[Senate Hearing 113-108, Part 4]
[From the U.S. Government Publishing Office]



                                                  S. Hrg. 113-108 Pt. 4

 
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 4

                                AIRLAND

                               __________

                        APRIL 24 AND MAY 8, 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 Airland

                JOE MANCHIN III, West Virginia, Chairman

BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri           JOHN McCAIN, Arizona
KIRSTEN E. GILLIBRAND, New York      JEFF SESSIONS, Alabama
RICHARD BLUMENTHAL, Connecticut      SAXBY CHAMBLISS, Georgia
JOE DONNELLY, Indiana                ROY BLUNT, Missouri

                                  (ii)



                            C O N T E N T S


                              ----------                              

                    CHRONOLOGICAL LIST OF WITNESSES
                       Tactical Aircraft Programs
                             april 24, 2013

                                                                   Page

Bogdan, Lt. Gen. Christopher C., USAF, Program Executive Officer, 
  F-35 Lightning II Joint Program Office.........................     8
Skinner, VADM W. Mark, USN, Principal Military Deputy to the 
  Assistant Secretary of the Navy for Research, Development, and 
  Acquisition....................................................    15
Davis, Lt. Gen. Charles R., USAF, Military Deputy to the 
  Assistant Secretary of the Air Force for Acquisition...........    31

                           Army Modernization
                              may 8, 2013

Barclay, LTG James O., III, USA, Deputy Chief of Staff of the 
  Army (G-8).....................................................    81
Phillips, LTG William N., USA, Principal Military Deputy to the 
  Assistant Secretary of the Army for Acquisition, Logistics, and 
  Technology, and Director, Acquisition Career Management, and 
  Chief Integration Officer......................................    87

                                 (iii)


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

                              ----------                              


                       WEDNESDAY, APRIL 24, 2013

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

                       TACTICAL AIRCRAFT PROGRAMS

    The subcommittee met, pursuant to notice, at 3:04 p.m. in 
room SD-G50, Dirksen Senate Office Building, Senator Joe 
Manchin III (chairman of the subcommittee) presiding.
    Committee members present: Senators Manchin, Blumenthal, 
McCain, and Wicker.
    Committee staff member present: Leah C. Brewer, nominations 
and hearings clerk.
    Majority staff members present: Creighton Greene, 
professional staff member; William K. Sutey, professional staff 
member; and Bradley S. Watson, special assistant for 
investigations.
    Minority staff members present: Ambrose R. Hock, 
professional staff member; and Anthony J. Lazarski, 
professional staff member.
    Staff assistant present: John L. Principato.
    Committee members' assistants present: Mara Boggs, Patrick 
Hayes, and David LaPorte, assistants to Senator Manchin; Paul 
C. Hutton IV, assistant to Senator McCain; Todd Harmer, 
assistant to Senator Chambliss; and Joseph Lai, assistant to 
Senator Wicker.

     OPENING STATEMENT OF SENATOR JOE MANCHIN III, CHAIRMAN

    Senator Manchin. The subcommittee will come to order and 
thank you for being here. We want to apologize. Senator Wicker 
and I were both together at a briefing that we attended and we 
appreciate your understanding.
    I want to extend a welcome to and thank each of our 
witnesses for appearing before this subcommittee today. This is 
my first hearing as a subcommittee chairman and, although he 
has served for a number of years on the Senate Armed Services 
Committee, this will be Senator Wicker's first hearing as the 
Airland Subcommittee ranking member. Senator Wicker, I am 
really looking forward to working with you on the subcommittee 
this year.
    On behalf of the committee, I want to thank you each of you 
representing the men and women of our armed services for the 
wonderful jobs that they are performing in Afghanistan and 
around the world. We keep all those who are serving in our 
thoughts and prayers every day.
    Every year we are challenged to make decisions balancing a 
number of competing demands of resources, including resources 
for current operations and investments in future modernization. 
In this case we will be assessing plans and programs regarding 
the current status and future prospects for tactical aviation 
programs. Complicating things this year is sequestration, 
which, if Congress does not act to change things, could lead to 
significant consequences for our current readiness and future 
modernization.
    We meet today to talk about the F-35 Joint Strike Fighter 
(JSF) program and other tactical aviation programs. We all know 
that the JSF program is central to the long-term modernization 
plan for the Air Force, Navy, and Marine Corps for more than 15 
years now. Given that fact, any change in cost, schedule, and 
performance of the JSF program really sends shock waves 
throughout the Department of Defense (DOD) and raises many 
questions of achieving that balance between the demands of 
maintaining readiness in the near-term and those of modernizing 
for tomorrow.
    For instance, the Government Accountability Office (GAO) 
has estimated that extending the service lives of existing F-16 
and F-18 aircraft would be approximately $5 billion. Today we 
will seek a better understanding of implementation of the 
corrective actions DOD has identified in the JSF program after 
the Nunn-McCurdy certification 3 years ago and what levels of 
risk remain in the development and fielding program.
    General Bogdan, I know there were a couple of engine-
related problems since last year and, while we are always 
concerned any time that we hear about engine problems during 
the research and development (R&D) stage, I understand that you 
have identified the problems and have mapped a way ahead to 
minimize the effect of the problems on the testing and 
development program. I hope you will discuss these programs and 
solutions during your testimony.
    In addition to the more immediate acquisition issues, we 
also know there is significant concern about how much the F-35 
is going to cost to operate during its life cycle. We do not 
have the new selected acquisition reports (SARs) for major 
defense acquisition programs yet this year, but last year DOD 
was predicting the F-35 life cycle cost over 50 years would be 
approximately $1 trillion. That is a large mountain of cost and 
I hope that we can gather some insight today on what DOD is 
doing to try to reduce those costs.
    In addition, today we want to focus on a number of issues, 
but primarily we want to understand how DOD has been executing 
to the baseline for the F-35 program since last year, how the 
Services are refining their responses to the JSF delays that 
emerged 2 years ago, and what effects those delays may have on 
our forces.
    Today we are going to hear from Lieutenant General 
Christopher C. Bogdan, USAF, the JSF Program Executive; Vice 
Admiral W. Mark Skinner, USN, Principal Military Deputy in the 
Office of the Assistant Secretary of the Navy for Research, 
Development, and Acquisition; and Lieutenant General Charles R. 
Davis, USAF, the Military Deputy for the Office of the 
Assistant Secretary of the Air Force for Acquisition.
    There are worrisome prospects for the future of tactical 
aviation programs, particularly in terms of having the numbers 
of aircraft that we need to keep from hollowing out our 
tactical aviation forces. We've been following your progress in 
trying to mitigate to close those gaps.
    There are a number of other issues that we may discuss, but 
in the interest of time I will stop here. Again, I want to 
thank our witnesses. I look forward to hearing your testimony.
    [The prepared statement of Senator Manchin follows:]
             Prepared Statement by Senator Joe Manchin III
    The subcommittee will come to order. I want to extend a welcome and 
thank each our witnesses for appearing before this subcommittee today. 
I also appreciate your flexibility is delaying the hearing. This 
afternoon, we are having a committee meeting with the King of Jordan 
and two other subcommittee hearings beside this one.
    This is my first hearing as subcommittee chairman and, although he 
has served elsewhere in the committee, this will be Senator Wicker's 
first hearing as Airland Subcommittee Ranking Member. Senator Wicker, I 
am really looking forward to working with you on the subcommittee this 
year.
    On behalf of the committee, I want to thank each of you, 
representing the men and women of our Armed Forces, for the wonderful 
jobs they are performing in Afghanistan and elsewhere around the world. 
We keep all those who are serving right now in our thoughts and 
prayers, and also remember that both they and their families are 
serving and sacrificing every
    Every year, we are challenged to make decisions balancing a number 
of competing demands for resources, including resources for current 
operations and investment in future modernization. In this case, we 
will be assessing plans and programs regarding the current status and 
future prospects for tactical aviation programs. Complicating things 
this year is sequestration, which, if Congress does not act to change 
things, could lead to significant consequences for our current 
readiness and future modernization.
    We meet today to talk about the F-35 Joint Strike Fighter (JSF) 
program and other tactical aviation programs. We all know that the JSF 
program is important, since it has been central to the long-term 
modernization plans for the Air Force, Navy and Marine Corps for more 
than 15 years now. Given that fact, any change in the cost, schedule, 
and performance of the JSF program sends shock waves throughout the 
Department and raises many questions of achieving that balance between 
the demands of maintaining readiness in the near term and those of 
modernizing for tomorrow. For instance, the Government Accountability 
Office has estimated that extending the service lives of existing F-16 
and F-18 aircraft would be approximately $5 billion.
    Today, we will seek a better understanding of implementation of the 
corrective actions the Department identified in the JSF program after 
the Nunn-McCurdy certification 3 years ago, and what levels of risk 
remains in the development and fielding program. General Bogdan, I know 
that there were a couple of engine-related problems since last year, 
and while we are always concerned anytime we hear about engine problems 
during research and development, I understand that you have identified 
the problems and have mapped a way ahead to minimize the effect of the 
problems on the testing and development program. I hope you will 
discuss these problems and solutions during your testimony.
    In addition to the more immediate acquisition issues, we also know 
there is significant concern about how much the F-35 is going to cost 
to operate during its life cycle. We do not have the new Selected 
Acquisition Reports for Major Defense Acquisition Programs yet this 
year, but last year, the Department was predicting the F-35 life cycle 
cost over 50 years would be approximately $1 trillion. That is a large 
mountain of cost. I hope we can gather some insight today into what the 
Department is doing to try to reduce those costs.
    In addition today, we want to focus on a number of issues, but 
primarily, we want to understand how the Department has been executing 
to the baseline for the JSF program since last year, how the Services 
are refining their responses to the JSF delays that emerged 2 years 
ago, and what effects those delays may have on our forces.
    Today we will hear from:

         Lieutenant General Christopher C. Bogdan, USAF, 
        Program Executive Officer, F-35 Lightning II Program
         Vice Admiral Walter M. Skinner, USN Principal Military 
        Deputy Office of the Assistant Secretary of the Navy (Research, 
        Development, and Acquisition)
         Lieutenant General Charles R. Davis, USAF, Military 
        Deputy Office of the Assistant Secretary of the Air Force for 
        Acquisition

