldiers, marines, 
airmen, sailors' lives at risk. So, I'm worried that too many 
people here in Washington forget that we're in a fight.
    Senator Ayotte. Right.
    General Campbell. We're going to be there for several more 
years. Tonight there's 60,000 people--troops in Afghanistan 
that are in harm's way. We can never forget that. We can't 
forget the sacrifice of their families.
    Senator Ayotte. Also, less than 1 percent of our Nation 
defending----
    General Campbell. Yes, ma'am.
    Senator Ayotte.--defending the rest of us, gratefully. 
Thank you.
    Admiral Ferguson. I would echo that concern about the 
fiscal uncertainty. For us, it's coupled with the 
extraordinarily high operational tempo that we're operating the 
fleet at. Over the last decade, we've decreased the fleet size 
by about 10 percent, while our deployed presence has remained 
about the same. We're seeing squadrons and ships spending an 
average of about 15 percent more days away from home per year 
than they did 10 years ago. You're seeing deployment lengths go 
up, in terms of the average carrier. An amphibious-ready group 
will deploy, 7 to 8 months. Eisenhower came home, turned around 
and went back for an additional deployment. Several will go for 
9 months, and our ballistic missile defense ships are at 9 
months.
    This cumulative stress, with a very high OPTEMPO, fiscal 
uncertainty, and decreasing resources, from my perspective, is 
the one that I spend the most time thinking about.
    General Paxton. Yes, Senator Ayotte, three things, if I 
may.
    First, on your previous question on the OCO, like--as with 
the Army, we've been fairly clear and consistent about the 
first 2 to 3, and now closer to 3 years, OCO after the closure 
of operations and activities in Afghanistan. But, I would just 
caution that that's not time-driven, that's event-driven.
    So, you can actually finish something over there, and you 
can have the Pakistan ground lines of communication closed for 
15 months because of negotiations and movement of vehicles. 
That will further delay things.
    Senator Ayotte. Right.
    General Paxton. So, we are obviously obligated, in terms of 
the way we do our fiscal planning in Washington, or the way we 
do our recruiting and training, to look at things in quarters 
and years, but it's an event-driven issue instead of----
    Senator Ayotte. Obviously, we have a bilateral security 
agreement that has to be worked out----
    General Paxton. Right.
    Senator Ayotte.--and there are so many other contingencies, 
yes.
    General Paxton. Then, in terms of, Senator, the things that 
keep me up at night, as General Campbell said, the 
unpredictability of the fiscal environment is one thing. It's 
easy to get lulled into a sense that the only big thing we have 
going on is Afghanistan. There's a lot of unease and unrest and 
potential danger elsewhere around the world that you expect 
your soldiers, your sailors, your airmen, and your marines to 
be ready for. Indeed, in the case of the Marine Corps, where we 
think, since 1950-1952, that's our mandate. With the Navy, 
we're supposed to be most ready when the Nation's least ready.
    So, I worry that if we continue to focus on Afghanistan, 
then the gradual and seemingly negligible, but obviously 
compounding-over-time impact on home station training and the 
readiness of the next-to-deploy units, if the balloon goes up 
and you're relying on a home-surge capability, it's not going 
to be there. Unfortunately, the readiness--I worry less about a 
hollow force than I do about, particularly, broken units, and 
you won't see it until it's in the rearview mirror.
    General Spencer. Senator, along with my colleagues, I'm 
really concerned about the uncertainty of our budgets going 
forward. But, that's sort of a Pentagon worry for me.
    As I mentioned to you, I haven't always been a general. I 
started off as an E-1. So when I go visit a base, although we 
can't visit that much anymore, we don't have much money to 
travel, but I go right to those E-1s and E-2s and E-3s. I don't 
want to talk to the colonels.
    If you visit a base that's had a--one of their squadrons 
stood down, I mean, they look at us and say, ``What in the 
world is going on? What are we doing?''
    I'm going to be very honest. I mean, everyone at this table 
could get out of the military and go make more money. But, 
we're here for one reason; it is those troops that are out 
there getting the mission done, and that's all they want to do. 
As you mentioned, only 1 percent of the public are even 
eligible to serve, and they don't deserve that. I mean, all 
they want to do is come in and serve. They watch the news, and 
they know the threats as well as you do. We're going to--if we 
get called to go do something, we want to go trained and ready, 
we want the best equipment we can have, and we want to go over 
there and get the thing done and come back. That's all that 
troops want to do. We owe it to them, I think, to make sure 
that we're doing everything we can to get them the training and 
the equipment that they need. That's what keeps me up at night.
    Senator Ayotte. Thank you.
    Senator Shaheen. Thank you.
    Senator Kaine.
    Senator Kaine. General Spencer, just one question real 
quick to connect a couple of the points. It really picks up on 
what you just said.
    You talked about your maintenance folks are all civilians 
in Texas, a high number of civilians at Langley in Virginia. 
This tiered readiness structure, where you're standing down 
combat wings without saying more than you should--I mean, I--
we're doing a lot of contingency planning for things like Syria 
or North Korea or Iran right now I would be fair to assume that 
the Air Force has pretty significant roles in all that 
contingency planning.
    General Spencer. Yes, sir.
    Senator Kaine. If any of those contingencies or, God 
forbid, more than one, were to come to pass, there would be a 
pretty immediate need for an awful lot of Air Force activity.
    General Spencer. That's correct.
    Senator Kaine. That depends upon training and maintenance 
and folks being ready to roll right at the moment.
    General Spencer. Yes, sir.
    Senator Kaine. Yes, that's what keeps me up at night. Thank 
you.
    Senator Shaheen. Thank you, Senator Kaine.
    Apropos your comments, General Campbell, about, ``At what 
point might we have to say no when the country comes and 
asks?''--one of the things that I'm not going to ask you all 
about, but I just want to put on for the record today, is, as 
you all know, we're changing over the system by which you 
report on readiness to this committee and to Congress. I know 
there have been some challenges in getting that new system up 
and running. I just think, given the comments that you and--all 
of you really have had, testifying about the readiness 
challenges, that it's incumbent on all of us to figure out how 
to get that reporting system done in a way that better reflects 
the real circumstances that you're experiencing so that 
Congress can better understand what's going on and, hopefully, 
be very responsive to that.
    I just want to follow up with one more question about 
energy because, as I said in my opening statement, it's one of 
the things that has significantly affected your budgets. While 
over the last 10 years, there's not been much fluctuation in 
DOD's fuel consumption, there has been tremendous volatility in 
the price of--the cost of fuel. I wonder if you all could talk 
about the link between readiness and fuel price volatility and 
how--what you think is going to suffer in this budget because 
of the additional cost of fuel, because of the increases.
    Admiral Ferguson, do you want to begin?
    Admiral Ferguson. We're very, very dependent on fuel, and 
we're facing a bill due to this recent price jump of about $450 
million that we have to resolve. A good rule of thumb for us 
is, every dollar change in the price of oil is $30 million to 
me and my readiness accounts. So, it ends up we have to curtail 
existing operations, start to curtail some other base operating 
support, and move the money within the account to cover it. 
We're going to be relying on a reprogramming action, I think, 
to cover some of these costs this year for that. But that's 
kind of our rule of thumb, when you see those dollar amounts 
change.
    Senator Shaheen. Thank you.
    General Spencer. Senator, the Air Force uses the bulk of 
the fuel in the DOD, and we've done a lot of work in that area. 
Since 2006, we've reduced our requirement by about 12 percent, 
which is actually 2 percent ahead of where we thought we would 
be.
    To sort of put a dollar on that, if we were to pay for the 
same amount of fuel today that we did in 2006, we're paying, 
now, a billion and a half less, based on those efforts. So, 
we've really taken a--we've gone to these metrics--for example, 
large airplanes, the ton-mile-per-gallon. I don't know if 
you've flown in a C-17 lately. I had that experience. I was up 
in the cockpit with the pilots, and a young--former C-17 pilot, 
here--and I was pleasantly surprised; as I was sitting there 
looking around in the cockpit, they were talking to each other 
about optimum fuel load, optimum speed, optimum altitude to get 
the best fuel efficiency. So, it is becoming a culture. We're 
really working hard at that.
    The thing that bothers me about sequestration, frankly, is 
we have about 220 energy projects in our facilities, 
sustainment, restoration, and modernization budget, or our 
installation support budget, that we can't get to now because 
we've had to cut that account by about 50 percent, and we're 
only doing emergency repairs. So, that's a problem. We aren't 
able to now fund a lot of those energy projects that we have.
    Senator Shaheen. Thank you.
    Any--General Campbell?
    General Campbell. Yes, ma'am. A lot of our fuel really is 
embedded in our OPTEMPO, and--but, I think we will see an 
increase in costs for U.S. Transportation Command or secondary 
destination transportation costs will come up that'll impact 
retrograde, as well.
    But, at a different level, at the tactical level, the 
investment that we're making in the operational energy piece--
and you talked a little bit about that--whether it's battery 
packs or solar panels we put on soldiers to decrease the weight 
by 40 percent, by changing out--40 percent of the fuel we use 
in Afghanistan is in generators for the Army. By investing in a 
different type generator, by putting a different type fuel cell 
in at different forward operating bases, I mean, we really 
reduce the fuel dependability on the soldiers there. So, I 
think, at that level, we've been doing a lot of great work 
there to help out, and we'll continue to work that very hard.
    Senator Shaheen. Thank you.
    General Paxton, do you want to add anything?
    General Paxton. Yes, ma'am. It's the same thing. Because 
you get--fuel benefits will be seen tactically, operationally, 
and strategically. I mean, you'll have--you'll be able to lift 
more people further distances if you have less load to carry. 
You'll be able to have less dependency on the internal lines of 
communication for the amount of fuel you need to support an 
operation, and then you'll have greater flexibility to move 
strategically. So, we all pay attention to it at all three 
levels.
    Senator Shaheen. Yes. I think the story of what you all 
have done with addressing your fuel consumption is an amazing 
story that's really little known to the public, as a whole. It 
really provides a great model for where I think the private 
sector is going. They've figured out what you all have figured 
out, is that it's not just a cost to your bottom line, but 
there are other benefits, as well.
    So, I hope we're going to continue to tell that story 
because I think it's very impressive.
    So, thank you all. I don't have any further questions. 
Anyone else?
    Thank you very much for being here. We will continue this 
discussion and look forward to working with you.
    The hearing's adjourned.
    [Questions for the record with answers supplied follow:]

             Questions Submitted by Senator Kelly A. Ayotte

                IMPACT OF FISCAL YEAR 2013 SEQUESTRATION

    1. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, due to sequestration, the Department of 
Defense (DOD) is faced with an immediate reduction of $41 billion for 
the rest of fiscal year 2013. As you have discussed in your opening 
statements, the immediate impact of these cuts to the readiness of your 
forces will be severe and long lasting, creating a bow wave of reduced 
readiness and increased risk for years to come. Are additional funds 
budgeted for fiscal year 2014 in your operation and maintenance (O&M) 
accounts to recover from the sequestration cuts in 2013?
    General Campbell. No, the fiscal year 2014 President's budget (PB) 
request does not contain additional funds in our accounts to recover 
from the sequestration cuts in 2013. We developed the fiscal year 2014 
PB request prior to the start of sequestration on March 1, 2013.
    Admiral Ferguson. No. The fiscal year 2014 budget submission does 
not include additional funds to recover from all of the readiness 
impacts of sequestration in fiscal year 2013. For example, civilian 
furloughs, restructured ship construction, and maintenance schedules 
are irreversible once they are executed. Similarly, deployment 
schedules would preclude a fiscal year 2014 recovery of deferred fiscal 
year 2013 maintenance that was deferred by sequestration funding 
reductions. This deferred ship/aircraft maintenance will have to be 
funded and rescheduled at the next major maintenance availability. 
Recovery of this maintenance, in some cases, will take several years 
and could be at risk due to future funding levels.
    General Paxton. No, the Marine Corps did not budget additional 
funds in our operation and maintenance appropriation in fiscal year 
2014 to recover from sequestration cuts in fiscal year 2013. Despite 
the constrained funding resulting from sequestration, the passing of 
H.R. 933 mitigated most of the near-term operational impacts of 
sequestration in fiscal year 2013. The Marine Corps will meet near-term 
readiness commitments for deployed and next-to-deploy forces and will 
continue to rebalance to the Pacific and support the Marine Rotational 
Force Darwin and the Unit Deployment Program.
    While the Marine Corps is capable of meeting near-term readiness 
commitments in fiscal year 2013, we have taken risks in our long-term 
infrastructure sustainment and the unit readiness of our home station 
units. We cannot continue to sustain these levels of reductions in 
fiscal year 2014 without immediate impact to our deployed and next-to-
deploy forces and our nondeployed crisis response forces at home.
    General Spencer. No. The Air Force submission for the fiscal year 
2014 budget request was compiled prior to sequestration and did not 
take into account sequestration impacts on readiness caused by an 
approximate $3 billion reduction to critical readiness accounts in 
fiscal year 2013.

    2. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, how will you reverse the damage caused in 
these 6 months?
    General Campbell. The Army's fiscal year 2014 President's budget 
does not include all the resources needed to recover from lost 
readiness in fiscal year 2013. The impact of sequestration reductions 
is an atrophy of readiness due to cancelled training, deferred 
equipment maintenance, and delayed procurements. Any new unfunded 
directed missions will also negatively impact our OPTEMPO accounts and 
our ability to build readiness for all except the top priority units of 
those next to deploy, rotating to Korea, or a part of the Global 
Response Force. Funding above the amounts requested in the fiscal year 
2014 President's budget would help buy back some of the lost readiness.
    The Army has significant unfunded Operation and Maintenance, Army 
(OMA) requirements needed to recover lost training and rebuild lost 
readiness. Adding funds to those OMA accounts and to procurement 
accounts would be a positive step toward rebuilding readiness in fiscal 
year 2014. This would not, however, address the need to restore the 
Army's base funding for Overseas Contingency Operations (OCO)-funded 
training, sustainment, and procurement that supported the Army at war 
for nearly 12 years. As more soldiers return to home stations, the 
restoring base funding is among the biggest challenges in an 
environment of continued fiscal uncertainty.
    As soon as we can provide forces with the resources they need to 
execute their full training strategies, they will be able to 
progressively build readiness for a broader range of missions. It takes 
an Army Brigade Combat Team (BCT) approximately a full year to reset 
from a deployment and train-up for another mission. Even with full 
funding, a unit's training progression is generally linear, which 
limits acceleration. Units must go through the steps of building 
proficiency from smaller units to larger formations, from easy 
conditions to ambiguous or varied conditions, from basic tasks to 
synchronization of more complex operations. A BCT is not considered 
fully ready for decisive action until it has completed a training 
rotation at a maneuver combat training center (CTC). The Army will 
manage limited training assets (like CTC rotations) as best we can to 
support the training progression of priority units. Even with 
additional funding for CTC rotations, units at squad-level proficiency 
at the end of fiscal year 2013 would not have time to adequately 
prepare and benefit from a CTC rotation early in fiscal year 2014.
    Admiral Ferguson. We continuously assess the damage of 
sequestration to our readiness and are in the process of determining 
the actions necessary to recover from its impact and the associated 
cost; however, we will not be able to reverse all of the effects of 
sequestration.
    For example, we cancelled the deployment of a second carrier strike 
group to U.S. Central Command in February and have cancelled other 
operational training and deployments to U.S. European Command, U.S. 
Pacific Command, and U.S. Southern Command. We have also reduced our 
parts purchases, lowering our ability to surge forces and maintain our 
readiness levels while deployed. Nondeployed readiness will continue to 
decline over the remainder of the fiscal year and can only be recovered 
at a higher funding level.
    For our deferred maintenance, deployment and maintenance facility 
schedules will result in some maintenance being deferred for several 
years or cancelled altogether. Where possible, we will attempt to 
recover the most critical maintenance requirements.
    Much of our reduction was focused on shore infrastructure, where we 
have both reduced base operating support and curtailed repairs. For 
example, we have deferred noncritical dredging in places such as San 
Diego, Pearl Harbor, Guam, and Japan. This dredging must be done in the 
future to maintain safe port operations, and will cost more when we do 
it. To remain within future budgets, other dredging projects will be 
deferred. This creates a continued rightward push of projects for what 
amounts to a one-time, nonrepeatable savings. As such, future budgets 
will not have the trade space available to address the readiness damage 
incurred. In fact, should sequestration continue and the Department is 
placed on a lower funding path, the readiness impacts will increase 
disproportionately, as shore infrastructure degrades and all the one-
time cost deferments are used up.
    For our acquisition programs, we have reduced quantities and 
deferred payment of certain program costs into fiscal year 2014. 
Without an increase in funding, we will see higher unit costs, lower 
purchase quantities, and longer time to introduce new capabilities into 
the fleet.
    General Paxton. Despite the constrained funding resulting from 
sequestration, the passing of H.R. 933 mitigated most of the near-term 
operational impacts of sequestration in fiscal year 2013. The Marine 
Corps is capable of meeting all near-term readiness commitments in 
fiscal year 2013; however, we have taken risks in our long-term 
infrastructure sustainment and the unit readiness of our home station 
units by incurring significant reductions in facilities sustainment.
    These reductions in facilities sustainment are not sustainable and 
could degrade home station training and quality of life for marines and 
their families. As such, the Marine Corps' facilities sustainment in 
fiscal year 2014 fully funds the maintenance and upkeep of our vital 
facilities as we continue to strive to be good stewards of the 
infrastructure we have.
    An additional impact of sequestration and the uncertainty of the 
fiscal year 2013 budget during the first 6 months of the year is that 
the Marine Corps has been directed to furlough our civilian workforce. 
Although these furloughs have not yet begun, the continual uncertainty 
associated with lost pay damages our workforce's morale and the trust 
they have in the institution. This trust, once lost, cannot easily be 
recovered.
    General Spencer. We estimate between 3 to 6 months are needed for 
stood-down, combat-coded units to regain pre-sequester readiness 
levels. The Air Force estimates approximately a 10 percent increase in 
flying hours is needed in fiscal year 2014 above the current budgeted 
program for these stood-down units. In addition, there are weapon 
system sustainment costs and a multi-year recovery period from the bow 
wave created in fiscal year 2013.

    3. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, how does this affect the risk to our 
military members?
    General Campbell. Fiscal year 2013 budget uncertainty has delayed 
the Army's ability to refocus the training of contingency forces on 
conventional threats and required the Army to accept risk in meeting 
force deployment timelines in Combatant Commander Operational Plans. 
Only units with high-priority missions are able to fully prepare. Lower 
priority units will not be able to fully execute broader-focused 
training strategies since they must constrain training activity to the 
squad/crew/team level. These forces will require additional time to 
prepare for an unforeseen contingency, or will have to be deployed at 
less than full effectiveness. If units are deployed before being fully 
trained, operational commanders will have to use all available time to 
continue to prepare and assess whether mission requirements warrant the 
risks of force employment or offer alternatives. All military members 
would, however, have the personal skills needed to protect themselves 
with their individual weapon and equipment within context of any 
operation.
    Admiral Ferguson. In the near term, the fiscal year 2013 
sequestration has impacted our ability to train our people, maintain 
our existing force structure, and invest in future capability and 
capacity. While we have made every effort to protect family and sailor 
programs, these programs will be affected through reduced operating 
hours and availability of support.
    In addition to reducing the readiness levels of our nondeployed 
forces and bases, sequestration will mean lower levels of training and 
maintenance. It will place a premium on safety and risk management, as 
our sailors are asked to do more with resources that are being 
stretched and with less operational proficiency. We will carefully 
monitor the safety performance of the force to minimize risk.
    Over the long term, sequestration presents additional risk with 
respect to the capability of the force and its operational proficiency.
    General Paxton. Despite the constrained funding from sequestration, 
the passing of H.R. 933 mitigated most of the near-term operational 
impacts of sequestration in fiscal year 2013; the Marine Corps will 
meet near-term readiness commitments for deployed and next-to-deploy 
forces. In order to meet these commitments, the Marine Corps has been 
forced to reduce other accounts such as long-term infrastructure 
sustainment, Warrior and Family Support programs, and civilian 
personnel funding.
    The Marine Corps has taken risk in our long-term infrastructure 
sustainment by incurring significant reductions in facilities 
sustainment and thus degrades unit readiness of our home station units. 
Reductions in facilities sustainment are not sustainable in the long-
term and will degrade home station training and quality of life for 
marines and their families.
    Although Warrior and Family Support Programs will be protected to 
the greatest extent feasible, the long-term effects of sequestration 
will impact these programs. The Marine Corps' approach to sequestration 
cuts will be focused on preserving programs that support the health and 
welfare of our marines, including the Wounded Warrior Regiment and 
Combat Operational Stress Control for those returning from Afghanistan. 
We will prioritize our resources to ensure we maintain these programs 
while taking risk in lower priority programs, such as our leisure and 
recreation programs.
    As a result of sequestration, the Secretary of Defense has directed 
implementation of up to 11 days of furlough, which will have a 
significant impact on not only the affected employees and their 
families, but also to uniformed marines and overall readiness of the 
Marine Corps. The impact of an 11 workday furlough in the final quarter 
of this fiscal year will result in an approximate 20 percent pay 
reduction for affected employees and a commensurate reduction in work. 
Of our civilian marines, 68 percent are veterans that have chosen to 
continue to serve our Nation, and of those, 16 percent have a certified 
disability. As a result of this loss of income, employee stress will 
increase, morale will decline, productivity will suffer, and the burden 
on military personnel will increase--all of which translates to reduced 
readiness.
    Civilian furloughs will also impact the Marine Corps bases and 
stations with a commensurate reduction in services to our personnel, as 
these civilians provide critical functions that support our marines, 
sailors, and their families. With a ratio of 1 civilian to every 10 
marines, the Marine Corps already maintains the leanest civilian 
workforce--each of these civilians are an integral part of our total 
workforce. Ninety-five percent of civilian marines work outside the 
headquarters and support critical missions at our depots, bases, and 
stations in a multitude of roles that serve our active duty personnel 
and their families. Missions such as depot maintenance and training 
range operations directly support the warfighter and the Marine Corps' 
mission to provide the best-trained and -equipped marines.
    Sequestration's impacts include degradation to infrastructure 
sustainment, Warrior and Family Support Programs, and civilian Marine 
contributions due to furloughs--all of which affects our All-Volunteer 
Force and reduces readiness.
    General Spencer. Sequestration diminishes ready forces for steady 
state and emergent requirements. Sequestration has introduced 
heightened risk to current and emergent missions due to fewer trained 
and ready aircrew, maintenance, and support personnel.

    4. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, do you believe your Service will have the 
opportunity to advocate for a higher budget in fiscal year 2015, if the 
impacts to readiness from sequestration become too severe?
    General Campbell. We expect we will have an opportunity to advocate 
for a higher budget in fiscal year 2015 informed by fiscal year 2013 
and fiscal year 2014 sequestration readiness impacts and DOD Strategic 
Choices Management Review (SCMR). However, as an Army, we share the 
sacrifice of all Americans during this period of fiscal uncertainty and 
must shape the Army of 2020 with an understanding of both our national 
security obligations and the fiscal constraints we all share.
    Admiral Ferguson. We will articulate the funding requirements 
necessary to meet the National Defense Strategy and to meet the 
readiness requirements of the force. Our planning and recommendations 
must be informed by the discretionary budget caps enacted into law.
    General Paxton. The fiscal year 2015 budget is still under 
development; however, given current expectations the Budget Control Act 
caps will remain in place during coming fiscal years, it is unrealistic 
to expect larger budgets in the out-years.
    General Spencer. While the Air Force has made every effort to 
minimize impacts to readiness and people, the bow-wave of reductions, 
deferments, and cancelations will challenge the strategic choices made 
in the fiscal year 2014 request.
    The exact impact of sequestration on readiness in fiscal year 2014 
and beyond is still being assessed. We do know that more reductions 
will drive additional risks to our readiness, force structure, and 
ability to modernize our aging aircraft inventory. As we navigate the 
uncertain way ahead, we will continue to work with Congress.

                           CIVILIAN FURLOUGHS

    5. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, as you may know, many of us in the Senate 
tried for more than a year to get firm details on the impact of defense 
sequestration with little cooperation from the administration. Now that 
we are experiencing sequestration, there is still some uncertainty 
regarding the real effects, including the need to furlough civilian 
employees. Not only do furloughs put our skilled DOD civilians in a 
difficult financial position, but I am concerned that furloughs will 
inflict serious damage to our military readiness. What would be the 
readiness impact of furloughs on your Service?
    General Campbell. Civilian furloughs will impact the training 
capability at the Army's training institutions. Most U.S. Army Training 
and Doctrine Command (TRADOC) and non-TRADOC schools use Department of 
the Army civilians as instructors and their absence will require the 
training institutions to implement less than optimal training 
alternatives, in part all or in. These alternatives could include 
extending the program of instruction time period and creating a student 
throughput delay or backlog, or accepting risk in training standards. 
Degraded administrative support such as resource management, quality 
assurance, and course program management may cause a disruption to 
student services. Furloughs will also degrade the capability to provide 
development of doctrine, training, concepts, and requirements 
determination.
    Civilian furloughs will impact Army training support system 
capabilities as well. Maintaining training support, range operations, 
and airfield operation capabilities will require qualified borrowed 
military manpower to replace DA civilian shortfalls. Some of these 
training support capabilities include the use and/or maintenance of 
simulators (flight and ground vehicle, weapon, tactical, etc.), 
distributed learning facilities, and training aids, devices, and 
simulations, for which soldiers are not normally trained in their 
Military Occupational Specialty (MOS) to use or maintain. Furloughs 
limit Army civilians available to offset reductions as incremental 
funding of Mission Command Training contracts reduce workforce 
available to support units' preparations for future training exercises.
    The impact on Combat Training Center (CTC) rotations is expected to 
be manageable. All CTCs will work with their respective DA civilians to 
schedule furloughs around CTC rotations. This will ensure training 
units are adequately supported while at the CTCs. Currently there are 
842 DA civilians working at the 4 different CTCs. The primary effect of 
furloughs will be a reduction in the ability of the CTC staff to react 
to changes during a rotation. While uniformed personnel can, in many 
cases, cover down on a furloughed civilian position, the military 
personnel often lack the technical expertise or required certifications 
necessary to perform certain tasks expeditiously. Furloughing civilian 
employees at our organic depots and arsenals will slow production, 
increase repair cycle time, and potentially result in increased 
carryover.
    Admiral Ferguson. Furloughs, combined with the ongoing hiring 
freeze and overtime restrictions, will have an extended impact on Fleet 
maintenance capacity. Over time, it is our assessment furloughs will 
impact the morale of our civilian workforce, our ability to retain that 
workforce, and our ability to recruit new skilled workers into Federal 
service.
    Specifically, the combination of the civilian hiring freeze, 
overtime restrictions, and 11 furlough days at the aviation depots is 
expected to delay the delivery of approximately 66 aircraft and 370 
engines and modules from fiscal year 2013 into fiscal year 2014. 
Recovery of the delayed work will drive additional unbudgeted costs.
    The naval shipyards have been exempted from the furlough but 
capacity is still being impacted by overtime restrictions and the 
hiring freeze. This capacity reduction will result in maintenance 
availability completion delays.
    If the hiring freeze continues through the end of fiscal year 2013 
it will prevent the naval shipyards from hiring approximately 1,030 
production artisans and engineers. Fiscal year 2013 capacity would be 
reduced by 87,000 mandays, resulting in a 2 month delay for 1 aircraft 
carrier maintenance availability; a 2 month delay for 1 ballistic 
missile submarine maintenance availability; and a total of 8 months 
delay for 2 fast attack submarine maintenance availabilities.
    General Paxton. The full impact of civilian furloughs has yet to be 
determined since they are not scheduled to begin until July 8, 2013. 
However, once furloughs are implemented, it is expected that the lost 
days of labor from our civilian marine workforce will begin to affect 
overall Marine Corps readiness in the last quarter of fiscal year 2013. 
Furloughs will not only affect the overall readiness of the total force 
in terms of morale, stress, and quality, it could more specifically 
cause undue and immeasurable readiness impacts to organizations and 
entities that rely heavily on civilian workforces to complete their 
mission.
    Civilian marines comprise the leanest appropriated funded civilian 
workforce within DOD, with only 1 civilian for every 10 marines. Less 
than 5 percent of civilian marines work at the Headquarters elements in 
the Pentagon; most work at bases, stations, depots, and installations. 
Veterans comprise 68 percent of civilian marines and 13 percent of 
these veterans have a certified disability. Many civilian marines, who 
have already gone 3 years without salary increases, will not be able to 
easily absorb the loss of income from furloughs. Prolonged budgetary 
uncertainty extending into fiscal year 2014--regarding furloughs--will 
increase employee stress, reduce morale, and could be detrimental to 
retaining quality civilian personnel.
    As mentioned, the effect on organizations and entities that rely on 
a proportionally heavy civilian workforce may be significant. For 
instance, productivity at maintenance depots and Fleet Readiness 
Centers (FRCs) will suffer because of reduced labor hours. 
Approximately 20 percent of the remaining fiscal year 2013 depot and 
FRC organic capacities will be lost, resulting in requirements to shift 
post-combat reset workload completions into fiscal year 2014 and 
beyond. Equipment shortages are the biggest readiness detractors for 
the Corps and furloughs will exacerbate that problem. Aviation 
readiness is already decremented due to aircraft, engines, and 
components awaiting depot work. The furlough of civilian employees at 
FRCs is anticipated to create up to a 1-month delay for aircraft, 
engine, and component deliveries in the remainder of fiscal year 2013. 
These delays would affect the aircraft materiel readiness condition and 
availability for training of F/A-18, AV-8B, CH-53E, MV-22B, AH-1, and 
UH-1 aircraft. Should civilian furloughs continue into fiscal year 
2014, the impacts would be extended across the operating forces, 
Reserves, and the supporting establishment. The impacts to depots and 
FRCs will result in deferred inductions, degraded overall materiel 
condition, reduced aircraft and equipment availability for training, 
and increased risk to safety and combat readiness. Units with aircraft 
inducted into the maintenance cycle would be impacted first, followed 
by training and operational units that would be forced to defer 
maintenance actions and training and readiness requirements that are 
imperative to producing qualified aircrews and being deployment-ready.
    General Spencer. The Air Force is comprised of over 170,000 
civilian employees (one third of the entire Air Force) with the vast 
majority currently expecting to be impacted by furloughs. The entire 
Air Force will be affected. The most significant impact will be felt in 
those areas that rely primarily on civilians. For example, the depot 
workforce is 77 percent civilian, and the depot role is vital to 
aircraft sustainment and modernization. Civilians also contribute 
invaluable expertise in the staffs at major commands and headquarters 
and their absence will further increase the workload on our uniformed 
force.

    6. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what will be the impact to the morale of 
our civilian employees?
    General Campbell. On January 10, 2013, the Deputy Secretary of 
Defense directed the components to take necessary steps to mitigate the 
impact of a financial shortfall, which resulted in an immediate freeze 
on civilian hiring. Not only does this freeze hinder the civilians' 
ability to support the soldier and the mission, it also limits the 
promotional opportunities for our workforce. The Army has also released 
temporary employees and allowed term appointments to expire, which only 
places increased workload and demands on our existing workforce. These 
actions, in addition to the continued freeze on civilian pay, the 
limitations placed on overtime, the discontinuance of monetary awards, 
and the implementation of furlough are having significant impact on the 
morale of our civilian workforce, particularly because it impacts their 
financial stability.
    All of these actions are a reflection of budgetary constraints and 
in no way reflect the outstanding quality and performance of the Army 
civilian professionalism.
    Admiral Ferguson. Furloughs present an immediate challenge to our 
workforce in terms of morale, retention, and recruiting. Navy civilians 
enable the Navy and Marine Corps team to operate forward around the 
globe, as the majority directly supports the readiness of our force. 
DOD will execute up to 88 hours, or approximately 11 furlough days, by 
the end of the fiscal year. Civilian employees will incur a 20 percent 
reduction in their pay due to the furlough. In addition to previous pay 
freezes, this adversely affects morale, will likely result in 
recruiting and retention challenges of skilled personnel in the future, 
and will impact the performance of the workforce overall. Through 
exemptions and other actions, we have attempted to reduce the impacts 
to readiness and operations where possible and consistent with DOD 
policy.
    General Paxton. Our civilian marines support the mission and daily 
functions of the Marine Corps and are an integral part of our Total 
Force. Serving alongside our marines throughout the world, in every 
occupation and at every level, our civilian appropriated funded 
workforce remains the leanest of all Services, with a ratio of 1 
civilian to every 10 active duty marines. More than 93 percent of our 
civilians do not work in Headquarters' elements in the Pentagon; they 
are at our bases, stations, depots, and installations. Sixty-eight 
percent are veterans who have chosen to continue to serve our Nation; 
of those, a full 13 percent have a certified disability.
    The potential human impact associated with furloughing our civilian 
marines is significant. While we would like to believe that a 
discontinuous furlough will reduce the impact on our employees, most 
will not be able to easily absorb this sudden loss of income, even over 
a period of several months. With prolonged budgetary uncertainty, 
including the possibility of additional furloughs in fiscal year 2014, 
employee stress is increasing, civilian morale is declining, and at 
some point productivity will begin to suffer.
    General Spencer. We have a dedicated and professional civilian 
force that serves our Nation proudly. However, our civilian employees 
are concerned about lost pay due to the furlough and potential future 
reductions due to sustained budget cuts; all of this negatively impacts 
the morale of our civilian airmen.