    There are worrisome prospects for the future of tactical aviation 
programs, particularly in terms of having the numbers of aircraft we 
need to keep from hollowing out our tactical aviation forces. We have 
been following your progress in trying to mitigate or close these gaps.
    For example, the subcommittee has have been following the 
Department of the Navy's attempts to reduce the strike fighter 
shortfall to manageable levels. Five years ago, the Department of the 
Navy was estimating that we would be facing a shortfall in 2017 that, 
optimistically, would amount to 125 tactical fighters needed to outfit 
our 10 aircraft carrier air wings and 3 Marine Corps air wings. Three 
years ago, based on further analysis, the Navy was estimating that the 
maximum shortfall could be nearly twice that large, or roughly 250 
aircraft. Within the past 2 years, the Navy has taken actions, such as 
reducing squadron size, conducting service life extensions on some 
aircraft, and reducing time aircraft spend in the depots, that could 
reduce the gap to as small as 18 aircraft.
    Unfortunately, there has been a similar story regarding the Air 
Force. Previous Air Force witnesses at our aviation hearings have also 
projected a potential shortfall of Air Force tactical fighters in 
excess of 800 aircraft around 2025. Last year, the Air Force, as a part 
of the new Defense strategy, reduced fighter force structure. It is not 
clear to what extent this change in demand for tactical fighters has 
ameliorated the shortfall that the Air Force had been projecting, but 
we hope to hear more about that this afternoon.
    Last year, the Air Force was also investigating ways to extend the 
service lives of its A-10, F-15, and F-16 aircraft to help mitigate the 
gap between requirements and aircraft that it foresees. We would like 
to get an update on where these various life extension efforts stand 
and the confidence with which we can pursue these efforts.
    Although this is not necessarily a modernization issue yet, we 
would also like to get an update from General Davis on the full flight 
release of the F-22 aircraft after concerns about the F-22 life support 
system and hypoxia, including a brief description on what the Air Force 
has concluded and what actions you have taken to minimize the risk to 
F-22 crews.
    There are a number of other issues that we may discuss, but in the 
interest of time, I will stop here. Again, I want to thank our 
witnesses. I look forward to hearing your testimony.

    Senator Manchin. I would now like to recognize Senator 
Wicker, who will give his opening statement and ask questions.
    Senator Wicker.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Mr. Chairman. Thank you for 
holding the hearing. Thank you for your kind words of welcome 
to the subcommittee. Thank you to our three witnesses today for 
your selfless service to our Nation. I look forward to your 
testimony.
    Senator Manchin, I also want to take a brief moment to 
congratulate you on your appointment as chair of the Airland 
Subcommittee. Our subcommittee responsibilities are immense. 
They include programmatic and budget oversight of most Army and 
Air Force programs, as well as oversight of the Navy and Marine 
Corps tactical aviation activities. As ranking member I look 
forward to working with you to ensure that our Armed Forces 
remain the best trained, best equipped, and most professional 
fighting force in the world.
    I would like to begin by saying that I remain deeply 
concerned about the fiscal year 2013 defense authorization 
conference committee decision, made behind closed doors and 
without consultation of all conferees, which enabled the Air 
Force to begin implementation of its total force plan (TFP). I 
am convinced that some elements of the TFP were shortsighted 
and may adversely impact our intra-theater airlift capability 
at a time when our Services are evolving toward a more 
rotational deployment model.
    Similar to our committee's bipartisan efforts last year, I 
look forward to working with the chair on initiatives to help 
ensure the Air Force makes its force structure decisions based 
on the best possible understanding of long-term global force 
requirements. These decisions should not be based solely on 
self-imposed resource constraints.
    Now, as to tactical air superiority, our military has 
fought four major regional conflicts over the last 22 years--
Kuwait, Bosnia, Afghanistan, and Iraq. America's security 
challenges continue to persist across the globe, from the 
defiance of a volatile and dangerous dictator in North Korea to 
the scourge of transnational terrorism that persists in sub-
Saharan Africa. Effectively dealing with our current and 
potential adversaries means we must be prepared to act across 
the continuum of conflict, from lending humanitarian assistance 
in the wake of natural disasters to combating terrorism and 
cyber attacks, and we must be ready to fight and win a high-end 
conventional war against a nuclear-armed foe. Air power will no 
doubt continue to play a central role in our national security.
    Since 1953, no U.S. ground personnel have been killed by an 
attack from enemy aircraft. That is a success story. America's 
superiority and dominance in the air protects our homeland, 
deters potential adversaries, and ensures that our joint and 
coalition forces never have to question whether the aircraft 
flying above them is friend or foe.
    However, our air dominance is being challenged. Both Russia 
and China are currently fielding fifth generation fighters. 
Like our ground forces, America's combat air assets are worn 
out and spread thin after 2 decades of deferred modernization 
programs and curtailed purchases of key platforms.
    The service lives of many of these aircraft now extend 
beyond 30 years, in some cases well beyond 30 years. These 
extensions come at a price. Extending the lives of legacy 
aircraft means increased operation and maintenance (O&M) costs, 
as well as decreased technical superiority gaps.
    America must continue to be able to deter or defeat any 
threat, be it an asymmetric threat from a terrorist 
organization or a conventional challenge from a near-peer 
competitor. To do so we must be able to modernize and sustain 
our military, including our tactical aircraft. We cannot 
continue to kick the modernization can down the road, and I 
hope we agree on that, Mr. Chairman.
    Successfully modernizing means we must be cognizant of the 
negative impact of the overly expensive and slow acquisition 
process we currently have. We must find ways to deliver new and 
innovative systems on time and on budget. Changing the system 
will require the combined efforts of Congress, DOD, and 
industry.
    Specifically, number one, DOD must get its acquisition 
process in order by defining program risks upfront, setting 
realistic requirements, adequately prioritizing R&D, and 
leveraging the power of competition.
    Number two, DOD's industry partners must submit realistic 
contract proposals and be held accountable to their contractual 
obligations.
    Number three, Congress must uphold our responsibility to 
provide timely and adequate funding for key acquisition 
programs to help ensure predictability and long-term 
affordability for DOD and our foreign government partners.
    Let me conclude by observing that national defense is 
solely a Federal responsibility, but it requires assistance 
from all levels of government and civilian industry. We need 
our States to maintain or implement business-friendly policies 
that will encourage the industrial base to grow and add high 
tech manufacturing jobs. We need defense companies to meet 
their contractual obligations to the taxpayer by delivering 
products on time and on budget.
    Finally, we need better cooperation and transparency 
between the executive branch, DOD, and Congress, in order to 
ensure all parties fully understand our national security 
challenges and the means our military leaders require to meet 
them.
    I hope our witnesses today will elaborate on their 
assessment of the long-term impact that reduced defense 
spending will have on our industrial base and our ability to 
acquire new tactical aircraft on time and on budget.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Senator Wicker follows:]
             Prepared Statement by Senator Roger F. Wicker
                              introduction
    Mr. Chairman, thank you for holding this hearing. I thank our 
witnesses for their attendance today and their selfless service to our 
Nation. I look forward to your testimony.
    Senator Manchin, I also want to take a brief moment to congratulate 
you on your appointment as chairman of the Airland Subcommittee. Our 
subcommittee responsibilities are immense. They include programmatic 
and budget oversight of most Army and Air Force programs, as well as 
oversight of Navy and Marine Corps tactical aviation activities. As 
Ranking Member, I look forward to working with you to ensure that our 
Armed Forces remain the best-trained, best-equipped, and most 
professional fighting force in the world.
                       air force total force plan
    Mr. Chairman, I would like to speak on a personal point of 
privilege before I provide some brief comments on the tactical aviation 
programs for the Air Force, Navy and Marine Corps.
    I remain deeply concerned about the National Defense Authorization 
Act for Fiscal Year 2013 conference decision--made behind closed doors 
and without consultation of all conferees--that enabled the Air Force 
to begin implementation of its Total Force Plan (TFP).
    I am convinced that some elements of the TFP were shortsighted. 
They may adversely impact our intra-theater airlift capability at a 
time when our Services are evolving towards a more rotational 
deployment model. Mr. Chairman, similar to our committee's bipartisan 
efforts last year, I look forward to working with you on initiatives to 
help ensure the Air Force makes its force structure decisions based on 
the best possible understanding of long-term global force requirements. 
These decisions should not be based solely on self-imposed resource 
constraints.
                        tactical air superiority
    Our military has fought four major regional conflicts (Bosnia, 
Kuwait, Afghanistan, and Iraq) over the last 22 years. America's 
security challenges continue to persist across the globe, from the 
defiance of a petulant leader in North Korea, to the scourge of 
transnational terrorism that persists in Sub-Saharan Africa. 
Effectively dealing with our current and potential adversaries means we 
must be prepared to act across the continuum of conflict, from lending 
humanitarian assistance in the wake of natural disasters to combatting 
terrorism and cyber-attacks. We must be ready to fight and win a high-
end conventional war against a nuclear armed foe.
    Airpower will no doubt continue to play a central role in our 
national security. Many Americans may be surprised to learn that no 
U.S. ground personnel have been killed in an attack by an enemy 
aircraft since 1953. America's superiority and dominance in the air 
protects our homeland, deters potential adversaries, and ensures that 
our joint and coalition forces never have to question if the aircraft 
flying above them is friend or foe.
    However, our air dominance is being challenged; both Russia and 
China are currently fielding fifth-generation fighters. Like our ground 
forces, America's combat air assets are worn out and spread thin after 
two decades of deferred modernization programs and curtailed purchases 
of key platforms. The service lives of many of these aircraft now 
extend beyond 30 years. These extensions come at a price. Extending the 
lives of legacy aircraft means increased operation and maintenance 
costs as well as decreased technical superiority gaps.
                       maintaining air dominance
    America must continue to be able to deter or defeat any threat, be 
it an asymmetric threat from a terrorist organization or a conventional 
challenge from a near-peer competitor. To do so, we must be able to 
continually modernize and sustain our military--including our tactical 
aircraft. We cannot continue to kick the modernization can down the 
road. Successfully modernizing means we must be cognizant of the 
negative impact of the overly expensive and slow acquisition process we 
currently have in place. We must find ways to deliver new and 
innovative systems on time and on budget. Changing the system will 
require the combined efforts of Congress, the Department of Defense, 
and industry.
    Specifically:

    (1)  DOD must get its acquisition process in order by defining 
program risks upfront, setting realistic requirements, adequately 
prioritizing research and development, and leveraging the power of 
competition;
    (2)  DOD's industry partners must submit realistic contract 
proposals and be held accountable to their contractual obligations; and
    (3)  Congress must uphold its responsibility to provide timely and 
adequate funding for key acquisition programs to help ensure 
predictability and long-term affordability for DOD and our foreign 
government partners.
                               conclusion
    Let me conclude by observing that national defense is a Federal 
responsibility that requires assistance from all levels of government 
and civilian industry. We need our States to maintain or implement 
business-friendly policies that will encourage the industrial base to 
grow and add high-tech manufacturing jobs. We need defense companies to 
meet their contractual obligations to the taxpayer by delivering 
products on time and on budget. Finally, we need better cooperation and 
honesty between the executive branch, the Defense Department, and 
Congress, in order to ensure all parties fully understand our national 
security challenges and the means our military leaders require to meet 
them.
    As such, I hope our witnesses today will elaborate on their 
assessment of the long-term impact that reduced defense spending will 
have on our industrial base and our ability to acquire new tactical 
aircraft on time and on budget.
    With that in mind, I look forward to the testimony of all the 
witnesses.

    Senator Manchin. Thank you, Senator Wicker.
    I think at this time, Senator Wicker, I know that you have 
to leave soon, we'll go back to regular order then, if we can. 
We'll start with brief comments from our three presenters 
today, if you will. General Bogdan, if you would like to start, 
we'd like to hear from you.