    7. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, within your current budget constraints, 
could your Service find a way to avoid civilian furloughs without 
taking unacceptable risks in other budget areas?
    General Campbell. The current budget constraints do not permit us 
to avoid a civilian furlough without taking unacceptable risks in 
readiness. From the outset of the budgetary uncertainty, the Army 
identified significant shortfalls in its OMA account. The shortfalls 
were due to the effect of the Continuing Resolution, the impact of 
sequestration, and the higher than expected costs related to Operation 
Enduring Freedom.
    On March 1, sequestration went into effect across the Federal 
Government. DOD's budget was reduced by $37 billion, including $20 
billion in the O&M accounts that pay many of our civilian workers.
    Because our wartime budget is also subject to sequestration, we 
must utilize funds originally budgeted for other purposes in order to 
provide troops at war with every resource they need. These factors lead 
to a shortfall in all Defense O&M accounts of more than $30 billion--a 
level that exceeds 15 percent of the DOD budget request, with fewer 
than 6 months left in the fiscal year in which to accommodate this 
dramatic reduction in available resources. At this time, we simply do 
not have a lot of flexibility to account for the large shortfalls in 
O&M dollars. However, we will continue to closely monitor funding for 
the remainder of the fiscal year, and if the funding situation permits, 
we will avoid or end furloughs.
    Admiral Ferguson. Yes. The Department of the Navy presented fiscal 
options to avoid the necessity of furloughs for the Navy and Marine 
Corps. These options were considered but not authorized by DOD.
    General Paxton. Given current funding levels, the Marine Corps 
could avoid civilian furloughs. However, because of the overall funding 
deficiencies of DOD, the Secretary of Defense has directed 
implementation of furloughs. Implementing furloughs will have a 
significant impact to Marine Corps readiness.
    General Spencer. There are limited options to absorb sequestration 
reductions of this magnitude during the year of execution. The Air 
Force has maximized every option to minimize the risk to readiness 
which includes our civilians. The Air Force is highly leveraged and 
furloughing our civilians is not a desirable option, but unfortunately 
necessary.

    8. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what is the total projected savings in 
2013 for your Service for both a 14-day and a 7-day furlough, and could 
that savings be found elsewhere?
    General Campbell. Based our current estimates we believe that we 
could save approximately $726.5 million across all appropriations with 
a 14-day furlough. If we are directed to reduce the number of furlough 
days to 7, our savings would be reduced to approximately $363.3 
million. Continuing to reduce the number of furlough days will force us 
to assume increasing risk in other parts of the budget, such as taking 
further reductions to unit training or reducing services our 
installations provide to our soldiers and their families. This would 
also be on top of the emerging OCOs shortfall of approximately $8.3 
billion with which we are currently grappling. We planned to use the 
furlough as a tool of last resort, and I think we have reached that 
point. We could find the savings elsewhere, but based on Army 
priorities, that would force us to assume additional and unacceptable 
risk in our readiness accounts, further affecting our ability to 
provide ready forces in the case of emerging contingencies.
    Admiral Ferguson. The most current estimates of projected savings 
are for the 11-day furlough announced by the Secretary of Defense on 14 
May 2013. Estimated savings in Operation and Maintenance, Navy and 
Operation and Maintenance, Navy Reserve are approximately $130 million 
and $2 million, respectively.
    For Navy, savings could be found elsewhere within the Department of 
the Navy. However, Department-wide civilian furloughs were directed on 
14 May 2013 to prioritize military missions and minimize adverse 
mission effects, and subject to that criterion, to ensure reasonable 
consistency and fairness across the Department.
    General Paxton. Per the letter dated 14 May 2013, the Secretary of 
Defense has directed up to 11 days of furlough for all DOD civilian 
employees with limited exceptions. The Marine Corps projects the 
savings from an 11-day furlough to be approximately $58 million and 
will implement furloughs as directed. The passage of H.R. 933 helped 
mitigate some of the near-term impacts of sequestration. Consequently, 
the Marine Corps could prioritize its available funding to meet near-
term readiness commitments for deployed and next-to-deploy forces, 
while taking risk in other areas to otherwise find the $58 million that 
would be made available by furlough.
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    

    General Spencer. The savings associated with furlough are $409 
million for 14 days and $205 million for 7 days.
    The Air Force has taken every action to live within our reduced top 
line and reduce the adverse impact sequestration is having on 
readiness. The Air Force has stood down flying squadrons to include 
one-third of combat coded squadrons, deferred depot inductions, and 
deferred critical facility projects as well as implemented a hiring 
freeze. Unfortunately, after taking all these actions, we still had to 
make the extremely difficult decision to furlough civilians for 11 
days.

                  LONG-TERM IMPACTS FROM SEQUESTRATION

    9. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, the President's budget for fiscal year 
2014 does not take into consideration the potential impact of the 
sequestration of $53 billion to defense accounts in 2014. What is your 
assessment regarding the readiness impact of a continuation of 
sequestration in 2014?
    General Campbell. If sequestration continues into fiscal year 2014, 
the Army will potentially have to reduce the ground OPTEMPO and flying 
hour programs. This can impact the Army's ability to provide units 
trained for decisive action by limiting the training events at home 
stations and combat training centers. Less training will reduce 
required repairs of depot level reparable components and the workforce 
required to make those repairs. The Army may curtail units scheduled to 
train at the combat training centers or send only portions of those 
units, limiting the benefits of world class opposing forces, after 
action reviews by observer controllers, and an operational environment 
with training in multiple environments against hybrid threats. The Army 
will be challenged to prepare for a variety of contingencies and may 
require more time to prepare forces for deployment.
    Potential reductions could also impact the Army's ability to 
execute home station individual and collective gunnery training by 
limiting the availability of ranges and deferring replacement of 
damaged targets. Range modernization efforts may be impacted as several 
projects will not have unexploded ordnance clearance completed. Reduced 
mission training complex capabilities will limit battalion, brigade, 
division and corps staff proficiency on their mission command systems 
in a realistic environment. Training support centers may not be able to 
provide instructor/operator support for numerous complex virtual 
trainers, including flight simulators and medical simulation training.
    Potential reductions may impact the Army's institutional training 
capability to conduct Initial Military Training and critical functional 
skills training. This could result in a backlog of recruits awaiting 
training at the institutional training base. Soldiers may not receive 
duty-specific skill training required by the soldier's unit, thus 
contributing to degraded unit readiness. Additionally, funding 
reductions may impact the Army's ability to develop agile and adaptive 
leaders by reducing the opportunities for Professional Military 
Education.
    Significant reductions to training accounts will reduce jobs for 
Department of the Army civilians and contractors who maintain and 
operate key training enablers to include ranges, mission command 
training centers, training aids, devices, simulators, and simulations.
    Admiral Ferguson. While we have not yet completed our assessment of 
the potential readiness impacts of sequestration in fiscal year 2014, 
we expect to take similar actions as those in fiscal year 2013 to 
address an estimated $5.7 billion reduction to our Operation and 
Maintenance Navy accounts.
    These potential actions include:

         Reductions in operational deployments;
         Reductions in readiness levels of nondeployed units;
         Deferred or reduced maintenance availabilities for 
        ships and aircraft;
         Reduced base operating support and improvements in 
        shore infrastructure; and
         Reductions to investment accounts.

    Our priorities for O&M, Navy expenditures in fiscal year 2014 will 
be:

         Fund our must pay bills;
         Fund fleet operations to meet adjudicated combatant 
        commander requirements;
         Provide required training, maintenance, and 
        certification for next-to-deploy forces;
         Fund necessary base operations and renovation projects 
        to support training and operations; and
         Sustain sailor and family support programs

    By the end of this fiscal year, two-thirds of our nondeployed ships 
and aviation squadrons will be less than fully mission capable and not 
certified for major combat operations. Should sequestration continue 
through fiscal year 2014, this percentage will likely increase.
    General Paxton. DOD and the Marine Corps are still examining the 
implications of sequestration continuing into fiscal year 2014. Budget 
complexities and a lack of details pertaining to sequestration and/or a 
Continuing Resolution in fiscal year 2014 make it difficult to predict 
detailed impacts. The Marine Corps maintains the long-term health and 
readiness of its force by balancing resources across five broad 
pillars: high quality people, unit readiness, capability and capacity 
to meet requirements, infrastructure sustainment, and equipment 
modernization. Maintaining balance across all five pillars is critical 
to achieving and sustaining Marine Corps readiness. Given the impacts 
of sequestration for fiscal year 2013, the Corps ensured its short-term 
readiness with actions such as transferring facilities sustainment 
funding, delaying military construction (MILCON) to support operations, 
and delaying equipment maintenance and modernization. These actions 
created an imbalance across the readiness pillars that resulted in both 
near- and far-term readiness shortfalls and concomitant impacts with 
respect to long-term readiness. Sequestration in fiscal year 2014 would 
underfund the readiness needed to execute the National Defense 
Strategy, potentially leading toward a hollow force.
    The Marine Corps is drawing down to an Active Duty end strength of 
182,100 by the end of fiscal year 2016, at the rate of no more than 
5,000 a year, and it will be retaining the Reserves at 39,600 marines. 
This will allow it to retain the capacity and capability to support 
steady state and crisis response operations; complete the mission in 
Afghanistan; provide sufficient dwell times; and keep faith with its 
marines. Further force reductions, due to sequestration, would cause 
the Corps to reevaluate its role in the National Defense Strategy and 
break faith with its marines.
    The Marine Corps anticipates a significant reduction in deployable 
readiness due to reduced funding for the flying hour program, to the 
extent that by fiscal year 2015, approximately half of all aviation 
squadrons would not meet the minimum requirements for combat 
deployment. Reductions in training and maintenance would put more than 
50 percent of tactical units at unacceptable levels of readiness for 
deployment. The curtailment of training and maintenance due to 
sequestration would further degrade the readiness of nondeployed crisis 
response forces. Nearly half of the Marine Corps' ground units and one-
third of its aviation combat units would remain below acceptable 
readiness levels. Sequestration would also have adverse impacts on the 
availability and combat readiness of amphibious and maritime 
prepositioning ships, which are a foundational requirement for training 
and executing expeditionary force presence and amphibious force 
projection capabilities. Sequestration would decrease Service, joint, 
and combined training opportunities since the Corps would be forced to 
reduce its scale, scope, and participation in operations and exercises 
for geographic combatant commanders.
    Facilities sustainment reductions in fiscal year 2014 and beyond 
due to sequestration would be unsustainable, hinder the rebalance to 
the Pacific, degrade training range sustainment, and reduce the quality 
of life for marines and their families. Equipment shortages are a 
principal readiness detractor for the operating forces and 
sequestration's impacts on depots would adversely impact the 
modifications, critical survivability and mobility upgrades, and 
modernization programs for equipment. Sequestration also would 
significantly delay the modernization programs essential to our medium- 
and long-term operational readiness.
    General Spencer. Sequestration has created significant readiness 
shortfalls and reduced our ability to meet future steady state and 
surge requirements. A sequestered 2014 budget will exacerbate those 
impacts. Examples of current sequestration impacts include stood-down, 
combat-coded flying units, postponement of field-level maintenance and 
depot inductions, reductions in depot production, and interruption of 
aircraft modification and modernization efforts. Under ideal budget 
scenarios, achieving full mission readiness goals will be a multi-year 
effort beyond what is achievable in fiscal year 2014. If fiscal year 
2014 is sequestered, readiness recovery is not possible and the 
downward readiness trend will continue.

    10. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, if sequestration is allowed to occur in 
2014, in your professional military judgment, what changes to our 
National Military Strategy (NMS) will have to occur for your Service?
    General Campbell. If sequestration occurs, we will necessarily have 
to revisit the Defense Strategic Guidance announced by the President in 
January 2012. Our existing service strategy to support the Defense 
Strategic Guidance was predicated on pre-sequestration manning of the 
force, but did include force reductions mandated under the 2011 Budget 
Control Act. The drastic cuts necessitated by sequestration will 
warrant a comprehensive review of the defense strategy. That process is 
underway as part of the SCMR directed by Secretary Hagel on 15 March 
2013.
    Admiral Ferguson. Under this scenario, Navy would be unable to meet 
the National Defense Strategy as presently written. We are working with 
the Office of the Secretary of Defense (OSD) in the SCMR to inform the 
major decisions that must be made in the decade ahead to preserve and 
adapt our defense strategy, our force, and our institutions under a 
range of future budgetary scenarios. The results of this review will 
frame the Secretary's fiscal guidance and will ultimately be the 
foundation for the Quadrennial Defense Review due to Congress in 
February 2014.
    General Paxton. DOD and the Marine Corps are still examining the 
implications of sequestration continuing into fiscal year 2014. Under 
sequestration, we may be forced to do less, but that does not 
invalidate the guidance provided in our NMS. Some of our customary 
`ways' and `means' may have to be revisited, because we will have less 
capacity, but sweeping changes to strategic goals (or `ends') do not 
seem to be warranted. The Marine Corps does not believe a radical 
departure from the broad goals articulated in our current strategic 
guidance is necessary until we have exhausted every effort to achieve 
these goals within a reduced resource environment.
    As the Nation's principal crisis response force, maintaining a high 
state of readiness across the entire force is necessary in order to 
ensure the security of our country's global interests. This readiness 
comes at a cost and the high readiness of our deployed forces has come 
at the expense of the Corps' nondeployed unit readiness. To maintain 
the high readiness of our forward deployed forces, we have had to 
source equipment globally while sourcing personnel for Afghanistan and 
other emerging threats from our nondeployed units. These nondeployed 
forces' principal readiness challenge is the reduced availability of 
equipment at home stations with which to outfit and train units, due 
largely to portions of their equipment being redistributed to support 
units deployed forward. The manning of home station units also suffers 
due to the need to meet enhanced personnel requirements for deploying 
units, Joint Force Individual Augments, and Security Force Assistance 
Teams. The primary concern with the out-of-balance readiness of the 
Corps' operating forces is the increased risk it creates in the timely 
response to unexpected crises or large-scale contingencies, since these 
nondeployed forces will likely be the responders.
    General Spencer. With the fiscal year 2013 sequestration ongoing, 
we have already noticed serious concerns with respect to readiness and 
response capability. We have stood down a number of our frontline 
active-duty fighter and bomber squadrons and have made unavoidable cuts 
in other operations and training budgets, and to our modernization 
accounts. As we continue into fiscal year 2014--if sequestration 
continues--I believe we will be challenged to provide a ready joint 
force with the proper capabilities and capacities to execute the NMS. 
Our senior leaders will be faced with some very difficult choices.

    11. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, please provide a detailed assessment of 
the impacts to military readiness and capabilities if sequestration 
continues into 2014.
    General Campbell. If sequestration continues into fiscal year 2014, 
the Army will potentially have to reduce the ground OPTEMPO and flying 
hour programs. This can impact the Army's ability to provide units 
trained for decisive action by limiting the training events at home 
stations and combat training centers. Less training will reduce 
required repairs of depot level reparable components and the workforce 
required to make those repairs. The Army may curtail units scheduled to 
train at the combat training centers or send only portions of those 
units, limiting the benefits of world class opposing forces, after 
action reviews by observer controllers, and an operational environment 
with training in multiple environments against hybrid threats. The Army 
will be challenged to prepare for a variety of contingencies and may 
require more time to prepare forces for deployment.
    Potential reductions could also impact the Army's ability to 
execute home station individual and collective gunnery training by 
limiting the availability of ranges and deferring replacement of 
damaged targets. Range modernization efforts may be impacted as several 
projects will not have unexploded ordnance clearance completed. Reduced 
mission training complex capabilities will limit battalion, brigade, 
division and corps staff proficiency on their mission command systems 
in a realistic environment. Training Support Centers may not be able to 
provide instructor/operator support for numerous complex virtual 
trainers, including flight simulators and medical simulation training.
    Potential reductions may impact the Army's institutional training 
capability to conduct Initial Military Training and critical functional 
skills training. This could result in a backlog of recruits awaiting 
training at the institutional training base. Soldiers may not receive 
duty-specific skill training required by the soldier's unit, thus 
contributing to degraded unit readiness. Additionally, funding 
reductions may impact the Army's ability to develop agile and adaptive 
leaders at all levels by reducing the opportunities for Professional 
Military Education.
    Significant reductions to training accounts will reduce jobs for 
Department of the Army civilians and contractors who maintain and 
operate key training enablers to include ranges, mission command 
training centers, training aids, devices, simulators, and simulations.
    Admiral Ferguson. Should sequestration continue in 2014, Navy would 
continue to apply the general principles we used to assess readiness 
options in fiscal year 2013. Based upon the CNO's three tenets, 
``Warfighting First, Operate Forward, and Be Ready,'' Navy would have 
the following impacts:

         Navy forces on the ground engaged in combat operations 
        and those forces forward providing direct support to combat 
        operations would be at full readiness.
         Navy forces scheduled to deploy or forward deployed 
        would be provided the resources to complete essential 
        maintenance and training to meet their deployment date. The 
        number of deployed forces would decrease.
         Beyond these first two criteria, hard choices would 
        again be required with respect to the readiness of the 
        remainder of the force.
         These choices would include:

                 Prioritizing support for the fiscal year 2014 
                Global Force Management Allocation Plan (GFMAP), 
                cancelling additional deployments;
                 Reducing operating funding (Flying Hours/
                Steaming Days) for forward deployed forces not directly 
                engaged in combat operations or supporting combat 
                operations, reducing the level of operations by forward 
                forces;
                 Deferring ship depot and intermediate 
                maintenance below that is required to efficiently 
                sustain expected service life. Ships deploying in 
                fiscal year 2014 or fiscal year 2015 would be 
                prioritized, but maintenance deferred would need to be 
                completed later at a higher cost;
                 Deferring induction of airframes and engines 
                for aviation depot maintenance, building a significant 
                backlog into future years, and increasing cost;
                 Reducing training, technical support, repair 
                parts, and admin support for forces not scheduled to 
                deploy in fiscal year 2014 or early fiscal year 2015;
                 Imposing a hiring freeze or conducting limited 
                furloughs of the civilian workforce. We would also 
                assess the necessity to conduct a reduction in force;
                 Continuing deferral of facility sustainment 
                and modernization, prioritizing projects involving 
                life, health and safety, critical infrastructure, 
                mission critical shipyard projects, and high return 
                energy projects. Overall condition of shore 
                infrastructure will deteriorate; and
                 Reducing quantities and cancelling selected 
                procurement programs.

    General Paxton. DOD and the Marine Corps are still examining the 
implications of sequestration continuing into fiscal year 2014. Budget 
complexities and a lack of details pertaining to sequestration and/or a 
Continuing Resolution in fiscal year 2014 make it difficult to predict 
detailed impacts. The Marine Corps maintains the long-term health and 
readiness of its force by balancing resources across five broad 
pillars: high quality people, unit readiness, capability and capacity 
to meet requirements, infrastructure sustainment, and equipment 
modernization. Maintaining balance across all five pillars is critical 
to achieving and sustaining Marine Corps readiness.
    Given the impacts of sequestration for fiscal year 2013, the Corps 
ensured its short-term readiness with actions such as transferring 
facilities sustainment funding, delaying MILCON to support operations, 
and delaying equipment maintenance and modernization. These actions 
created an imbalance across the readiness pillars that resulted in both 
near- and far-term readiness shortfalls and concomitant impacts with 
respect to long-term readiness. Sequestration in fiscal year 2014 may 
underfund the readiness requirements necessary to execute the National 
Defense Strategy, potentially leading toward a hollow force.
    The Marine Corps is drawing down to an Active Duty end strength of 
182,100 by the end of fiscal year 2016, at the rate of no more than 
5,000 a year, while retaining a trained Reserve component of 
approximately 39,600 marines. This force structure balance will enable 
your Corps to retain a capacity and capability to support steady state 
and crisis response operations; complete the mission in Afghanistan; 
provide sufficient dwell times; and keep faith with our marines. 
Further force reductions due to sequestration may cause the Corps to 
break faith with its marines and have to revisit its role in the 
National Defense Strategy because we have less capacity (ways and 
means) to support the strategic goals (ends).
    The Marine Corps anticipates a significant reduction in deployable 
readiness due to reduced funding for the flying hour program to the 
extent that by fiscal year 2015, approximately half of all aviation 
squadrons would not meet the minimum requirements for combat 
deployment. Reductions in training and maintenance will put more than 
50 percent of tactical units at unacceptable levels of readiness for 
deployment. The curtailment of training and maintenance due to 
sequestration would further degrade the readiness of nondeployed crisis 
response forces. Nearly half of the Marine Corps' ground units and one-
third of its aviation combat units would remain below acceptable 
readiness levels. Sequestration would also have adverse impacts on the 
availability and combat readiness of amphibious and maritime 
prepositioning ships, which are a foundational requirement for training 
and executing expeditionary force presence and amphibious force 
projection capabilities. Sequestration would decrease Service, joint, 
and combined training opportunities, as the Corps may be forced to 
reduce its scale, scope, and participation in operations and exercises 
with the geographic combatant commanders.
    Facilities sustainment reductions in fiscal year 2014 and beyond 
due to sequestration would be unsustainable, hinder the rebalance to 
the Pacific, degrade training range sustainment, and reduce the quality 
of life for marines and their families. Equipment shortages are a 
principal readiness detractor for the operating forces and 
sequestration's impacts on depots would adversely impact the 
modifications, critical survivability and mobility upgrades, and 
modernization programs for equipment. Sequestration would also 
significantly delay the modernization programs essential to our medium- 
and long-term operational readiness.
    General Spencer. If we do not receive sufficient funding in fiscal 
year 2014, we may have to rotationally stand down flying units, or fly 
them at a reduced rate, similar to the actions we've taken in fiscal 
year 2013. This sequester-induced non-combat ready posture of a portion 
of our fleet will impact our ability to fill our operation plan and 
Secretary of Defense-ordered missions, continue to degrade our depot 
maintenance and modernization programs, and will significantly erode 
our training and force development efforts creating long-term readiness 
shortfalls. Detailed assessments are ongoing and will require a 
classified venue for presentation.

                            PUBLIC SHIPYARDS

    12. Senator Ayotte. Admiral Ferguson, you state in your written 
testimony regarding the impact of sequestration, that, ``In fiscal year 
2014, we will reduce intermediate-level ship maintenance and defer 8 of 
33 planned depot-level surface ship maintenance availabilities.'' 
Previously, the Navy announced the need to defer essential maintenance 
that allows our public shipyards to provide our combatant commanders 
the well-maintained fleet they require to protect our country. Can you 
explain how the Navy plans to minimize the disruption sequestration 
will cause the workforce at our public shipyards--which play such a 
critical role in maintaining our fleet's readiness?
    Admiral Ferguson. Navy plans to continue to meet the requirements 
in title 10, U.S.C., to provide the essential organic capability to 
perform depot- and intermediate-level maintenance, modernization, 
emergency repair work, and in-activations on nuclear-powered aircraft 
carriers and submarines. Additionally, to mitigate the impact of 
sequestration on maintenance availabilities for our ships, we requested 
and the OSD approved furlough exemptions for over 29,000 general and 
nuclear shipyard workers. Where possible, we will commence rehiring 
workers in the shipyards.
    We will continue to manage public depot civilian employment on the 
basis of workload and the funds available for such depot maintenance, 
remaining within the limitation that no more than 50 percent of depot-
maintenance funds can be contracted out to the private sector.

    13. Senator Ayotte. Admiral Ferguson, if sequestration goes forward 
in 2014, will it become increasingly difficult to shield our public 
shipyards from the impacts of sequestration?
    Admiral Ferguson. Yes. Navy will continue to do everything possible 
to protect the naval shipyards from the impacts of sequestration due to 
the immediate readiness impacts to our nuclear powered submarines and 
aircraft carriers. While we will be able to sustain their workload in 
the near-term, eventually shortfalls will accrue to the point where 
even nuclear work will have to be deferred. At that point, the public 
shipyards would experience similar funding shortfalls as those 
currently seen in the private sector depots.

                              HOLLOW FORCE

    14. Senator Ayotte. General Paxton and General Spencer, the 
Chairman of the Joint Chiefs recently testified that if Congress allows 
major across-the-board spending cuts to go forward, the military 
eventually will be asked to deploy troops who are unready and ill-
equipped. He said, ``if ever the force is so degraded and so unready, 
and then we're asked to use it, it would be immoral.'' Each of you have 
testified about severe long-term degradations of nondeployed unit 
readiness by the end of the fiscal year. These same forces could be 
called upon to respond to an unanticipated major regional contingency 
like an attack by North Korea. What are the first indicators that your 
Service is becoming a hollow force?
    General Paxton. A critical measure of the effectiveness of the 
Marine Corps is its institutional readiness. This readiness is 
preserved through a careful balance of high quality people, well-
trained units, modernized equipment, well-sustained installations, and 
a force level sufficient to accomplish its many missions. Failure in 
any one of these pillars of readiness begins to set the conditions for 
an eventual hollowing of the force. Lessons learned from past post-war 
budget patterns (e.g. Korea, Vietnam, Cold War, etc.) have been 
institutionally inculcated. Some of the warning signals of approaching 
``hollowness'' were such things as reductions in defense spending 
without reductions in forces, reductions in unit readiness levels, 
infrastructure and installations that could not support unit 
warfighting requirements, and reduced morale and retention. 
Additionally, safety and mishap rates could be an indication of 
inadequate training associated with reduced readiness. The Marine Corps 
is attuned to such indicators and is carefully watching for them.
    Through close and continual Service command interactions and 
communications, the Defense Readiness Reporting System-Marine Corps 
(DRRS-MC), and Service-level personnel, materiel, installation, 
medical, and other data systems are utilized to inform Marine Corps 
leadership with respect to the status of the five institutional 
readiness pillars. Service-level readiness is further integrated into 
the Joint DOD community through the Chairman's Readiness System to 
measure the military's preparedness to achieve objectives as outlined 
by the NMS. These processes will inform the Marine Corps and enable it 
to inform Congress before the Service reaches a readiness crisis.
    General Spencer. A hollow force is one that looks good on paper, 
but has more units, equipment, and installations than it can support, 
lacks the resources to adequately man, train, and maintain them, and is 
not provided with enough capable equipment and weapons to perform its 
missions. We believe we've already seen the first indicators of a 
hollow force. Readiness is down, we are unable to train, our 
installations are not being maintained, and our weapons inventory is 
inadequate. The Air Force has been able to meet all Secretary of 
Defense-ordered missions remaining in fiscal year 2013, by maintaining 
combat-ready status for only select units. However, sequester 
jeopardizes our ability to surge additional forces to meet contingency 
and emergent combatant commander requirements. Based on our global 
intelligence, surveillance, and reconnaissance mission, the sequester-
induced readiness deficit we are currently experiencing has placed us 
beyond the red line, or tipping point, in terms of risk. This will, 
however, only be evident outside of DOD in the event of a crisis 
requiring rapid and robust response.

    15. Senator Ayotte. General Paxton and General Spencer, what 
percentage or status of nondeployed unit readiness will be the red line 
or tipping point for your Service?
    General Paxton. As the Nation's principal crisis response force, 
maintaining a high state of readiness across the entire force is 
necessary in order to ensure the security of the country's global 
interests. Readiness comes at a cost and the high readiness of our 
deployed forces has come at the expense of the Corps' nondeployed unit 
readiness. To maintain the high readiness of our forward deployed 
forces, we have had to globally source equipment and personnel for 
Afghanistan and other emerging threats from our nondeployed units. 
These nondeployed forces' principal readiness challenge is the reduced 
availability of equipment at home stations with which to outfit and 
train units. The manning of home station units also suffers due to the 
need to meet enhanced personnel requirements for deploying units, Joint 
Force Individual Augments, and Security Force Assistance Teams. The 
primary concern with the out-of-balance readiness of the Corps' 
operating forces is the increased risk in the timely response to 
unexpected crises or large-scale contingencies, since these nondeployed 
forces will likely be the responders.
    Financing near-term readiness has caused the Corps to decrement 
continually its modernization and infrastructure accounts. Over the 
long-term, resourcing short-term readiness by borrowing-forward from 
long-term investment resources is unsustainable, and will eventually 
degrade unit readiness to an unacceptable level. Full implementation of 
sequestration and the associated cap reductions in the coming years may 
require a top-to-bottom re-examination of priorities, missions, and 
what it will take to continue to be your Nation's Expeditionary Force 
in Readiness.
    General Spencer. Hollowness is best described in terms of risk. 
Under sequester, the Air Force is experiencing heightened risk that is 
exceptionally difficult to manage as we continue to meet the Defense 
Strategic Guidance. Based on our mission requiring global intelligence, 
surveillance, and reconnaissance, the sequester-induced readiness 
deficit we are currently experiencing has placed us past the red line 
or tipping point in terms of risk. This will, however, only be evident 
outside of DOD in the event of a crisis requiring a rapid and robust 
military response.

    16. Senator Ayotte. General Paxton and General Spencer, how close 
is your Service to becoming a hollow force?
    General Paxton. A critical measure of the effectiveness of the 
Marine Corps is its institutional readiness. This readiness is 
preserved through a careful balance of high quality people, well-
trained units, modernized equipment, well-maintained installations, and 
a force level sufficient to accomplish our many missions. Failure in 
any one of these pillars of readiness begins to set the conditions for 
an eventual hollowing of the force. Lessons learned from past post-war 
budget patterns (e.g. Korea, Vietnam, Cold War, etc.) have been 
institutionally inculcated. Some of the warning signals of approaching 
``hollowness'' were such things as reductions in defense spending 
without reductions in forces, reductions in unit readiness levels, 
infrastructure and installations that could not support unit 
warfighting requirements, and reduced morale and retention. 
Additionally, safety and mishap rates could be an indication of 
inadequate training associated with reduced readiness. The Marine Corps 
is attuned to such indicators and is carefully watching for them.
    Through close and continual Service command interactions and 
communications, coupled with the DRRS-MC and Service-level personnel, 
materiel, installation, medical, and other data systems, Marine Corps 
leadership remains informed with respect to the status of the five 
institutional readiness pillars. Service-level readiness is further 
integrated into the Joint DOD community through the Chairman's 
Readiness System to measure the military's preparedness to achieve 
objectives as outlined by the NMS. These processes inform the Marine 
Corps and enable it to inform Congress before the Service reaches a 
readiness crisis.
    General Spencer. As we enter fiscal year 2014, we will focus on 
returning units that have been stood down to operational levels of 
readiness to prevent further erosion in their capabilities. However, if 
we do not receive sufficient funding in fiscal year 2014, we may have 
to again rotationally stand down units, or fly them at a reduced rate, 
similar to the actions we've taken in fiscal year 2013 while under 
sequester. A hollow force is one that looks good on paper, but has more 
units, equipment, and installations than it can support; lacks the 
resources to adequately man, train, and maintain them; lacks sufficient 
logistical support to employ forces effectively; and is not provided 
with enough capable equipment and weapons to perform their missions.
    We believe we have already seen the first indicators of a hollow 
force. Readiness is down, we are unable to train, our installations are 
not being maintained, and our weapons inventory is inadequate. A 
sequester-induced non-combat ready posture of a portion of our fleet 
will impact our ability to fill operational plans and Secretary of 
Defense-ordered missions, as well as significantly erode our training 
and force development efforts, creating long-term readiness shortfalls. 
Overall, this lack of readiness creates increased and significant risk, 
and is incompatible with the Defense Strategy.

    17. Senator Ayotte. General Paxton and General Spencer, are your 
forces ready today to defend South Korea and Japan from the full range 
of possible North Korean attacks?
    General Paxton. A Marine Active-Duty Force of 182,100 will 
absolutely retain the capacity and capability to support current and 
crisis response operations through rotational deployments, and to 
rapidly surge in support of major contingency operations.
    The Marine Corps' ability to execute our expeditionary crisis 
response role is based on one word--Readiness. This requires trained 
marines, ships at sea, and aircraft in the air. With fewer ready 
amphibious ships and fewer well-trained Marine units, we will still 
respond to crises, but the Nation's response options may be more 
limited, and our response times dramatically slowed.
    General Spencer. Under sequestration, we have preserved the flying 
hours for Pacific Air Force's squadrons to ensure these ``fight 
tonight'' forces are ready. Detailed descriptions of the Air Force's 
ability to meet South Korea and Japan defense requirements are 
classified and may only be presented in a classified venue.

                           WORLDWIDE THREATS

    18. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, do you agree with Director Clapper, the 
Director of National Intelligence, that national security threats are 
``more diverse, interconnected, and viral than at any time in 
history''?
    General Campbell. Together with his remarks to this subcommittee, 
Director Clapper's statement is consistent with and supports the Army's 
view of the current and future operational environment. In his remarks 
Director Clapper expanded on the statement quoted above saying, ``I do 
not recall a period in which we confronted a more diverse array of 
threats, crises, and challenges around the world.'' On 16 November 
2012, in response to the Chairman of the Joint Chiefs of Staff in the 
Comprehensive Joint Assessment, General Odierno stated, ``we face a 
complex and interconnected global operational environment characterized 
by a multitude of actors. This presents a wide range of possible 
threats.'' The Army agrees with Director Clapper and further asserts 
that conditions across the future strategic environment will range in 
scope from major conventional fights to limited contingency operations 
such as humanitarian assistance, stability missions, and cyber 
operations. Potential adversaries will range from conventional forces 
to unconventional forces; from international terrorist to homegrown 
violet extremist; and from foreign intelligence entities to trusted 
insiders and criminal elements.
    Admiral Ferguson. Yes.
    General Paxton. We concur with Director Clapper's characterization 
of the nature of the national security threats we are currently facing. 
Moreover, his view is reflective of the threat perceptions that have 
been driving Marine Corps combat and doctrine development for the last 
several years. In the U.S. Marine Corps Service Campaign Plan 2012-
2020, our principal strategic planning document, we envisioned a 
``world of increasing instability and conflict, affected by competition 
for resources, urbanization, overpopulation, poverty, and extremism.'' 
Over the last several years, analysts within the Marine Corps 
Intelligence Enterprise have, in fact, shared this view with their 
Intelligence Community counterparts. Further, we assess that failing 
and failed states or those that cannot adequately govern their own 
territory have strong potential to become safe havens for terrorist, 
insurgent, and criminal groups that threaten the United States and its 
allies. These combined stresses will not help to simplify the threat 
forecast Director Clapper outlined.
    General Spencer. Yes, as Director Clapper points out, we face an 
unprecedented array of threats. Because of this rapidly evolving and 
highly complex operating environment, we continue to invest in world-
class intelligence, surveillance, and reconnaissance capabilities 
focused on reducing uncertainty for combatant commanders as well as 
Joint and Allied Forces.

    19. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, how would you assess the readiness of your 
force to respond to the full range of diverse threats?
    General Campbell. Fiscal year 2013 budget uncertainty has delayed 
the Army's ability to refocus the training of contingency forces on 
conventional threats and required the Army to accept risk in meeting 
force deployment timelines in Combatant Commander Operational Plans. 
The Army does have a professional core of combat-tested leaders, but 
that will decay without further training challenges.
    For the past decade, the Army's focus has primarily been on 
preparing forces to support operations in Iraq and Afghanistan. We 
learned and institutionalized much about conducting unified operations 
as part of whole-of-government campaigns in contemporary operating 
environments against asymmetric threats. In the process, we have forged 
a combat hardened core of Army leaders in both our Active and Reserve 
Forces. We understand the importance of mastering core tasks from which 
leaders and forces can adjust to unexpected and evolving assigned-
mission circumstances.
    As forces are on longer needed to deploy, we will use available 
resources to prepare them for the missions they were doctrinally 
designed to perform, that is, for decisive action in unified operations 
across a broader range of military missions and against a range of 
diverse contemporary threats. As forces are able to fully execute 
broader-focused training strategies, they will regain experience 
against conventional adversaries as well as irregular ones. The 
President's fiscal year 2014 budget will largely enable the Army to 
sustain leader core competencies through professional military 
education and begin building broadbased unit readiness. It takes an 
Army BCT approximately a full year to reset from a deployment and 
train-up for a broad range of missions. In the face of fiscal year 2013 
budget uncertainty, the Army will ensure units with high-priority 
missions have the resources they need to be fully prepared and must 
accept risk in lower-priority units. Lowest priority forces may not be 
able to fully execute broader-focused training strategies and will only 
be able to achieve training proficiency up to the squad/crew/team 
level. If sequestration continues in fiscal year 2014, the Army will 
not have the resources to support the current Defense Strategic 
Guidance, placing readiness at risk. The Army will be unable to meet 
the range of missions in the existing strategic guidance if 
sequestration requires us to further reduce end strength.
    Admiral Ferguson. Our deployed forces are fully ready to support 
the President's Defense Strategic Guidance and operate forward in 
accordance with the adjudicated Global Force Management Plan.
    Due to the impact of sequestration, by the end of this fiscal year, 
two-thirds of our nondeployed ships and aviation squadrons will be less 
than fully mission capable and not certified for Major Combat 
Operations. Additionally, we remain able to support 2.0 carrier strike 
groups deployed.
    The most immediate impact is a reduction in the number and 
availability of fully-trained surge forces to support combatant 
commander crisis response requirements.
    General Paxton. The Marine Corps can sustain its current 
operational requirements into fiscal year 2014; however, to maintain 
the high readiness of our forward deployed forces the Corps has 
globally sourced equipment and personnel for Afghanistan and other 
emerging threats from its nondeployed units. These nondeployed forces' 
principal readiness challenge is the reduced availability of equipment 
at home station with which to outfit and train units. The manning of 
home station units also suffers due to the need to meet enhanced 
personnel requirements for deploying forces, Joint Individual 
Augmentation requirements, and manning Security Force Assistance Teams.
    The primary concern with the out-of-balance readiness of the 
operating forces is increased risk in the timely response to unexpected 
crises or large-scale contingency, since those nondeployed forces will 
likely be the responders. Efforts to maintain the readiness of all of 
our forces may be further exacerbated if the O&M account is diminished 
and an annualized Continuing Resolution or sequestration is implemented 
in fiscal year 2014.
    An annualized Continuing Resolution and/or sequestration in fiscal 
year 2014 would also adversely impact the availability of amphibious 
and maritime prepositioning ships. The combat readiness of these ships 
is a foundational requirement for training to and executing 
expeditionary force presence and amphibious force projection.
    General Spencer. Sequestration negatively affects Air Force full-
spectrum readiness at a time when we have been striving to reverse a 
declining readiness trend. While the Air Force has met the demands of a 
high operational tempo in support of today's fight, this has inevitably 
taken a toll on our weapons systems and people, putting a strain on the 
overall readiness of the force. The effects of sequestration on 
readiness create heightened risk for the Air Force to respond to the 
full range of threats with ready forces.

    20. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what would you consider to be your 
Service's greatest capability gaps?
    General Campbell. Our greatest capability gaps come if we are 
challenged concurrently by multiple major events. Additionally, when 
rapidly declining resources cause us to ramp down too quickly, we will 
be unable to balance modernization, readiness, and end strength 
appropriately, resulting in a hollow force.
    Admiral Ferguson. One of the most important characteristics of our 
naval force is that we operate forward where it matters. Some of our 
most significant capability gaps are where potential adversaries 
develop or invest in Anti-Access/Area Denial (A2/AD) systems and 
strategies. The gaps that the Navy faces from A2/AD threats include:

         Mines
         Small boat attacks
         Anti-ship missiles
         Undersea threats from adversary submarines and 
        torpedoes
         Air threats from advanced aircraft and aircraft 
        targeting systems
         Cyber attack capabilities
         Denying access to coastal areas and port facilities

    The Navy's fiscal year 2014 budget submission prioritizes 
developing future capabilities in the above domains to address these 
capability gaps. Our development of future capability is bench-marked 
to support our rebalance toward the Asia-Pacific and is guided in large 
part by the Air-Sea Battle concept, which implements the Joint 
Operational Access Concept. Both these concepts are designed to assure 
U.S. forces freedom of action and access to support deterrence, 
assurance of our allies and partners, and the ability to respond to 
crises. Our investments (detailed in question #21) focus on assuring 
access in each domain, often by exploiting the asymmetric capability 
advantages of U.S. forces across domains.
    General Paxton. The Marine Corps' greatest capability gap concerns 
the ability to project ground maneuver forces to inland objectives from 
amphibious ships positioned over-the-horizon at distances of 12 
nautical miles or greater. As certified in 2007 by the Chairman of the 
Joint Chiefs of Staff, and in light of projected future threats and 
operational scenarios, an amphibious capability remains essential to 
our national security.
    Today, the Amphibious Assault Vehicle (AAV), originally fielded in 
the mid-1970s, provides a limited amphibious capability for Marine 
Corps infantry. The vehicle has several component obsolescence issues 
which make it increasingly difficult and expensive to maintain and, 
beyond that, it was not designed to operate in the way we now require 
it to. Specifically, when the AAV's capabilities are measured against 
current and future operational requirements and threat capabilities the 
vehicle's performance falls critically short in water and land 
mobility, personnel protection, lethality, communications, navigation, 
and situational awareness.
    We are addressing this critical capability gap with the Amphibious 
Combat Vehicle (ACV) program which is now in the requirements 
definition phase of development. An ACV is a key capability for the 
Nation's expeditionary force-in-readiness. The capability to project 
power from the sea ensures joint freedom of maneuver against 
increasingly sophisticated A2/AD strategies across the range of 
military operations in areas vital to our national interest. To this 
end, an ACV creates operational and tactical options through rapid 
maneuver on sea and land, provides for the seamless transition of 
combat power from sea to land, enables rapid response to crisis, 
enables the introduction of joint follow-on forces and can impose 
disproportionate costs on our enemies who must extend their defenses.
    General Spencer. The ability to penetrate, operate, hold targets at 
risk, and persist in highly contested environments is our Service's 
greatest challenge. The long-term Air Force commitment is to maintain 
the world's best air force and sustain the capability to operate 
anywhere the Nation requires, including highly contested airspace. 
Near-term improvements and acquisitions will bolster the Air Force's 
capability to support our Joint Forces. Specifically, the Air Force 
must continue to move forward with force modernization of key weapon 
systems and inventory fulfillment of preferred munitions.
    Our legacy, or fourth-generation, fighter fleet has secured more 
than 20 years of an air superiority advantage, but may lose its ability 
to operate as effectively in highly contested environments. Air 
superiority and long-range strike capabilities cannot be assumed. New 
threats and corresponding investment needs are not theoretical future 
possibilities; they are here, now. Significant investment in fifth-
generation platforms and preferred munitions is essential to address 
these threats. The future success of the Nation's military and the 
joint team depends on modernizing our Air Force and keeping it ready to 
fight. Weapon systems like the F-22, with contributions from the F-35, 
are what will carry America's Air Force forward to continue to provide 
air superiority. The Long-Range Strike Bomber is a key piece of the 
development of our long-range strike family of systems, the 
capabilities of which are critical to our ability to carry out our 
global strike mission. There are also areas of research and development 
which have the potential to sustain and extend America's edge in 
aerospace technology, which will be delayed and perhaps not achieve 
fielding given current resource constraints. Potential specifics would 
be in the area of ballistic missile defense and advanced jet engine 
development.

    21. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what funding is included in the fiscal 
year 2014 budget request to address those capability gaps?
    General Campbell. The 2014 budget request reflects what would be 
required to execute the January 2012 Defense Strategic Guidance. 
However, that assessment predates sequestration or any changes to the 
guidance necessitated by sequestration-imposed budget cuts. The 
capability gaps we will face will be caused, if not compounded, by the 
steepness of those cuts above the gradual reductions now programmed 
within the budget.
    Admiral Ferguson. The fiscal year 2014 budget submission improves 
capabilities in our ability to counter A2/AD threats and address 
vulnerabilities in our capabilities and provides our forces with proven 
technologies that limit the adversary's ability to defeat our ability 
to project power.

         Mine threat: Countering potential enemy ability to use 
        mines to deny access to naval forces continues to be a 
        significant emphasis in the near term. The Navy budget request 
        funds Littoral Combat Ship MCM Mission Package development to 
        include MH-60S helicopter Airborne Laser Mine Detection System 
        and Airborne Mine Neutralization System systems, MCM hull-
        mounted sonar, and accelerates fielding of the MK-18 UUV and 
        Seafox mine neutralization system;
         Small boat and anti-ship missile threat: Small boats 
        with explosives and anti-ship missiles remain a potential 
        threat to our forces in the constrained waters of the Arabian 
        Gulf. The Navy budget request funds integration of an Advanced 
        Precision Kill Weapon System into our MH-60R helicopters to 
        counter small boats with explosives or anti-ship missiles. The 
        Laser Weapons System is also being tested in the Arabian Gulf 
        onboard USS Ponce and we are investing in development and 
        testing of near-term modifications to existing weapons on our 
        larger surface combatants;
         Undersea threat: Navy's dominance of the undersea 
        domain provides U.S. forces their most significant asymmetric 
        advantage. Our investments continue to improve our capability 
        to deny the undersea to adversaries, while exploiting it for 
        our own operations. The Navy budget request sustains and plans 
        production of proven Anti-Submarine Warfare (ASW) platforms 
        including MH-60R Seahawk helicopters, P-8A Poseidon maritime 
        patrol aircraft, and DDG-51 and Virginia-class nuclear 
        submarines. The request also funds capabilities such as 
        advanced airborne sensors for the P-8A Poseidon, accelerates 
        torpedo defense systems for CVN, improves Navy's Undersea 
        Surveillance system, continues development of the Large 
        Displacement Unmanned Underwater Vehicles and additional 
        payloads for existing submarines. We also continue to practice 
        and refine warfighting in wargames and real-world exercises 
        including Valiant Shield and Rim of the Pacific which practices 
        high-end ballistic missile defense, surface warfare and ASW in 
        simulations and live-fire missile and torpedo events;
         Air threat: Air power is a key component of the naval 
        force, and improving the capability of our CSGs to project 
        power despite threats to access closes a key gap. The Navy 
        budget request funds the continued development and low rate 
        production of the new F-35C Lighting II and capability 
        improvements such as infra-red sensors and weapons that provide 
        air-to-air capability that are not susceptible to radio 
        frequency jamming. The request also funds improvements to 
        further network sensors and weapons in the Navy Integrated Fire 
        Control Counter Air capability that uses a network between 
        Aegis ships and the E-2D aircraft to seamlessly share threat 
        information. Lastly, the budget funds the development and 
        testing of the Unmanned Combat Air System Demonstrator;
         Electromagnetic Spectrum and Cyber: Future conflicts 
        will be fought and won in the electromagnetic spectrum and 
        cyberspace, which are converging to become one continuous 
        environment. This environment is becoming increasingly 
        important to defeating threats to access, since through it we 
        can disrupt adversary sensors, command and control and weapons 
        homing. The Navy budget request funds two additional squadrons 
        of EA-18G Growler electronic warfare aircraft, the Next 
        Generation Jammer, seven SLQ-32 Electronic Warfare Improvement 
        Program (SEWIP) block I upgrades, accelerates research and 
        development on SEWIP Block 3, fields new deployable decoys to 
        defeat anti-ship missiles and continues procurement of 
        improvements to Navy's Ships Signal Exploitation Equipment to 
        provide protection from electronic attack; and
         Amphibious warfare: The flexibility to come ashore in 
        unexpected areas or from less predictable directions is an 
        asymmetric advantage against adversary anti-access efforts. The 
        Navy budget request funds training to conduct integrated 
        operations with the Marine Corps, construction of an 11th ``big 
        deck'' amphibious assault ship (LHA-8), which will bring 
        enhanced aviation capacity and a traditional well deck to 
        expand its ability to support the full range of amphibious 
        operations, improvements to extend the life of USS Peleliu 
        through fiscal year 2015, and sustaining our ship-to-shore 
        connector capacity through life extensions and 
        recapitalization.

    General Paxton. Many of the Marine Corps' ground combat tactical 
vehicles show signs of age, but none more than the current AAV which 
has been in service since the mid-1970s. The legacy AAV has served the 
Corps well for more than 40 years, but faces multiple component 
obsolescence issues that affect readiness, sustainment costs, safety, 
and our ability to respond from the sea. The ACV is needed to replace 
this aging fleet. To meet the demands of both amphibious crisis 
response and forcible entry, the ACV program will develop and field an 
advanced generation, fully amphibious, armored personnel carrier for 
Marine Corps expeditionary forces.
    The ACV will provide the ability to maneuver from the sea and to 
conduct amphibious and combat operations ashore by providing the 
capability to self-deploy from amphibious ships and to seamlessly 
transition between sea and land domains. The ACV will enable the 
efficient, tactical mobility of infantry combat forces from ships to 
inland objectives across beach landing zones under uncertain, non-
permissive, or hostile conditions in order to facilitate the rapid 
buildup of combat power ashore. Our objective in the ACV acquisition 
program is to provide a sufficient quantity of vehicles to ensure we 
can meet the requirement of the surface assault force for forcible 
entry and sustain Marine Air Ground Task Force (MAGTF) operations. To 
support this program, the Marine Corps has requested $137 million for 
research and development of the ACV in fiscal year 2014.
    During the interval in which we design, build, and field the ACV, 
we must ensure the continued safety, reliability, and operational 
capability of our ``legacy'' AAV. The current AAV platform faces 
significant maintenance challenges and obsolescence issues. 
Accordingly, AAV sustainment efforts remain a top Marine Corps 
recapitalization effort priority until fielding of the ACV. As such, 
the Marine Corps has requested $70 million for AAV sustainment in 
fiscal year 2014.
    General Spencer. The Air Force fiscal year 2014 budget request is 
strategy-based, fiscally informed, and sets a course toward full-
spectrum readiness of the force to execute the Defense Strategic 
Guidance (DSG). Furthermore, the fiscal year 2014 request addresses 
modernization challenges and keeps the Air Force ``Big 3'' 
modernization programs (Long-Range Strike Bomber, KC-46A, and F-35A) on 
track. These are critical programs to ensure the Air Force can operate 
and win in highly contested environments worldwide.
    Specifically, the fiscal year 2014 research, development, test, and 
evaluation appropriation request includes $1.6 billion for the KC-46A 
and $800 million to support development of the F-35A Joint Strike 
Fighter. It also funds $400 million towards efforts to develop a new 
long-range, nuclear capable, optionally-manned, penetrating bomber. The 
fiscal year 2014 procurement portfolio delivers both immediate and 
future capabilities through investments across four specific 
appropriations: aircraft, missile, ammunition, and other procurement. 
In fiscal year 2014, the Air Force procures 19 F-35As and 3 CV-22B 
Ospreys in addition to various upgrades and modifications to the 
existing fleet.
    The priorities articulated and funded in the fiscal year 2014 
budget request balance the Air Force's requirement to support the 
current DSG with today's fiscally constrained environment. We will 
continue making tough trade-offs to preserve our core capabilities and 
deliver on our commitment to national defense.

                  BREAKING FAITH--MORALE OF OUR FORCES

    22. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, I am concerned that continuing to ask our 
military members and DOD civilians to assume more risk by doing more 
with less will eventually break faith with our troops. How would you 
assess the trends in the morale of the military members and civilians 
working in your Service?
    General Campbell. The current source of morale data is from the 
Spring 2012 Sample Survey of Military Personnel (SSMP). The SSMP was 
distributed between May and August 2012 and contains the responses of 
over 12,000 Active Army, Army National Guard, and U.S. Army Reserve 
soldiers. Results for Active Army respondents were not significantly 
different from previous data collected in 2011. Since this was the 
first distribution of the SSMP to the Reserve component (RC), previous 
RC survey data are not available for comparison. When asked how they 
would rate their current morale, 35 percent-54 percent of Active, U.S. 
Army Reserve, and Army National Guard soldiers responded ``high'' or 
``very high,'' 33 percent-38 percent responded ``moderate,'' and 10 
percent-28 percent responded ``low'' or ``very low.'' When asked how 
they would rate the morale in their unit, 21 percent-45 percent of 
Active, U.S. Army Reserve, and Army National Guard soldiers responded 
``high'' or ``very high,'' 38 percent-48 percent responded 
``moderate,'' and 12 percent-40 percent responded ``low'' or ``very 
low.''
    Although furlough is only a short-term fiscal mitigation tool, it 
may pose long-term financial implications for our civilian workforce. 
The continued freeze on civilian pay, limitations placed on overtime, 
discontinuance of monetary awards, and implementation of furlough are 
having significant impact on the morale of our civilian workforce, 
particularly because it impacts their financial stability.
    Admiral Ferguson. By our most recent surveys, overall health of the 
force is good, morale remains near historic high levels, and work 
satisfaction has increased over the last 12 years. Aggregate retention 
remains strong, though some areas of highly skilled sailors are showing 
indications of reduced retention. The 2012 Quality of Life Survey and 
Behavioral Health quick polls revealed positive feedback with standard 
of living, income and job satisfaction, while concern was expressed 
about manning shortages, long work hours, and high operational tempo.
    These surveys were taken before the force had observed the impact 
on readiness and operating schedules due to reduced funding, and 
potential force structure cuts. We do not presently see a trend in 
morale after a few months of sequestration. We anticipate a more 
negative trend to emerge as furloughs are enacted, maintenance is 
cancelled or deferred, and operational tempo changes for the force. We 
will continue to monitor this closely.
    General Paxton. Marines and their families are resilient and morale 
remains high; however, talk of looming budget cuts and the possible 
impact those cuts will have on marines' quality of life, families, and 
jobs all take a toll. In the fiscal year 2013 Enlisted Retention 
Survey: 76 percent of respondents said they are either satisfied or 
very satisfied with being a marine, which is in line with what we have 
seen over the past 2 years; and 57 percent of respondents said they are 
either likely or very likely to reenlist, which also is in line with 
what we have seen over the past 2 years. In the most recent Officer 
Satisfaction Survey, 85 percent of respondents said they are satisfied 
with the military lifestyle.
    Our civilian marines support the mission and daily functions of the 
Marine Corps and are an integral part of our Total Force. Serving 
alongside our marines throughout the world, in every occupation and at 
every level, our civilian appropriated funded workforce remains the 
leanest of all Services, with a ratio of 1 civilian to every 10 active 
duty marines. More than 93 percent of our civilians do not work in 
Headquarters' elements in the Pentagon; they are at our bases, 
stations, depots, and installations. Sixty-eight percent are veterans 
who have chosen to continue to serve our Nation; of those, a full 13 
percent have a certified disability.
    The potential human impact associated with furloughing our civilian 
marines is significant. While we would like to believe that a 
discontinuous furlough will reduce the impact on our employees, most 
will not be able to easily absorb this sudden loss of income, even over 
a period of several months. With prolonged budgetary uncertainty, 
including the possibility of additional furloughs in fiscal year 2014, 
employee stress is increasing, civilian morale is declining, and at 
some point productivity will begin to suffer.
    General Spencer. We have a dedicated and professional force that 
serves our Nation proudly. However, with many of our pilots not flying, 
our civilian employees worried about lost pay due to the furlough, and 
the future of our morale, welfare, and recreation and quality of life 
programs in question, all of this negatively impacts the morale of our 
airmen.

    23. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, are you concerned that the steep decline 
in DOD budgets will eventually erode morale for military members and 
DOD civilians, ultimately having an insidious effect on readiness?
    General Campbell. Yes, I am concerned that steep budget cuts could 
lead to a decline in morale, which could impact readiness. Our soldier 
survey data does not indicate a drop in morale now, but the data was 
collected too early to take into account sequestration. If soldiers are 
continually asked to do more with less, it will have an impact. I am 
also concerned that civilian morale will be affected by furloughs, pay 
and hiring freezes, curtailment of training opportunities, and overtime 
limitations. Any decrease in morale in our civilian workforce will have 
a negative impact on readiness.
    Admiral Ferguson. Overall, the health of the Active Duty and 
Reserve Force is good and morale as determined through our surveys 
remains positive. We continue to monitor the force to measure the 
impact of fiscal uncertainty, budget reductions, and furloughs on their 
morale and propensity to serve.
    We continue to meet overall active duty recruiting and retention 
goals, though we are beginning to see some impacts to the retention of 
highly skilled sailors and a slight drop in recruit quality as the 
economy improves. Anecdotally, the multi-year pay freeze, hiring 
freeze, and pending furloughs have begun to impact the morale of our 
civilian workforce. We will continue to monitor this closely to assess 
the impact of funding reductions.
    General Paxton. Marines and their families are resilient and morale 
remains high; however, talk of looming budget cuts and the possible 
impact those cuts will have on marines' quality of life, families, and 
jobs all take a toll. In the fiscal year 2013 Enlisted Retention 
Survey: 76 percent of respondents said they are either satisfied or 
very satisfied with being a marine, which is in line with what we have 
seen over the past 2 years; and 57 percent of respondents said they are 
either likely or very likely to reenlist, which also is in line with 
what we have seen over the past 2 years. In the most recent Officer 
Satisfaction Survey, 85 percent of respondents said they are satisfied 
with the military lifestyle.
    Our civilian marines support the mission and daily functions of the 
Marine Corps and are an integral part of our Total Force. Serving 
alongside our marines throughout the world, in every occupation and at 
every level, our civilian appropriated funded workforce remains the 
leanest of all Services, with a ratio of 1 civilian to every 10 Active 
Duty marines. More than 93 percent of our civilians do not work in 
Headquarters' elements in the Pentagon; they are at our bases, 
stations, depots, and installations. Sixty-eight percent are veterans 
who have chosen to continue to serve our Nation; of those, a full 13 
percent have a certified disability.
    The potential human impact associated with furloughing our civilian 
marines is significant. While we would like to believe that a 
discontinuous furlough will reduce the impact on our employees, most 
will not be able to easily absorb this sudden loss of income, even over 
a period of several months. With prolonged budgetary uncertainty, 
including the possibility of additional furloughs in fiscal year 2014, 
employee stress is increasing, civilian morale is declining, and at 
some point productivity will begin to suffer.
    General Spencer. Sequestration reductions are already negatively 
affecting Air Force readiness and morale. Currently nine combat-coded 
fighter units and three combat-coded bomber units are stood down and 
have ceased flying operations. Seven combat-coded units are flying at 
basic mission capable levels and will only return to combat mission 
ready status if funding becomes available. Flying hour reductions will 
halt training for the rest of the year in many units and will take up 
to 6 months to restore pilot proficiency. Additionally, there is the 
furlough of our valued civilian workforce, significantly reducing 
civilian pay and slowing productivity.

    24. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, how will this impact retention and 
recruitment?
    General Campbell. By shifting funding, the Army addressed the risk 
of military recruitment mission failure in fiscal year 2013 due to 
sequestration. Future civilian furloughs will not affect the ability of 
Army accessioning agencies to achieve fiscal year 2013 accession 
missions. However, if the U.S. Military Entrance Processing Command 
curtails operations in fiscal year 2013 due to civilian furloughs, some 
delays in contracting new servicemembers for entry into the Army, Navy, 
Air Force, and Marine Corps in fiscal year 2014 may occur. The Army 
plans to mitigate these delays by processing these soldiers after the 
beginning of the new fiscal year.
    Sequestration has impacted retention in terms of reenlistment 
rates, training, and Selective Retention Bonuses. Since 2012, the Army 
has observed a slight decline in retention rates that is attributable 
to a general loss of predictability in benefits, assignments, and 
promotion opportunities in consequence of sequestration and the ongoing 
Army drawdown. An indicator of this emerging trend is the fiscal year 
2013 Expiration Term of Service mission to retain 7,800 Active 
component enlisted soldiers. We anticipate that the Army will only 
retain around 7,500 soldiers in this particular category. The Army 
National Guard is also anticipated to fall short of its fiscal year 
2013 retention mission. The impact of these retention mission 
shortfalls will be somewhat mitigated as the Army decreases its force 
structure. Sequestration has constrained the conduct of essential 
training that develops career counselors' abilities and effectiveness 
to advise commanders at all levels on retention policies and issues. 
Sequestration has also constrained future funding of the Army's 
Selective Retention Bonuses and Critical Skill Retention Bonuses. These 
monetary incentives are employed to retain and attract soldiers into 
the most critical skills that either have higher attrition rates and/or 
require a higher level of skill and training. The Army's continued 
investment in these critical skills is essential to mission success.
    On January 10, 2013, the Deputy Secretary of Defense directed the 
Services to take necessary steps to mitigate budget execution risks, 
resulting in an immediate freeze on civilian hiring and the release of 
personnel on temporary appointments. Not only does the freeze hinder 
Army Commands' ability to support their missions, it limits the 
civilian workforces' promotional opportunities. This may negatively 
affect retention rates, especially those deemed hard to fill (e.g., 
medical and behavioral health occupations) and immediately impact the 
retention for our temporary workforce. The ultimate result of these 
actions could drive civilians to see DOD as not a viable career.
    Admiral Ferguson. Economic conditions for the past several years 
have favored recruitment and retention in our Active-Duty Forces. 
Reductions in funding, the impact of reduced training, last minute 
deployment cancellations, and extended deployments may hinder our 
ability to recruit and retain high quality individuals to meet 
aggregate and critical skill manning requirements in the future. A 
prolonged sequestration would likely inhibit recruiting efforts and 
reduced training opportunities would be felt across increasingly larger 
segments of the force.
    General Paxton. Severe budget constraints related to sequestration 
that result in reductions in recruiters and recruit advertising, and 
potential civilian furloughs at our recruit processing stations will 
degrade the quality of our recruit pool, cause disruptions in our 
pipeline of recruits, and place added stress on our recruiters, 71 
percent of whom already work in excess of 60 hours per week. Reductions 
to our recruit advertising budget jeopardizes our established market 
share and awareness with prospects and their influencers. All service 
recruiting will be impacted by civilian furloughs at Military Entrance 
Processing Stations (MEPS) because 80 percent of MEPS personnel are 
civilians. The mandated civilian furlough reduces their available 
processing capacity. Implementation of a 4-day processing week will 
therefore degrade our accession efforts. Similarly, additional cuts to 
our retention programs, such as re-enlistment incentive pays, will 
impact our ability to shape our force to meet continuing mission 
requirements and retain critical MOSs with the most qualified marines.
    General Spencer. We have enjoyed a robust recruiting and retention 
environment in recent years mostly due to the relatively high 
unemployment rate and a struggling economy. Youth studies, such as 
those done by Joint Advertising Market Research and Studies already 
indicate that youth are less likely to serve in our Nation's military 
then they have been in the past. The study also indicated that 47 
percent of new recruits were undecided about a career choice and were 
influenced to consider the military within a year of joining the 
Service. Budget cuts to advertising, marketing, and outreach programs 
will jeopardize the Air Force's ability to meet career field and DOD 
quality requirements within a shrinking recruiting pool. Additionally, 
respondents to these surveys also indicate pay and educational 
opportunities as two of the major reasons for their decision to enlist 
and DOD budget cuts are a perceived threat to these benefits.

                      NAVY FLEET OPERATIONS TEMPO

    25. Senator Ayotte. Admiral Ferguson, last year at our hearing, I 
asked you about the unsustainable pace of surged fleet operations as 
high demand for ships and submarines was taking its toll. You responded 
that the Navy was taking measures to ensure appropriate levels of 
readiness by shifting to a more sustainable deployment model including 
fully funding ship maintenance and midlife modernization periods. The 
Navy has been through a lot in the past year, including sequestration, 
the loss of a minesweeper, and other significant, unanticipated ship 
expenses. Can you provide me an update on efforts in fiscal year 2013 
to prevent further degradation to fleet readiness?
    Admiral Ferguson. As reflected in our initial fiscal year 2013 
budget, Navy remains committed to performing the necessary ship depot 
maintenance to sustain the readiness of the Fleet. Our budget fully 
funded surface ship maintenance availabilities in fiscal year 2013. We 
also funded the Total Ship Readiness Assessment program to improve ship 
readiness through the earlier identification of material readiness 
deficiencies, and the Surface Maintenance Engineering Planning Program 
to provide centralized life cycle maintenance engineering and class 
maintenance planning and management for the surface fleet.
    Because of sequestration's impact to surface ship maintenance 
funding, we were unable to execute eight of the planned fiscal year 
2013 availabilities. Those eight remain a top priority and we are 
pursuing options in conjunction with OSD Comptroller to fund them this 
year. Aircraft carrier and submarine availabilities were fully funded 
in fiscal year 2013, and the impacts of sequestration have been 
mitigated by exempting the public shipyard workforce from furlough. 
Despite these efforts to reduce the impact of sequestration on 
readiness, by the end of this fiscal year, two-thirds of our 
nondeployed ships and aviation squadrons will be less than fully 
mission capable and not certified for Major Combat Operations.

    26. Senator Ayotte. Admiral Ferguson, will any of this work be 
recovered in the Navy's budget request for fiscal year 2014?
    Admiral Ferguson. No. The Navy's fiscal year 2014 budget is based 
on the assumption that all fiscal year 2013 work is completed as 
planned. Any work deferred from fiscal year 2013 will either displace 
planned fiscal year 2014 work, be deferred into a future year, or be 
cancelled. It could be executed should the Navy receive additional 
funding in the O&M account.

    27. Senator Ayotte. Admiral Ferguson, can you provide a list of 
unplanned or unbudgeted ship repairs identified in fiscal year 2013 and 
the Navy's plan to fund those repairs?
    Admiral Ferguson. Navy prioritizes scheduling and funding of 
unplanned, emergent requirements as necessary to return ships to full 
service as soon as practicable. The following emergent work has 
occurred or is in progress in fiscal year 2013. All listed work has 
been funded or obligated with fiscal year 2013 Operation and 
Maintenance, Navy funds.

         USS Porter (DDG 78) collision repairs

                 $77 million firm-fixed-price contract awarded 
                to BAE Systems Norfolk Ship Repair for the fiscal year 
                2013 extended dry-docking selected restricted 
                availability to complete final permanent repairs as 
                well as previously scheduled maintenance and 
                modernization

         USS Montpelier (SSN 765) collision repairs

                 Newport News Shipbuilding/Huntington Ingalls 
                Industries is in the process of repairing the ship with 
                a current cost estimate of approximately $52 million

         USS San Jacinto (CG 56) collision repairs

                 Repaired in BAE Systems in Mayport, FL, at a 
                cost of approximately $13 million

         USS Guardian (MCM 5) grounding damage

                 Repair not economically feasible, 
                decommissioned on 6 Mar 2013
                 Dismantling and disposal cost an estimated $45 
                million

         USS Miami (SSN 755) fire damage

                 Repair estimates are currently under review.
                 $45 million for USS Providence availability 
                cost (associated with shift to private sector)

         USS Nimitz (CVN 68) cooling pump repairs

                 $32 million for repairs

    28. Senator Ayotte. Admiral Ferguson, how would you assess the 
readiness of our carrier force to meet combatant commanders' 
requirements?
    Admiral Ferguson. Our carrier forces are meeting operational 
demands and required readiness levels, but are operating under strain.
    For the past 3 years, carrier forces have met adjudicated Global 
Force Management presence requirements; however, in doing so, they have 
been deployed at unsustainable rates, deferring maintenance and 
increasing the risk of significant cost growth in subsequent 
maintenance availabilities. The deployment rates have also exceeded 
original CVN force structure plans, thereby increasing the risk of not 
reaching expected CVN service lives. The combination of increased CVN 
operational tempo and current budgetary constraints has resulted in 
accumulating pressures on personnel, CVN material condition, and 
service life.
    With respect to surge requirements, the fiscal year 2014 budget 
request would support only a single carrier strike group available for 
worldwide surge. This is a reduction from previous years, when 
generally three carrier strike groups were fully trained and available 
for surge operations.

               CONTRACTS FOR ESSENTIAL MILITARY SERVICES

    29. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, on April 1, 2013, U.S. Transportation 
Command (TRANSCOM) issued a $50 million solicitation to procure 
contractor services for short take-off and landing services for 
military casualty evacuation, military personnel airlift, cargo 
airlift, and military air drops in the Trans-Sahara area of Africa for 
the next 4 years to support high-risk military operations. According to 
the solicitation, the Services shall be based from Burkina Faso and be 
capable of conducting operations from various temporary forward 
operating locations, to include primitive field accommodations such as 
tents. I have some fundamental concerns about this solicitation. In 
your experience, is the use of a commercial contract for these types of 
services common in the military?
    General Campbell. TRANSCOM, a unified combatant command, is 
responsible for managing air and surface lift utilizing an appropriate 
mixture of organic and contracted commercial capabilities. The Army 
routinely utilizes TRANSCOM managed capabilities for the movement of 
cargo, passengers, and casualties worldwide to include contingency 
operations support. The Army is confident that TRANSCOM will maintain 
the appropriate mix of organic and commercial capabilities and will 
provide the appropriate asset to meet Army mission requirements.
    Admiral Ferguson. The Navy's contracting authority is limited to 
support of the Navy's core mission. The Navy has no contracting 
authority to procure commercial contractor services for short take-off 
and landing services for military casualty evacuation, military 
personnel airlift, cargo airlift, and military air drops to support 
high-risk military operations overseas.
    General Paxton. The use of commercial contract airlift support has 
evolved into a standard practice since its inception during Operation 
Iraqi Freedom (OIF) and continued use during Operation Enduring 
Freedom-Afghanistan (OEF-A); it is a viable and often cost effective 
transportation capability that compliments operational and tactical 
airlift resources. United States Forces-Afghanistan (USFOR-A) manages 
ISAF Contracted Air Transportation (ICAT) which provides support to 
each regional command in Afghanistan. The program has been successful 
in providing relief to Marine Corps assault aircraft that would 
otherwise be required to support these usually non-priority/regularly 
scheduled logistics runs of bulk items to outlying Combat Outposts.
    AFRICOM engaged TRANSCOM to leverage contracting authority to 
satisfy a gap in current medical coverage from Level I to Level V in 
their area of responsibility. Currently, there is inadequate capability 
for short-term intervention for injured, wounded, and ill 
servicemembers in a geographically huge theater with numerous remote 
locations. Specifically, there are no personnel, aircraft, or in-
patient medical facilities. DOD has historically contracted for 
services not available in the Military Health System in the continental 
United States (CONUS) or outside CONUS.
    DOD Aeromedical Evacuation using U.S. military airlift is designed 
to function in contingencies with large casualty numbers. In regional 
areas and when moving single casualties from regions with a low level 
of activity, military airlift is expensive and challenging to access 
since it is unlikely in the region. The use of smaller, more agile 
contract aircraft is often more efficient and effective (timelier) for 
the patient.
    General Spencer. Yes. Utilizing current military assets is normally 
the preferred method to fulfill requirements, but is not always 
appropriate given competing operational requirements and diplomatic 
sensitivities. Diplomatic concerns regarding a large U.S. military 
presence in the region played a significant role in the selection of 
this course of action to support the warfighter. The use of military 
aircraft not only introduces overtly marked U.S. military aircraft to 
the region, it also requires a larger footprint of U.S. military 
enablers. Contracted airlift meets this requirement without adding to 
our military presence. Additionally, organic military aircraft cannot 
access the smaller airfields in the region, and diplomatic clearance 
timelines for military aircraft range from 7 to 21 days (based on 
country), whereas contracted lift processes clearances through the 
commercial channels which greatly reduces this timeline (in some cases 
gaining clearance in 48 hours or less).