  STATEMENT OF LT. GEN. CHRISTOPHER C. BOGDAN, USAF, PROGRAM 
   EXECUTIVE OFFICER, F-35 LIGHTNING II JOINT PROGRAM OFFICE

    General Bogdan. Thank you, sir. Chairman Manchin, Senator 
Wicker: Thank you for the opportunity to address this 
subcommittee regarding the F-35 Lightning.
    I first came to the F-35 Joint Program Office (JPO) in 
August 2012, serving as the Deputy to the then-Program 
Executive Officer (PEO), Vice Admiral Dave Venlet. On December 
6, 2012, I took over as the PEO from Admiral Venlet, who left 
me a program that was well on its way to getting its legs back 
underneath.
    Despite a turbulent past, the F-35 program is making steady 
progress today. This progress may not be as fast as you and I 
may like, but the size and the complexity of the program do 
contribute to this inertia. I hope that I'll be able to leave 
you today with an understanding of where the F-35 program is, 
where it is headed in the future, and what we are doing to 
ensure its success.
    Today, the program continues to make slow but steady 
progress and is moving forward in a disciplined manner. Let me 
highlight a few of the program's accomplishments in 2012. We 
conducted the first in-flight weapons releases from both the F-
35 A and B last year. We stood up our first operational F-35B 
squadron at Yuma Marine Corps Air Station. Additionally, the 
program began edge-of-the-flight envelope testing to the 
aircraft's maximum speed and altitude, and we also began our 
high angle of attack testing, all of which to date has been 
very successful.
    The program also successfully completed a U.S. Air Force 
operational evaluation, clearing the way for them to begin 
pilot and maintenance training at Eglin Air Force Base. 
Additionally, the cost of producing the F-35 continues to come 
down for each successive lot of airplanes. For example, Lot 5 
airplanes cost 4 percent lower than the previous Lot 4 
airplanes, and we expect such reductions to continue.
    While the program has continued to progress, there are 
still challenges and risks ahead. The biggest technical concern 
on the program is the development of software. Although most of 
the basic coding of software is complete, the integration of 
this software, linking all the systems on the airplane 
together, still has a ways to go.
    Over the past 2 years, the program office has implemented 
many changes in the way software is developed, tested, flight 
tested, measured, and controlled by the program office. These 
changes are beginning to have a positive effect, and as a 
result we are moderately confident that the program will 
successfully release our Block 2B and our Block 3I capabilities 
in 2015 and 2016. Our Block 2B capability is our initial combat 
capability, which we believe the U.S. Marine Corps will 
potentially use to declare initial operating capability in 
2015.
    However, there is more risk to the delivery of our final 
block, known as Block 3F, which is the Services' full 
warfighting capability. We intend on delivering that by the end 
of late 2017 and there is some risk there.
    The program office will be conducting a Block 3 critical 
design review this summer and that, coupled with at least 6 
months of flight testing of the current 2B software, will allow 
DOD to assess the likelihood of meeting the Block 3F final 
capability requirements in 2017. I will have a better answer 
for this committee and for the enterprise by the end of the 
summer about how likely it is to meet that final block of 
capability.
    Other technical risks we continue to monitor include the 
helmet-mounted display system, lightning protection, the 
tailhook, the fuel dump system, and the maturity of our 
autonomic logistics information system (ALIS). The program 
office has been working with the contractors and the Navy and 
the Air Force systems commands to arrive at solutions for all 
these issues.
    Affordability remains DOD's and my number one priority. The 
program office must execute the development program with 
discipline to ensure it can be completed within the time and 
the money we have been given. DOD must also continue to drive 
the cost of producing F-35s down and continue to attack the 
long-term life cycle costs of the F-35 weapons system.
    Let me tell you a few things DOD is doing today to ensure 
that in the long-run this aircraft is affordable. First, we've 
been studying all areas of sustainment to identify areas for 
cost reduction in what we call our business case analysis. We 
will continue this analysis through the summer and I will 
report those results when it is completed.
    Second, the program office intends on injecting competition 
into various portions of the overall sustainment effort. We 
conducted an industry day in November 2012 to see if there were 
both domestic and foreign companies that had the capacity, the 
capability, and the desire to compete for various sustainment 
areas, including managing our global supply chain, producing 
support equipment, operating our training centers, and 
administering our ALIS.
    Additionally, the program has instituted a robust 
reliability and maintainability program that is systematically 
identifying all the parts and systems on the aircraft that 
today require repairs all too frequently, and DOD is standing 
up its organic depots to improve the quality, throughput, and 
turnaround times for parts repairs. DOD is committed to doing 
everything it can to drive the cost of sustaining the F-35 down 
to a level that is considered affordable by all the Services, 
the partners, and foreign military sales (FMS) customers.
    In summary, I believe the basic F-35 aircraft design is 
sound and the program office can deliver on our commitments. As 
in any complex development program, there are still challenges 
and risks ahead. I intend to continue to lead this program with 
discipline, transparency, and accountability and we will 
continue to drive costs out of this program.
    Thank you again for the opportunity to discuss the F-35 and 
I look forward to answering your questions.
    [The prepared statement of General Bogdan follows:]
       Prepared Statement by Lt. Gen. Christopher C. Bogdan, USAF
    Chairman Manchin, Ranking Member Wicker, and distinguished members 
of the subcommittee. Thank you for the opportunity to address this 
subcommittee regarding the F-35 Joint Strike Fighter.
    The F-35 Joint Strike Fighter is the Department of Defense`s 
largest acquisition program, and its importance to our national 
security is immense. The F-35 will form the backbone of U.S. air combat 
superiority for generations to come. It will replace the legacy 
tactical fighter fleets of the Air Force, Navy, and Marine Corps with a 
dominant, multirole, fifth-generation aircraft, capable of projecting 
U.S. power and deterring potential adversaries. For our international 
partners and foreign military sales customers who are participating in 
the program, the F-35 will become a linchpin for future coalition 
operations and will help to close a crucial capability gap that will 
enhance the strength of our security alliances. The fiscal year 2014 
budget includes $8.4 billion for continued system development, test and 
procurement of 29 F-35 aircraft.
    It is our duty to produce the next generation fighter jet for the 
United States and our allies, understanding that we live in a resource 
constrained world. The current F-35 program is focused on completing 
System Design and Development within the time and funding planned, 
producing aircraft that are affordable and achieve mission needs, and 
sustaining fielded aircraft in an effective and economical fashion. 
This plan, which has been in place since 2012, is already resulting in 
steady progress, however, I am pressing for faster and stronger 
performance in the upcoming year. There are 29 F-35s now deployed in 
operational and training squadrons at three locations and the program 
has started a slow shift of focus to production and long-term 
sustainment without losing the momentum we see in the development and 
flight test programs. Affordability remains my number one priority. We 
must use all of our energy finishing development within the time and 
money we have, we must continue to drive the cost of producing F-35s 
down, and we must start today to attack the long term life cycle costs 
of the F-35 weapon system.
                program accomplishments in the last year
    The F-35 program team achieved a number of accomplishments in 2012, 
such as the delivery of 30 aircraft, including the last System 
Development and Demonstration (SDD) aircraft (CF-5, delivered to 
Patuxent River) and jets delivered to training squadrons at Eglin Air 
Force Base and the stand up of the first USMC operational squadron at 
Yuma.
    F-35s flew 1,984 sorties for a total of 3,118 hours last year, 
bringing the total hours flown by F-35s to 5,487. We conducted the 
first in-flight weapons releases from the F-35 A and B and enabled the 
first stand up of an operational F-35B squadron at Yuma Marine Corps 
Air Station. The F-35C has shown good progress in testing the modified 
tailhook, although we have more work to do. Additionally, the program 
began high angle of attack testing which has been successful to date, 
completed the Air Force's F-35A Operational Utility Evaluation, and 
enabled the start of pilot and maintenance training activities at Eglin 
Air Force Base for both the Air Force and U.S. Marine Corps. From a 
business perspective, the F-35 program successfully closed negotiations 
on the Lockheed Martin Low Rate Initial Production (LRIP) lot 5 and 
modified SDD contracts. Additionally, negotiations for the Pratt & 
Whitney engine contracts for LRIP lot 5 and modifications for the SDD 
contract were completed in February, 2013.
                        impacts of the sequester
    Sequestration, as well as congressionally directed reductions to 
the System Design and Development program in fiscal year 2013, has the 
potential to either stretch the development program out or reduce the 
capabilities we can deliver to the warfighter. My first priority is to 
preserve the development of Block 2B and 3I capabilities. Block 2B is 
important because it is the initial warfighting capability of the F-35 
and potentially the capability that could be used to declare USMC 
Initial Operating Capability. I have moderate confidence that Block 2B 
and 3I will be delivered on time with all the capability we have 
promised. However, I am less optimistic about Block 3F, our final 
capability. Without some form of payback of the SDD money we will lose 
to Congressional cuts and sequestration, we will not be able to deliver 
3F on time with full capability. Additionally, if the Department and 
the Services decide to take reductions to procurement funding, fewer 
aircraft may be ordered in LRIP Lot 7 (fiscal year 2013 budget) for 
Department of the Navy and the Air Force. While this would slightly 
lessen the cost burden imposed by concurrency, fewer aircraft in LRIP 
Lot 7 would increase the unit cost of the remaining aircraft in Lot 7. 
Our international partners are closely watching unit cost and are 
highly sensitive to cost increases. These increases may result in 
reduction of their aircraft quantities, which would in turn increase 
unit costs even more and cause them to relook their commitment to the 
program. Moreover, furloughing my government civilians will have 
immediate negative consequences. As one example, due to the reduction 
in personnel and base operating support, my test and evaluation program 
will be reduced from currently operating on a 6-day a week schedule 
with extended hours to one that will likely be limited to 4 days a week 
and only 8 hours a day. I estimate that this could reduce the F-35 
flight test program's productivity by nearly one-third, significantly 
slowing the program's forward momentum.
                       international partnership
    The F-35 program continues to be the Department of Defense's 
largest cooperative program, with eight Partner countries participating 
under Memorandums of Understanding for System Development and 
Demonstration (SDD) and for Production, Sustainment and Follow-on 
Development (PSFD). The eight partner countries include the United 
Kingdom, Italy, the Netherlands, Turkey, Canada, Australia, Denmark, 
and Norway. The partners recently met and all expressed their continued 
commitment and support for the program. However, as stated above, they 
are all watching closely how the DOD deals with our budget cuts and the 
impact this has on the cost of the program.
    In October 2010, Israel signed a letter of offer and acceptance to 
purchase 19 F-35A aircraft for $2.75 billion, with deliveries scheduled 
to begin in 2016. In June 2012, Japan signed an agreement to purchase 
the first 4 of a planned acquisition of 42 F-35A aircraft for $741 
million with deliveries scheduled to begin in 2016. The F-35 team 
developed a proposal to support the Republic of Korea's competitive 
Request for Proposal for acquisition of its future fighter. Selection 
is expected in the summer of 2013.
                    development program performance
    The F-35 development program continues to execute to the baseline 
approved at the March 2012 Milestone B recertification Defense 
Acquisition Board. My biggest concern in development is software. I am 
moderately confident that the program will successfully release the 
Block 2B and 3I capability by 2015 and 2016, respectively. However, I 
see more risk to the delivery of Block 3F, our full warfighting, 
capability by 2017. I will have better information to assess if we can 
meet our Block 3F promises after the Block 3 Critical Design Review and 
after at least 6 months of flight test on our 2B software, both of 
which are currently scheduled for early summer 2013.
    In the past year, the F-35 program has implemented a major shift in 
the oversight and management of software development, which has 
resulted in reduced times to develop and integrate software, reduced 
errors in the software code developed, and a marked increase in the 
cooperation and understanding between the prime contractor and the 
program office. I have directed a Capability Block Plan that is an 
integrated roadmap that defines the incorporation of capabilities for 
the F-35 program. Additionally, I have instituted a Block Review Board 
which places the government in charge of all configuration, capability, 
and schedule changes to software development. We have also implemented 
robust systems engineering/technical review process for all development 
work to provide greater knowledge and defined decision gates to 
determine if the system configuration under consideration is mature 
enough to proceed to the next phase. This, coupled with automated tools 
and processes, has resulted in an almost 10-fold reduction in software 
release build time, and we have seen corresponding improvements in 
configuration management, test automation and error detection and 
resolution. However, we still have challenges and the prime contractor 
and its subs still need to improve both the speed and quality of 
software development to be able to catch up from previous software 
delays.
    In addition to software challenges, the three F-35 variants are 
encountering the types of development problems typically experienced on 
advanced state-of-the-art, high performance aircraft development 
programs at this stage of maturity. While we still have technical risks 
on the program, I have confidence that the known technical issues we 
have will be solved and properly integrated into the F-35. The Helmet 
Mounted Display System (HMDS) for the F-35 is a major technological 
advance and a design challenge. Issues faced by the program office over 
the past year relative to the HMDS were ``green glow'' or insufficient 
helmet display contrast, latency of the displayed information, 
``jitter'' or lack of stability of the displayed symbology, night 
vision acuity and alignment. We executed a short flight test program 
from November 2012 to March 2013 dedicated solely to exploring and 
understanding the helmet problems using developmental and operational 
test pilots flying a number of operationally representative missions. 
As a result of this testing, the program now understands and has 
mitigated the effects of ''green glow'', latency, jitter and alignment. 
Additional work still needs to be done to ensure that the program has a 
night vision camera that is effective for operations as our testing 
indicated that the current night vision camera is unsuitable for 
operational use. As risk reduction, the program continues to fund 
development of a night vision goggle-based alternative helmet solution. 
The goggle-based helmet development will continue until we see 
demonstrated improvement in all of the risk areas of the original 
helmet and until the government has secured a price agreement with the 
prime contractor showing significant cost reduction in the original 
helmet.
    During land-based ship suitability testing in 2011, the F-35C 
tailhook did not catch the arresting wire at a rate considered to be 
acceptable. A Critical Design Review was completed in February 2013 on 
a redesigned arresting hook system and modeling and simulation 
involving the redesigned hook showed a marked improvement in 
performance. Ground test of this newly redesigned hook is scheduled at 