    30. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, wouldn't you consider medical casualty 
evacuation and air drops in a high risk area to be an inherently 
military function?
    General Campbell. We always plan to utilize military means when 
developing the medical evacuation plan in support of our conventional 
forces. We go to great lengths to ensure our commanders are properly 
resourced for this critical lifesaving mission and will not compromise 
the safety of our soldiers. Likewise, our preferred method for air drop 
is also via military means, however, under exceptional circumstances if 
the contractor is certified, we do make exceptions for both casualty 
evacuation and air drop operations.
    Admiral Ferguson. While the Navy does not have the authority to 
contract for commercial air services, I do consider medical casualty 
evacuation and air drops in a high risk area to be an inherently 
military function. In combat or during other high risk activities, a 
commander must have the ability to personally direct personnel to 
perform certain functions.
    General Paxton. Yes, medical casualty evacuation and air drops in a 
high risk area are considered an inherently military function. The use 
of commercial contract support for aerial delivery and medical casualty 
evacuation has been in use over the past 10 years to complement 
military resources and fill shortfalls in support of combat operations. 
Medical contract support offsets our limited capabilities and serves as 
an alternative but shouldn't be used as the primary enabler if at all 
possible.
    Any designated non-kinetic environment, such as transporting 
patients from a strategic hub to Ramstein Air Force Base for further 
treatment and follow-on movement to CONUS, could be supported via a 
commercial/contracted aero evacuation solution so long as appropriate 
medical staff and equipment are included in the contract.
    Contracted aerial delivery is conducted today on a routine basis to 
support combat operations in Afghanistan and can be considered to 
support future operations in other areas of the world.
    General Spencer. Yes. However, contracted air services have proven 
more than a sufficient level of capability in certain permissive 
environments. Utilizing military assets is normally the preferred 
method to fulfill requirements, but is not always appropriate given 
competing operational requirements and diplomatic sensitivities.

    31. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, if you were commanding forces in military 
operations in that part of the world, would you be comfortable relying 
on a contractor to evacuate your wounded or to drop your commandos?
    General Campbell. Speaking as a former division commander and 
brigade commander in Iraq and Afghanistan, the care and welfare of our 
soldiers is paramount in all military operations. In planning and 
execution the preferred method of evacuating wounded is always via 
military means, as is the delivery of troops via air. In some unique 
circumstances if the contractor is certified, we do make exceptions and 
execute these missions by other means.
    Admiral Ferguson. The functions to which you are referring by 
definition fall under ``inherently governmental'' and therefore should 
not be contracted support services.
    General Paxton. Given the fact the contractor is a non-combatant, 
and extracting wounded and dropping marines in a hot zone is a military 
(combatant) function, I would not feel comfortable having to primarily 
rely on a contractor to support these types of missions. Contract 
support should be considered as a complement to military air or as an 
alternative in a benign or otherwise stable environment with military 
oversight.
    General Spencer. U.S. Africa Command (AFRICOM) created and 
validated the requirement to provide Special Operations Command Africa 
with airlift for both medical evacuation and logistical support in 
Western Africa. This contract replaces an existing contract with 
similar specifications which expires at the end of the fiscal year. To 
date, the aircraft and personnel under the existing contract have 
performed admirably in support of our operations in Africa and there is 
no reason to believe that fact will change. Personnel drops will not be 
accomplished with these assets.

    32. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, are you aware of a command request for 
forces for the missions specified in the solicitation which was denied?
    General Campbell. The Army is not aware of any Request for Forces 
for the missions specified in the TRANSCOM solicitation.
    Admiral Ferguson. I am unaware of any Navy command submitting a 
request for these services which was denied.
    General Paxton. This particular solicitation offers a TRANSCOM 
contracted solution to an AFRICOM operations and exercise capacity 
shortfall for Joint Special Operations Task Force-Trans Sahara. The 
Marine Corps has been queried by the Joint Staff on multiple occasions 
concerning our Services' ability to support AFRICOM combat search and 
rescue-personnel recovery requirements. The Marine Corps has 
consistently responded to the Joint Staff with the ability to provide a 
limited, in lieu of casualty, evacuation capability. The Marine Corps 
has not been directed to provide this limited capability to date.
    General Spencer. Requests for forces are initiated by combatant 
commanders, then routed through the Joint Staff for tasking to the 
appropriate Service. The Air Force is not aware of a denial for any 
request for forces for the missions specified in the solicitation.

    33. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, I realize that this administration's 
revised defense strategy calls for less force structure and greater 
operational flexibility in certain combatant command areas of 
responsibility, but in your opinion, will our Armed Forces need to rely 
more on contractors for these types of services in the future?
    General Campbell. The Army will not necessarily need to rely more 
on contractors to meet the needs of the combatant commands. The defense 
strategy calls for less structure and greater operational flexibility 
which requires the Army to further optimize our modular formations 
allowing them to meet a wider range of missions and provide greater 
latitude in fulfilling combatant command needs. This may increase 
reliance on contractors in some areas and decrease the reliance in 
others. Like today, where resources, force structure, or modular 
designs are inadequate, the Army will continue to consider all aspects 
of risk in determining which capabilities are built into Army force 
structure and where we can rely on contractor services.
    Admiral Ferguson. While the Navy manpower force structure supports 
the current military defense strategy, we continually assess the proper 
mix of Active, Reserve, civilian, and contractor personnel in the 
planning for our missions. I would anticipate certain missions clearly 
defined as not inherently military or governmental would be open to 
increased contractor participation in the future. Inherently military 
or governmental functions should not be opened to contractors.
    General Paxton. The Services organize, train, and equip forces for 
use by the combatant commanders. With a force of 182,100 marines, we 
are able to meet the combatant commanders' most critical needs/
requirements. It will be up to the combatant commanders to determine 
priorities and decide which initially unfilled missions/requirements 
are delayed, are filled by contractors, or are never filled. The 
combatant commanders are in the best position to analyze operational 
risk to their assigned U.S. Forces and determine when contractors are 
utilized for certain missions, vice U.S. Active or Reserve component 
military forces.
    As the Nation's crisis response force, the Marine Corps is 
organized, trained, and equipped to conduct expeditionary and 
amphibious operations across the globe and in the most austere 
locations without the requirement of contractor or host nation support. 
We are careful to retain the right balance of logistics capabilities in 
our Active Forces to enable this expeditionary and amphibious 
character. However, in a prolonged conflict, where enduring bases are 
established and manned to support combat personnel, the answer is 
``yes,'' we will likely be required to rely more on contractors for 
logistical sustainment services.
    Although the Marine Corps possesses varying degrees of combat 
service support force structure (equipment/personnel) to sustain our 
expeditionary and amphibious requirements, we do not possess enough 
combat service support force structure to provide the enduring level of 
support of these types of services on the scale provided by the U.S. 
Army and contractors in Iraq and Afghanistan. As we experienced in Iraq 
and Afghanistan, contractors free up military personnel and equipment 
from managing the day-to-day caretaking tasks of base management 
functions (feeding/laundry/power generation, etc). This allows the 
warfighter to focus on combat and combat support operations.
    General Spencer. Not necessarily. Utilizing military assets is 
preferred, but is not always feasible given competing operational 
requirements and diplomatic sensitivities. In every case, a rigorous 
analysis will be performed that takes into account the operating 
environment, legal requirements, availability of military assets, 
political sensitivities, and capabilities of contractor services. In 
those cases, where it makes operational and political sense, 
contractors will be used to support specific operational support 
missions.

    34. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what risk does this pose to our military 
members?
    General Campbell. Sequestration risks are putting us on the path to 
creating a hollow force. We must reduce the Army's overall structure 
through a drawdown strategy that ensures that we keep a high-quality, 
mission-capable force to achieve end strength without jeopardizing 
readiness. Civilian reductions must be determined in advance and be a 
part of planned strategic human capital decisions to avoid arbitrary 
cuts that impact readiness. Reductions implemented too quickly risk 
breaking the All-Volunteer Force social contract, and drastically 
affect readiness in the near term. Hollowing out the force will also 
incur greater costs to buy back lost readiness should the force be 
called to respond to a contingency, and directly increases the risk to 
our military members going into harm's way.
    Admiral Ferguson. Because the Navy force structure supports the 
defense strategy, there is no additional risk to Navy military members 
based on increased service contractors.
    General Paxton. Supported by our recent experiences in Iraq and 
Afghanistan and other contingencies and crises around the globe, there 
is no direct risk to our military members by using contractors to 
support enduring base operations. Although the Marine Corps possesses 
varying degrees of combat service support force structure (equipment/
personnel) to sustain our expeditionary and amphibious requirements, we 
do not possess enough combat service support force structure to provide 
the enduring level of support of these types of services on the scale 
provided by the U.S. Army and by contractors in Iraq and Afghanistan. 
The use of contracted services frees up military personnel and 
equipment from managing the day-to-day caretaking tasks of base 
management functions (feeding/laundry/power generation, et cetera). 
This allows the warfighter to focus on combat and combat support 
operations.
    General Spencer. Contractor services are not inherently more risky 
than organic military operations. All operations are evaluated to 
ensure that acceptable levels of risk are attainable for a desired 
mission end state. It is important to understand that though contractor 
services are available, military assets will still be used if a 
particular operation warrants the required capability. This decision 
will be made during the planning phases of each operation and reflects 
the commander's analysis of operating environment and associated risk.

          FLYING HOURS IMPACT OF BUDGET CUTS AND SEQUESTRATION

    35. Senator Ayotte. General Spencer, in your written testimony you 
correctly state: ``The cornerstone of our airmens' ability to provide 
airpower to the Nation and contribute our core missions to the joint 
team is their readiness.'' You also stated: ``Readiness is the ability 
of a unit to provide its designed operational capabilities within the 
required timeframe.'' Spending cuts have eliminated 44,000 flying hours 
through September with the Air Force grounding 17 squadrons, including 
12 combat coded squadrons. Some units will be grounded upon return from 
deployment. That includes the F-22s from the 1st Fighter Wing that are 
deployed to the Pacific right now to deter Kim Jong Un and stand ready 
to take action if he makes a wrong step. Are these grounded squadrons 
tasked to fill COCOMs' operations plans?
    General Spencer. Under sequestration, we've preserved the flying 
hours for Pacific Air Force's squadrons to ensure these ``fight 
tonight'' forces are ready. Although the details of our ability to 
source Combatant Commander Operational Plans may only be discussed in a 
classified forum, it can be said that the number of stood down units 
adversely affects our ability to fulfill Combatant Commander 
Operational Plan requirements.

    36. Senator Ayotte. General Spencer, what is the impact of our 
ability to fill all COCOMs' operational requirements?
    General Spencer. The Air Force prioritized which combat-coded 
squadrons received flying hours to maintain readiness to meet the 
requirements of Secretary of Defense-ordered missions and to deter any 
potential adversaries. However, if the Air Force does not receive 
sufficient funding in fiscal year 2014, we may have to rotationally 
stand down units again or fly them at reduced readiness rates, similar 
to the actions we've taken in fiscal year 2013. This sequester-induced 
readiness deficit will impact our ability to fill operational plans and 
Secretary of Defense-ordered missions, continue to degrade our depot 
maintenance and modernization programs, and will significantly erode 
our training and force development efforts, creating long-term 
readiness shortfalls. Detailed descriptions of unit taskings and 
ability to meet operational plans are classified and may only be 
presented in a classified venue.

    37. Senator Ayotte. General Spencer, how does grounding impact the 
Air Force's ability to both deter and conduct combat operations, if 
required, outside of Afghanistan?
    General Spencer. The Air Force prioritized which combat-coded 
squadrons received flying hours to maintain readiness to meet the 
requirements of Secretary of Defense-ordered missions. Almost all of 
these mission-ready units are tasked to Secretary of Defense-ordered 
missions or forward-based, so the ability of the Air Force to provide 
requisite numbers of ready forces for emergent requirements is severely 
limited and will continue to become more difficult the longer we 
operate under these conditions. Detailed descriptions of unit taskings 
and ability to meet operational plans requirements are classified and 
may only be presented in a classified venue.

    38. Senator Ayotte. General Spencer, how many aircrew are impacted 
by the grounding; how many hours will have to be dedicated to bring all 
these aircrews back up to mission ready status; and how much will that 
cost?
    General Spencer. Approximately 750 crew members are assigned to the 
stood-down units. In order to bring units back to current, sub-optimal 
readiness levels, it is anticipated the stood-down units would need an 
additional 10 percent increase over the fiscal year 2014 budget request 
for flying hours and would require 3 to 6 months.

    39. Senator Ayotte. General Spencer, how will the student pilot 
pipeline be impacted . . . pilot training and the initial qualification 
training for each of the Air Force's weapon systems?
    General Spencer. Under the Air Force's current plan, we have 
allocated sufficient flying hours to enable our basic student pilot 
pipeline production to continue. However, we will potentially 
experience impacts if there is a civilian furlough because Air 
Education and Training Command maintenance and simulators are primarily 
run by government civilians. In addition, the absorption of these 
future graduates into operational units will be slower due to 
sequester-induced flying hour reductions. Due to sequestration, we have 
also curtailed and/or cancelled advanced training courses, such as the 
Weapons School Instructor course, which will have a significant impact 
on our ability to maintain the requisite tactical expertise in our 
operational units.

    40. Senator Ayotte. General Spencer, as the Air Force focuses its 
flying hours on getting the grounded aircrews mission-ready again, what 
is the impact on the rest of the force?
    General Spencer. There are myriad second- and third-order effects 
of sequestration, including the impact on the rest of the force as the 
stooddown crews return to fly. Since flying hours are contained within 
our significantly reduced O&M budget, freeing up additional flying 
hours will adversely impact other training and direct-support accounts 
such as base operating support, facility maintenance, and professional 
military education. Overall, the Air Force does not have sufficient O&M 
funding in fiscal year 2013, and will not in fiscal year 2014, if the 
President's 2014 budget request is sequestered. In both cases, we are 
compelled to make difficult choices that impact the whole force.

    41. Senator Ayotte. General Spencer, what are the safety risks 
associated with reducing Air Force flying hours?
    General Spencer. The Air Force flying hour model identifies 
required hours, by weapon system, for aircrews to accomplish their 
assigned missions in a safe and proficient manner. Providing fewer 
flying hours reduces the readiness of these aircrews and places them at 
higher risk if they are called upon to execute operational taskings. As 
we return stooddown units to combat mission readiness, doing so safely 
will remain a top priority.

    42. Senator Ayotte. General Spencer, we know this will impact our 
aircrews and their readiness. How will the groundings impact the 
readiness of other mission essential personnel such as munitions, 
maintenance, and life support?
    General Spencer. Units which have stood down flying operations are 
focusing their efforts on preserving skill sets vital to our 
maintenance, munitions, and life support operations. Aircraft not 
committed to flying operations, and those that have stood down, are 
being used to facilitate on-the-job training for personnel in upgrade 
training as well as for specialized field training courses. Despite the 
fact internal business rules have been put in place to ensure limited 
resources are allocated correctly across the enterprise, these efforts 
only slow the loss of proficiency and individual training progression 
remains limited. Lack of training opportunities limits our workforce's 
ability to attain and maintain required skill sets and reduces the Air 
Force's ability to cultivate a well-trained/qualified force which 
ultimately will lengthen our readiness recovery period.

    43. Senator Ayotte. General Spencer, the Air Force starts fiscal 
year 2014 with a backlog of flying hours requirements but the fiscal 
year 2014 budget does not include extra funding for these hours and it 
does not factor in sequestration. Can the Air Force return its total 
force back to required mission ready status in fiscal year 2014 given 
these budget impacts?
    General Spencer. No, the fiscal year 2014 budget does not factor in 
sequestration and was submitted before fiscal year 2013 sequestration 
was in place. Consequently, we cannot return the Active Force back to 
required readiness. The Air National Guard and Air Force Reserve 
Command readiness programs were not significantly affected by 
sequestration. We will manage our readiness levels as best we can with 
the funding provided in fiscal year 2014, but there will continue to be 
considerable negative impacts to readiness if critical readiness 
accounts (such as flying hours and weapon system sustainment) are not 
adequately funded in the future.
    As we enter fiscal year 2014, we will focus on returning units that 
have been stood down to operational levels of readiness to prevent 
further erosion in their capabilities. However, if we do not receive 
sufficient funding in fiscal year 2014, we may again have to 
rotationally stand down units, or fly them at reduced readiness rates, 
similar to the actions we've taken in fiscal year 2013. This sequester-
induced non-combat ready posture of portions of our fleet will impact 
our ability to fill operational plans and Secretary of Defense-ordered 
missions, continue to degrade our depot maintenance and modernization 
programs, and will significantly erode our training and force 
development efforts, creating long-term readiness shortfalls. Overall, 
this lack of readiness prevents us from attaining required mission 
ready status in fiscal year 2014, creates heightened risk, and is 
incompatible with the defense strategy.

             DEPOT IMPACT OF BUDGET CUTS AND SEQUESTRATION

    44. Senator Ayotte. General Spencer, the Air Force has been at war 
for the past decade in both Afghanistan (2001) and Iraq (2003), and it 
has been constantly deployed conducting combat operations for over 20 
years. This has taken a toll on its aircraft. The Air Force is planning 
to fund weapon system sustainment to 81 percent of the fiscal year 2014 
requirement using funds from the base budget as well as OCO funds. Do 
you know what the OCO funds will be?
    General Spencer. The Air Force has requested $1.76 billion in OCO 
funding for weapon system sustainment in the fiscal year 2014 
President's budget.

    45. Senator Ayotte. General Spencer, what have you requested?
    General Spencer. The Air Force has requested $1.76 billion in OCO 
funding for weapon system sustainment in the fiscal year 2014 
President's budget.

    46. Senator Ayotte. General Spencer, do you expect to be fully 
funded?
    General Spencer. The Air Force requests full support of the 
President's budget to fund our requirements. We will likely see 
additional unfunded requirements in fiscal year 2014 as a result of 
deferred workload in fiscal year 2013 due to sequestration.

    47. Senator Ayotte. General Spencer, as you have stated, depot 
delays will result in aircraft grounding, degradation of workforce 
proficiency and productivity, and increased costs. You have also stated 
that it can take 2 to 3 years to recover full restoration of depot 
workforce productivity and proficiency. What are the safety risks 
associated with reducing depot maintenance?
    General Spencer. There are no safety risks. The reduced depot 
maintenance is a result of fewer depot inductions, but does not affect 
quality of maintenance. Those aircraft and engines not inducted will be 
grounded (not flown) until the required depot maintenance can be 
performed.

    48. Senator Ayotte. General Spencer, the Air Force is on track to 
start fiscal year 2014 with a backlog of depot and maintenance 
requirements, but the fiscal year 2014 budget does not include extra 
funding and it does not factor in sequestration. Can the Air Force 
fully restore readiness in fiscal year 2014 given these budget impacts?
    General Spencer. No, the fiscal year 2014 budget does not factor in 
sequestration and was submitted before fiscal year 2013 sequestration 
was in place. Consequently, we cannot return the Active Force back to 
required readiness. The Air National Guard and Air Force Reserve 
Command readiness programs were not significantly affected by 
sequestration. We will manage our readiness levels as best we can with 
the funding provided in fiscal year 2014, but there will continue to be 
considerable impacts to readiness if critical readiness accounts 
(particularly weapon system sustainment, to include organic and 
contract depot maintenance programs) are not fully funded in the 
future.
    As we enter fiscal year 2014, we will focus on accomplishing 
deferred depot and maintenance activities to ensure adequate aircraft 
availability for flying squadrons to properly train and deploy. If we 
do not receive sufficient funding in fiscal year 2014, we may have to 
rotationally standdown units, or fly them at a reduced rate, similar to 
the actions we've taken in fiscal year 2013. This sequester-induced 
non-combat ready posture of a portion of our fleet will impact our 
ability to fill operational plans and Secretary of Defense-ordered 
missions, continue to degrade our depot maintenance and modernization 
programs, and will significantly erode our training and force 
development efforts, creating long-term readiness shortfalls. Overall, 
this lack of readiness prevents us from attaining required mission 
ready status in fiscal year 2014, creates heightened risk, and is 
incompatible with the defense strategy.

    49. Senator Ayotte. General Spencer, is the Air Force assuming the 
fiscal year 2014 budget becomes law on October 1, 2013?
    General Spencer. We would like to see enactment of the fiscal year 
2014 Defense Appropriations Act by October 1, 2013.

    50. Senator Ayotte. General Spencer, what happens to readiness of 
the Air Force fleet of aircraft if this does not happen?
    General Spencer. If we do not receive sufficient funding in fiscal 
year 2014 for weapon system sustainment accounts, to include depot and 
maintenance programs, aircraft availability rates across the Air Force 
will likely decrease, which will have an adverse impact on readiness. 
In addition, weapon system sustainment reductions tend to have longer-
term impacts, e.g., depot deferrals have cascading impacts on future 
depot schedules, so reductions in fiscal year 2013 will impact fiscal 
year 2014 and beyond. These impacts cannot be solved solely by 
increased funding; depot capacity limits our ability to recover from 
deferrals.

                             ARMY READINESS

    51. Senator Ayotte. General Campbell, the fiscal year 2014 
President's budget request for Army O&M exacerbates existing fiscal 
year 2013 readiness challenges from which it will take years to 
recover. From your written testimony, I understand that the Army has 
already curtailed or canceled seven major training exercises for those 
units not preparing to deploy and will defer depot maintenance 
activities. From your experience, how can the Army recover from the 
steps you have had to take in the current fiscal environment?
    General Campbell. Fiscal year 2013 budget uncertainty has delayed 
the Army's ability to refocus the training of contingency forces on 
conventional threats and required the Army to accept risk in meeting 
force deployment timelines in Combatant Commander Operational Plans. 
Only units with high-priority missions were able to fully prepare. 
Lower priority units will not be able to fully execute broader-focused 
training strategies since they must constrain training activity to the 
squad/crew/team level.
    As soon as we can provide forces with the resources they need to 
execute their full training strategies, as reflected in the President's 
fiscal year 2014 budget submission, they will be able to progressively 
build readiness for a broader range of missions. We will manage limited 
training assets (like CTC rotations) as best we can to support the 
training progression of priority units. A unit must go through all the 
steps of building proficiency, and a brigade combat team is not 
considered fully ready for decisive action until it has completed a 
training rotation at a maneuver CTC. Even with additional funding for 
CTC rotations, units at squad-level proficiency at the end of fiscal 
year 2013 would not have time to adequately prepare to benefit from a 
CTC rotation early in fiscal year 2014. Time required by nondeploying 
forces to restore readiness in fiscal year 2014 will depend largely on 
how far their readiness slips in fiscal year 2013.
    With additional funding, Army force readiness would benefit from 
additional maneuver CTC rotations and additional warfighter exercises 
(designed to train BCT, division and corps level staffs). 
Unfortunately, there is a time component of readiness. We are now going 
to go through a period where we need to buy back readiness to prepare 
forces for next year. Even with full access to additional training 
resources in fiscal year 2014, it will take a BCT approximately a full 
year to reset and train-up for another mission--assuming they will have 
access to required training support facilities and ranges.

    52. Senator Ayotte. General Campbell, does the Army need a fiscal 
year 2013 supplemental funding request?
    General Campbell. The Army may need a fiscal year 2013 supplemental 
funding request to ensure adequate resources are available to support 
ongoing contingency operations. The Department recently submitted two 
reprogramming actions for fiscal year 2013 that uses all the OCO 
special transfer authority and all but $200 million of general transfer 
authority for fiscal year 2013. Congressional approval of the 
reprogramming actions as submitted will help reduce Army's current OCO 
shortfall from $8.3 billion to $3.3 billion. The Army is continuing to 
work with U.S. Force-Afghanistan and all other OCO stakeholders to 
reduce the remaining $3.3 billion shortfall. If unsuccessful, the Army 
may have to submit a request for supplemental funding later in fiscal 
year 2013.

                         MARINE CORPS READINESS

    53. Senator Ayotte. General Paxton, prior to the Continuing 
Resolution, the Commandant described a steady deterioration in Marine 
Corps readiness should there be an annualized Continuing Resolution and 
the implementation of sequestration. Now that Defense appropriations 
have been passed for fiscal year 2013, DOD still must implement $41 
billion in sequestration cuts. From your experience, how do you assess 
the Marine Corps' ability to recover from the steps you have had to 
take in the current fiscal environment?
    General Paxton. America's ``Force in Readiness'' must maintain a 
high state of readiness at all times to be able to respond to 
contingencies and commitments throughout the globe. Despite the 
constrained funding resulting from sequestration, the passing of H.R. 
933 mitigated most of the near-term operational impacts in fiscal year 
2013. The Marine Corps will meet near-term readiness commitments for 
deployed and next-to-deploy forces and will continue to rebalance to 
the Pacific and support the Marine Rotational Force Darwin and the Unit 
Deployment Program.
    While the Marine Corps is capable of meeting near-term readiness 
commitments in fiscal year 2013, we have taken risks in our long-term 
infrastructure sustainment and the unit readiness of our home station 
units. We cannot continue to sustain these levels of reductions in 
fiscal year 2014 without immediate impact to our deployed and next-to-
deploy forces and our nondeployed crisis response forces at home.
    Sequestration's impacts on the availability of amphibious and 
maritime prepositioning ships are a concern for maintaining the Marine 
Corps' forward amphibious presence. The combat readiness of these ships 
is a foundational requirement for training and executing expeditionary 
force presence and amphibious force projection operations. As such, 
reduced amphibious ship availability and readiness could present a 
significant challenge to the training and maintenance of Naval 
Expeditionary Forces, thus driving overall readiness levels lower. 
Continued congressional support for the Navy's shipbuilding and surface 
ship-to-shore connector programs is vital to retain and maintain an 
adequate fleet of modern combat-ready amphibious ships.

    54. Senator Ayotte. General Paxton, what concerns do you have for 
Marine Corps readiness as you enter fiscal year 2014?
    General Paxton. DOD and the Marine Corps are still examining the 
implications of sequestration continuing into fiscal year 2014; 
however, we believe the Marine Corps can sustain its current 
operational requirements into fiscal year 2014. To maintain the high 
readiness of our forward-deployed forces, the Corps has globally-
sourced equipment and personnel for Afghanistan and other emerging 
threats from its nondeployed units. These nondeployed forces' principal 
readiness challenge is the reduced availability of equipment at home 
station with which to outfit and train units. The manning of home 
station units also suffers due to the need to meet enhanced personnel 
requirements for deploying forces, Joint Individual Augmentation 
requirements, and manning Security Force Assistance Teams.
    The primary concern with the out-of-balance readiness of the 
operating forces is increased risk in the timely response to unexpected 
crises or large-scale contingency, since those nondeployed forces will 
likely be the responders. Efforts to maintain the readiness of all of 
our forces may be further exacerbated if the O&M account is diminished 
and an annualized Continuing Resolution or sequestration is implemented 
in fiscal year 2014.
    An annualized Continuing Resolution and/or sequestration in fiscal 
year 2014 would also adversely impact the availability of amphibious 
and maritime prepositioning ships. The combat readiness of these ships 
is a foundational requirement for training to and executing 
expeditionary force presence and amphibious force projection.

                          READINESS REPORTING

    55. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, I am interested in knowing about readiness 
reporting requirements through the quarterly readiness reports. Are the 
reports useful to you in planning? If not, why?
    General Campbell. The Quarterly Readiness Report to Congress (QRRC) 
is useful in describing the operational overview of deployed and 
forward stationed soldiers, the Army's top readiness concerns, and 
supports the Joint Staff's effort to communicate DOD's current 
readiness posture.
    The Army is developing AR 525-XX-B, Army Strategic Readiness. This 
process will inform the quarterly readiness reports. The Army Strategic 
Readiness process will enable the Army to obtain a holistic view of 
Army Readiness. The Army staff elements will conduct detailed analysis 
of relevant readiness metrics associated with the six strategic 
readiness tenets (SRT) of manning, equipping, sustaining, training, 
installations, capacity, and capability. This analysis will encompass 
current and historical trends ranging from tactical unit readiness 
(i.e. unit status reporting trends) to aggregated analysis and 
prediction of critical elements supporting the six SRTs. Combined, 
these assessments will support Senior Leader decisionmaking processes 
across a range of DOD forums.
    Admiral Ferguson. The QRRC helps inform our fundamental analysis of 
current readiness and readiness trends and is useful to Navy's planning 
process. The QRRC information is also evaluated in concert with the 
real time readiness reporting by individual units and group commanders, 
the narrative reporting by our Fleet and Naval Component Commanders, 
and in support of assessments of the Joint Force readiness. The 
resulting comprehensive readiness analysis is used to inform our 
decisionmaking processes across the full range of Navy man, train, and 
equip responsibilities.
    General Paxton. The information contained in DOD QRRC is 
principally constructed to report military readiness to Congress per 
section 482, title 10, U.S.C. Some of the information in the QRRC, 
particularly that pertaining to the Chairman's Joint Force Readiness 
Review and Joint Combat Capability Assessment, reflect the Marine 
Corps' inputs for joint planning, readiness reporting, and risk 
assessments. Those inputs are useful both for Service planning and 
Joint Force planning.
    General Spencer. The Air Force submits our QRRC to the OSD who then 
compiles and submits the report to Congress. The QRRC requirements are 
dictated by title 10, U.S.C., and the Air Force provides the 
information required by the statute. This specific report is not used 
as a planning document; however, the Air Force closely monitors 
readiness from myriad sources and incorporates the information into 
planning, programming, and budgeting processes.

    56. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what systems do you use internally to 
track readiness trends?
    General Campbell. Unit commanders measure their unit readiness 
using the four functional areas of Manning, Equipping, Equipment 
Readiness, and Training. The unit overall readiness levels are reported 
using Core Mission (C) levels and Assigned Mission (A) levels. The C 
level assessment indicates the ability of the unit to accomplish its 
core mission while the A level assessment indicates the unit's ability 
to accomplish its directed mission currently assigned. Headquarters, 
Department of the Army uses numerous processes to measure readiness in 
addition to the Commanders Unit Status Report, the Joint Forces 
Readiness Review to Congress, the Strategic Readiness Update, and the 
QRRC. Additionally, we analyze command feedback from the Combatant 
Commanders Integrated Priorities List, Critical Needs Assessments, Mid-
Year Review, Operational Needs Statements, Joint Manning Documents, and 
Equipment Enterprise Reuse Conference. As our processes evolve, we look 
forward to developing a tool for predictive analysis to project 
readiness changes in the budget execution and forecast readiness 
concerns across the Future Years Defense Plan.
    Admiral Ferguson. Navy uses a variety of databases and a business 
intelligence tool to mine readiness trends. The Navy Readiness 
Reporting Enterprise (NRRE) database is the primary system through 
which Navy manages a series of subsystems that collect readiness 
information. The most significant of these subsystems is the Defense 
Readiness Reporting System-Navy. To increase the breadth of information 
available for readiness analysis, data is also collected from other 
systems outside the NRRE. One example is the Maintenance Figure of 
Merit database, which provides access to shipboard systems and material 
condition readiness of ships. Additionally, the quarterly Integrated 
Fleet Readiness Report tracks Fleet platform operational availability 
and readiness production metrics for the Chief of Naval Operations 
using a variety of data sources.
    General Paxton. The system used by the Marine Corps to track 
readiness trends is the program of record DRRS-MC. Commanders' 
assessments are inherently part of the DRRS-MC reporting system and 
provide operational perspective in terms of unit design mission 
capability and readiness.
    General Spencer. The Air Force uses the Status of Resources and 
Training System (SORTS) and the Defense Readiness Reporting System 
(DRRS) to track readiness trends. SORTS focuses on resources (people, 
equipment, and training), and DRRS focuses on capabilities. Further, 
there are many other indicators of readiness that are tracked by the 
Air Force, such as funding for flying hours, weapons system 
sustainment, training resources, and personnel readiness metrics.

    57. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, do you have suggestions for alternative 
reporting mechanisms?
    General Campbell. Presently, the Army is developing AR 525-XX-B, 
Army Strategic Readiness. This regulation will define Army Strategic 
Readiness and codifies the concept for developing the Army Strategic 
Readiness Assessment. The Army will track leading indicators across the 
six strategic readiness tenets of manning, equipping, sustaining, 
training, installations, capacity, and capability in order to provide a 
holistic view of Army readiness. Upon analyzing the leading indicators 
and associated trends, the Army staff will be able make readiness 
projections and recommend courses of actions to Senior Army leaders in 
efforts to mitigate impacts upon Army readiness at the strategic level. 
The Army Strategic Readiness Assessment will inform existing external 
reports such as the Joint Force Readiness Review and the QRRC.
    Admiral Ferguson. Navy would not recommend establishing alternative 
reporting mechanisms, although we will support adjustments to current 
reporting that the OSD and Congress determine should be made. For 
example, we are currently working with OSD to provide additional 
narrative context to the information provided in the QRRC.
    General Paxton. The DRRS enterprise is the best readiness reporting 
system for DOD. The system used by the Marine Corps to track readiness 
trends is the program of record DRRS-MC. With this readiness reporting 
system, commanders' assessments are an inherent part of the reporting 
process and they provide an operational perspective in terms of a 
unit's designed mission capability and its readiness to execute those 
missions. No alternatives are currently recommended.
    General Spencer. In a constrained fiscal environment, we are 
hesitant to advocate for additional reporting systems. However, the Air 
Force continues to analyze mechanisms for aggregating and synthesizing 
data from the various existing input sources in order to provide 
decision-quality strategic level readiness input for operational 
planning, force presentation, and the programming and budgeting 
processes.

    58. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what will tell you we have reached a 
readiness crisis?
    General Campbell. There will not be one signature event to indicate 
a ``readiness crisis.'' Rather, the long-term impacts of sequestration 
and the associated out-year reductions, particularly to force structure 
and readiness, threaten the Army's ability to provide trained and ready 
forces to perform enduring and vital missions. If steep cuts are made 
in fiscal year 2014 and beyond, this will create imbalance and 
significantly compound risk. It will cause a disproportionate 
investment across manpower, O&M, modernization, and procurement, 
challenging our ability to sustain appropriate readiness in the near 
term in support of our current defense strategy. Together, these 
impacts will further negatively impact Army readiness.
    Admiral Ferguson. A ready force has properly equipped and 
maintained ships and aircraft, crewed by trained and proficient 
sailors, with adequate spare parts and technical support, sufficient 
fuel and ready ordnance to execute mission requirements and contingency 
operations. Forces should be available to meet adjudicated Global Force 
Management Plan requirements. Sufficient surge capacity should exist to 
provide the combatant commander trained forces for crisis response as 
delineated by the National Defense Strategy.
    Failure to meet these standards would cause me to have concerns 
regarding the readiness of the force.
    General Paxton. Enabling close and continual Service command 
interactions and communications, the DRRS-MC; and Service-level 
personnel, materiel, installation, medical, and other data systems help 
to inform Marine Corps leadership with respect to the status of the 
five institutional readiness pillars. Service-level readiness is then 
integrated with the Joint DOD community through the Chairman's 
Readiness System to measure the military's preparedness to achieve 
objectives as outlined by the NMS. These processes will inform the 
Marine Corps and enable it to inform Congress before the Service 
reaches a readiness crisis.
    General Spencer. The Air Force has conducted 22 years of sustained 
combat operations and is continuing to meet high operation tempo 
demands to support today's counterinsurgency-centric fight. This has 
inevitably taken a toll on our weapons systems, people, and ability to 
meet the full spectrum of current and potential warfighter 
requirements. The Air Force provides unique capabilities for rapid 
response to taskings worldwide and response times are measured in 
hours, not days.
    The proper execution of the core missions our joint and allied 
partners rely on require our forces to be ready now. Combatant 
Commander Operational Plans do not provide the time for the Air Force 
to recover from a tiered readiness posture. The net effect is a 
requirement to maintain a high state of readiness across the Total 
Force, at all times. Pre-sequestration, the Air Force was already below 
acceptable readiness levels and sequestration has significantly 
exacerbated the situation. The Air Force will require additional 
resourcing above the President's fiscal year 2014 budget request, 
operation tempo relief, and at least 2 years to recover to required 
readiness levels.

    59. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what is the plan to address these impacts?
    General Campbell. Readiness degradation will stop as soon as we can 
support execution of unit-level training strategies and protect 
professional military education, at least to the levels supported by 
the President's fiscal year 2014 budget submission. The budget 
submission protects initial military training and professional military 
education as a hedge against a hollow force, supports training in 
Active Army units at moderate risk, preserves investment in an 
operational Reserve component as required by Army force generation 
models, and supports critical requirements of the training support 
system in the near term.
    The budget submission does not provide funding to accelerate 
recovery. With additional funding, Army readiness would benefit from 
additional maneuver CTC rotations and additional warfighter exercises 
(designed to train a BCT, division, and corps level staffs).
    Admiral Ferguson. Guided by the CNO's three tenets--``Warfighting 
First; Operate Forward; and Be Ready,'' Navy has taken actions to 
ensure the readiness of our units in the fight and all those operating 
forward. We are also focused on ensuring the readiness to deploy those 
forces planned to support the combatant commanders under the 
adjudicated GFMAP for the remainder of fiscal year 2013 and through 
fiscal year 2014. The funding provided in the fiscal year 2014 budget 
submission, with anticipated OCO funding, will support improved 
readiness in our nondeployed forces by the end of fiscal year 2014.
    Should fiscal year 2014 funding be sequestered, Navy will follow 
these same general principles, but we will not be able to fully support 
the fiscal year 2014 GFMAP as currently configured, and readiness of 
nondeployed forces will further degrade rather than recover. We are 
working with OSD, the Joint Staff, and the other Services in the SCMR 
to determine what further steps may be necessary to sustain a ready 
force in those circumstances.
    General Paxton. America's ``Force in Readiness'' must maintain a 
high state of readiness at all times to respond to contingencies and 
commitments throughout the globe. Despite the constrained funding 
resulting from sequestration, the passing of H.R. 933 will mitigate 
most of this year's near-term operational impacts from sequestration. 
The Marine Corps will meet its near-term commitments for deployed and 
next-to-deploy forces. It will continue to rebalance to the Pacific and 
support the Marine Rotational Force Darwin and the Unit Deployment 
Program.
    The funding levels for depot maintenance allow for the continuation 
of planned reset activities. H.R. 933 supports recruiting, advertising, 
and restores funding for tuition assistance programs. The fiscal year 
2014 budget, if approved, would help put the Marine Corps on a 
trajectory to reconstitute its combat capability. It would continue the 
transition to a post-OEF Marine Corps that complies with strategic 
guidance and is capable across the range of military operations.
    General Spencer. Bringing the Air Force back to full-spectrum 
mission readiness goals requires one full training cycle (approximately 
2 years) and additional resources above the President's 2014 budget 
request (approximately $3.2 billion increase in fiscal year 2014 and 
approximately $3.2 billion increase in fiscal year 2015) as well as a 
reduction in the number of deployment units currently are ordered to 
fulfill. The Air Force continues to plan for alternate funding and 
operation tempo scenarios, which will drive readiness recovery beyond 2 
years and, in many cases, will not permit readiness recovery to 
acceptable levels.

    60. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, when will Congress be notified of 
mitigation measures?
    General Campbell. Given the dynamic fiscal environment, there are 
still significant risks to the areas of collective training, equipment 
readiness, personnel impacts, and facility sustainment and 
modernization. The budget submission does not provide funding to 
accelerate recovery. Therefore, at this time, we do not have a timeline 
on when any mitigation measures may be instituted.
    Admiral Ferguson. Navy's approach to mitigating the impacts of the 
initial Continuing Resolution and then sequestration of fiscal year 
2013 funding has been the subject of testimony before Congress and 
discussed widely in other venues. We are working within the OSD SCMR to 
consider broad options in response to the potential for further 
reductions in DOD's top line in fiscal year 2015 and beyond. The Navy 
will work with OSD and the other Services to develop a budget that 
maximizes capability within the limits of the funding provided to us. 
Notification of Congress will be concomitant with the budget submission 
by the Department.
    General Paxton. Congress is provided the QRRC in accordance with 
title 10, U.S.C. statutory requirements. This report is prepared by the 
Office of the Under Secretary of Defense for Personnel and Readiness. 
It contains the status of the Department's readiness and the risks it 
faces in executing the National Military Strategy. As part of the 
Chairman's Readiness System, the Marine Corps also participates in the 
Joint Combat Capability Assessment process, which assesses and reports 
on DOD's readiness to execute the National Military Strategy. The 
Marine Corps also participates in the Chairman's Risk Assessment and 
the Secretary's Risk Mitigation Plan. In the latter document, for 
instance, the Marine Corps stated in 2012 that one of its risk 
mitigations was to regain proficiency in amphibious operations and 
reposture to the Pacific. The Marine Corps will also provide testimony 
as requested.
    The Marine Corps is participating in the SCMR. The SCMR will 
examine choices underlying the defense strategy, force structure, 
investments, and institutional management. The SCMR will help define 
major decisions that will inform the 2014 budget execution, guide the 
Quadrennial Defense Review (due to Congress in February 2014), and 
inform DOD's 2015 budget submission.
    General Spencer. The Air Force will continue to inform Congress of 
our ongoing mitigation measures during future readiness and posture 
hearings.

                    VIRGINIA-CLASS ATTACK SUBMARINES

    61. Senator Ayotte. Admiral Ferguson, how is the Virginia-class 
submarine performing operationally and as a program?
    Admiral Ferguson. The Virginia-class continues to be a highly 
successful acquisition program with ships consistently delivering early 
and within budget. Nine ships have delivered, the last being USS 
Mississippi (SSN 782), delivered 1 year ahead of schedule with a Navy 
Board of Inspection and Survey (INSURV) rating of ``green'' in all 22 
areas. The last ship of the Block II increment is USS Minnesota (SSN 
783) and is on schedule for a June 2013 delivery. All eight of the 
Block III ships have been funded with seven under construction. Block 
IV is on track to be awarded in October 2013. Overall, the program 
increased production to two ships per year in fiscal year 2011, 
starting with the construction of USS Washington (SSN 787) in September 
2011, with a follow-on multi-year procurement contract for 10 ships in 
fiscal year 2014-fiscal year 2018.
    Delivered ships are exceeding expectations for operational 
performance, with five ships already completing successful full length, 
worldwide deployments: USS Virginia (SSN 774), USS Texas (SSN 775), USS 
Hawaii (SSN 776), USS North Carolina (SSN 777), and USS New Hampshire 
(SSN 778). Virginia-class ships are preferentially assigned our most 
challenging missions and have performed superbly. Specific mission 
highlights are available at the appropriate classification level.

    62. Senator Ayotte. Admiral Ferguson, what critical capabilities 
does it provide our combatant commanders?
    Admiral Ferguson. Virginia-class submarines dominate the undersea 
domain and allow us to ``tunnel underneath'' an adversary's A2/AD 
systems. Their stealth, intelligence collection capability, and combat 
power give us access with influence to maintain overmatch--the ability 
to produce asymmetric effects by operating freely in the adversary's 
backyard--and are the mainstays of the conventional deterrence provided 
by our undersea force. In peacetime, Virginia-class submarines collect 
critical intelligence in support of national, combatant commander, and 
fleet tasking, as well as providing forward presence and warfighting 
readiness and flexibility.

    63. Senator Ayotte. Admiral Ferguson, what percentage of COCOM 
requirements for attack submarines was the Navy able to support in 
fiscal year 2012?
    Admiral Ferguson. COCOM requirements, including those for 
submarines, are sourced using the Global Force Management (GFM) 
process. For fiscal year 2012, COCOM unconstrained demand was 18.77 
submarines for worldwide SSN presence. The Navy met 100 percent of the 
GFM adjudicated requirement of 9.94 submarines deployed.

    64. Senator Ayotte. Admiral Ferguson, as Los Angeles-class 
submarines retire in the coming years and we fail to replace them 
quickly enough with Virginia-class submarines, our number of attack 
submarines will drop from 54 today to 43 in 2030. As a result, how much 
will our undersea strike volume decline?
    Admiral Ferguson. Undersea strike volume will decrease by 
approximately 63 percent in the 2030 timeframe due to two factors: SSN 
force structure reductions and SSGN retirement.
    The Navy is examining options to mitigate SSN shortfall, including: 
life extension for select Los Angeles-class submarines, decreased build 
time for new construction of Virginia-class submarines, and extended 
deployments for SSNs.
    Additionally, the Navy is examining an option to increase strike 
volume via a payload module inserted into future Virginia-class SSNs 
that would restore approximately 94 percent of our current undersea 
strike volume.

    65. Senator Ayotte. Admiral Ferguson, in order to at least 
partially address this decline in undersea strike volume, how important 
is it that we go forward with the Virginia payload module (VPM)?
    Admiral Ferguson. Undersea strike contributes to our ability to 
counter adversary A2/AD capabilities while providing additional attack 
capacity in our submarine force.
    The VPM could potentially more than triple the vertical launch 
capacity in current Virginia-class ships. VPM provides an additional 
four large diameter payload tubes per Virginia-class SSNs. VPM could 
replace the undersea strike volume gap created by the retirement of the 
SSGNs. The current advanced engineering design work on VPM will enable 
the Department of the Navy to consider incorporating VPM in the fiscal 
year 2019 Block V Virginia-class buy.
    While VPM represents a significant improvement in strike capacity, 
it comes at a cost. Given the increased costs, VPM would introduce in 
the Virginia-class concurrent with our efforts to field the SSBN(X) 
replacement, it may render VPM unaffordable as we assess the future 
fiscal impact of sequestration.

                        DEFENSE INDUSTRIAL BASE

    66. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what role does our Defense Industrial Base 
(DIB) play in our military readiness?
    General Campbell. The role that the DIB plays in our military 
readiness is of paramount importance. Our DIB provides the products and 
services in a timely manner to serve the needs of the warfighter. The 
DOD is pursuing efforts to ensure robust, secure, resilient, and 
innovative industrial capabilities upon which it can rely to fulfill 
warfighter requirements. DOD is assessing the health of the industrial 
base sectors by providing detailed analyses and in-depth understanding 
of the increasingly global, commercial, and financially complex 
industrial supply chain essential to our national defense, and 
recommending or taking appropriate actions to maintain the health, 
integrity, and technical superiority of that supply chain. DOD is 
addressing the challenges of critical and fragile elements of the base 
to identify systemic and fundamental issues that can be resolved 
through engagement across the public and private sectors. DOD is also 
pursuing innovation within supply chain sectors and supports 
responsible investment to advance industrial productivity through a 
variety of authorities and programs, including the sector-by-sector/
tier-by-tier assessment, the Defense Production Act, and the 
Manufacturing Technology program, among others.
    Admiral Ferguson. A strong DIB is vital to our Navy and Marine 
Corps sustaining our position as the preeminent naval force in the 
world. We depend on the DIB to build and maintain our weapon systems, 
develop new systems to pace evolving threats, and provide surge 
industrial capacity to meet crises.
    The human capital of the industrial base is the foundation of our 
technological advantage against potential adversaries and ensures we 
remain a dominant naval force. Competition and innovation provide us 
the ability to control costs in an environment of reduced defense 
spending. The capacity resident in our industrial base to build ships, 
aircraft, and submarines is a strategic hedge in an uncertain future.
    General Paxton. The Marine Corps' organic industrial base plays a 
critical role in our ability to sustain a high rate of equipment 
readiness in our operational forces and is central to the Marine Corps' 
role as the Nation's force in readiness. The bulk of our reset 
execution is occurring in our organic depots. The continued 
availability of our ground equipment depot capacity in both Barstow, 
CA, and Albany, GA, is essential for reset and our ability to both 
self-generate readiness and surge in response to demand. The broader 
DIB is just as critical to our Service readiness. Like our sister 
Services, the Marine Corps depends on a robust and capable defense 
industry to develop, field, and maintain high-quality equipment and 
services that provide our warfighters with unsurpassed technological 
advantage.
    General Spencer. The readiness of the Air Force to provide the 
capabilities inherent in global vision, global reach, and global power 
is sustained by the products and services purchased from the national 
technology and industrial base. Without the support of both the organic 
and the commercial components of the industrial base, the Air Force 
would not be ready to respond to the needs of the Nation. From the 
laces in our boots to the electronics in our air, space, and cyber 
systems, the Air Force draws upon a broad and diverse network of 
suppliers. Through this dynamic network, we equip our airmen; maintain 
our bases, laboratories, and ranges; modernize our current systems; and 
design, develop, and procure new capabilities to remain the world's 
preeminent Air Force.

    67. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what impact has sequestration had on our 
DIB?
    General Campbell. Sequestration has had a significant impact on our 
industrial base, especially as we face uncertainty in our long-term 
budgets. In the current fiscal year, we have deferred 50 percent of 
third and fourth quarter depot maintenance for fiscal year 2013. In the 
short term, the deferred depot maintenance requirements will have 
minimum to moderate risk on readiness, but the prospect of long-term 
fiscal uncertainty will significantly affect the industrial base with 
associated risks to equipment readiness and impact our core 
requirements and critical skills.
    Admiral Ferguson. There are several aspects to our DIB and each 
sector is being impacted differently. In the case of new ship 
construction, the near-term impacts to the prime contractors have been 
relatively minor with some slowdowns in contract awards. However, those 
slowdowns impacted subcontractors, which supply much of the material 
used by the primes. These suppliers represent, in many cases, small 
businesses that can ill afford breaks in their production lines.
    The surface ship maintenance industrial base depends on 
conventional surface ship maintenance availabilities which the Navy 
sends to the private sector. The uncertainty in available work and the 
contracting delays for this maintenance has significantly affected the 
ship maintenance industrial base. Even when we are able to restore ship 
availabilities, several of these businesses may have lost critical 
skilled trades.
    In aviation, we have already considered reduced quantities of 
aircraft, which generally causes the cost of the remaining units to 
increase, and places our aviation subcontractor industrial base at 
risk. We are seeing this trend in weapons procurement programs as well.
    For new systems, we are seeing delays to fleet introduction 
schedules, impacts to our ability to purchase systems in economic 
quantities, and higher overall program costs.
    General Paxton. The Marine Corps' depot workload is fully funded 
for fiscal year 2013; however, the recently announced 11-day civilian 
workforce furlough could potentially delay or defer scheduled 
maintenance. The challenge in mitigating the effects of the furlough 
will be maintaining the density in skill sets required to complete the 
fiscal year 2013 workload on schedule. Delayed or deferred maintenance 
caused by the furlough could result in additional carryover of fiscal 
year 2013 work into fiscal year 2014 and could create a ripple effect 
that would ultimately degrade readiness and delay completion of reset.
    General Spencer. The primary or first order impacts of 
sequestration have been on our airmen, military and civilian, on our 
readiness, and on our modernization programs. We are still in the very 
early stages of being able to identify and potentially assess the 
secondary impacts of sequestration, including those on the industrial 
base. It is similar to watching a river at flood stage. Observers can 
know exactly how high the river will crest, but not exactly where or 
when the water will spill beyond the banks. What begins as a small leak 
may lead to a cascade.
    For example, the Air Force has curtailed flying for some combat 
ready units. The readiness of the pilots and maintainers immediately 
begins to decline. The base purchases less jet fuel, uses fewer 
expendable parts and supplies, and the time interval between 
inspections based on flying hours lengthens. In turn, these reductions 
in demand flow across the organic and commercial industrial base supply 
chains. Large suppliers with a diverse customer base are like 
homeowners who live on high ground. The flood is around them but it 
doesn't touch them. Small or specialized suppliers who depend primarily 
on Air Force demand are like those who live in the flood plain watching 
anxiously as the water approaches. For them it is just a question of 
how high the water will get. Will it stop at the doorstep or leave only 
the rooftop visible? Neither the Air Force nor DOD has the ability to 
know exactly where or exactly how bad the impacts will be.
    The impacts go beyond the DIB to all those individuals and 
companies in our Nation's economy who provide goods and services to the 
Air Force. For example, the Air Force has severely limited official 
travel for temporary duty. We are making fewer airline and hotel 
reservations and have reduced the demand for food and transportation 
services at formerly frequented travel destinations. Again some 
industries will be impacted more than others, but the Air Force has no 
capability to predict which industries may be impacted and, if they 
are, to what extent.
    At this very early stage of sequestration, the Air Force can only 
accurately report on the size of the cuts, the immediate impacts to Air 
Force readiness, the delays to our modernization programs and provide 
preliminary estimates of restoring readiness and overcoming the delays 
in projects and programs. It is too soon to know the specifics of 
exactly where or exactly how significant the impacts of sequestration 
may be on the DIB and the Nation's economy.

    68. Senator Ayotte. General Campbell, Admiral Ferguson, General 
Paxton, and General Spencer, what will be the impact on our DIB if we 
allow sequestration to continue this year and next?
    General Campbell. The impact on our DIB if we allow sequestration 
to continue this year and next will be moderate to high. While it is 
too early for the Army to identify specific impacts associated with 
long-term sequestration on the DIB, the prospect of significant 
reductions and fiscal uncertainty are having some effect. Beyond fiscal 
year 2013, sequestration may result in the elimination or substantial 
modification of Army modernization programs, which will further affect 
the health of the industrial base. The Army is currently monitoring the 
stability of the DIB through active engagement in the following 
efforts:

         The Department-wide sector-by-sector/tier-by-tier 
        industrial base analysis that establishes early warning 
        indicators of risk, particularly at lower-tiers, to strengthen 
        the supply chain and to mitigate potential points of failure;
         The Industrial Base Baseline Assessment that conducts 
        a sector/sub-sector assessment of programs identified as 
        critical by Program Executive Offices and Life Cycle Management 
        Commands and determines the impact of reductions in funding to 
        program requirements; and
         The AT Kearney industrial base assessment that seeks 
        to develop viable strategic alternatives to sustain the Combat 
        Vehicles Industrial Base within a constrained fiscal 
        environment.

    Admiral Ferguson. As the Assistant Secretary of the Navy for 
Research, Development, and Acquisition, the Deputy Chief of Naval 
Operations and Deputy Commandant of the Marine Corps testified to the 
House Armed Services Committee in February of this year, the Department 
of the Navy's $7.8 billion sequestration investment reduction would 
potentially impact over 100,000 private sector jobs across the Nation 
considering direct and indirect impacts to the economy. If 
sequestration continues this year and the next, these impacts would 
continue to be realized with the resulting loss of industry capability 
to produce defense equipment in the long run accompanied by a 
reluctance of the capital markets to invest in the defense sector.
    General Paxton. The long-term impact of sequestration is degraded 
readiness. The Marine Corps will have to closely scrutinize and 
determine equipment maintenance priorities, assume risk in mission-
essential weapon system readiness, delay normal depot sustainment, and 
potentially delay reset operations. Our efforts to maintain the 
readiness of the deployed force and correct the readiness imbalance of 
the nondeployed forces would be further exacerbated by sequestration if 
our O&M accounts continue to be diminished.
    General Spencer. The Air Force's primary concern is the impact that 
continued sequestration will have on our airmen, military and civilian, 
on our readiness and our modernization programs. Our country and our 
allies depend on the air, space, and cyber capabilities the Air Force 
provides through global vision, global reach, and global power. The 
immediacy and abruptness of this year's sequestration has added 
uncertainty to the concerns of our airmen, and caused us to reduce our 
readiness, defer needed infrastructure maintenance, and delay our 
modernization programs.
    The DIB, both the organic and commercial components, provide the 
goods and services that build and sustain the systems that enable the 
Air Force's core missions of air and space superiority; global strike; 
rapid global mobility; intelligence, surveillance and reconnaissance; 
and global command and control. Continued sequestration may place some 
elements of that industrial base at risk, which in turn, could impact 
Air Force capability.
    While the Air Force can accurately estimate the size of the cuts 
stemming from continued sequestration and assess their impact on Air 
Force readiness and modernization, our ability to do the same for the 
industrial base is limited. The expectation is that larger firms with 
their capital structure are better equipped to respond to continued 
sequestration. However, slightly more than half of each contracted 
dollar goes to subcontractors. Some of these are small businesses and 
may lack the financial reserves to deal with the uncertainties of 
continued sequestration.
    The key issue is uncertainty. Uncertainty increases risk, reduces 
willingness to invest in a defense-oriented portfolio, and dries up 
innovation. While the Air Force can monitor and assess the impacts of 
continued sequestration on the industrial base, we may only learn of 
the loss of a key industrial base capability when we are forced to 
replace or restore it.

                          JOINT STRIKE FIGHTER

    69. Senator Ayotte. Admiral Ferguson, General Paxton, and General 
Spencer, how important is the F-35 Joint Strike Fighter to the future 
readiness and capabilities of your Service?
    Admiral Ferguson. The F-35C will provide a significant additive 
value when brought to bear with the networked fighting concepts of the 
U.S. Navy Carrier Strike Group and in a joint/combined warfighting 
arena. The F-35C provides a fifth generation fighter aircraft to the 
Navy carrier air wing and brings with it the ability to effectively 
engage and survive a wide range of threats, both air and surface, in 
contested airspace. It provides a ``day-one'' strike capability 
enabling tactical agility and strategic flexibility required to counter 
a broad spectrum of threats and win in operational scenarios that 
cannot be addressed by current legacy aircraft, including operations in 
an anti-access/area-denied environment.
    General Paxton. The F-35 JSF is the next generation strike weapons 
system designed to meet an advanced threat, while improving lethality, 
survivability, and supportability. It will be the cornerstone of a 
multi-mission joint force possessing improved mission flexibility and 
unprecedented effectiveness to engage and destroy both air and ground 
threats. The F-35 is designed to participate in a wide variety of 
operations from routine, recurring military activities to Major Theater 
War, and peacekeeping operations.
    The short takeoff and vertical landing (STOVL) F-35B is the 
centerpiece tactical aviation aircraft needed to support our MAGTF. Our 
requirement for expeditionary tactical aviation capabilities has been 
demonstrated repeatedly, most recently with forward operating bases 
(FOBs) in Operation Enduring Freedom (OEF). The F-35B surpasses our 
current generation of aircraft in combat effectiveness and 
survivability in the current and future threat environment.
    The capability inherent in a STOVL aircraft allows the Marine Corps 
to operate in harsh conditions and from remote locations where few 
airfields are available for conventional aircraft. It is also 
specifically designed to operate from amphibious ships--a capability 
that no other tactical fifth-generation aircraft possesses. The ability 
to employ a fifth-generation aircraft from 11 big-deck amphibious ships 
doubles the number of ``aircraft carriers'' from which the United 
States can employ fifth-generation capability. The expanded flexibility 
of STOVL capabilities operating both at-sea and from austere land bases 
is essential, especially in the Pacific.
    The Marine Corps will leverage the F-35B's sophisticated sensor 
suite and very low observable fifth-generation strike fighter 
capabilities, particularly in the area of data collection and 
information dissemination, to support the MAGTF well beyond the 
abilities of current MAGTF expeditionary attack, strike, and electronic 
warfare assets. Having these capabilities in one aircraft provides the 
Joint Force Commander and the MAGTF commander unprecedented strategic 
and operational agility.
    Marine Corps alignment with the security demands articulated in the 
2012 Strategic Guidance for the 21st Century is enhanced by the F-35's 
unprecedented lethality, and survivability; capabilities that do not 
exist in today's legacy fighter attack aircraft.
    General Spencer. Only a fifth-generation fighter, such as the F-35, 
provides the Air Force the levels of lethality and survivability 
required to gain and maintain air superiority in current and evolving 
high-end threat environments, ensuring we are able to continue to meet 
our defense planning guidance-directed joint warfighting requirements.
    Since World War II, the United States has relied on its ability to 
control the skies over the battlefield, protecting friendly forces 
while holding adversary targets at risk. For the past 30 years, our 
fighter fleet remained ahead of this evolving threat, superbly 
performing all its missions and supporting the joint warfighter in 
operations such as Operations Desert Storm, Allied Force, Enduring 
Freedom, and Iraqi Freedom. We have reaped the benefits of developing 
the most powerful Air Force on the globe and adversaries are keenly 
aware of our unrivaled ability to exploit the air to achieve our 
Nation's political objectives. Evidence of the respect adversaries have 
for U.S. Air Force capabilities is seen in the proliferation of new 
threat systems designed to counter our asymmetric advantage.
    The Air Force's ability to gain air superiority remains an 
imperative for providing freedom from enemy attack while ensuring our 
own freedom of maneuver. The threats we may face continue to evolve in 
technology and complexity. Potential adversaries are acquiring advanced 
fighters on par with or better than our legacy fleet, developing 
sophisticated and networked early warning radar surveillance systems, 
and fielding surface to air missile systems with increasing range and 
lethality. These capabilities all work together to create advanced, and 
extremely dangerous, integrated air defense systems. These A2/AD 
environments seriously challenge our ability to gain air superiority 
and hold targets at risk. We already face this challenge in select 
areas of the world and these threat environments will continue to 
expand as these systems proliferate.
    Our fleet of legacy fighters is approaching the limits of both 
service life and capability modernization that permits them to survive 
and operate in these environments--they simply do not have the 
capabilities, enhanced by advanced stealth, required to defeat the 
emerging threats. Only our fifth-generation fighter fleet's combination 
of advanced stealth, precision weapons, unmatched electronic warfare 
systems, fused multi-spectral battlespace awareness, combat 
identification systems, maneuverability, and speed has the ability to 
operate and survive in these advanced threat environments. All these 
capabilities inherent in the F-35, particularly its advanced stealth 
properties, ensure the United States and our allies have an air 
superiority advantage, and will enable our combatant commanders to 
bring the full spectrum of capabilities of the joint force to the 
fight.

                   SIZE OF THE ARMY AND MARINE CORPS

    70. Senator Ayotte. General Campbell and General Paxton, if 
sequestration continues next year, do you believe it will be necessary 
to further reduce the size of the Army and the Marine Corps? If yes, by 
how much?
    General Campbell. If further budget cuts are directed and end 
strength goes below 490,000 in the Active component, the Army could be 
put on a path toward a hollow force--that is an Army that has prolonged 
and disproportionate investments across manpower, O&M, modernization, 
and procurement without corresponding adjustments to strategy. 
Sequestration will have long-term impacts that extend well beyond 
fiscal year 2013. The Army may have to reduce an additional 100,000 
soldiers across the Active Army, Army National Guard, and U.S. Army 
Reserve, and further reduce the civilian workforce in order to maintain 
a balance between end strength, readiness, and modernization.
    General Paxton. We will not have a definitive answer to this 
question until the Defense Department completes its SCMR of our current 
National Defense Strategy and analysis of a range of potential budget 
cuts. Depending upon where the Department weighs its effort, 182,100 
may or may not be sustainable. We continue to believe that the Nation 
needs a ready crises response force, forward deployed and forward 
engaged. The President's current National Defense Strategy, which 
rebalances our forces toward the Pacific, is suited to the capabilities 
and strengths of your Marine Corps. If, as a result of the SCMR, the 
Marine Corps budget is further reduced below current Budget Control Act 
levels, the Marine Corps will have to look at reducing forces below 
182,100. Determining how much below 182,100 will again depend on how 
much the Marine Corps is required to reduce their budget based on 
decisions that result from the SCMR.

    71. Senator Ayotte. General Campbell and General Paxton, how much 
would the Guard and Reserve have to be cut?
    General Campbell. The Army has yet to quantify precisely how future 
end strength reductions would impact the Reserve component, however, as 
Chief of Staff of the Army Ray Odierno recently testified, if 
sequestration is fully implemented through fiscal year 2021, it will 
require us to reduce, at a minimum, another 100,000 soldiers from the 
total Army, which will include the Active and Reserve components.
    General Paxton. We will not have a definitive answer to this 
question until the Defense Department completes its SCMR of our current 
National Defense Strategy and analysis of a range of potential budget 
cuts. Depending upon where the Department weights its effort, 39,600 
reservists may or may not be sustainable. We continue to believe that 
the Nation needs a ready operational Reserve Force. The President's 
current National Defense Strategy, which rebalances our forces toward 
the Pacific, is suited to the capabilities and strengths of your Marine 
Corps. If, as a result of the SCMR, the Marine Corps budget is further 
reduced below current Budget Control Act levels, the Marine Corps will 
have to look at reducing Reserve Forces below 39,600. Determining how 
much below 39,600 will again depend on how much the Marine Corps is 
required to reduce their budget based on decisions that result from the 
SCMR.

    72. Senator Ayotte. General Campbell and General Paxton, what would 
be the impact on your Service and your ability to support the current 
strategy if you are required to further reduce your end strength?
    General Campbell. If sequestration continues, the Army will simply 
not have the resources to support the current Defense Strategic 
Guidance, and we risk becoming a hollow force. The Army will be unable 
to meet the range of missions in the current strategic guidance if 
sequestration requires us to further reduce end strength.
    General Paxton. In 2010, the Marine Corps conducted a careful 
review of force structure requirements in the future operating 
environment. At that time, we arrived at a force requirement of 186,800 
to meet the security demands of the Nation. In anticipation of a more 
austere fiscal environment, risk was taken to reduce that number to 
182,100. Reductions below this force level will create greater risk.
    The Marine Corps, by design, is not organized to conduct extended 
land campaigns; it is organized to support forward deployed crisis 
response rotations at an aggressive deploy-to-dwell ratio and to meet 
its obligations to the Joint Force for amphibious forcible entry. 
Reductions in the number of marines available creates risk not only to 
future war scenarios, but also to the immediate demands of warfighting, 
crisis response, deterrence, humanitarian assistance/disaster relief, 
reassuring our allies, and creating options for our strategic 
leadership.
    Fewer marines means:

        - Fewer forward engagements, decreasing our deterrent effect;
        - Leaving our allies less assured, creating uncertainty with 
        response to U.S. security guarantees;
        - Smaller investment in building the capabilities of our 
        security partners;
        - Decreased capacity to respond to major contingency 
        operations;
        - Less time to train to complex missions, putting marines at 
        risk; and
        - Reduced dwell-time coupled with greater stress on military 
        families.

    73. Senator Ayotte. General Campbell and General Paxton, would 
either of your Services have to utilize involuntary separations to 
achieve these end strength reductions?
    General Campbell. Yes. The Army learned some very valuable lessons 
during the drawdown of the 1990s. Therefore, a principal tenet of the 
Army's plan to reduce end strength is that the Army, not the individual 
servicemember, will make the determinations as to who continues to 
serve and who must transition. The most critical concerns are to retain 
those servicemembers with the greatest potential for future 
contribution and to provide fair and comprehensive transition 
assistance for members and families who must continue their service in 
a Reserve component or transition to civilian employment. To the extent 
that sequestration considerations increase the number of personnel 
reductions that are required, the Army will achieve a portion of those 
additional reductions through involuntary separations.
    General Paxton. The Marine Corps' plan to reduce our Active 
component end strength from 202,100 to 182,100 by the end of fiscal 
year 2016 is being conducted in a measured way. Our plan is to reduce 
our end strength by no more than 5,000 marines per year and will be 
accomplished primarily by natural attrition, voluntary separation, and 
retirement authorities. Involuntary separations will be minimized as 
much as possible, and we have no plans to conduct a reduction-in-force. 
Such an approach would do significant long-term damage to our ability 
to recruit and maintain a high quality force. Our overarching goal is 
to keep faith with our marines and their families. This plan would have 
to be re-assessed should we be given a mandate for additional end 
strength reduction and increased use of involuntary separation 
authorities would likely be required.