Lakehurst, NJ in the fourth quarter of 2013, followed by aircraft 
carrier qualifications in third quarter of 2014. Although work remains 
to be done, I am confident this new hook will meet our needs.
    Early Fuel Dump testing revealed that fuel was migrating within the 
wing during fuel dumping and the fuel was impinging on the underside of 
the wing. We have designed improved seals within the wing to mitigate 
the migration issue and selected a new design of the fuel pump port on 
the underside of the wing which appears from initial prototype testing 
to resolve the fuel impingement issue.
    The Autonomic Logistics Information System (ALIS) provides 
maintenance, reliability, logistics, and training information to 
support sustainment of F-35 aircraft. Currently, ALIS is exhibiting a 
level of unreliable data tracking within its health management system. 
Additionally, the software for ALIS requires development and time to 
mature. I continue to closely watch the progress of ALIS and have put 
in place a new systems engineering rigor and a new leadership structure 
that has improved performance. The program is delivering incremental 
software fixes to address problems more quickly and I have put into 
place a plan for a complete end-to-end test to ensure the aircraft and 
ALIS can operate together seamlessly.
    In 2012, the F-35 SDD Flight Test program exceeded the number of 
planned flights, but fell slightly behind in overall test points. The 
ITF achieved 1,167 test flights, a 17 percent increase from the total 
flights in 2011. The ITF also executed 9,319 test points, which was 
roughly 2 percent shy of what was planned. This shortfall was largely 
due to restrictions levied on the flight envelope due to problems with 
the weapons bay flipper doors, as well as challenges due to software 
maturity.
    Pratt & Whitney SDD F135 engines have completed a total of 25,296 
operating hours, 11,289 hours on flight-test engines, and a total of 
4,566 hours of flying time on all three variants of F-35 aircraft. 
Pratt & Whitney is currently supporting flight test on all three 
variants at three locations. Various engine ``firsts'' were also 
achieved including the completion of air-start testing and acceleration 
to the F-35's maximum speed of 1.6 Mach.
    The F-35 fleet experienced two fleet-wide groundings in January and 
February 2013 due to issues with the F135 engines. The first incident 
occurred in January 2013. An F-35B was forced to abort a take-off for 
what would later be understood to be an improperly crimped fueldraulic 
hose in the F135 engine. The F-35B fleet was grounded for 19 days, but 
was returned to flight after confirming the integrity of all similar 
hoses in the engines. The program office put in place activities to 
better monitor and improve the quality of the hoses being provided for 
the engine, and continues to track this closely. The second incident 
grounded all variants of the F-35 for approximately 7 days and resulted 
from a crack discovered in the third stage engine turbine blade. The 
engine in question had been flying at the highest heat and most 
significant stresses of any of the jets in the test and operational 
fleets, which contributed to this crack. After confirming the source of 
the crack, the fleet was inspected and returned to flight. Engineering 
work continues to assess the long term implications of this turbine 
blade crack on the life of the F-35 engine.
                     production program performance
    Costs for production aircraft continue to come down for each 
successive lot put on contract. In 2012, Lockheed Martin delivered 30 
aircraft, a 57 percent increase over 2011. Lockheed Martin in 2012 did 
not deliver all planned aircraft in large part due to a strike by the 
International Association of Machinist and Aerospace Workers that 
lasted from April 28th until all members went back to work on July 9th. 
Since the strike, performance has been fairly stable and the program 
has seen marked improvements in design stability, parts availability, 
workforce stability, shop floor discipline and a reduction in scrap, 
rework and repair. Overall, production performance is tracking to the 
definitized baseline, with factory assembly performance only 2 days 
behind plan. With the demonstrated improvements in all production areas 
leading to delivery, my level of confidence in the program's ability to 
produce high quality F-35s and our ability to eventually ramp up 
production is strong.
    Pratt & Whitney has delivered 85 engines and 38 lift fans to date. 
For 2012, Pratt & Whitney has improved their delivery rate, increasing 
from two per month average in 2011 to four per month average in 2012. 
Pratt & Whitney product deliveries were interrupted on several 
occasions due to technical issues and quality escapes resulting in 
product delivery holds and material deficiencies. Lot 4 spare engine 
modules and spare parts are tracking behind contract delivery dates and 
will not be delivered within the contract period of performance, an 
issue my team is addressing.
    In September 2012, LM Aero notified the F-35 program office of the 
discovery of a specialty metals noncompliance. The Under Secretary of 
Defense for Acquisition, Technology, and Logistics (USD(AT&L)) approved 
a waiver to allow the program to accept lot 4 through 9 aircraft with 
noncompliant specialty metals (magnets) in the radar controller. 
USD(AT&L) subsequently approved an amendment to allow the acceptance of 
lot 4 aircraft with noncompliant specialty metals in the radar radio 
frequency isolators also. A subsequent amendment will extend the waiver 
to lot 5 aircraft. All lot 6 aircraft will have compliant radar radio 
frequency isolators. I also directed a top-to-bottom assessment of all 
companies within the F-35 supply chain. As a result, an additional part 
procured from a non-qualifying country was identified. The subsequent 
waiver for target assemblies (proximity magnets) approved by USD(AT&L) 
was sent to you and the other Defense Committees earlier this month. 
The program office, the contractor and the Defense Contract Management 
Agency have jointly developed a corrective action plan to assess supply 
chain compliance with all legal requirements.
                              concurrency
    The Department of Defense established the F-35 program in 2001 with 
a planned measure of concurrent development and production that 
attempted to balance cost, risk, and the need for tactical aircraft 
modernization. Changes that must be made to the production aircraft due 
to problems found in testing are very real and affect schedule and cost 
in hardware, software, test and production. However, concurrency is a 
transient issue in which risks progressively decline through the end of 
SDD and the test program. Concurrency risk will progressively recede 
between now and 2015, when second-life fatigue testing should complete 
for all variants and flight test will be through 80 percent of the 
loads envelope.
    Concurrency costs are primarily driven by span time for 
incorporating changes; the program office and Lockheed Martin have 
implemented a concurrency management system to control and expedite the 
number of changes cut into production or requiring retrofits. Since 
2011 the program has reduced average span times by 5 months, from 18 
months to 13 months, as measured from engineering drawing releases to 
new parts available for installation into production aircraft. The 
continual reduction in span time will significantly reduce the 
concurrency impact to the program.
    Concurrency costs were originally estimated to be roughly 5 percent 
to 8 percent of recurring flyaway costs. Over the past year, the F-35 
program has worked with Lockheed Martin to refine the estimate of 
concurrency costs based on actual F-35 discrete data results from 
qualification events. As a result of this approach, our concurrency 
estimate has decreased to 3 percent to 5 percent of recurring flyaway 
costs.
                 operations and sustainment performance
    2012 marked the first year of operational performance by F-35 A and 
B models in the Air Force and Marine Corps. The program continues to 
address the various issues arising from operating an aircraft still in 
development and providing the operators improved technical data and 
solutions to emerging issues. Overall, the reliability of the weapon 
system is improving and the product support integrators are gradually 
resolving issues with spares and repair cycle times.
    In 2012, the F-35 program began pilot and maintenance training for 
both F-35A and F-35B aircraft and as of today, has completed training 
for the transition of 37 pilots and 686 maintainers. In cooperation 
with the Joint Operational Test Team and Air Force Air Education and 
Training Command, the program successfully completed the Ready for 
Training Operational Utility Evaluation (OUE) which found that the 
training system is ``sufficient to meet the relatively low student 
training sortie demand of the syllabus'' for the training of 
experienced pilots.
    In 2013, the focus will be on delivering sustainment capability as 
we stand up new bases and squadrons at Edwards Air Force Base, Nellis 
Air Force Base and Luke Air Force Base. Additionally, the program will 
stand up depot activities for aircraft components at Jacksonville Naval 
Air Station, Naval Aviation Depot San Diego, and Warner-Robins Air 
Logistics Center, as well as modification lines at Cherry Point Marine 
Corps Air Station and Ogden Air Logistics Center.
    F-35 Sustainment costs remain a concern across the Department and 
to me personally. While the F-35 Joint Program Office and the Services 
continued to make progress in 2012 toward reducing sustainment 
estimates, there is much more work to be done in this area, and it is 
one of my highest priorities. The Services and the Department will 
continue to support the F-35 Joint Program Office (JPO) in its 
disciplined approach to analyzing and reducing sustainment costs. The 
program office continues to pursue a sustainment Business Case Analysis 
to identify areas for reduction. We conducted an Industry Day to foster 
competition in several areas of the sustainment program, including 
elements of the supply chain, support equipment, training operations 
support and Autonomic Logistics Information System administration. The 
program has instituted a robust Reliability and Maintainability program 
that is systematically identifying cost drivers and optimizing the 
maintenance approach for those components while continuing to institute 
tighter contract standards for suppliers to drive down repair turn 
times. Additionally, the program has instituted a Targeted 
Affordability Program that provides an increased emphasis on operations 
and sustainment and total ownership costs. We continue to work with the 
prime contractors to achieve an efficient Performance Based Logistics 
environment at the overarching weapon system level. The ultimate goal 
of all of this work is to produce a mutually beneficial sustainment 
enterprise that--with relevant metrics and incentives--operates, 
manages and supports the global system, while meeting warfighter-
defined readiness and cost objectives.
                airframe and propulsion contract actions
    The fiscal year 2011 lot 5 airframe contract was definitized in 
December 2012 following a ``Should Cost'' review and negotiations that 
lasted nearly 14 months. This FPIF contract with Lockheed Martin is 
valued at $3.8 billion and procures 32 aircraft (22 F-35A, 3 F-35B, and 
7 F-35C) and ancillary equipment. Although negotiations were lengthy, 
the parties reached a fair, well-reasoned settlement that caps the 
government's liability at a ceiling price of 112 percent, as compared 
to 120 percent of the target cost in the prior lot buy. In addition, 
for the first time on this program, the government's cost risk is being 
mitigated by transferring 50 percent of the cost responsibility for 
concurrency to Lockheed Martin. The terms of the contract include a 
``cost-sharing/no fee'' arrangement whereby the Government and Lockheed 
Martin share equally (50/50) in these costs with no fee for the known 
concurrency changes. Negotiations concluded on the fiscal year 2011 
FPIF engine contract in February 2013 at a value of $588 million for 32 
engines and spares. This contract reflects a 0/100 overrun shareline 
with the contractor assuming all cost overrun risk and capping the 
government's liability at the negotiated value of the contract, another 
first for the program.
    An Undefinitized Contract Action (UCA) for lot 6 was awarded on 
December 28, 2012 for the procurement of up to a total of 31 aircraft 
(18 F-35A, 6 F-35B and 7 F-35C). Proposal evaluation is underway for 
both the lot 6 (fiscal year 2012) and lot 7 (fiscal year 2013) airframe 
procurements. We believe we can have a negotiation settlement for lots 
6 and 7 by the end of May 2013, followed by final contract award in 
June 2013. By negotiating both lots 6 and 7 together, the program is 
striving to get out of the business of doing UCAs and attempting to 
align contracting actions with our budget and the actual production of 
aircraft. Concurrency sharing and a 0/100 overrun share (contractor 
assumes all the risk) will also be part of these contracts. There is no 
UCA for the lot 6 (fiscal year 2012) engine procurement and 
negotiations are expected to commence this month (April) with closure 
planned for summer 2013. The engine fiscal year 2012 and fiscal year 
2013 buys will similarly be combined to regain a more appropriate 
contracting cadence.
    Fixed-price-type contracts are planned for future F-35 aircraft and 
F135 engines procurements. The JSF Program Office will ensure that 
future U.S. aircraft and engine procurements comply with Section 143 of 
the National Defense Authorization Act (NDAA) for fiscal year 2012, 
which provides: ``. . . [t]he Secretary of Defense shall ensure each of 
the following: (1) That the contract is a fixed-price contract. (2) 
That the contract requires the contractor to assume full responsibility 
for costs under the contract above the target cost specified in the 
contract.''
    An effective Earned Value Management System (EVMS) is critical to 
monitoring performance and controlling costs. In 2007, a Defense 
Contract Management Agency (DCMA) review found the Lockheed Martin 
Aeronautics (LM Aero) EVMS to be noncompliant with EVM guidelines. 
Although both DCMA and LM Aero engaged in a focused effort to bring the 
LM Aero EVMS into compliance, appropriate corrections were not 
completed and DCMA decertified the LM Aero EVMS in 2010. LM Aero 
created its EVMS Corrective Action Plan (CAP) during 2012; actions 
include development of new tools and processes as well as modifications 
to core management processes. This CAP was accepted by the DCMA in 
February 2013. After an 8-12 month timetable to complete elements of 
the CAP, DCMA will start its re-certification process. In accordance 
with DOD Federal Acquisition Regulations, the DCMA imposed a 5 percent 
withhold against progress payments for new F-35 contracts, starting 
with LRIP 5. This 5 percent withhold is a result of the disapproved 
status of LM Aero's EVMS. The withhold will remain in place until LM 
Aero's EVMS deficiencies are corrected and the EVMS is compliant with 
EVM guidelines.
                               conclusion
    My observations and assessments since my arrival on the program 
give me reason to believe the basic aircraft design is sound and we can 
deliver on our promises to you, the taxpayers and warfighters. While 
there is still risk in the program, I have confidence in the resilience 
of the plan to absorb expected further learning and discovery and stay 
on track, so long as it remains properly resourced.
    Software development remains one of my key focus areas. I have 
observed past and current performance by industry on software that 
gives me concern about the ability to deliver full capability within 
the current schedule without improvement in software development and 
test performance. The changes implemented by the combined government/
contractor team have improved this outlook, but more work still needs 
to be done. The previous PEO developed a solid program baseline, and I 
continue to refine the execution of this baseline. However, I need my 
industry partners to step up to the plate and execute at the high 
levels I know they are capable of.
    As in any complex development program there are challenges, but I 
believe the enhanced capability of the F-35 will provide the backbone 
of the U.S. combat air superiority for generations to come. The 
technological capabilities of the aircraft are sound. The program's 
management is rising to the challenges of managing this complex system 
with discipline, transparency and accountability. Our progress 
continues at a slow but steady pace. I intend on completing this 
program within the budget and schedule I have been given. I ask that 
you hold me, my team, our stakeholders and contractors accountable over 
the coming months and years to ensure that we develop and deliver the 
warfighting capability this country needs.
    Thank you again for this opportunity to discuss the F-35 Joint 
Strike Fighter Program. I look forward to answering any questions you 
have.