                                 KC-46

    74. Senator Ayotte. General Spencer, in terms of readiness, what 
are the Air Force's top modernization priorities?
    General Spencer. In order to achieve readiness levels necessary to 
meet the Defense Strategic Guidance, the Air Force must modernize its 
aging fleet. In particular, the strategic guidance directs a shift to 
the Pacific where the challenges of an A2/AD environment dictate full-
spectrum readiness across the Air Force. The limits of our legacy 
fleet's ability to survive and operate in these environments are being 
approached by near-peer adversaries in the region that possess advanced 
fighter aircraft, networked early warning radar surveillance systems 
and integrated air defense systems. Our legacy fleet simply does not 
have the advanced capabilities required to survive and operate in the 
emerging threat environment. As such, Air Force modernization 
priorities are focused on these threat scenarios. The F-35 Joint Strike 
Fighter, KC-46 tanker, and Long-Range Strike Bomber will help ensure 
the United States and our allies have an air superiority advantage, and 
will enable our combatant commanders to bring the full spectrum of 
capabilities of the joint force to the fight in these future threat 
environments.

    75. Senator Ayotte. General Spencer, how important is the KC-46A 
program to Air Force readiness?
    General Spencer. The KC-46A is an essential component of force 
readiness, particularly with the strategic shift to the Pacific Area of 
Operations coupled with concerns on the long-term sustainment on our 
aging KC-135R tanker fleet. To meet the Defense Strategic Guidance, air 
refueling capability remains the linchpin of our ability to project 
power across intercontinental distances to hold any target at risk. To 
this end, the KC-46A will ensure our Nation retains a ready and capable 
tanker force supporting joint and coalition aircraft in worldwide 
operations for decades to come.

    [Whereupon, at 4:21 p.m., the subcommittee adjourned.]


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2014 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                       WEDNESDAY, APRIL 24, 2013

                           U.S. Senate,    
                  Subcommittee on Readiness
                            and Management Support,
                               Committee on Armed Services,
                                                    Washington, DC.

    MILITARY CONSTRUCTION, ENVIRONMENTAL, AND BASE CLOSURE PROGRAMS

    The subcommittee met, pursuant to notice, at 2:35 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Jeanne 
Shaheen (chairman of the subcommittee) presiding.
    Committee members present: Senators Shaheen, Kaine, Ayotte, 
and Lee.
    Majority staff members present: Joseph M. Bryan, 
professional staff member; Jason W. Maroney, counsel; Michael 
J. Noblet, professional staff member; John H. Quirk V, 
professional staff member; and Russell L. Shaffer, counsel.
    Minority staff member present: Lucian L. Niemeyer, 
professional staff member.
    Staff assistant present: Daniel J. Harder.
    Committee members' assistants present: Chad Kreikemeier, 
assistant to Senator Shaheen; Marta McLellan Ross, assistant to 
Senator Donnelly; Karen Courington, assistant to Senator Kaine; 
Brad Bowman, assistant to Senator Ayotte; and Robert Moore, 
assistant to Senator Lee.

     OPENING STATEMENT OF SENATOR JEANNE SHAHEEN, CHAIRMAN

    Senator Shaheen. Good afternoon, everyone.
    At this time I would like to call this subcommittee hearing 
to order.
    Actually, given that we have two witnesses who are from New 
Hampshire, as well as Senator Ayotte and myself, I think next 
year we should do this in New Hampshire as opposed to down 
here. For the audience, you would really enjoy it very much to 
be up there. We will do it a little later in the year so it is 
a little warmer than it is right now.
    Senator Ayotte. More foliage.
    Senator Shaheen. Yes, that is right, when we have foliage.
    But seriously, I want to welcome everyone to the hearing 
this afternoon. Testifying, we have representatives from each 
of the Military Services and the Office of the Secretary of 
Defense (OSD) who are responsible for the Department of 
Defense's (DOD) military construction (MILCON) and 
environmental programs, and we very much look forward to your 
testimony.
    Overall, the President's budget request for military 
construction and family housing is $11.1 billion in fiscal year 
2014, approximately $200 million less than what was requested 
last year. The budget request broadly reflects the fiscal 
realities facing DOD, but especially in the absence of a 
resolution to sequestration, additional savings will need to be 
achieved. I look forward to hearing more from our witnesses on 
their top priorities for this year's request so that the 
subcommittee can move forward in a prudent and informed manner 
on the defense authorization bill.
    Last year's National Defense Authorization Act (NDAA) 
reduced or eliminated more than $660 million in programs in the 
military construction and environment accounts. We will be, 
again, looking to find savings in these areas, recognizing the 
current fiscal pressures, the subcommittee's responsibility to 
help DOD eliminate duplicative programs and projects, and 
increase management efficiencies and reduce waste.
    DOD has again requested a base realignment and closure 
(BRAC) round in 2015. I joined the majority of my colleagues in 
opposing this proposal last year, and I continue to believe 
that now is not the time to spend billions of dollars on 
another BRAC round, especially as DOD grounds combat aircraft 
and cancels ship deployments due to sequestration. The 
Government Accountability Office (GAO) has done a number of 
studies on the 2005 BRAC round which found, among other things, 
that BRAC implementation costs grew to about $35 billion, 
exceeding the initial 2005 estimate of $21 billion by 67 
percent. In this time of fiscal uncertainty, we clearly cannot 
afford another round like the last one.
    The GAO has made a number of recommendations for improving 
future BRAC rounds, including improving the process for 
accurately identifying and estimating all costs associated with 
BRAC decisions. I look forward to hearing more from our 
witnesses about why they believe that another BRAC round is 
necessary and what changes DOD has put in place to ensure 
similar cost growth will not occur in any future BRAC round.
    Now, setting BRAC aside, one of the more immediate ways our 
military installations can save money is through the adoption 
of more energy-efficient technologies. I am pleased to see DOD 
and each of the Services continue to strive for smarter ways to 
become energy efficient. That is perhaps why DOD was able to 
reduce its installation energy consumption by 2.4 percent and 
approximately $100 million in fiscal year 2012. The expanded 
use of metering to ensure an accurate baseline and smart grid 
technologies enable energy users to adapt to demand 
fluctuations and better informs our installation energy 
managers. Even simple fixes, like stopping water line leaks, 
ensures that in these times of fiscal uncertainty, DOD is doing 
its best at increasing efficiency.
    Last week, the full committee released a report of our 
year-long review of DOD spending overseas. The review focused 
on spending in Japan, South Korea, and Germany, three critical 
allies. In order to better sustain our presence in these 
countries, we need to understand and control our costs. The 
committee's bipartisan report describes inadequate oversight of 
MILCON projects built with in-kind payments. It also discusses 
in-kind payments earmarked for nonessential projects at a time 
when DOD is under severe budget constraints. Every dollar spent 
on unnecessary or unsustainable projects is a dollar 
unavailable to care for our troops and their families, to 
maintain and modernize equipment, and to pay for necessary 
investments in base infrastructure. The committee will be 
assessing what changes in law might be necessary to ensure 
closer scrutiny of our overseas investments and avoid future 
commitments that may be inefficient or unaffordable. I will be 
very interested in hearing what our panels think about this 
report and suggestions for future changes.
    The President's budget request also includes $3.8 billion 
for defense environmental programs, down from last year's 
request and representing the fourth consecutive year of 
decreases in funding for the program. As with past years, the 
largest piece of the environmental budget request is the 
environmental restoration program, the cleanup of contamination 
at bases, current and former, including the remediation of 
discarded military munitions. While the restoration budget has 
remained relatively steady over the past few years, it is 
important that DOD and Congress remain committed to the 
remediation of contamination, including the cleanup of military 
munitions at thousands of sites around the country.
    I would also like to take a moment to express my strong 
support for the Navy's inclusion of a project in its budget 
request to modernize and consolidate a number of facilities at 
Portsmouth Naval Shipyard that support our nuclear submarine 
fleet. I am sure it comes as no surprise that Senator Ayotte 
and I are particularly interested in what is happening at the 
shipyard. But Portsmouth is the only east coast maintenance 
depot for Virginia-class submarines, and this project will help 
to ensure that this capability is maintained for many years 
into the future. I understand that this project will not only 
improve productivity by consolidating several dispersed 
activities, but will also result in energy savings by reducing 
the overall footprint of the facilities and through the 
adoption of more energy efficient technologies. I believe these 
are exactly the kinds of projects DOD should be pursuing, and I 
applaud DOD and the Navy for making these investments.
    Now, before our witnesses deliver their opening remarks, I 
will ask Senator Ayotte if she has any statement.

               STATEMENT OF SENATOR KELLY AYOTTE

    Senator Ayotte. I thank the chairman very much and very 
much appreciate being a part of the leadership of this 
subcommittee with you. I want to thank you for calling this 
very important hearing, particularly with the challenges we 
face right now with sequestration.
    As we all know, DOD has come in for a significant number of 
cuts with sequestration, and if you look at the percentages, it 
is actually disproportionate to what other areas of the 
Government have taken in terms of cuts. As Lieutenant General 
Milstead testified this morning before the Personnel 
Subcommittee, he said, ``Those who have given the most to the 
security of this Nation are asked to accept the bulk of the 
risk that sequestration poses to this Nation.'' So we need to 
understand fully from each of the witnesses what the impact is 
of sequestration in your areas because it is very important 
that we understand those implications.
    I share Senator Shaheen's desire to work to make sure that 
we are eliminating waste, duplication, misallocated funds, 
given the budget challenges we face. But with that said, we 
also need to fully understand the implications of the 
significant reductions that you are facing and what that means.
    In one of the areas, I also would certainly echo the praise 
that Senator Shaheen gave to the Navy for their commitment and 
recent projects at the Portsmouth Naval Shipyard. I think that 
is terrific and we really appreciate it, and also the 
importance of those projects in terms of helping the efficiency 
of the shipyard, as well as energy efficiency is terrific.
    But I have to say I note that the Department of Navy's 
recent report on the modernization of naval shipyards cites a 
$3.5 billion facility maintenance backlog, which is higher than 
the overall Navy's average. This backlog includes $1.2 billion 
of critical repairs for mission-essential facilities. So we 
have some significant challenges with the budget issues that 
you are facing.
    Naval shipyards play a critical role in maintaining the 
readiness of our fleet and are currently the sole provider of 
many depot-level maintenance capabilities. The readiness of our 
aircraft carriers and submarines is directly linked to 
sufficient funding for and efficient operation of the naval 
shipyards. These shipyards, including the Portsmouth Naval 
Shipyard, are highly dependent on the condition of shipyard 
infrastructure, including dry docks, piers, nuclear facilities, 
production shops, and other facilities.
    Yet, despite the importance of these facilities, based on 
current investment levels, as curtailed by the budget cuts that 
we are going to talk about today, the Navy will need 17 years 
to clear the current maintenance and infrastructure repair 
backlog, that is a significant number, and I think people need 
to understand that. While the Navy is looking at potential 
options to accelerate the rate of overall improvements in 
shipyard infrastructure, workplace efficiency, and operating 
conditions, the report concludes that a quicker upgrade plan 
``is currently unaffordable.'' I know that the chairman and I 
will make this a primary focus to understand this for this 
hearing today and also throughout our work on this committee.
    I want to raise another issue, something that I have been 
very concerned about on the national security front. In section 
227 of the NDAA for Fiscal Year 2013, I would like to get an 
update regarding the environmental impact statements (EIS) that 
are being prepared for a potential third homeland missile 
defense interceptor site on the east coast of the country. The 
purpose of an east coast missile defense site would be to 
ensure that we have shoot-look-shoot capability against a 
potential Iranian intercontinental ballistic missile (ICBM) 
fired at the east coast of the United States. I know very well 
that the witnesses that are before us are familiar with the 
fact that if we were to receive an incoming missile from North 
Korea on the west coast of the country, we have that shoot-
look-shoot capability, but we do not have the same capability 
on the east coast of the country.
    Director of National Intelligence James Clapper testified 
this month that this Iranian ICBM threat could emerge as early 
as 2015. Yet, in order to properly site and build an east coast 
missile defense site, and I want to commend the administration 
for now looking very seriously at this issue, it could take up 
to 5 or 6 years to build an east coast missile defense site. So 
this is, obviously, I think something we need to look at with a 
sense of urgency, and I certainly look forward to hearing from 
you as to where that process stands right now.
    I also join the chairman in opposing DOD's request for the 
authorization to conduct a round of BRAC in 2015. Now is not 
the time to spend billions of dollars on another BRAC round, 
especially as DOD grounds combat aircraft, cancels ship 
deployments, and furloughs workers due to sequestration.
    As the chairman mentioned earlier, we have not fully 
understood or realized the cost from the last BRAC round, and 
there were significant costs to undertaking a BRAC round. In 
fact, if you look at what happened in 2005, the BRAC Commission 
estimated that the total cost of the BRAC decisions would be 
$21 billion. According to GAO, the 2005 BRAC round actually 
cost taxpayers $35 billion, $14 billion more than projected, a 
massive increase, in terms of the estimate, of 67 percent. 
Given the budget environment we are in, we simply cannot afford 
this type of endeavor right now or this kind of cost growth.
    I have heard from DOD certain assurances that the new round 
will be better than the last round. However, I am not sure how 
I understand DOD can make those assurances, given that this is 
designed to act as an independent entity, free from the 
influence of DOD. It is not clear to me how we can be confident 
that there are any real cost savings to be gained from another 
BRAC round, and that is among the reasons that I certainly 
oppose a BRAC round.
    I want to thank the chairman for this hearing, and I look 
forward to the testimony of the witnesses. I want to thank each 
of you for your service to our country during very challenging 
times. Thank you for being here today.
    Senator Shaheen. Thank you, Senator Ayotte.
    Let me welcome all of you who will be testifying. First, we 
have John Conger, who is the Acting Deputy Under Secretary of 
Defense for Installations and Environment. Welcome. Katherine 
Hammack, Assistant Secretary of the Army for Installations, 
Energy, and Environment. Thank you for being here. Roger 
Natsuhara, Principal Deputy Assistant Secretary of the Navy for 
Energy, Installations, and Environment; and Kathleen Ferguson, 
who is the Acting Assistant Secretary of the Air Force for 
Installations, Environment, and Logistics. Again, thank you all 
for being here this afternoon. We look forward to your 
testimony. I will ask you if you will go ahead and present in 
that order. Mr. Conger?

 STATEMENT OF JOHN C. CONGER, ACTING DEPUTY UNDER SECRETARY OF 
             DEFENSE, INSTALLATIONS AND ENVIRONMENT

    Mr. Conger. Thank you very much. Chairman Shaheen, Ranking 
Member Ayotte, distinguished members of the subcommittee, I 
appreciate the opportunity to appear before you to discuss 
DOD's fiscal year 2014 budget request for installations and 
environment. As a side note, I am happy to be part of Team New 
Hampshire here, as the chairman alluded.
    The testimony I have submitted for the record describes the 
$11 billion we are requesting for MILCON; the $10.9 billion 
more we are investing in sustaining and restoring our 
facilities; and the $3.8 billion that we are seeking for 
environmental compliance and cleanup.
    You will note that 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 is because the President's budget request 
replaces the across-the-board sequester cuts with a 
comprehensive deficit reduction plan. Within the request, that 
plan averts what would otherwise be another significant 
reduction in the defense budget and enables us to present to 
you a fiscal year 2014 budget request that allows us to 
continue prudent investment in our installations.
    However, sequestration has significantly impacted fiscal 
year 2013. While this hearing is focused on the 2014 request, I 
would like to address the 2013 issue briefly.
    Sequestration will affect our fiscal year 2013 execution in 
two ways. MILCON projects will be individually cut. Some of 
them will still be executable but others will not, and we are 
reviewing each project to assess the impact. It is possible 
that we will need to defer some lower priority fiscal year 2013 
projects to ensure there are funds available to reprogram so we 
can execute the higher priority ones, and we are still 
reviewing these impacts.
    More serious, though, is the impact to our facilities 
sustainment and restoration accounts. Because operation and 
maintenance (O&M) dollars are more discretionary and therefore 
more flexible, 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 probably accommodate this for a short period of time, but 
the system will break if we shortchange these accounts for 
multiple years.
    My colleagues will be able to speak about how each of them 
are managing this risk in their individual Services.
    Finally, let me say a word or two about BRAC. Obviously, it 
is an issue of concern, and as you mentioned, the 
administration is requesting a BRAC round in 2015.
    DOD 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 cannot do their job without bases from which to 
fight, on which to train, or on 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 as well, from depot maintenance, to training, 
to bullets and bombs.
    We are continually looking for ways to reduce the cost of 
doing business, looking for ways to reduce the cost of MILCON 
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 DOD. The previous five 
rounds of BRAC are providing us with recurring savings of $12 
billion or $13 billion every year, savings that do not result 
in decreased capability because it is derived from the 
elimination of excess.
    I am well aware of the skepticism that many in Congress 
have about the need for BRAC, and that seems based on the fact 
that we spent more than originally advertised during the 2005 
BRAC 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 which directed the use of the authority to 
accomplish transformative change not just elimination of 
excess. Today, 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, and I can assert with confidence that a 2015 
round will have far more in common with them than it would with 
the 2005 round.
    Thanks for the opportunity to testify this morning. It is a 
pleasure to be here, and I look forward to your questions. In 
the questions and answers, we can address a couple of the other 
points you made in your opening statements.
    [The prepared statement of Mr. Conger follows:]

                 Prepared Statement by Mr. John Conger

                              INTRODUCTION

    Chairman Shaheen, Ranking Member Ayotte, 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 (DOD) 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
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                        Change from Fiscal Year
                                                        Fiscal Year     Fiscal Year              2013
                                                       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          0.0           0.0
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
    We are requesting $9.0 billion for military construction (Military 
Construction, Chemical Demilitarization, Energy Conservation Investment 
Program (ECIP), and the North Atlantic Treaty Organization (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 
ECIP. 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 Marine Corps installations; a third increment of the Naval 
Explosives Handling Wharf at Kitsap, WA; 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 restationing, 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
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                        Change from Fiscal Year
                                                        Fiscal Year     Fiscal Year              2013
                                                       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          (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
    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 
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 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 Departments of 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
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                        Change from Fiscal Year
                                                        Fiscal Year     Fiscal Year              2013
                                                       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 President's budget 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 
MILCON 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 life cycle. 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 MILCON projects, as part of our 
focus on Better Buying Power initiatives. We are completing a study on 
MILCON 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 Life Cycle 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
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                        Change from Fiscal Year
                                                        Fiscal Year     Fiscal Year              2013
                                                       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          ^$12          ^3.1
BRAC 2005 Environmental.............................             $73
                                                     -----------------------------------------------------------
  Total.............................................          $3,974          $3,826         ^$148         ^3.7
----------------------------------------------------------------------------------------------------------------
* BRAC accounts were combined in the National Defense Authorization Act (NDAA) for Fiscal Year 2013

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
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
----------------------------------------------------------------------------------------------------------------
                                                                           Projected Status    Projected Status
                                                       Status as of the      at the end of       at the end of
                                                      end of fiscal year   fiscal year 2018    fiscal year 2021
                                                        2012  (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
----------------------------------------------------------------------------------------------------------------

    By the end of 2012, the Department, in cooperation with State 
agencies and the Environmental Protection Agency (EPA), 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 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 $214.0 million, our core efforts are conducted 
and coordinated through two key programs--the Strategic Environmental 
Research and Development Program (SERDP-STCP--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 the Environmental Security Technology Certification Program 
(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 life-cycle costs of multiple weapons systems, and most 
recently, developing technology that allows us to discriminate between 
hazardous unexpoloded 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, 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 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: (1) BRAC, (2) European Basing Consolidation, (3) Rebasing 
of marines from Okinawa to Guam, (4) DOD Facilities Energy Programs, 
and (5) Request for Legislative Land Withdrawals.

    1.  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 NDAA for Fiscal Year 2013. 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 enables 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 8 EDCs for real and related personal property at the 
following BRAC 2005 locations: Kansas Army Ammunition Plant, KS; Lone 
Star/Red River Army Depot, TX; Naval Air Station (NAS) Brunswick, ME; 
Newport Chemical Depot, IN; Buckley Annex, CO; Fort Monmouth, NJ; 
Pascagoula Naval Station, MS; and Ingleside Naval Station, TX. The 
Department anticipates approving additional EDCs in fiscal years 2013 
and 2014.

    2. 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.

    3. 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 U.S.-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 restationed 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 Marine Air Ground Task Forces 
(MAGTF) (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 (AFB). 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 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.

    4. 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 FSRM 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 ECIP, a 
MILCON 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 and Utility Energy Service Contracts, 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 Dec. 2, 2011 commitment ($2 
billion in such contracts Federal Government-wide). To date, the 
Department has awarded 39 contracts worth $362 million with another 
approximately $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 Onsite Energy
    DOD is increasing the supply of renewable and other distributed 
(onsite) sources of energy on our installations. Onsite energy is 
critical to making our bases more energy secure. 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. Sec. 2922a and 
enhanced use leases).
    The Army issued a Multiple Award Task Order Contract Request for 
Proposal for $7 billion in total contract capacity for RE. Army 
projects currently underway include Fort Bliss, TX (1 MW Solar PV), 
White Sands Missile Range, NM (4.5 MW Solar PV), and Fort Carson, CO (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, 
CA (3 MW Landfill Gas), Marine Corps Logistics Base, Barstow, CA (1.5MW 
Solar PV), Naval Air Weapons Station (NAWS) China Lake, CA (13.8 MW 
Solar PV) and Marine Corps Air Ground Combat Center (MCAGCC) Twentynine 
Palms, CA (1.2 MW Solar PV). The 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, CA 
(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 Interior (DOI) to identify and overcome 
impediments to the execution of renewable energy projects on such 
lands.

Enhance Security
    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-
Defense Logistics Agency-Energy and Federal Emergency Management Agency 
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 Department of Energy (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 ESTCP.
    The Test Bed has more than 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 
approximately 1 GW 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. 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 GWs 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, Department of Homeland Security, 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 AFB 
in California, and Nellis AFB 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.
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    Finally, the Clearinghouse is taking advantage of section 358 of 
the NDAA for Fiscal Year 2011, which allows DOD to accept voluntary 
contributions from developers to pay for mitigation. 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 NAS Kingsville, TX, 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.

    5.  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 
DOI through the Bureau of Land Management (BLM). Withdrawals of public 
lands for military use require joint actions by DOD and DOI. 
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 NAWS, China Lake, CA, and the Chocolate 
Mountain Aerial Gunnery Range (CMAGR), CA, 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 MCAGCC Twentynine 
Palms, CA, 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 DOI, 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 Aerial Gunnery Range
    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 BLM. 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, MT, 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.
    Marine Corps Air Ground Combat Center 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, CA, where it can conduct 
such training.
    The Department has worked since 2007 with the DOI, 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, MEBs, 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 NDAA for Fiscal Year 2014. This is 
somewhat different, in that in past withdrawals, the DOI 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, U.S.C. 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 Shaheen. Thank you very much.
    Secretary Hammack?

STATEMENT OF HON. KATHERINE G. HAMMACK, ASSISTANT SECRETARY OF 
        THE ARMY, INSTALLATIONS, ENERGY AND ENVIRONMENT

    Ms. Hammack. Thank you very much, Chairman Shaheen and 
Ranking Member Ayotte. I am delighted to be here with you this 
morning and other members of the subcommittee. I want to thank 
you for the opportunity to present the Army's fiscal year 2014 
MILCON budget.
    For fiscal year 2014, the Army requests $2.4 billion for 
MILCON, Army Family Housing, and the Army's share of the DOD 
BRAC account. This represents a 34 percent decrease from the 
fiscal year 2013 request.
    In addition to and in support of Army installations and 
facilities, the Army also requests $15.2 billion for 
installation, energy, and environmental programs, facilities 
sustainment, restoration, and modernization, and base operating 
support.
    With the fiscal challenges we are facing, the Army has 
closely reviewed the facility investments to determine the 
level of resources needed to support the force. Supporting the 
force requires appropriate facilities, training ranges, 
maintenance and operations, and that is where we have focused.
    But as you are well aware, the Army is reducing our end 
strength from a high of 570,000 in 2010 to 490,000 in 2017. In 
January of this year, we published a Programmatic Environmental 
Assessment (PEA) which was prepared in accordance with the 
National Environmental Policy Act, and a signed finding of no 
significant impact was published earlier this month.
    The resulting force structure reduction will create excess 
capacity at several installations. With a reduced end strength 
and force structure in the United States, now is the time to 
assess and right-size the supporting infrastructure. In line 
with force structure reductions in Europe, the Army is already 
downsizing our infrastructure in Europe.
    With a 45 percent reduction in force structure, 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. A future round of BRAC in 
the United States is essential to identify excess Army 
infrastructure and prudently align civilian staffing with 
reduced uniformed force structure just like we are doing in 
Europe.
    We are also working closely with OSD to examine whether 
there are additional opportunities for consolidation in Europe 
through joint or multi-service consolidation.
    We do have property remaining from prior rounds of BRAC in 
the United States, and BRAC property conveyance remains an Army 
priority. Putting excess property back into productive reuse 
can facilitate job creation, help communities build the local 
tax base, and generate revenue. In total, the Army has conveyed 
almost 78 percent of the total prior BRAC acreage.
    In closing, I ask for the committee's continued support to 
our soldiers, families, and civilians in support of the Army's 
MILCON installations program. The Army's fiscal year 2014 
installation management budget request is a program that 
supports the Army's needs while recognizing the current fiscal 
conditions. The Army does request authority from Congress to 
conduct a BRAC round in 2015 because the Army's strength is our 
soldiers, families, and Army civilians who support them. They 
are, and will continue to be, the centerpiece for the Army.
    Thank you for your attention, and I look forward to your 
questions.
    [The prepared statement of Ms. Hammack follows:]

            Prepared Statement by Hon. Katherine G. Hammack

                              INTRODUCTION

    Chairman Shaheen, Ranking Member Ayotte, and members of the 
committee, on behalf of the soldiers, families, and civilians of the 
U.S. Army, I want to thank you for the opportunity to present the 
Army's 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 committee'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 (DOD) 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 & 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, the operationalization of the Reserve components, 
and transformation of the Army infrastructure through 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 (OSD), 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). The PEA analyzes the 
environmental and socio-economic 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 2 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

    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, CA. 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 U.S. 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 National Defense Authorization Act (NDAA) for Fiscal 
Year 2013. 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 3 installations replacing 
current housing in relocatable and temporary buildings. The locations 
of these replacement projects are: Fort Gordon, GA; Fort Leonard Wood, 
MO; and Joint Base Langley-Eustis, VA. The final project in this 
category is $42 million for the second increment of the Cadet Barracks 
at the U.S. 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, WA, 
and Fort Wainwright, AK, 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, HI, for U.S. 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, CO. The facilities include two aircraft 
maintenance hangars, a runway, a headquarters building, simulator 
buildings, a fire station, and a central energy plant. Fort Bliss, TX, 
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, KY. The Army will construct a company operations complex 
and an O&M facility for a total of $54 million at unspecified worldwide 
locations as directed by 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, MD, a $5.9 million command and control 
operations facility at Fort Bragg, NC, and a $10.8 million air traffic 
control tower at Biggs Army Airfield, Fort Bliss, TX.

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, KS, and a $4.7 
million weapons simulation center in support of enlisted Initial Entry 
Training, and Officer and Noncommissioned Officer career courses at 
Fort Leonard Wood, MO. The Army will construct a $4.7 million automated 
sniper field fire range for Special Operations Forces training at Eglin 
Air Force Base, FL, and a $9.1 million multi-purpose machine gun range 
at Yakima Firing Center, WA, 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 Services. 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, AR.

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 MILCON.

                  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 noncommissioned officer 
Academy dining facility at Fort McCoy, WI. At Joint Base McGuire-Dix-
Lakehurst, NJ, 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, CA, 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, NJ. 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 MILCON.

             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 U.S. Special Operations 
Command 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 NDAA for Fiscal Year 2013 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 indentified 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 onpost 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 IDPs are 
scheduled to be completed by 2018. After all IDPs 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, WI, to support the senior officer and senior noncommissioned 
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

    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 NDAA for Fiscal Year 2013 consolidated BRAC Legacy and BRAC 
2005 accounts into a single DOD 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, CA; Fort McClellan, AL; Fort Wingate, 
NM; Fort Devens, MA; and Savanna Army Depot, IL. Additionally, funds 
requested support environmental restoration projects at several BRAC 
2005 installations such as Lone Star Army Ammunition Plant, TX; Kansas 
Army Ammunition Plant, KS; and Umatilla Chemical Depot, OR. Completing 
environmental remediation is critical to transferring property back 
into productive reuse 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 life cycle cost analysis, and return on 
investment evaluations for all energy initiatives.

ECIP ($43 million):
    The Army invests in energy efficiency, onsite 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 the 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 life 
cycle process and the supporting installation operations.

                              ENVIRONMENT

    The Army's fiscal year 2014 O&M 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 restationing 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.

              SUSTAINMENT, RESTORATION, AND MODERNIZATION

    This year's 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 & 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

    The Army's fiscal year 2014 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 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 
committee and 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 endstrength. A future round of 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 Shaheen. Thank you.
    Mr. Natsuhara?

  STATEMENT OF ROGER M. NATSUHARA, PRINCIPAL DEPUTY ASSISTANT 
 SECRETARY OF THE NAVY, ENERGY, INSTALLATIONS, AND ENVIRONMENT

    Mr. Natsuhara. Chairman Shaheen, Ranking Member Ayotte, and 
members of the subcommittee, I am pleased to appear before you 
today to provide the overview of the Department of the Navy's 
investment in its shore infrastructure.
    For fiscal year 2014, the Department of the Navy 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 of the Navy'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 
MILCON and O&M projects to address critical requirements at our 
shipyards.
    Our request includes $1.7 billion in MILCON 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 wharf improvement at Naval Base Guam.
    We have $200 million in projects such as the broad area of 
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 investments in a barracks and armory at Camp 
Lemonnier, Djibouti provides supporting infrastructure enabling 
U.S. 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 team 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 the weapons, operate and maintain 
the machinery, or fly the planes, and from the families and 
civilians supporting them. Towards this end, the Navy and 
Marine Corps have programmed over $224 million of MILCON funds 
for operational and tactical training, professional 
development, and academic facilities, nearly $100 million for 
unaccompanied housing, and $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 of the Navy recognizes congressional 
concerns regarding execution of the Guam military realignment 
and is taking steps necessary to resolve critical issues that 
will allow the construction program to move forward.
    Furthermore, the United States and Japan are continuously 
looking for more efficient and effective ways to achieve the 
goals of the realignment road map. Both countries remain 
committed to maintaining and enhancing a robust security 
alliance and the United States remains committed to enhancing 
the U.S.-Japan alliance and strengthening operational 
capabilities.
    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 of 
the Navy'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.
    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 prepared statement of Mr. Natsuhara follows:]

              Prepared Statement by Mr. Roger M. Natsuhara

    Chairman Sheehan, Ranking Member Ayotte, and members of the 
subcommittee, I am pleased to appear before you today to provide an 
overview of the Department of the Navy's 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 
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 of the Navy continues to consider options that could 
mitigate the impact of sequestration to the extent possible. With 
respect to military construction (MILCON), the 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 of the Navy 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 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 of the Navy 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.
      
    
    
      
    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 of the Navy'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 
(MCB), HI, 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, WA, 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, MD, 
that will leverage proximity to U.S. Cyber Command and the National 
Security Agency to operate effectively in the cyberspace domain. 
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 of the Navy continues efforts to reduce our energy 
costs. The fiscal year 2014 request includes nearly $70 million to 
decentralize steam plants at MCB 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, HI ($8 
million) and Marine Corps Air Station (MCAS) Miramar, CA ($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 Sustainment, Restoration, 
and Modernization/Operation and Maintenance (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 investment 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
    The Department of Defense (DOD) uses a Facilities Sustainment Model 
to calculate life cycle 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 O&M 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 MILCON, and $618 million of O&M 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. Protecting our sailors, marines, civilian 
employees, and their families remains one of our highest priorities as 
we continue to reduce mishaps across the Department of the Navy.

Training and Education
    Of the $1.7 billion request for MILCON, 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 2 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 2 supporting facilities to address 
pressing billeting needs ($33.6 million).
    The Marine Corps is benefitting 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 of the Navy 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 of the Navy 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 MCAS 
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 of the Navy 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 of 
the Navy 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 interest of the 
Government.
    Finally, the Department of the Navy 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.

Safety
    The fiscal uncertainty we live with today not only affects 
operational readiness; the impact may also manifest itself in safety 
performance. More than ever, we must emphasize safety and risk 
management, both on- and off-duty, as operational tempo increases and 
our sailors and marines are asked to do more with resources that are 
being stretched. Efforts to ensure the safest and most secure force in 
the Department of the Navy's history include more targeted oversight of 
our high risk evolutions and training, based on hazard- and leading-
indicators rather than just mishap reporting. To do so requires a 
robust analytical capability that pulls safety and safety-related data 
from a variety of sources and rapidly disseminates actionable lessons 
learned to the Fleet and shore establishments. In fiscal year 2012, the 
Department of the Navy committed to developing this needed capability 
by establishing a secure funding stream for the Risk Management 
Information System. But targeted data alone is not enough. We are 
employing System Safety Engineers in the hazard and mishap 
investigation process and incorporating safety considerations in every 
stage of design and production, from the blueprint to rollout.

                         MANAGING OUR FOOTPRINT

Overview
    It is a basic tenet that DOD 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 of the Navy 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, closing Naval Air 
Station (NAS) Keflavik in 2007, and closing 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, NAS 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
    With respect to consolidating our domestic infrastructure, the Base 
Realignment and Closure (BRAC) 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 of the Navy has closed 186 
domestic installations and activities, including 52 major 
installations. Figure 2 demonstrates the evolution of the Department of 
the Navy's force structure since 2005:
      
    
    
      
    The Department of the Navy has programmed $145 million to continue 
environmental cleanup, caretaker operations, and meet the property 
disposal plan. By the end of fiscal year 2012, we 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 NAS 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, TX, 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 NAS 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 the 
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.
    DOD provides funds through the Readiness and Environmental 
Protection Initiative that are used in conjunction with Navy and Marine 
Corps O&M funds to leverage acquisitions in partnership with States, 
local governments, and nongovernmental organizations. Figure 3 
represents the activity and funding for restrictive easements the 
Department of the Navy acquired 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 of the Navy 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 (NDAA) for 
Fiscal Year 2014, the administration requests to renew the withdrawals 
for Naval Air Weapons Station, China Lake, CA, and the Chocolate 
Mountains Air Gunnery Range, CA, 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, CA, 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, 
MT. Each of these withdrawal actions would extend for a period of 25 
years.

                       PROTECTING OUR ENVIRONMENT

Overview
    The Department of the Navy is committed to environmental 
compliance, stewardship, and responsible fiscal management that support 
mission readiness and sustainability, investing over $1 billion across 
all appropriations to achieve our statutory and stewardship goals. This 
level of funding remains relatively stable over the past few years, 
even while other investments have been reduced. Figure 4 provides a 
comparison between the fiscal year 2013 and fiscal year 2014 budget 
request by appropriation.
      
    
    
      
    The Department of the Navy continues to be a Federal leader in 
environmental management by focusing our resources on achieving 
specific environmental goals and proactively managing emerging 
environmental issues, integrating sound environmental policies and 
lifecycle cost considerations into weapon systems acquisition to 
achieve cleaner, safer, more energy-efficient and affordable 
warfighting capabilities.

Conservation
    I want to highlight an achievement demonstrating the Department of 
the Navy's ability to manage our training lands simultaneously for the 
benefit of endangered species and military operations. Our conservation 
efforts have led to the proposed delisting of the Island Night Lizard 
by the U.S. Fish & Wildlife Service from the Federal list of threatened 
and endangered species. The Island Night Lizard is found only on three 
of the California Channel Islands, which include the Navy's San Nicolas 
Island and San Clemente Island. The Navy's recovery efforts and 
environmental stewardship of San Nicolas and San Clemente Island over 
the past 3 decades made this national achievement possible. This 
delisting also reduces the regulatory encumbrances the Navy experiences 
at San Clemente Island--the Navy's premier land, air, and sea 
combination live fire range. Developing and implementing conservation 
programs such as this enables the Department of the Navy to maintain 
combat readiness by ensuring continued access to the land, sea, and 
airspace necessary to test, train, and live on with as few 
environmental constraints as possible.

                       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. DOD 
recognizes Congress' concerns regarding execution of the Guam military 
realignment as outlined in the NDAA for Fiscal Years 2012 and 2013 and 
is taking steps necessary to resolve critical issues that will allow 
the construction program to move forward.

Moving Forward
    In April 2012, the U.S.-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 of the Navy 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 MILCON contracts funded by both the U.S. and Government 
of Japan at Apra Harbor, Andersen Air Force Base (AFB) 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 AFB 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 AFB 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 U.S.-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 of the Navy's fiscal year 2014 request supports 
critical elements of the Defense Strategic Guidance 2012 by making 
needed investments in our infrastructure and people, reducing our 
worldwide 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 
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.

    Senator Shaheen. Thank you.
    Ms. Ferguson.

 STATEMENT OF KATHLEEN I. FERGUSON, ACTING ASSISTANT SECRETARY 
  OF THE AIR FORCE, INSTALLATIONS, ENVIRONMENT, AND LOGISTICS

    Ms. Ferguson. Chairman Shaheen, Ranking Member Ayotte, and 
distinguished members of the subcommittee, thank you for the 
opportunity to speak to you today about the Air Force's 
installations, MILCON, and environmental programs. I am also 
proud to be part of Team New Hampshire, having graduated both 
from Nashua High School and the University of New Hampshire.
    On behalf of the Secretary and the Chief of Staff of the 
Air Force, I would like to thank the committee for your 
unwavering support for our airmen in the Air Force.
    Our fiscal year 2014 budget request contains $1.3 billion 
for MILCON, $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 approximately $900 
million above our fiscal year 2013 request and returns us to 
near historical funding levels, supports DOD's strategic 
priorities, our top weapons systems modernization programs, and 
distributes MILCON funding equitably between Active, Guard, and 
Reserve components.
    This budget request reflects our ongoing modernization 
effort. This includes critical infrastructure for the F-35 and 
KC-46A, recapitalization of the U.S. Strategic Command 
headquarters, and construction of the new Cyber Command Joint 
Operations Center.
    Included in this budget request is $265 million at 
unspecified locations to support the KC-46 bed-down. We will 
submit site-specific MILCON project document forms in May 2013 
after preferred and reasonable alternative bases are announced 
and will request the committee's support of the substitution.
    The Air Force strongly supports DOD'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 our basing infrastructure was 
excess to needs. BRAC 2005 did not result in major reductions 
to the Air Force, and since that time, we have reduced our 
force structure by more than 500 aircraft and nearly 8 percent 
of active duty military end strength. 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.
    We are also working hard to identify innovative ways to 
reduce costs. Installation community partnerships are one 
approach to reducing operating and service costs while 
enhancing and retaining quality.
    The Air Force is currently prototyping a variety of 
projects in States including Texas, Florida, Georgia, 
California, and North Carolina. In total we have 15 locations 
where installation and community leaders have fully embraced 
the Air Force community partnership concept and are coming 
together to collectively reduce costs.
    During this period of fiscal uncertainty, the Air Force is 
ready to make the tough decisions required to avoid mission-
impacting reductions and installation support that contribute 
to a hollow force. Our fiscal year 2014 budget request 
addresses our most pressing needs, seeks authorization to 
eliminate unnecessary infrastructure, and stays true to the 
fundamental priorities of our Air Force.
    Thank you and I look forward to your questions.
    [The prepared statement of Ms. Ferguson follows:]

             Prepared Statement by Ms. Kathleen I. Ferguson

                              INTRODUCTION

    As you are aware, the U.S. 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 (DOD) 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 DOD 
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 MILCON, facility sustainment, restoration, and 
modernization (FSRM), 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 MILCON, 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 DOD'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 (AFB), ND; and Kirtland AFB, NM. 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, MD; Terre Haute, IN; Birmingham, 
AL; and the Air Force Weapons School at Nellis AFB, NV.
    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 AFB 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 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 bed-down 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) #1, $63 
million at an unspecified location for the Flight Training Unit (FTU), 
and $9 million for land acquisition at Tinker AFB, OK, for the KC-46A 
depot. Potential facility types at MOB #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 #1 and FTU projects in May 2013 after Preferred & 
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 AFB, NE, and 
construction of the new Cyber Command Joint Operations Center at Fort 
Meade, MD.

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 MILCON 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 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; 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 
initiative with communities around Eglin AFB 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 and 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 National Defense 
Authorization Act for Fiscal Year 2013 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.

                             ENVIRONMENTAL

    Our environmental programs are designed to provide the mission-
ready people, infrastructure, and natural resources necessary to meet 
mission requirements, today and tomorrow. The Air Force is committed to 
conducting our operations in an environmentally responsible way; 
meeting all environmental standards and legal obligations applicable to 
these operations; planning future activities to consider environmental 
and community impacts, and minimize them where practicable; eliminating 
pollution from activities wherever and whenever we can; cleaning up 
environmental damage resulting from past activities; and responsibly 
managing our irreplaceable natural and cultural resources in a 
sustainable manner. To address these commitments, the Air Force's 
fiscal year 2014 President's budget request seeks a total of $1 billion 
for environmental programs.

Environmental Restoration
    Our fiscal year 2014 President's budget request seeks $560 million 
for cleanup of active installations and BRAC installations. We 
established our cleanup program in 1984 to clean-up former hazardous 
waste disposal sites on active and BRAC installations. Our past focus 
was on completing investigations and getting remedial actions in 
place--many of which were designed to operate for decades. In early 
2011, we put into place a new policy and new metrics--a policy that 
shifts the goal from remedy-in-place to closing sites, from one that 
tolerated decades to complete the clean-up to one that rewards 
innovative technologies; from one that was cost-plus to one that is 
fixed price and performance based and incentivizes contractors to 
develop innovative ways to get to site closure; and to one that 
considers the total life cycle cost informed by a solid business case 
analysis.
    Our new goals are to achieve accelerated completion of 90 percent 
of Air Force BRAC cleanup sites and 75 percent of non-BRAC sites by 
2015, in order to place the emphasis on bringing the program to 
closure. Through the use of improved performance-based contracting, 
coupled with this new policy, after 2-plus years of focused effort we 
have put in-place almost 80 new performance-based contracts, and we are 
cleaning up sites three times faster, with life-cycle cost savings at 
these sites as much as 33 percent over original government estimates--
and it is our expectation this will go even higher as we continue to 
mature this contracting approach. By using this approach, we are not 
only closing sites faster, we are also reducing land access 
restrictions where possible, while still being fully protective of 
human health and environment.
    We continue to work with State and Federal regulators on 
socializing this new approach. We continue to receive positive feedback 
from many of the regulators on the overarching goal to finish clean-up 
more expediently and more efficiently.

Environmental Quality
    Our fiscal year 2014 President's budget request seeks $487 million 
in Environmental Quality funding for compliance, environmental 
conservation, pollution prevention, and environmental technology 
investment. As in our clean-up program, we have refocused our efforts 
to streamline and more effectively manage our environmental quality 
program activities. One example we introduced to you last year is how 
we are continuing to improve our approach for our National 
Environmental Policy Act (NEPA) program. Every decision we make is 
backed by environmental analyses, with major efforts and costs going 
into the development of Environmental Impact Statements (EIS) and 
Environmental Assessments (EA).
    As we looked at how to become more efficient in all our functional 
areas, we found that over time our NEPA process had become stagnant and 
bureaucratic. We had migrated away from the Council on Environmental 
Quality guidance that emphasizes clear, concise, and analytical 
analyses rather than encyclopedic documents. On average, EISs were 
taking 3\1/2\ years to complete and EAs half that time. Our 
decisionmaking process was being crippled by such tasks as elaborate 
internal reviews and steps that added very little value to the quality 
of the analysis.
    Last year, we informed you we had issued policy to refocus our NEPA 
process. The policy emphasizes use of performance-based contracts to 
incentivize contractors to provide quality environmental analyses that 
are fully-compliant with NEPA, that are aimed at better decisionmaking. 
Likewise, to refocus our internal reviews, the policy set goals for 
completion of EISs in 12 months and EAs in 6 months. To execute the new 
policy the Air Force established a NEPA center of excellence to 
standardize the Air Force approach to NEPA management and contracting 
and to provide reach back to major commands and installation NEPA 
professionals. Currently, we have approximately 400 EAs and EISs 
underway, with some being performed in-house, and most being supported 
by contract. Our focus this year is to streamline our execution 
processes for all NEPA actions to align them with our new standardized 
processes and performance-based contracts, to ensure we get timely 
decisions in a cost-effective manner. Results from these changes 
continue to be very promising; our contract actions have been reducing 
NEPA analysis time requirements and costs, and we're doing this without 
sacrificing quality.
    We continue to look at ways to improve how the Air Force manages 
waste. Pollution prevention and waste minimization provide great 
potential to realize efficiencies while at the same time sustaining the 
Air Force mission, maintaining a safe and healthy workplace for our 
people, and improving the environment in which we live. Last April, we 
established stronger pollution prevention and waste minimization goals 
that apply Air Force wide. Our new pollution prevention goals seek to 
reduce our hazardous waste disposal by 20 percent, reduce our toxic 
releases by 35 percent, and divert 65 percent of our non-hazardous 
solid waste by reduction, recycling, reuse or composting, rather than 
landfilling; all by 2020. We will use our environmental management 
system to achieve these goals; and we fully expect to see our 
operations become more efficient, more protective of the workforce, 
while realizing cost savings. We are also striving to change how our 
culture considers waste and the environment. The Air Force believes 
that `green' is a smart way to do business. Simply put: green is money; 
green is innovation; green is safety; and green is good stewardship.
    We will continue to improve our environmental programs while 
complying with legal requirements, reducing unacceptable risk to 
operations from energy-related considerations and environmental 
impacts, by continuously improving energy and environmental management 
practices to be more effective and efficient, and to ensure sustainable 
management of the resources we need to adequately fly, fight, and win 
into the future. There is no question that responsible and prudent 
stewardship of the natural and other resources with which we are 
entrusted is of great importance to national and economic security.
    Working together with regulatory agencies, other Federal partners, 
and industry experts, the Air Force is continuously innovating and 
adopting best practices to lessen the environmental impact of its 
operations while helping the Air Force maintain its mission-ready 
posture and capabilities.

                               CONCLUSION

    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. 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. 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.

    Senator Shaheen. Thank you all very much for your 
testimony.
    I want to start with BRAC, which probably does not surprise 
any of you, but I want to talk about it in the context of what 
is happening overseas. I addressed in my opening remarks, as 
did Senator Ayotte, our concerns about the costs of the last 
round, and I think last year DOD heard very clearly from the 
Armed Services Committee the concerns that we had about a 
future round and about looking at our excess capacity overseas 
and seeing what savings could be accomplished there.
    So I understand that last May DOD announced the U.S. 
presence in Europe will be reduced by approximately 15 percent 
over the next 10 years, and I understand that the Secretary of 
Defense has initiated a study looking at consolidating 
infrastructure in Europe.
    So, Mr. Conger, what is the current status of the closure 
and consolidation of U.S. facilities in Europe?
    Mr. Conger. There are two parts to that answer.
    First, we have been reducing our force structure in Europe 
for quite some time and we have been reducing our facilities in 
Europe for that same amount of time. There is a lot that has 
been done already.
    That said, we listened very closely to what Congress said 
last year when they said close bases overseas first before you 
start talking about BRAC rounds. In response, we have kicked 
off--the Secretary kicked off in January a BRAC-like process 
for looking at bases in Europe. Given the reduced force 
presence that we are going to have there, we had plans in place 
to reduce the number of bases we have there. But what we are 
looking at here is not just sort of a one-for type of thing 
where, here is a brigade leaving, therefore, this base is 
closing. We are doing a thorough scrub and we are doing it 
using joint principles. We are going to look for ways to 
leverage the various Services together in order to maximize the 
amount of consolidation. Frankly, while military value always 
takes precedence, we are looking to save money and we are 
looking to get rid of this excess.
    So we have started that process. We have had several 
meetings at a variety of levels, a couple meetings in the 
executive groups, but lots and lots of meetings of various 
subgroups, starting to pull together the capacity analysis. 
Then once that is completely done, we are going to do the 
military value analysis and we are going to run various 
scenarios and score them against each other. This is just like 
the BRAC process except we are looking at bases in Europe.
    We are hopeful that we will have products at the end of 
this year. I recognize the fact that in order to influence this 
budget process, we have to report to you at least the interim 
results, but frankly, if it takes a little bit longer, we are 
going to do a thorough job. We are not just going to stop once 
any interim data is provided to this committee or the House 
side either.
    Senator Shaheen. But the goal is to have that report ready 
to present to the congressional committees by the end of the 
year?
    Mr. Conger. The schedule that we have laid out at the 
initiation of the process had us finishing up in December, but 
I will say that earlier this week Mr. Kendall, my boss, and the 
chairman of the senior steering group that is running this 
study said he wants results earlier than that. Now, if that 
means that we have two batches of results, so be it. But we are 
going to do what Mr. Kendall says.
    Senator Shaheen. Do I understand you to say that it is also 
looking at the opportunities for joint consolidation so that we 
could put Air Force and Army personnel in a single facility if 
that was the determination of what was most efficient and 
effective?
    Mr. Conger. Absolutely. In fact, I would say this: as each 
Service looks at their own individual footprint, you get a 
certain set of answers. But if you look at things holistically, 
sometimes you get more opportunities for consolidation. There 
might be a case where we can consolidate at a particular 
location that would put the bill on one Service's back, but a 
lot of savings to another Service. Under the traditional rules, 
that would not happen, right? But as we look at things from a 
joint perspective, that would be exactly the kind of thing that 
we might recommend.
    Senator Shaheen. So I was struck by the fact--and we had 
this conversation yesterday--that there is money recommended in 
this budget proposal to support a new round of base closures. I 
am curious about why money was not also put in to look at 
overseas base closures as well.
    Mr. Conger. I think it is an issue of scale. One of the 
things that we heard from Congress last year was that we did 
not have a wedge built in for a BRAC round to pay for it. That 
reduced the credibility of our BRAC request, and it was a fair 
criticism. This year, we wanted to address that criticism, and 
we used earlier BRAC rounds as a model to come up with a 
projection and say, here is what the net requirement would be 
across an entire BRAC round; we laid in a wedge that we would 
be able to leverage against that.
    A BRAC round is bigger than European rebasing round, and so 
we have not specifically laid in that wedge. Moreover, I would 
say because we can just go off and do the European review 
without congressional authority at this point in time, because 
you need congressional authorization to do a BRAC round, we can 
just start running with the European review. We just went ahead 
and did that.
    Senator Shaheen. But you are assuming you have money that 
you could shift in the budget in order to accommodate those 
closures.
    Mr. Conger. I am assuming that if an investment is required 
in order to accommodate the recommendations of a European 
basing round, that that will be provided to Congress in a 
budget request.
    Senator Shaheen. Thank you.
    Ms. Ferguson, I noticed that the Air Force budget request 
includes $34 million in new operational facilities in the 
United Kingdom. Why would we authorize new facilities until we 
have the results of the study that Mr. Conger referred to?
    Ms. Ferguson. The fiscal year 2014 MILCON was put together 
recognizing that we may have a European infrastructure 
consolidation, but we made a determination that these would be 
required. However, if at some future point that would change, 
we would not execute those dollars, but right now we would 
anticipate needing those.
    Senator Shaheen. Why are they so urgent?
    Ms. Ferguson. They support U.S. Special Operations Command 
at Mildenhall. I can get you a more detailed response.
    [The information referred to follows:]

    The Military Construction (MILCON) projects requested in fiscal 
year 2014 in the United Kingdom include a $22 million Guardian Angel 
(GA) Operations Facility at Royal Air Force (RAF) Lakenheath and a $12 
million Main Gate Complex at RAF Croughton.
    U.S. European Command (EUCOM)/U.S. Africa Command (AFRICOM) 
requires an increase of U.S. Air Forces in Europe GA personnel recovery 
assets to fully respond to and support simultaneous contingency plans 
and operations. The GA Operations Facility project at RAF Lakenheath 
constructs a 6,045 square mile facility for GA Squadron operations, 
administration, warehouse, equipment storage, and aquatic training, 
which provides the minimum facility requirements necessary to meet a 
EUCOM and AFRICOM requirement. The proposed project enables full 
operational capability for three GA Unit Type Codes (UTCs deployable 
asset) and one Support UTC planned for fiscal years 2014-2016. Without 
this facility, there is no adequate permanent facility to accommodate 
additional personnel and equipment. Critical equipment/assets will have 
to be stored outside and exposed to elements, thereby inhibiting 
mission readiness and expediting degradation. There are no aquatic 
training facilities currently available at RAF Lakenheath to ensure 
water-based training currency for GA personnel. Currently, they use an 
off-base pool (only allows fin swimming 1 day per week, and does not 
meet dive training requirement). It involves a 4-hour round trip and 
$750 per day rental fee. If the project is slipped, personnel will need 
to be housed in temporary accommodations.
    The Main Gate Complex project at RAF Croughton constructs a 1,074 
square mile Main Gate Complex including the main gate, visitor control 
center, privately-owned vehicle inspection area with canopy, large 
vehicle inspection station and overwatch building. The project also 
includes a road network providing controlled flow and separation of 
vehicles for inspection, plus capacity for peak flow traffic during 
heightened security. The current entrance fails to comply with security 
directives, increasing risk to airmen, critical satellite 
communications missions, and Department of State regional 
communications hub. The requirement is driven by Joint Staff Integrated 
Vulnerability Assessment write-up, DOD 2000.16, UFC 4-022-01, and 
Operations Order 08-01. There are no acceptable workarounds and the 
current gate is noncompliant due to lack of acceptable queue space, 
serpentine, etc.