    Senator Manchin. Thank you, General.
    Now we'll hear from Admiral Skinner.

  STATEMENT OF VADM W. MARK SKINNER, USN, PRINCIPAL MILITARY 
  DEPUTY TO THE ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, 
                  DEVELOPMENT, AND ACQUISITION

    Admiral Skinner. Chairman Manchin, Senator Wicker: Thank 
you for the opportunity to appear today before your 
subcommittee to discuss the Department of the Navy's aviation 
programs. On behalf of the Department of the Navy, I thank you 
and all members for your steadfast support to our Navy and 
Marine Corps who are meeting the Nation's commitments around 
the world. I propose to provide a brief statement and submit a 
separate formal statement for the record.
    The Navy-Marine Corps team is forward-deployed and forward-
engaged performing missions around the globe. Today naval 
aviation components are in the skies of Afghanistan protecting 
troops and Afghan civilians on the ground, providing 
intelligence, surveillance, and reconnaissance (ISR) off the 
coast of Korea, over the Sea of Japan, the Persian Gulf, and 
the Horn of Africa, and they are providing maritime security 
along the world's vital sea lanes, and standing as a force of 
deterrence to those who would do harm to our Nation or our 
Nation's interests.
    In support of the Defense Strategic Guidance, we are also 
developing and recapitalizing to support the President and the 
Secretary of Defense's strategic priorities to rebalance to the 
Pacific, to ensure we provide the capability and the capacity 
to maintain an important presence in this region today and for 
the foreseeable future. We continue to assess and reshape our 
naval aviation plan to reflect the priorities of this defense 
strategy, with the reality of fact-of-life top-line reductions 
consistent with the Budget Control Act (BCA) of 2011. As such, 
this year's aviation and strike weapons plan strikes a balance 
between capacity, capability, affordability, and 
maintainability of the industrial base.
    To fulfill our Nation's commitments and strategic 
priorities, the Department of the Navy's 2014 aviation budget 
request includes funding for R&D and procurement of 165 
aircraft and more than 2,400 strike weapons. We have important 
work to do to close out-year capability gaps and risks. In 
doing so, however, we are working to deliver the full 
capability and capacity that our warfighters need in an 
affordable manner.
    For example, we are increasing implementation of new cost 
reduction initiatives, like competition and early standup of 
depot maintenance, striving to use multi-year procurement 
strategies and strengthening an acquisition workforce culture 
to ensure we provide the best return on investment and be the 
best possible stewards of the taxpayers' monies.
    Ultimately, we recognize that as we balance requirements, 
manage the increasing pressure to our top line, and factor in 
industrial base considerations, it is ever more important that 
our naval aviation programs closely align with not only the 
priorities outlined in the new defense strategy, but that 
government and industry continues to work together to increase 
efficiencies and improve affordability to support our current 
forces and help us build the future force of naval aviation.
    Mr. Chairman, thank you for the opportunity to appear 
before your subcommittee today and I look forward to answering 
your questions.
    [The prepared statement of Admiral Skinner follows:]
            Prepared Statement by VADM W. Mark Skinner, USN
                              introduction
    Mr. Chairman, Senator Wicker, and distinguished members of the 
subcommittee, we thank you for the opportunity to appear before you 
today to discuss the Department of the Navy's aviation programs. Our 
testimony will provide background and rationale for the Department's 
fiscal year 2014 budget request for aviation programs aligning to our 
strategic priorities and budgetary goals.
    The United States is a maritime nation with global 
responsibilities. Our Navy and Marine Corps' persistent presence and 
multi-mission capability represent U.S. power projection across the 
global commons. They move at will across the world's oceans, seas and 
littorals, and they extend the effects of the sea-base deep inland. 
Naval Aviation provides our Nation's leaders with ``offshore options.'' 
We enable global reach and access, regardless of changing 
circumstances, and will continue to be the Nation's preeminent option 
for employing deterrence through global presence, sea control, mission 
flexibility and when necessary, interdiction. We are an agile strike 
and amphibious power projection force in readiness, and such agility 
requires that the aviation arm of our naval strike and expeditionary 
forces remain strong.
    There are several central themes to our 2014 Naval Aviation Budget 
plan: fifth generation fighter/attack capability; persistent multi-role 
intelligence, surveillance, and reconnaissance; supporting capabilities 
such as electronic attack, maritime patrol, and vertical lift; robust 
strike weapons programs; and targeted modernization of the force for 
relevance and sustainability.
    First, we are acquiring F-35 fifth generation fighter/attack 
aircraft while maintaining sufficient legacy aircraft inventory 
capacity. Our plan will integrate fifth generation technologies into 
the carrier air-wing and expeditionary forces while maintaining and 
modernizing the capability of the legacy fleet. The F-35B will replace 
three Marine Corps legacy aircraft: F/A-18, EA-6B, and AV-8B. The F-35C 
will complement the capabilities of the F/A-18E/F Super Hornet and E/A-
18G. We have maintained our F-35B and F-35C procurement profile 
achieving the program procurement stability in line with the 
improvements in program accountability, discipline and transparency. 
The overall F-35 development program is adequately resourced and has 
realistic schedule planning factors to complete System Development and 
Demonstration (SDD). Although challenges still remain, the Navy and 
Marine Corps are fully committed to the F-35B and F-35C variants as we 
believe this aircraft is on sound footing towards delivering full Block 
3 capabilities.
    The F/A-18E/F will continue to receive capability enhancements to 
sustain its lethality well into the next decade. Future avionics 
upgrades will enable network-centric operations for situational 
awareness and transfer of data to command-and-control nodes.
    To meet the demand for persistent, multi-role intelligence, 
surveillance, and reconnaissance (ISR) capability, the Navy and Marine 
Corps are building a balanced portfolio of manned and unmanned 
aircraft, leveraging other service capacity where able, but valuing the 
unique contribution of maritime ISR. Unmanned systems have experienced 
high growth in the past decade and have proved to be invaluable assets 
for the joint force commanders. Because of their increasing presence, 
importance, and integration on the maritime and littoral battlefields, 
the roadmaps for the unmanned air systems are now included alongside 
the manned aircraft platforms in the mission categories they serve. The 
Unmanned Carrier Launched Airborne Surveillance and Strike (UCLASS) air 
system will provide a persistent aircraft carrier-based reconnaissance 
and strike capability to support carrier air-wing operations beginning 
by the end of the decade. MQ-4C Triton will provide persistent land-
based maritime surveillance and complement our P-8 Multi-Mission 
Maritime Aircraft; MQ-8 Vertical Takeoff and Landing Tactical Unmanned 
Aerial Vehicle (VTUAV) will provide ISR support to our Littoral Combat 
Ships (LCS); and smaller unmanned systems as the RQ-21A Small Tactical 
Unmanned Aircraft System and RQ-7B Marine Corps Tactical Unmanned 
Aerial System (UAS) will provide the shorter duration, line-of-sight 
reconnaissance capability essential for the unit level.
    The fiscal year 2014 budget request enables Naval Aviation to 
continue recapitalization of our aging fleets of airborne early 
warning, maritime patrol, electronic attack, and vertical lift 
platforms.
    The Department is recapitalizing our fleet of E-2C airborne early 
warning aircraft with the E-2D. E-2D integrates a new electronically-
scanned radar that provides a two-generation leap in technology with 
the capability to detect and track emerging air and cruise missile 
threats in support of Integrated Air and Missile Defense. We continue 
efforts to replace our aged fleet of P-3C maritime patrol aircraft with 
a modern P-8A equipped with a sensor suite that provides persistent 
undersea and anti-surface warfare capabilities. Electronic attack 
capabilities, both carrier-based and expeditionary, continue to mature 
with plans to field 16 EA-18G squadrons, while we also continue 
development of the Next Generation Jammer (NGJ) to replace the legacy 
ALQ-99 Tactical Jamming System.
    The Navy and Marine Corps are participating in Joint Future 
Vertical Lift efforts to identify leverage points for future rotorcraft 
investment. Currently, the Department continues to modernize vertical 
lift capability and capacity with procurement of MH-60R/S, AH-1Z, UH-
1Y, CH-53K, MV-22B, and the fleet of Presidential Helicopters (VXX 
program).
    Finally, within our fiscal year 2014 budget request, the Department 
is continuing investments in the strike weapons programs that enable 
any deterrence or combat operation to ultimately succeed. Strike 
weapons investments include the Air Intercept
    Missile/AIM-9X Block 2; Small Diameter Bomb II (SDB II); the Joint 
Standoff Weapon (JSOW C-1); Tactical Tomahawk Cruise Missiles (TACTOM/
BLK IV); and the Advanced Anti-Radiation Guided Missile (AARGM). These 
capabilities ensure our Navy and Marine Corps warfighters can and will 
dominate in the air, on the world's oceans, seas and littorals, and in 
any land-combat operation.
                       tactical aviation (tacair)
F-35B/F-35C Lightning II
    The Department of the Navy remains firmly committed to both the F-
35B Short Take-Off and Vertical Landing (STOVL) variant and the F-35C 
Carrier Variant (CV) of the Joint Strike Fighter (JSF) program, as they 
are essential to our immediate and long-range Navy and Marine Corps 
aviation strategy and the Nation's security. F-35 will supplant the 
Navy's aging TACAIR fleet by replacing the Navy and Marine Corps legacy 
F/A-18 A-D Hornet and the Marine Corps AV-8B Harrier. The incorporation 
of F-35B and F-35C aircraft into our naval force will provide the 
dominant, multi-role, fifth-generation capabilities that are essential 
across the full spectrum of combat operations to deter potential 
adversaries and enable future naval aviation power projection.
    The Marine Corps will leverage the F-35B's capabilities to ensure 
our TACAIR is able to provide the fifth-generation benefits to our 
ground warriors. The concept is one aircraft, capable of multiple 
missions, providing the MAGTF with flexible expeditionary basing and 
superior technology to dominate the fight. Our requirement for 
expeditionary tactical aircraft has been demonstrated repeatedly since 
the inception of Marine aviation almost 100 years ago today. From the 
expeditionary airfields and agile jeep carriers, to close air support, 
to forward basing on cratered runways and taxiways throughout Iraq, and 
strikes from the sea in Libya to today's fight in Afghanistan, our 
ability to tactically base fixed-wing aircraft has been instrumental to 
our success on the battlefield. Given the threats we will face in the 
future, the F-35B is clearly the aircraft of choice to meet our 
expeditionary operating requirements at sea and ashore. It is the 
interoperability catalyst that optimizes our TACAIR effectiveness and 
will generate unprecedented strategic and operational agility within 
our MAGTF's to counter a broad spectrum of threats and win in 
operational scenarios that cannot be addressed by current legacy 
aircraft. Similarly, in the Carrier Battle Group, the F-35C complements 
the F/A-18E/F Block II and EA-18G in providing survivable, long-range 
strike capability and persistence in an access-denied environment. F-
35C will provide the Carrier Strike Group Commanders greater tactical 
agility and strategic flexibility to counter a broad spectrum of 
threats and win in operational scenarios that cannot be addressed by 
current legacy aircraft.
    With the resources applied to the F-35 program at the March 2012 
Milestone B recertification and reflected in fiscal year 2014 
President's budget request, the overall F-35 development program is 
adequately resourced with realistic schedule planning factors to 
complete SDD. The SDD contract renegotiation has been completed and 
includes these updated planning factors. Although challenges still 
remain, this plan has strong support within the Department of the Navy 
as we believe it places the development program on sound footing 
towards delivering full Block 3 capabilities.
    DOD established the F-35 program with a planned measure of 
concurrent development and production that balanced cost, risk, and 
need for TACAIR modernization. Concurrency, however, is a transient 
issue in which risks progressively decline through the end of SDD. Over 
the past year, the F-35 program has worked with Lockheed Martin to 
implement a concurrency management structure and refine the estimate of 
concurrency costs based on discrete test and qualification events. As 
more testing is completed, concurrency risks are progressively reduced 
as the design is confirmed or issues identified requiring changes are 
incorporated. Earlier aircraft are open to a greater need for changes, 
and as succeeding Low-Rate Initial Production (LRIP) lots are built, 
their cumulative requirements for retrofit modifications decline. 
Furthermore, beginning with LRIP 5, Lockheed Martin is contractually 
obligated to share in the costs associated with concurrency.
    F-35 sustainment costs remain a concern. The Navy continues to 
support the F-35 Joint Program Office (JPO) in its disciplined approach 
to analyzing and reducing sustainment costs. While the JPO and the 
Services made progress this past year identifying approximately $30 
billion (callendar year 2012 money) in projected life-cycle savings, 
there is more work to do in this area and the focus remains. The Navy, 
working in concert with the JPO, will analyze options outside of the 
Program Executive Office's (PEO) span of control to reduce operating 
cost such as reviewing basing options and sequencing, unit level 
manpower/squadron size, and discrete sustainment requirements. Through 
these combined efforts, the Department believes the PEO can increase 
convergence on an affordable F-35 sustainment strategy that both meets 
the required level of Service/Partner performance and lowers the total 
life cycle cost of the overall program.
    The fiscal year 2014 President's budget requests $1.0 billion in 
Research, Development, Test, and Evaluation, Navy (RDT&E,N) to continue 
the F-35 SDD program and $2.9 billion in Aircraft Procurement, Navy 
(APN) for 10 F-35 aircraft (6 F-35B and 4 F-35C) with associated 
aircraft hardware, modification requirements, and spares. The request 
includes funding for Block 4 for systems engineering and planning to 
achieve follow on capabilities for emerging and evolving threats. 
Maintaining procurement rate, and an eventual optimum production ramp 
rate, is critical towards achieving F-35 affordability goals and 
preventing excessive expenditures on aircraft with limited service-life 
and decreasing operational relevance.
    The Navy is aware of the many challenges that remain on the F-35 
program, but the program is improving and showing accountability, 
discipline, and transparency. The F-35 is an essential future Navy/
Marine Corps Aviation capability and the Department is fully committed 
to the F-35B and F-35C variants of this program. The Navy continues to 
closely monitor all F-35 development, production, and sustainment to 
ensure that this capability is obtained at the lowest cost, at the 
earliest date possible, to meet our national security obligations.
F/A-18 Overview
    The F/A-18 Hornets have consistently met readiness and operational 
commitments. There are 24 Navy Super Hornet squadrons with 506 F/A-18E/
Fs; deliveries and squadron transitions will continue through 2016. 
There are 11 Navy and 11 Marine Corps F/A-18 A-D squadrons with 621 
legacy A-D Hornets. While the F/A-18 A-Ds transition to the F/A-18E/F 
and F-35, the current inventory of F/A-18 A-Ds will comprise more than 
half of the Navy's strike fighter inventory well into 2013. Super 
Hornets and legacy Hornets have conducted more than 189,000 combat 
missions since September 11, 2001. Over the last 12 years of combat 
operations, deployed ashore and aboard our aircraft carriers at sea, 
Department of the Navy F/A-18s have provided vital over watch and 
direct support to our troops in combat, on the ground, and in multiple 
theaters of operation, brought significant precision ordnance and 
laser-guided munitions to the fight, and have employed thousands of 
rounds of 20-millimeter ammunition supporting forces during strafing 
runs.
    Both the legacy Hornet and the Super Hornet were procured with an 
objective of 20 years' time in service. The average legacy Hornet has 
exceeded that goal (73 percent of legacy aircraft exceed 20 years of 
age) and the Super Hornet is already at almost 30 percent of its 
expected 20-year life. Based on current trends we anticipate that most 
aircraft will substantially exceed 20 years in service.
F/A-18 A/B/C/D (Legacy) Hornet
    The fiscal year 2014 President's budget requests $59.5 million in 
APN is for the continuation of a Service Life Extension Program (SLEP) 
and system upgrades and obsolescence programs for the inventory of 621 
legacy F/A-18 Hornets. Funds requested will procure and install SLEP 
kits required to extend the service life of select candidate F/A-18 A-D 
aircraft to 10,000 flight hours. The High Flight Hour (HFH) inspections 
and SLEP modifications can extend the F/A-18 A-D service life beyond 
8,000 flight hours. Continued investment in program related engineering 
and program related logistics funds within the Operation and 
Maintenance, Navy accounts is critical for sustaining the combat 
relevancy of the Navy's legacy platforms through the TACAIR transition.
    The F/A-18 A-D was designed for, and has achieved, a service life 
of 6,000 flight hours. These aircraft have performed as expected 
through their design life and now service life management of this 
aircraft is intended to extend this platform well beyond its designed 
6,000 flight hours. Naval Aviation has been successful in achieving 
8,000 flight hours per aircraft and is pursuing a strategy to go as far 
as 10,000 flight hours on select aircraft. Ongoing service life 
management initiatives continue to demonstrate excellent return on 
investment against the effort to close the strike fighter shortfall 
gap.
    Flying aircraft outside their design life is not without risk and 
comes with less predictability and more variability. In order to 
mitigate this risk, engineering analysis will continue to ensure our 
ability to address these discoveries, lesson burden on the operating 
forces, and ensure needed aircraft availability. Fleet Readiness 
Centers have the capacity to execute the required number of HFH 
inspections and SLEP modifications.
    In order to maintain warfighting relevancy in a changing threat 
environment, we will continue to procure and install advanced systems 
such as Joint Helmet-Mounted Cueing Systems (JHMCS), Multi-Function 
Information Distribution System (MIDS), APG-73 radar enhancements, 
Advanced Targeting FLIR (ATFLIR) upgrades, and Litening for the Marine 
Corps on selected F/A-18 A-D aircraft.
    The continued outstanding efforts of the Navy/Marine Corps team 
will further define necessary actions required to manage aging F/A-18 
A-D aircraft, address discovery of potentially greater than expected 
fatigue and corrosion, and ensure required availability of aircraft 
until JSF fleet introduction.
F/A-18E/F Super Hornet
    The fiscal year 2014 President's budget requests $206.5 million in 
APN for tasks common to F/A-18E/F and EA-18G production; $491.9 million 
in APN to implement aircraft commonality programs to maintain 
capabilities and improve reliability/structural safety of the Super 
Hornet fleet; and $21.9 million RDT&E,N to support the F/A-18E/F 
Service Life Assessment Program (SLAP).
    The F/A-18E/F significantly improves the survivability and strike 
capability of the carrier air-wing. The Super Hornet provides increased 
combat radius and endurance, and a 25 percent increase in weapons 
payload over legacy Hornets. The production program continues to 
deliver on-cost and on-schedule.
    There are no F/A-18E/F aircraft programmed in fiscal year 2014; 
only the 21 EA-18Gs. fiscal year 2013 is the final planned procurement 
year to complete the program of record (POR) of 552 F/A-18E/F aircraft. 
The congressional add of 11 F/A-18E/F in 2013 changes the total number 
of aircraft to 563 which will be incorporated into the POR with the 
next budget submission. A multiyear procurement (MYP) contract for 124 
F/A-18E/F
    Super Hornets and EA-18G Growlers (fiscal years 2010 through 2013) 
was signed on September 24, 2010. In December 2010, the Secretary of 
Defense added 41 F/A-18E/F aircraft to the fiscal year 2012 President's 
budget request in fiscal years 2012 through 2014.
    All Lot 30 (fiscal year 2006) and beyond F/A-18E/Fs and EA-18Gs 
have the APG-79 Active Electronically Scanned Array (AESA) Radar system 
installed in production, and a retrofit program exists to modify 133 
Lot 26-29 Block II aircraft with the AESA Radar. More than 300 APG-79 