    Senator Shaheen. Okay, thank you.
    Senator Ayotte?
    Senator Ayotte. I want to thank the chairman.
    I wanted to follow up, Mr. Conger, on the questions that 
you were asked by Senator Shaheen. Just so we understand it, is 
it the intention of DOD, once this review is completed 
obviously, you do not necessarily need the same type of legal 
authority that you would with a domestic BRAC round--to come to 
the Senate Armed Service Committee to report your 
recommendations for the European base closing?
    Mr. Conger. Absolutely. Obviously, we are doing this from a 
good government perspective, but Congress was very loud and 
very clear, and to do something and then not take credit for it 
would seem to be a little bit unproductive.
    Senator Ayotte. That is important and I think that one of 
the issues that I did not raise in my opening statement but, 
obviously, Senator Shaheen has just hit upon, is that I think 
it is very difficult for this body to even consider undertaking 
a domestic BRAC round without a full consideration of what 
bases could be consolidated and/or closed overseas, given that 
the interest is always to have domestic capacity foremost.
    One of the things that I think will be important for the 
overall committee to hear--and I am assuming that it would be 
important on the House side too--is to be able to evaluate the 
European plan. What savings do you think you can realize from 
that and then, obviously, see what the costs are, because I 
assume there are some costs in going through the European 
closings, either of relocating and/or in some instances you 
have environmental issues, et cetera, that you would have even 
with a domestic round. We would then evaluate whether there is 
merit to bringing the domestic BRAC round.
    So I think that is why this is so important; that we have a 
full understanding before we would go forward, and also given 
the history on the 2005 BRAC round. I understand what you are 
saying about that this would be very different. But again, a 
lot of this is out of the control of DOD, correct? You do not 
control the BRAC.
    Mr. Conger. To a degree. We make our recommendations and 
then the commission reviews them and makes changes. 
Traditionally, the majority of DOD's recommendations are upheld 
by the commission.
    Senator Ayotte. There have also been changes too.
    Mr. Conger. There have been changes.
    Senator Ayotte. It is independent.
    So this is an important issue and I appreciate the 
chairman's questions on this issue because we look forward to 
seeing your plan and understanding what it is really going to 
take and what savings, and then we can discuss whether it makes 
sense to have a domestic BRAC round. I still have a lot of 
concerns about it.
    I wanted to follow up. I know that I raised in my opening 
statement the idea of the east coast missile defense site and 
the EISs that were asked for based on the last defense 
authorization. So I am not sure, Mr. Conger, if this is the 
right question for you, but can you give us a status update on 
where things are with that?
    Mr. Conger. I can. Fortunately, I was signaled that you 
might ask that question. I checked with the Military Defense 
Agency (MDA), who owns the ball on this. So MDA has started the 
study and is in the process of narrowing the potential sites 
down to five or six within the next 30 days. MDA is on schedule 
for completing the study by December 31st, as required, and the 
EIS is projected to start subsequently in 2014 and will take 18 
to 24 months to complete. So that is the status of the study.
    Senator Ayotte. Just so we understand, if the EIS starts in 
2014 and takes 18 to 24 months to complete, we are in or beyond 
2015.
    Mr. Conger. I think that is right.
    Senator Ayotte. Director Clapper just told me that there 
are many that believe that Iran will have ICBM capability by 
then.
    Mr. Conger. I am going to have to defer to the MDA folks to 
be able to answer your more detailed questions on this. I did 
want to make sure that we had this status for you.
    Senator Ayotte. I will follow up with the appropriate folks 
on this issue because it seems to me that there is more of an 
urgency than the administration, given some of the threats we 
are all concerned about with Iran. Obviously, I appreciate the 
administration's enhancement recently in Alaska of the ground-
based interceptors. I will bring this to the appropriate 
individuals at DOD. But it seems to me there needs to be a 
greater sense of urgency so we can truly make the decision and 
put this information in the hands of the President sooner 
rather than later, given the threat we face from Iran.
    Secretary Ferguson, I know that you played a very critical 
role. You already discussed that you will get back to the 
committee once you make the basing decision for the KC-46A and 
appreciate certainly the work that you are doing on that. Can 
you give us an update on how that process is going forward?
    Obviously, this is something that the chairman and I have a 
deep interest in. We are very proud of the work done by the 
157th Air Refueling Wing, and particularly the objective 
criteria, the strategic location, close to the operational 
refueling tracks, and most of all, the performance of the 
pilots there, given that they have supported every major 
contingency operation. If you can give us an update on where 
things are with that? Are they on track and what we can expect 
when the decision will be made?
    Ms. Ferguson. Of course. Thank you.
    Pease was selected as one of the candidate locations a few 
months ago, and right after the first of the year each one of 
the candidate bases was site-surveyed by a joint team from Air 
Mobility Command in the Air National Guard. Those site surveys 
are now all complete. Air Mobility Command has brought the 
results of those site surveys into the Pentagon, and the 
gentleman sitting behind me now chairs the Strategic Basing 
Executive Steering Group. So the baton has been passed.
    Senator Ayotte. Welcome. [Laughter.]
    Senator Shaheen. We hope you plan to stay for a while.
    Senator Ayotte. We are glad and also we would love to have 
you come to New Hampshire. [Laughter.]
    Ms. Ferguson. So he is running that through the process 
right now over the next few weeks. There are a series of 
briefings. These are decisions that the Chief and Secretary do 
not take lightly, and so we do not go and just run time, give 
them the briefing, and walk out. We do not make recommendations 
to them. So there will be at least three events where the Chief 
and Secretary get briefed on the results of the site surveys. 
In the room, they have their senior advisors, the Commander of 
Air Mobility Command and the Director of the Air National 
Guard. Once they make the decision, then Mr. Bridges will be 
over. There will be telephone calls certainly made to folks as 
well, but then there will be a rollout here. About the middle 
of May is what we are anticipating.
    Senator Ayotte. Great. Thank you for the update.
    Senator Shaheen. Welcome, Senator Kaine. Even if you are 
not from New Hampshire, we are delighted you are here. 
[Laughter.]
    Senator Kaine. Yes. Sorry to break up the gang here, but it 
is great to be here. Thank you and thank you all for your 
service and especially at a challenging time. You are doing 
important work at a challenging time.
    So I want to stick with BRAC too. It is an observation and 
a question, and I want candor and even argument with my 
observation. For my colleagues, I am saying the same thing 
because it may be something that my colleagues have different 
feelings about.
    I was on the BRAC commission, the State-appointed BRAC 
Commission in Virginia, pre-2005 as the Lieutenant Governor at 
the appointment of Senator Warner, Governor at the time. My 
observation about it--and I credit your points that 2005 might 
have been different than earlier rounds--was that once the BRAC 
round begins, every last community and every last base or 
installation and its surroundings was on high alert. Whether 
they have a need to be or not, they are and they hire the 
phalanx of accountants, PR people, lawyers, and lobbyists, and 
they spend a lot of time and a lot of drama preparing and 
lobbying. We certainly did that, and then there is an 
announcement and then there is some process following the 
announcement.
    But I have been underwhelmed at the amount of savings that 
results from all the drama. So if there have been five BRAC 
rounds and there are $12.5 billion of annual savings, it is 
about $2.5 billion per round in a $3.6 trillion budget. Yet, 
there is a lot of additional expense on the communities and a 
lot of expense that might have an effect in the local economy 
too. There is anxiety, that expense probably does not get 
captured. So it seems to me that the process is big, 
complicated, and costly, and creates a lot of anxiety, but the 
savings at the end of the day, frankly, are not all that great.
    One of my assessments for why the savings may not be that 
great: if you start with a process where your job is to look at 
installations, it is not really overall a cost savings 
exercise. Let us look at cost savings generally, but if it is 
just installation-specific, it is not really an integrated 
review. It is just pulling installations out.
    There is a second example in Virginia that I thought was an 
interesting one that was not a BRAC. Certain projects are 
subject to BRAC because of the size and certain are not. After 
I was Governor, Secretary Gates asked if the Joint Forces 
Command (JFCOM) in Hampton Roads, which I think had been 
initiated under Secretary Rumsfeld as part of the 
transformation, the jointness approach: do we really need a 
separate JFCOM when the Joint Chiefs of Staff have offices next 
to each other on the same floor of the Pentagon? Do we need a 
separate command for this? It was not subject to BRAC because 
it was not of a certain size, and it was a suggestion of a 
closure of a mission, not a huge public process, not a lot of 
sturm and drang. Secretary Gates announced that he did not 
think we needed this.
    The Virginia congressional delegation got together and did 
not like this. This is important to the Hampton Roads economy, 
but they also said Secretary Gates laid out some rationale and 
was not 100 percent wrong. There was a good faith behind the 
rationale.
    The congressional delegation went to the Pentagon and said 
they understood the rationale about the entire command, but 
there are some missions being performed that are valuable that 
would be performed under any scenario. They hoped that the DOD 
would keep these and keep it in Hampton Roads.
    Without a BRAC round and all the process surrounding it, 
that discussion took place. The decision was made to stand down 
JFCOM, but some functions should remain and many of the 
functions did remain in Hampton Roads. There were savings, but 
it was a different kind of a process.
    Analyzing those two, I know we need to save money, and I 
think we probably need to save money including in 
installations. But the way Secretary Gates made the JFCOM 
announcement, it was not part of an installation-specific 
review. It was mission-driven rather than installation-driven. 
He said this mission is not one in a resource-constrained 
environment that is at the top right now in terms of funding.
    To me, that had some real virtues to it. It did not create 
the sturm and drang for everybody. There was a mission-driven 
announcement. There was opportunity for Members of Congress to 
come in and say we think you got it wrong, and we have an 
alternative. We hope you will consider it. There was a 
discussion. There was a consideration. It saved money.
    I am wrestling with going forward; we do need to find 
savings, and I think we may well need to find savings on 
installations and I think certainly installations overseas. But 
I am open to the notion that some of the savings that we may 
need to find in installations would be here. I gather that is 
why, when you say we support BRAC, you are all saying we may 
have excess capacity in installations. We need to deal with it.
    But what I am wondering about is whether the process of a 
BRAC seems big, expensive, creates a lot of drama, and not 
likely to lead to a lot of savings. There is a different way to 
come at it, which is basically a strong executive makes a 
recommendation as we are looking at ways to save, here are 
ideas. Some of the ideas have impact on installations, maybe 
even some closures. We are making those recommendations to 
Congress, and Congress, now we want you to wrestle with them.
    I am the only Governor in Virginia that left office with a 
smaller budget than when I started because I had to. I get no 
virtue points, I was required to balance the budget during a 
recession. I had to make a lot of painful recommendations to my 
legislature, including closing installations, not military 
installations, but we had schools for the deaf and blind and 
training facilities and all kinds of things. I would make 
recommendations, including closing installations.
    Invariably--and you know this, Governor Shaheen--my 
legislature would say I was a heartless dope and I had not 
thought about it enough. Then after about 3 or 4 months of 
looking at the budget, they would basically approve about 75 
percent of what I proposed. They would not take back the 
heartless dope comment, but they would eventually come to see 
that I had thought about it and maybe I was making some good 
recommendations.
    A second way to come at this installation issue is not the 
massive BRAC process that gets everybody all worked up, but is 
just for the Chairman of the Joint Chiefs, after discussion 
with the branches, to make a series of recommendations on cost 
savings. It would not be limited to installations. It would not 
be installation-specific but it would be mission-driven and 
because they are mission-driven would probably include some 
installation recommendations. Then it would be on Congress and 
we would have to make hard decisions.
    I think BRAC was set up as almost an anti-accountability 
mechanism. It enables us to make decisions without anybody's 
fingerprints being completely on them. But the more of those 
things we do, the more of these anti-accountability strategies 
we come up with, and the more we try either as an executive or 
a legislature to keep our fingerprints off things, it does not 
seem like we are going the right way in making the fiscally 
responsible choices. It seems like the more things we come up 
with, we go the wrong way.
    So I am just saying this for my colleagues, and I said it 
briefly at the full hearing the other day, and I would say it 
to you as well. If we have excess capacity, is the big BRAC 
round the right way to deal with the questions of excess 
capacity? That is, I guess, the question that I would pose to 
everybody.
    I would love to hear your thoughts.
    Mr. Conger. I will take that. A couple of things.
    First of all, I am sympathetic to the heartless comments. 
As you might imagine, being the person who has to come up to 
the Hill and talk about BRAC, I am not winning a whole lot of 
popularity points myself.
    As far as $2.5 billion being a relatively small amount of 
money, as you might remember, there is the old quote that says, 
``A billion here, a billion there, and sooner or later you are 
talking about real money.'' I think that that is reflected in 
the fact that these savings recur. If you are talking about $12 
billion out of a big budget, that is one thing, but if you are 
talking about $12 billion that happens every single year, that 
is like getting a new aircraft carrier every year or six 
submarines. $2.5 billion might not seem like a lot of money in 
the budget, but if the alternative to doing a BRAC round was 
cutting a submarine, there might be some other folks who might 
have an issue with that. I am using naval examples because they 
are big, but it is reflected across all of our things.
    With regard to JFCOM, the dynamics are different with the 
JFCOM facility because it was within the scope of the BRAC law. 
There is a specific law that says we cannot just go off and 
close bases in the same way, and because JFCOM was part of a 
larger base, it did not have the same legal triggers. You are 
familiar with all of this and that is why that was a different 
scenario.
    We are looking for ways where we do not need authority 
specifically from Congress to go ahead and go save money. We 
are not sitting idly waiting for BRAC. That is why we kicked 
off the European round already because we do not need authority 
to go off and do that. So we went off and started working it. 
There are other examples where we are driving towards 
efficiencies throughout DOD, and we have to do that. 
Installations are just one piece of the puzzle. But as we cut 
down in force structure, it would be irresponsible of us to not 
try and propose ways to cut the tail as we cut the tooth. So we 
have to look for a way to find this money.
    I respect the drama that goes on in communities as they 
prepare for BRAC. It is a difficult process, but it is a fair 
process. One of the dynamics that led to BRAC in the first 
place was that when base closures were proposed, there was 
politics. It depended on who the chairman was, on what got 
closed and what did not get closed. This was a way to take 
politics out of the process and put it into a ``you cannot edit 
this list'' type of dynamic. So you did not have the base 
closures depending on who was the most senior person at the 
table. So it is about fairness in that regard. There is a whole 
other dynamic in the BRAC law, but I think that is the one that 
is pertinent to this part of the discussion.
    Senator Shaheen. Does anybody else want to respond to that 
question?
    Ms. Hammack. Yes, I just want to make a comment that in 
Europe, where we are reducing our force structure by 45 
percent, we are systematically closing bases and we are 
consolidating. Navy and Air Force are also looking at their 
infrastructure. OSD is taking a look at what is already in 
process underway to see if there are additional opportunities.
    Now, anytime Army, Navy, or Air Force has property that is 
excess, the first thing is to go to the other Federal agencies 
and essentially say, ``hey, does anybody need this?'' At that 
point in time, the Army is moving into an Air Force facility 
that was excessed, and we do some of that already.
    OSD is looking to see if there is anything else that could 
be done if all options have been evaluated. So when we talk 
about BRAC in the United States, we are reducing our force 
structure size, and with the PEA, we announced that there are 
21 locations that might have force structure reductions. That 
is going to create excess space. Each brigade combat team takes 
up a little over 1 million square feet. So we are going to have 
holes. We are going to have empty buildings, and we are going 
to have places that we could move other units or other options 
into. In order to consolidate our infrastructure, we need the 
authority. Congress has told us we cannot close any of these 
facilities without authority.
    Senator Kaine. Congress has not said you cannot recommend 
to us things that should be closed. I agree, you cannot close 
without our approval, but there is no prohibition to the DOD 
making recommendations about how to take those gaps, 
consolidate, and then leave them subject to our approval. So I 
get that you cannot do it unilaterally, but you can still 
propose.
    Mr. Conger. That is why BRAC was designed to take politics 
out of the process.
    Senator Shaheen. Senator Lee?
    Senator Lee. Thank you, Madam Chairman.
    Thanks to each of you for joining us today.
    Mr. Conger, Under Secretary of Defense Robert Hale stated 
multiple times during the DOD posture hearing last week that 
the 2015 BRAC proposed by the President in his budget would be 
significantly different from the last BRAC that we had in 2005. 
Can you elaborate on what Under Secretary Hale might have had 
in mind when he made that statement?
    Mr. Conger. Sure. As I noted at the beginning of the 
hearing, I think he was right. The BRAC 2015 will not look like 
BRAC 2005. BRAC 2005 was conducted while force structure was 
growing, while budgets were growing, and under leadership that 
directed the use of the authority to accomplish transformative 
change, not just elimination of excess. Today force structure 
is shrinking, the budget is shrinking, and we are firmly 
focused on reducing our future costs. That is the dynamic that 
we are dealing with here.
    You get to a point under the BRAC law and constrained by 
the BRAC law where even if we were in an environment without 
excess, we would not be able to shift things around because 
BRAC says you cannot move functions around. One of the things 
that happened, in addition to eliminating excess during the 
2005 round, was that Secretary Rumsfeld wanted to optimize 
where we are all located. So not everything was driven by 
savings. Should it have been that way? That I leave open to the 
committee to judge. But that was part of what drove the 
recommendations that we got in 2005. It is different from the 
recommendations that were in the 1990s.
    I would offer that Mr. Hale's comments drive to that point 
that we are focused on saving money and eliminating excess 
because of the dire budget situation that we are in. We are 
looking to save money and this is going to be a round much 
closer to the ones from the 1990s.
    Senator Lee. Okay.
    Ms. Hammack. If I may make a comment.
    Senator Lee. Yes.
    Ms. Hammack. Another thing that is not well understood is 
the Army moved units back to the United States from overseas. 
So in Korea and in Europe, we had facilities that were 
optimized for those units. When we moved them back to the 
United States, we had to build new infrastructure to house 
them. From an Army standpoint, we did not really reduce our 
overall square footage. For us it was a realignment more than 
it was a closure. Although there were some facilities that were 
closed, it was realigning a lot of our units and realigning our 
forces. So it was a very different BRAC from all of the other 
BRAC rounds.
    Mr. Conger. To add on that point, the closures overseas are 
not calculated as part of the savings as GAO audits them. The 
savings that we calculate are domestic savings.
    Senator Lee. Okay. Given that factor and the set of 
circumstances you identified, economically we are in a 
different position now.
    Ms. Ferguson, I want to talk about the F-35 for a minute. 
Last week there was an announcement that the EIS for the F-35 
basing decision was delayed until I think this fall. That, 
following the incorporation of new census data into the EIS and 
the determination, additional public commentary was necessary 
in a lot of that data.
    Do you think this will have any impact on the arrival of 
the first operational units of the F-35 that are scheduled for 
2015?
    Ms. Ferguson. No. Based on our analysis, the delay of the 
EIS to the fall of this year will have no impact. Now, there 
could be other impacts to delivery beyond the EIS, but directly 
related to the delay of the EIS, no.
    Senator Lee. On this one alone, you do not see it having 
that impact.
    Ms. Ferguson. No, it should not impact.
    Senator Lee. Are you concerned that even if there is not an 
impact, that this could at least create less of a margin for 
delays, for any other delays that might come up? We are slicing 
it thinner and thinner. I assume you would agree with that.
    Ms. Ferguson. Certainly as we get closer to the delivery of 
the first aircraft and we have construction still to do at the 
first operational location, then we need to make sure that 
construction is done to the maximum extent practicable before 
that first aircraft arrives. But we have taken a look at that, 
and we are not concerned at this point.
    Senator Lee. Okay. The reason I raise the concern, as you 
can imagine, is that we have had a number of delays in 
connection with the F-35, but it sounds like at this point you 
are not anticipating any additional delays.
    Ms. Ferguson. We are not.
    Senator Lee. Can you tell me why originally census data 
from over a decade ago was being used in the EIS process?
    Ms. Ferguson. When they started working on the EIS, that 
was the only data that was available. The 2010 Census data had 
not yet been published. They got through the end of the 
process, published the document, and then by that point in 
time, the 2010 data was published. For one of the locations, 
that data was significantly different. So we went back and 
modified the EIS to incorporate that new data.
    Senator Lee. Right. Can you help me understand why it is 
that the incorporation of the new census data necessarily 
required new hearings to be conducted for new input on the EIS?
    Ms. Ferguson. We are not going to do new hearings. We are 
going to put the EIS out on the street for a public comment 
period, but we will not accomplish additional hearings, but it 
will provide the public the opportunity to comment on the 
updated information that will be contained in the EIS.
    Senator Lee. Now, we know that sequestration is likely to 
slow the input, will slow down the induction of some aircraft 
into depot. What impact do you think the slowdown will have on 
the working capital fund and depot labor rates?
    Ms. Ferguson. On depot labor rates, I do not have that 
specifically, but we do know with the combination of the 
reduction in weapons systems sustainment, we are reducing 
weapons systems sustainment by about 18 percent. We have 
civilian furloughs; the 35,000 civilians at the depot will be 
out. We are anticipating 60 fewer aircraft will be inducted and 
about 35 fewer engines will be inducted. Through a combination 
of those factors, it will take us a period of time to build out 
of that bow wave. It could take us a year or more to come out 
of that after we realize the effects of sequestration from 
2013.
    Senator Lee. How can DOD work to address, anticipate, and 
mitigate against the so-called bow wave that will be caused by 
the slowdown in depot inductions that we are seeing?
    Ms. Ferguson. The Air Force Materiel Command staff, the 
staffs at each one of the depots, headquarters Air Force, my 
staff--they are working very closely with everyone at our 
lifecycle management center to try to mitigate that. But right 
now, with an 18-percent reduction in weapons systems 
sustainment, the furlough, reduction also in flying hours 
contributes to that as well. There will be a readiness impact 
associated with that.
    Senator Lee. Okay. All right, thank you.
    Thank you, Madam Chairman.
    Senator Shaheen. Thank you.
    Mr. Conger, I want to go back to the European 
infrastructure question because there was one piece of it that 
I did not get to, and that is the NDAA for Fiscal Year 2013 
required DOD to evaluate the feasibility and cost savings that 
could be realized by closing and consolidating operations of 
the 16 major defense agencies of DOD that are also maintaining 
facilities and personnel overseas.
    So are these facilities going to be part of the Secretary 
of Defense's review of the infrastructure in Europe?
    Mr. Conger. We are doing a comprehensive look. It is going 
to include the defense agencies, yes.
    Senator Shaheen. Do you believe that they also maintain 
excess or under-utilized facilities overseas?
    Mr. Conger. I think it is fair to say that defense 
agencies, in particular those that support the force structure, 
are proportional to the force structure. Therefore, if we find 
efficiencies and optimization in basing of our forces, people 
consolidate in a particular location, you may need fewer 
schools, fewer medical facilities, et cetera. Those are the 
supporting requirements of having a force in a particular 
location.
    Senator Shaheen. Thank you. I look forward to seeing that 
report when it is completed. I certainly hope that the urgency 
about expediting it will be conveyed to DOD.
    I want to go now to some issues that were raised in a 
report by this committee's review of overseas basings that 
looked at some of the projects that are built with in-kind 
payments from foreign governments. For example, the committee's 
review found that the Army does not approve construction 
projects that are built with in-kind payments in Korea.
    Secretary Hammack, can you let us know why the Army does 
not review and approve these projects? Is this something that 
should be approved and reviewed by the Army? How can we make 
sure that they are subject to that same review as other 
projects?
    Ms. Hammack. They are reviewed by the Army, but they are 
also subject to the requirements of the U.S. Forces Korea 
commander, which is a combatant command that works through the 
OSD. So I would defer to Mr. Conger.
    Mr. Conger. In general, the requirements are--they 
originate from one of the Service subcommands inside a theater, 
come up through the combatant command, come over to the Joint 
Staff, and they are being reviewed at each step in this process 
for approval inside OSD. So there are a variety of looks at 
each of these.
    Senator Shaheen. As we discussed yesterday, some of the 
projects that have been discussed raise questions about whether 
there is urgency to those projects, given all the other demands 
that currently exist. So I wonder if you are looking at 
legislative or procedural changes that could help ensure that 
the projects that are being funded and undertaken are those 
that are real priorities and not something that is less than a 
priority for the various Services.
    Mr. Conger. I understand that point. As we discussed the 
other day, the report led to the Washington Post article. 
Several of the examples were highlighted in there.
    One thing I did want to make sure that everybody was aware 
of is that when a project list is approved at DOD, the Deputy 
Secretary of Defense sends a letter over to Congress saying 
this is the list of items that we are looking to pursue. In 
particular, I am talking about the payment in-kind projects in 
Germany because those were the ones highlighted in the article 
the other day. That oversight process is responsive to 
Congress.
    In particular, I would point out that one of the projects 
sent over in July of 2011 was a warehousing project that this 
committee sent a letter to the Pentagon on and said we have 
concerns about. We, as a consequence, even though it was 2 
years later, put a hold on that. We are looking at it, and in 
fact, the facts on the ground do change. The warehousing 
project in particular that, once again, we notified the Hill 
about 2 years ago, because of the reduction in forces at 
Grafenwoehr, while the requirement has not changed, there is 
more space available, and so we did not necessarily need to 
build the project.
    The oversight of this committee helped us to save some 
money and so that is valuable. We send these reports over to 
Congress not because we think you are going to file them in a 
drawer, but because we value your feedback.
    Senator Shaheen. Sure, and I appreciate that, although the 
report suggested that there were some projects that had gone 
forward without sufficient notification to the appropriate 
committees in Congress. Do you disagree with that?
    Mr. Conger. We can look through those in particular, and I 
think we need to have an ongoing conversation about that. Some 
of the ones that were highlighted have not actually been 
submitted for approval yet. I mean, they are in the preliminary 
stages. We have not even gotten them in OSD. But the 
investigators from this committee went out to Europe and they 
looked at the lists of projects that they were looking at, and 
some of those made it into the report even though they were 
pre-approval. They were just under consideration.
    Senator Shaheen. Again, I guess I am not sure I quite 
understand what recommendations you might have to improve the 
current process so we do not have things like sunroom additions 
to senior officer housing in Germany done at a time when there 
are other priorities that supersede that.
    Mr. Conger. Yes. The sunroom one was sent over in 2010. It 
was $200,000 total for changes to three housing units in order 
to bring them up to the standards for the individuals that they 
were hoping to station in them. Those projects in retrospect--
were they ideal? Well, it brings the housing up to standard. So 
we do not want to be subject to the churning of the sound bite 
in that it does not sound particularly like a high priority to 
add sunrooms to housing. There is a certain amount of space 
that is associated with a certain rank of officer, and they 
were trying to make sure that the housing was up to standards 
for the people that they wanted to station in the housing.
    Senator Shaheen. I appreciate that. I guess my concern--and 
I am still not clear on how or whether you think it is 
appropriate to address it--is the oversight of the projects 
that are undertaken and to what extent there is appropriate 
oversight. How you prioritize how those in-kind contributions 
are done? It is still not clear to me exactly how that works.
    Mr. Conger. I think that securing construction from foreign 
governments is valuable to DOD and to the country. I think it 
is important to be able to receive those payments in kind, to 
receive MILCON from other nations.
    Senator Shaheen. I am not taking issue with that.
    Mr. Conger. Is there enough oversight? I think we can have 
a conversation. There certainly is oversight. Is there enough 
oversight? That is something that we should engage in. In all 
honesty, given the degree to which we are looking to reduce 
force structure in Europe and given the degree to which we 
expect probably an increase in those payments in-kind coming up 
in the future as we go through our reductions, as we hand bases 
back after brigades are removed, after we go through our 
European base review, there is going to be a lot more of this. 
So as a consequence, we are going to want to do more oversight, 
and we should do that with this committee.
    I do not question for a second that this committee, OSD, or 
the Services should be doing oversight over these projects. 
What was a relatively small list in the past may become a 
bigger list, and we need to make sure that we are all on the 
same page.
    Senator Shaheen. Certainly I think this subcommittee would 
appreciate the recommendations that you will be looking at for 
how to improve the oversight process.
    Mr. Conger. Yes, ma'am.
    Senator Ayotte. I thank the chairman, and I would share in 
her request that we do greater oversight for these in-kind 
contributions. I understand that we are grateful that these 
nations are willing to give in-kind contributions, but given 
that they are on our bases, the oversight is still very, very 
important. So I would share her request that we be more engaged 
in that oversight and more vigorous oversight.
    I wanted to ask Mr. Natsuhara about the plan that I 
referenced in the opening that we recently received that was 
required pursuant to the 2012 NDAA, the modernization of naval 
shipyards.
    As I referenced in the opening, we certainly have some 
facilities that are aging with our shipyards. Looking at the 
facilities, some are approximately 60 years old. The average 
dry dock age is 79 years old. So the overall condition of 
infrastructure is certainly a big challenge. As I mentioned in 
the opening, the Navy will need, according to the report, about 
17 years at the current funding rates to clear the current 
maintenance backlog.
    So I appreciate that you are trying to look at ways to 
quickly address the maintenance backlog. So can you help us 
understand what additional annual funding you will need to 
achieve this goal? I would also like to understand what the 
impact is on sequestration, thinking about especially 2013 and 
2014. I know you have submitted a budget request with us 
assuming that sequestration gets resolved, but I think we need 
to understand what the implications are if this thing stays in 
place.
    I would also open up that question beyond this issue with 
the backlog on the maintenance and ask all of the witnesses to 
talk about the long-term implications if it is not resolved.
    Mr. Natsuhara. Thank you.
    Based on our plan, we believe that our projected budgets 
out through the 17 years, that we will be able to meet that 17-
year plan. It was all based on very detailed analysis and study 
with our Chief of Naval Operations staff, our Naval Sea Systems 
staff, and Naval Facilities Engineering staff to really balance 
the risks to determine what is that right risk to recapitalize, 
clear the backlog of the shipyards to maintain their mission, 
but also balance the rest of the Navy's priorities in 
facilities to make sure that we do not fix one part of the Navy 
at the expense of the other. So it was a very balanced approach 
we took trying to balance the risks of the shipyards and the 
rest of the facilities. So we believe our budget will be able 
to match the 17 years.
    As far as 2013, we will be able to meet for the shipyards, 
the 6 percent requirement. We have already funded that. We will 
be able to meet--but for the rest of the depots, the Fleet 
Readiness Centers, we are not there yet because of 
sequestration, but for the shipyards for 2013, we are going to 
meet the 6 percent.
    For 2014, we do not know yet. Our plan is in our budget, 
but we do not know what the sequestration is going to be. So we 
will do that analysis if that happens.
    Senator Ayotte. So you have not done the analysis yet if 
sequestration goes into place, how this thing impacts the 
maintenance going forward?
    Mr. Natsuhara. We have not done the analysis yet.
    Senator Ayotte. I would ask for follow-up information on 
that. It is just important for us to all understand here 
because the more information I think Members of Congress 
receive on the implications of this long term to the overall 
readiness of our forces, I think it, hopefully, will help get 
people off the sidelines here to try to resolve this in a 
sensible way.
    So I would also ask the other witnesses to be able to 
comment on what we look at going forward in terms of each of 
the areas that you are responsible for.
    Mr. Conger. Before we get into the specifics of each 
individual service impact, let me speak a little bit broadly 
about sequestration and how 2014 is different than 2013.
    In fiscal year 2013, sequestration is an appropriations/
authorization issue. It is all about individual accounts, how 
much money is available in individual accounts and the specific 
cuts that were taken that we are trying deal with halfway 
through a year. They are severe. They are rigid. Without 
question, as I mentioned earlier in my opening statement, they 
have consequences.
    That said, in fiscal year 2014, the President's budget 
request and the administration position is that we are not 
taking sequestration cuts in the defense budget but rather the 
administration's deficit reduction plan accommodates those cuts 
elsewhere. That means this becomes a budget resolution issue as 
opposed to an individual appropriation type of issue. The 
question is--and frankly, it is up to Congress to decide how 
that is dealt with, whether the particular offsets that the 
administration proposed are rejected or if----
    Senator Ayotte. Let me just interject for a minute.
    Mr. Conger. Yes.
    Senator Ayotte. We are where we are. So the Senate did a 
budget resolution. The House did a budget resolution. Who knows 
if they will get reconciled. The President's is hanging out 
there, a post-budget thing. I think we are where we are right 
now.
    Can you just let us know, assuming the status quo going 
forward and the President's plan does not get passed, which I 
think at this point is unlikely that it would, where are we?
    Mr. Conger. If the question is: what is the impact to DOD 
if, in fact, there is another broadbased 8 percent across-the-
board cut----
    Senator Ayotte. Yes, because the law stays in place as it 
is. The only thing you have differently is the Appropriations 
Committee can work with you versus the across-the-board 
approach, which they have already done. We did in the 
Continuing Resolution. But going forward, the numbers are where 
they are unless we make a change around here, as I understand 
it.
    Mr. Conger. I think for that broadbased answer, I defer to 
my colleagues to say if they took that specific cut in each of 
their areas, what it would be. But I think from a broader 
perspective, I think that rather than this panel answering the 
question in a narrow sense, I think it has to be a wider DOD 
answer for you, and we would have to get back to you.
    Senator Ayotte. I want you to know I have been asking this. 
All of us have been asking this in every hearing we have had 
with the Service Chiefs, with everyone. So to the extent you 
cannot answer us, I think it is important because there needs 
to be a full understanding around this place about what the 
real implications are.
    Thank you.
    Ms. Hammack. For the Army, the fiscal year 2013 budget is a 
63 percent reduction in our sustainment, restoration, and 
modernization. It is a risk and it does create what has been 
called a bow wave of a backlog of what needs to be done. An 
analogy that I heard, it is like not maintaining your car, 
there is a risk. When we are focusing only on the most critical 
life, health, and safety, we are taking a risk by not 
maintaining our existing infrastructure.
    Senator Ayotte. So after a while, if you do not change the 
oil, you have an issue.
    Ms. Hammack. You have an issue, and that cost of not 
changing the oil is much higher than if you had maintained the 
oil regularly. That holds true for maintaining our heating, 
ventilation, and air conditioning (HVAC) equipment. It holds 
true for maintaining our infrastructure, replacing roofs when 
they are at end of life versus waiting for failure. It is a 
higher cost if you wait for failure.
    In our 2014 budget, we took a reduction and we are taking a 
risk. It is 10 percent lower than what we thought was ideal, 
but it is taking a risk and that is how we are responding to 
the effects of a reduced fiscal environment. If we have to go 
further, if we have to go as deep as we did in 2013, it is 
going to be even much more of a bow wave. It is critical and it 
is something that we are going to have to respond to and fund 
at some time. Buildings need to be maintained. That is a fact.
    Senator Shaheen. Senator Kaine?
    Senator Kaine. I just want to come in on Senator Ayotte's 
point. We had an interesting interchange in the same way at the 
full committee hearing last week with Secretary Hagel and 
General Dempsey. I thought it was interesting because I think 
the questions from the Senate side--they might have seemed like 
hostile questions, but I think they were actually helpful 
questions.
    I fully support the budget. The way it was constructed said 
sequester is a bad idea, here is the better way. I completely 
agree, sequester is a bad idea. There is a better way and that 
is to significantly moderate the effects of sequester by 
reducing the size of the cuts, by making them targeted and not 
strategic, by not spreading them evenly across the 10-year 
budget, but back-loading these kinds of concepts. I am glad you 
prepared it that way.
    But the challenge we have is with our colleagues to really 
demonstrate why the administration's version is much better 
than the sequester version. Part of that is if you had to live 
with the sequester as is, if there is no alternative, instead 
of the budget that you have put on the table, which is not 
really your optimal budget--you are dealing with the cut 
already, as you described. You have presented it and you have 
had to sharpen the pencil and multiple drafts.
    But if you, the DOD, could show in large scope and if we do 
not get that and we have to live with the sequester, here is 
what this looks like down the road, I think we will create more 
momentum within our colleagues. This is what a lot of us are 
trying to do, create momentum within our colleagues to say we 
like the administration's version better than the status quo. 
So that was a request that was made DOD-wide, but it was a 
helpful request. I think this is going to help us add allies to 
try to come up with a budget that is better suited to what you 
are trying to do to keep our country safe.
    Senator Shaheen. Thank you, Senator Kaine.
    I want to go back to the in-kind burden-sharing issue for a 
minute, Mr. Conger, because one of the areas addressed by the 
Armed Services Committee report was South Korea, and one of the 
items in the budget that got my attention was a request for $52 
million to replace a school at Camp Walker in South Korea. I 
wondered if, before requesting those funds, DOD had considered 
trying to use South Korean in-kind contributions for that, and 
if not, why not. Is this not exactly the kind of project that 
we might be able to use in-kind burden-sharing funds to 
support?
    Mr. Conger. I will tell you what, I do not have a specific 
answer to that question right now. I will get you one for the 
record because I think you deserve a thoughtful, deliberative 
one rather than me just trying to answer off the cuff.
    Senator Shaheen. Okay. I appreciate that.
    [The information referred to follows:]

    The school at Camp Walker would normally be considered for burden-
sharing funds, but this particular project is part of a larger 
Department of Defense (DOD)-wide initiative undertaken in 2009 to 
improve the overall condition of Department of Defense Education 
Activity schools, and eliminate those in poor or failing condition. 
Burden-sharing funds were not used to meet this requirement because 
U.S. Forces Korea priorities for the funds over their 5-year plan were 
focused on implementing the Land Partnership Plan, which relocates U.S. 
military operations north of the Han River mainly to Camp Humphreys. 
Given that the requirement for a replacement school at Camp Walker was 
not directly related to LPP, DOD chose to fund this project from DOD 
resources.

    Senator Shaheen. I think we will have some follow-up 
questions for the record about some of the differences that we 
see in what the report found than I understood your answers to 
be.
    Mr. Conger. That is fair enough.
    Senator Shaheen. I appreciate that.
    I want to go now to one of the issues that I have been very 
concerned about and very appreciative of the lead that the DOD, 
and particularly all of our branches of the military have 
taken, around energy use. I think some of you have heard me 
talk about my appreciation for the work that has gone on around 
energy and energy efficiency, in particular, which is one of 
the things that I am particularly concerned about. I know in 
our conversations, Mr. Conger, you talked about the bill that 
DOD has for energy use on an annual basis, which is 
significant. So I wondered if each of you might talk about some 
of the areas where you think you are making real progress 
around energy use and then, if you could, indicate whether 
sequestration is having an effect on those areas and how you 
see the long-term implications of any impacts from 
sequestration on those energy efforts.
    Mr. Conger. Let me take the second part of your question 
and defer the first one to my colleagues.
    Under sequestration, the O&M accounts have been hit 
particularly hard and, in particular, the facilities 
sustainment accounts which have been limited to the life, 
safety, health types of repairs. Those accounts are where many 
of the energy efficiency upgrades occur. That is not to say 
that we are making a lot of changes to buildings just to 
increase the energy efficiency, although that is certainly the 
case. But when you replace the HVAC system, when you add 
insulation, when you replace the roof, you are making energy 
efficiency upgrades, and you are lowering your future bill by 
doing things the right way.
    Those proactive, bill-lowering efforts that are normally 
part of our sustainment budget were deferred because of 
sequestration in fiscal year 2013, and we have limited the 
investments that we are making in repair of our buildings. So 
is there an impact? Absolutely, there is an impact on the 
energy investments that we are making.
    Ms. Hammack. From the Army's standpoint, we have focused on 
leveraging the public/private partnerships, and those are the 
Energy Saving Performance Contracts. So in fiscal year 2012, we 
tripled the number of Energy Saving Performance Contracts that 
we executed and we are on a path to have about the same, if not 
a higher amount this year. So by leveraging private sector 
investments, we are able to continue with our energy 
efficiency.
    That being said, as Mr. Conger mentioned, there were some 
programs that are being delayed and those were the direct-
funded programs.
    Sequestration also affects us because those in the 
acquisition community will face furloughs, and that slows down 
the acquisition process. So that means our processing of the 
contracts and the task orders is going too slow. So while we 
are currently on target, we are unsure how it is going to 
affect us at the year end because there may be some slippage 
due to the effects of sequestration on our acquisition 
community.
    Senator Shaheen. Do you have data that quantifies what the 
savings are from those performance contracts that you have put 
in place already?
    Ms. Hammack. Absolutely, and we can get you that 
information.
    Senator Shaheen. I would really be interested in getting 
that.
    Ms. Hammack. Certainly.
    [The information referred to follows:]

    Since 1996, the Army has executed over 170 Energy Savings 
Performance Contract Task Orders at 72 installations resulting in over 
$1.17 billion in third party investments. Since 1992, the Army has 
executed over 350 Utilities Energy Service Contract Task Orders at 43 
installations resulting in over $543 million in energy investments. 
These investments have resulted in annual energy savings of 10.4 
trillion British Thermal Units per year and an annual cost avoidance of 
more than $157 million.

    Senator Shaheen. Thank you.
    Mr. Natsuhara?
    Mr. Natsuhara. At the Department of Navy, we have been very 
aggressive in our goals. We too are going to be leveraging the 
third party financing for a lot of our larger projects.
    We are very concerned with the sequestration. The Marine 
Corps cut about 50 percent of what they planned to do on their 
energy efficiency for fiscal year 2013. That will cause 
problems in the out-years because the investment that we 
planned to take this year--we have already taken the savings on 
the energy. So we are working hard to try to get those 
investments back because we are just going to create another 
bill in the out-years. So we are very concerned about that.
    On the Navy side, they are taking risk in other areas and 
trying to recover most of their efficiency projects. They are 
not there yet. But we also have the same concerns there. The 
main thing is not only getting the energy savings today, it is 
if we do not do them today, we are going to have another 
problem in the out-years. So we are very concerned about that 
on the shore side.
    On the operational energy side or forces side, we have been 
working hard with our systems commands to try to keep all those 
energy efficiencies. There it is about the combat 
effectiveness, making sure the warfighter gets the extra energy 
savings not just to save energy or money, but to increase their 
effectiveness for the warriors out there.
    Senator Shaheen. Will the impact of sequestration be enough 
to prevent you from getting to the 50 percent savings goal by 
2020?
    Mr. Natsuhara. Right now, we think we are going to be okay. 
We are still doing some analysis because we just got the 
numbers, but if you like, we can get you a brief on that.
    [The information referred to follows:]

    The Department of the Navy places a high priority on energy 
efficiency investments, so at this point in executing the fiscal year 
2013 ``post-sequester program'', the reductions do not immediately 
jeopardize our ability to meet our energy savings goals (50 percent 
Navy; 37.5 percent Marine Corps) by 2020. I must caveat this response, 
however, by saying the outcome is dependent upon enacting a stable 
investment profile in fiscal year 2014 and beyond that remains 
unencumbered by future sequester scenarios. Future investment 
reductions would imperil the Department of the Navy's ability to meet 
targeted consumption reductions and any other energy goals, including 
compliance with Federal legislation and mandates.

    Senator Shaheen. That would be helpful.
    I also understood that the Navy had been reluctant to 
engage in performance contracting. Is that the case, or is this 
a change that you are undertaking? Are you beginning to do that 
now?
    Mr. Natsuhara. We are beginning to look at those. We have 
programmed some money to do some analysis, upfront studies, and 
they take a little bit of time, but we are looking at those and 
we anticipate having some of those in the near future.
    Senator Shaheen. Secretary Hammack, perhaps you could share 
your experience with the Navy.
    Ms. Hammack. Absolutely. They can leverage the same 
contracting mechanisms that we have been using.
    Senator Shaheen. Ms. Ferguson?
    Ms. Ferguson. In 2012, the Air Force avoided $1.5 billion 
in energy costs due to initiatives that we have put in place, 
which I think is a really good news story. Part of that was 
from reducing aviation fuel consumption. We exceeded our goal 
early. We reduced our aviation fuel consumption by 12.4 percent 
since 2006. We have gone now and we have updated that goal, and 
we are going to look at improving our aviation energy 
efficiency by 10 percent by 2020, and really looking at how we 
operate the airplanes, including in a deployed environment.
    Some of the things we have done to reduce the fuel costs is 
we have done KC-135 engine upgrades, which has both an 
operational efficiency and an energy efficiency. We have C-5 
engining. That showed a 3 percent improvement in burn rate. So 
we are getting benefits from that. We have reduced our facility 
energy consumption by 22 percent, and we are on track to meet 
the 2020 goal, and we have done that since 2003. In 2012, we 
avoided $300 million in facility energy costs because of the 
initiatives we have put in place.
    The impact of sequestration: we are delaying about 220 
energy-related facility projects. The cost for those projects 
was right around $150 million, but the annual savings for those 
would be about $25 million. So it would pay back in about 5 to 
6 years. So we are deferring that, but we are continuing to 
look for opportunities. I envision that there could be similar 
issues that come up on the operational side, but we are going 
to continue to look at that. Energy, of course, is a high 
priority for DOD, and we will continue to focus where we can.
    Senator Shaheen. So when you talk about the aviation 
savings, is most of that accomplished through changing out the 
engines for more efficient engines, or are you also looking at 
biofuels as a way to save long term on energy use?
    Ms. Ferguson. We have looked at biofuels and all of our 
aircraft have been certified both on hydrotreated renewable jet 
and Fischer-Tropsch fuels, those are there. We are not going 
out and actively purchasing those, but those are there if it 
makes sense to buy them.
    Where we are really seeing savings is by changing the way 
we fly, how we load C-17s and C-5s and doing them more 
efficiently, and seeing how we can operate in a more efficient 
manner. So it is really changing the culture of how we fly, how 
we operate. I think when General Spencer was in front of the 
committee recently, he gave an example of when he was on a C-17 
and he was in the cockpit, and the crew talked about how to 
save fuel as they were going on their mission. So it is really 
about changing also the culture of our pilots.
    Senator Shaheen. I know that the Navy has done a lot of 
work around biofuels. Do you share those technologies with the 
Air Force and the Army as you look at developing new biofuels?
    Mr. Natsuhara. Yes, all the Services now have a Deputy 
Assistant Secretary of Energy. So collaboratively I think they 
have all been working very closely together sharing 
information, including the biofuels initiative.
    Senator Shaheen. Thank you.
    No further questions, Senator Kaine? At this point, I do 
not have any other than the questions that we will submit for 
the record.
    So thank you all very much for your testimony this 
afternoon and for your service to the country.
    This hearing is adjourned.
    [Questions for the record with answers supplied follow:]

                Question Submitted by Senator Tim Kaine

                        FORT MONROE-HAMPTON, VA

    1. Senator Kaine. Secretary Hammack, I would like to raise an issue 
that is important in my State, and that is the matter of Fort Monroe, 
in Hampton, VA. I know you are well-versed on this issue. I am also 
aware there is no hard deadline or decision point that will lead to a 
resolution to allow all parties to move forward. I would hope all 
stakeholders could sit down and agree on a reasonable way forward. Will 
you pledge to work with the Commonwealth of Virginia and the City of 
Hampton to find measures that can be undertaken to bring this process 
to a close in a timely way?
    Ms. Hammack. Yes, I will continue to work with the Commonwealth of 
Virginia and the City of Hampton regarding Fort Monroe. I am pleased to 
report that on June 14, 2013 the Governor recorded a Quitclaim Deed 
transferring 312.75 acres of reversionary property (approximately 55 
percent of the closed installation) to the Commonwealth. The Army looks 
forward to an appropriate ceremony to celebrate this historic 
milestone. The return of this property will support job creation, 
facilitate tourism opportunities, and provide economic benefits to the 
community.
                                 ______
                                 
             Question Submitted by Senator Saxby Chambliss

             LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN

    2. Senator Chambliss. Secretary Conger, as you are aware, the 
Unified Facilities Criteria (UFC) released by the Department of Defense 
(DOD) on March 1, 2013, states that DOD components will design and 
build all new construction and major renovations projects with third-
party certification to the U.S. Green Building Council Leadership in 
Energy and Environmental Design (LEED)-Silver Level (or approved 
equivalent rating). Singling out LEED specifically over other systems 
and not defining ``equivalent'' is, by default, a LEED preference 
policy. I am concerned that the LEED rating system discourages the use 
of domestically grown and processed wood products that are vital to 
rural communities all across the United States. In addition, as a 
recent National Research Council study found, there is no empirical 
evidence demonstrating the superiority of LEED-Silver over any of the 
other prevalent green building rating or certification systems in use. 
Given that, DOD should not arbitrarily select winners and losers by 
naming one green building standard to the exclusion of all others in 
its green building policy. As you develop revisions to this policy due 
out this summer, are you going to ensure that the new policy does not 
arbitrarily favor a private green building standard that hurts the 
domestic wood products industry?
    Mr. Conger. The UFC for High Performance Buildings published on 
March 1, 2013, sets standards for all new construction and major 
renovation that are independent of any certification system. While 
Chapter 5 of the UFC does reference the existing DOD policy as a tool 
for demonstrating compliance with some aspects of the UFC, the 
standard, as a whole, must not be read to construe endorsement of any 
particular certification system. The standards are based heavily on the 
American Society of Heating and Air-Conditioning Engineers 
sustainability standard 189.1, which is agnostic regarding 
certification systems and expresses no preference with regard to wood 
and most other building products. The revised sustainable buildings 
policy, currently under development, will allow DOD components to 
develop their own processes for demonstrating compliance with the 
minimum UFC standards. Those processes can include any of the third-
party certification systems approved for Federal Agency use under the 
Department of Energy's EISA section 436 authority.

    [Whereupon, at 4:14 p.m., the subcommittee adjourned.]

                                 
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