AESA Radars have been produced to date. The Navy plans to equip all 415 
Block II Super Hornets with AESA Radars, providing the Super Hornet a 
significant increase in detection range, lethality and survivability 
over the legacy Hornets. Successfully deployed since 2007, AESA Radar 
equipped squadrons are highly valued by fleet commanders because of 
their ability to share tactical battle space management data with the 
non-AESA Radar Tactical Aircraft in the carrier battle group. The F/A-
18E/F and EA-18G with the APG-79 are force multipliers.
    Production engineering support (PES) and integrated logistics 
support (ILS) funded efforts common to both F/A-18E/F and EA-18G 
aircraft are included in the F/A-18E/F budget lines independent of 
whether F/A-18E/F aircraft are being procured. These two support cost 
elements are not proportional to the number of aircraft being procured 
and are not duplicative to the funding in PES and ILS of the EA-18G 
budget.
    The $491.9 million in APN implements commonality efforts to 
maintain capabilities and improve reliability/structural safety of the 
Super Hornet fleet. The Super Hornet uses an incremental development/
commonality approach to incorporate new technologies and capabilities, 
to include: Digital Communication System Radio, MIDS, Joint Tactical 
Radio System, JHMCS, ATFLIR with shared real-time video, Accurate 
Navigation, Digital Memory Device, Distributing Targeting System, 
Infrared Search and Track and continued advancement of the APG-79 AESA 
Radar.
    The $21.9 million RDT&E,N request supports the F/A-18E/F SLAP 
requirement. Currently, the F/A-18E/F fleet has flown approximately 30 
percent of the available 6,000 total flight hours. The remaining 
service-life will not be adequate to meet operational commitments 
through 2035. In 2008, the Navy commenced a three phased F/A-18E/F SLAP 
to analyze actual usage versus structural test data and identify the 
feasibility of extending F/A-18E/F service life from 6,000 to 9,000 
flight hours via a follow-on SLEP. The F/A-18E/F SLAP will identify the 
necessary inspections and modifications required to achieve 9,000 
flight hours and increase total and arrested landings, and catapults 
beyond currently defined life limits and is currently assessed as low 
risk. The SLMP philosophy has been applied to the F/A-18E/F fleet at an 
earlier point in its lifecycle than the F/A-18 A-D. This will optimize 
fatigue life expended, flight hours, and total landings aligning 
aircraft service life with fleet requirements.
TACAIR Inventory Management
    The Navy and Marine Corps continue to carefully monitor strike 
fighter inventory requirements and projected availability. The fiscal 
year 2013 President's budget shortfall of 56 was assessed as 
manageable. The strike fighter shortfall is currently predicted to peak 
at 18 in 2023. The shortfall continues to fall primarily as a result of 
decreased F/A-18E/F utilization rates and flight extensions for F/A-18 
A-D aircraft after successful completion of the HFH inspections and 
repair. The shortfall is based on the following assumptions: The Navy 
will maintain its current tactical fixed-wing force structure; 
utilization rates will not increase; the delivery rate of F-35B/C does 
not slip further to the right; and SLEP efforts on legacy Hornets will 
allow most of them to fly past 8,000 flight hours to an extended 
authorization of 9,000 hours after completing the HFH inspections with 
a subset of those aircraft attaining 10,000 flight hours with SLEP 
modifications.
    The Marine Corps has been driven to evaluate inventory availability 
amongst its Harrier and Hornet fleet in the later years and adjust its 
transition priorities and timing. The last active Marine F/A-18 
squadron is currently scheduled to transition in 2026, and the current 
F/A-18 Reserve squadron does not receive its F-35s until the year 2030. 
Additional pressures are felt with an increase of F/A-18 A-D aircraft 
reaching 8,000 flight hours and requiring extensive depot time to 
inspect, repair, and extend service-life. The Harriers were expected to 
complete their transitions in 2022 in the fiscal year 2011 President's 
budget, and then 2026 in fiscal year 2012 President's budget. The 
Harriers are now planned to remain in service until 2030 due to reduced 
F-35 ramp rates and the fact that they have more flight hour life 
remaining than the Hornets.
    As legacy F/A-18 squadrons are reduced, the service shortfall 
number must be considered in proportion to the primary mission aircraft 
inventory requirement. Due to a lower number of F/A-18 squadrons in the 
2023 to 2026 timeframe, the shortfall number associated with the Marine 
Corps will have a more significant impact on their few remaining F/A-18 
operational squadrons.
    Additionally, the AV-8B is operating with an 18 aircraft shortfall. 
One AV-8B squadron will be retired at the end of fiscal year 2013 to 
meet Marine Corps manpower reductions, allowing the remaining squadrons 
to operate with a two aircraft shortfall. In fiscal year 2014, the Navy 
will transition two additional squadrons from F/A-18C to F/A-18E and 
then redistribute those F/A-18C aircraft amongst the Navy requirements.
    The Navy continues to meticulously manage the fatigue life and 
flight hours of our tactical aircraft. Since 2004, we have provided 
fleet users guidance and actions to optimize aircraft utilization rates 
while maximizing training and operational opportunities. The Inventory 
Forecasting Tool (IFT) projects the combined effects of transition 
plans, attrition, and pipeline requirements on the total strike fighter 
aircraft inventory. The IFT is updated in conjunction with budget 
submittals to provide forecasts of the strike fighter inventory 
compared to the requirements. The tool utilizes these critical 
variables to project future inventories--F/A-18E/F and F-35B/C 
deliveries, force structure, aircraft usage rates, structural life 
limits, depot turnaround time, fatigue life expenditure, arrested and 
field landings, and catapult launches.
Airborne Electronic Attack/EA-6B Prowler
    The fiscal year 2014 President's budget request includes $19.7 
million in RDT&E,N for electronic warfare (EW) counter response; $10.1 
million RDT&E,N for MAGTF EW, $48.5 million in APN for common airborne 
electronic attack (AEA) systems; $18.6 million in APN for all EA-6B 
series aircraft; and $14.4 million APN for MAGTF EW.
    Currently, 57 EA-6Bs in the Navy and Marine Corps support 51 
operational aircraft in 10 Active squadrons, 1 Reserve squadron, and 2 
test squadrons. This includes 24 Navy and Marine Corps Improved 
Capability (ICAP) II aircraft and 27 ICAP III aircraft. Following the 
final Navy EA-6B transition to EA-18G in 2015, all remaining ICAP III 
EA-6Bs will transfer to and be operated by the Marine Corps, or be in 
pipeline for final disposition. Final retirement of the EA-6B from the 
Department's inventory will be in 2019.
    Marine aviation is on a path towards a distributed AEA system of 
systems that is a critical element in achieving the MAGTF EW vision: a 
composite of manned and unmanned surface, air, and space assets, on a 
fully collaborative network providing the MAGTF commander control of 
the electromagnetic spectrum when and where desired. In development are 
the ALQ-231 Intrepid Tiger II communications jammer, UAS EW payloads, a 
software reprogrammable payload, and an EW services architecture to 
facilitate collaborative networked electronic warfare battle 
management.
    The Intrepid Tiger II is currently carried on the AV-8B in U.S. 
Central Command's (CENTCOM) area of responsibility (AOR) and the 15th 
Marine Expeditionary Unit (MEU). Intrepid Tiger II and similar 
electronic warfare capabilities will eventually be fielded on unmanned, 
fixed-wing, and rotary-wing platforms to provide direct AEA support to 
the MAGTF. Intrepid Tiger II development and procurement is in response 
to Marine Corps requirements for increased precision EW capability and 
capacity across the MAGTF and provides EW capability directly to 
tactical commanders without reliance upon the limited availability of 
the low density/high demand EA-6B Prowler.
Airborne Electronic Attack/EA-18G Growler
    The fiscal year 2014 President's budget request is $2.0 billion in 
APN for procurement of 21 EA-18G aircraft; $11.1 million in RDT&E,N for 
integration of jamming techniques optimization improvements and 
evolutionary software development; and $257.7 million RDT&E,N for NGJ.
    The first EA-18G squadron deployed in an expeditionary role in 
November 2010 to Iraq and subsequently redeployed on short notice to 
Italy in March 2011, in support of Operation New Dawn (OND) and 
Operation Unified Protector (OUP). Since the initial deployment, 
Growlers have flown more than 2,300 combat missions. The EA-18G 
received accolades from both CENTCOM and Supreme Headquarters Allied 
Powers Europe for its enabling combat capability contributions to the 
battlespace.
    In 2009, the Navy began transition from EA-6Bs to EA-18Gs. The 
first carrier-based EA-18G squadron deployed in May 2011. All three 
active component Navy expeditionary squadrons and four of the 10 
carrier based squadrons have completed transition to the EA-18G. The 10 
carrier based EA-18G squadrons will fulfill Navy requirements for AEAs; 
6 expeditionary EA-18G squadrons will fill the joint, high-intensity 
AEA capability required by the Joint Forces Commander previously 
fulfilled by the Navy and Marine Corps EA-6B. The Navy will be divested 
of EA-6Bs by 2015; the Marine Corps by 2019. The POR is for 135 EA-18G 
aircraft, of which 114 have been procured to date. The final 
procurement of EA-18Gs is planned for 2014. The EA-18G fleet has flown 
approximately 6 percent of the 7,500 total flight hours per aircraft 
and are meeting all operational commitments.
    The NGJ is new electronic warfare technology that replaces the 40-
year old ALQ-99 system. It is designed to provide modified escort power 
in support of joint and coalition air, land, and sea tactical strike 
missions. NGJ is critical to the Navy's vision for the future of AEA 
strike warfare. Funding is vital to maintain schedule, allowing the 
program to transition to the technology development phase and ensure 
timely start of the EA-18G long lead integration activities.
E-2D Advanced Hawkeye
    The fiscal year 2014 President's budget requests $152.0 million in 
RDT&E,N for continuation of SDD and added capabilities to include In-
Flight Refueling, Tactical Targeting Network Technology, Secret 
Internet Protocol Router Chat, and the Advanced Mid-Term 
Interoperability Improvement Program, and $1,264 million in APN for 
five Full Rate Production (FRP) Lot 2 aircraft and advance procurement 
(AP) for fiscal year 2015 FRP Lot 3 aircraft and EOQ funding for the 
proposed MYP for fiscal years 2016, 2017, and 2018.
    The E-2D Advanced Hawkeye (AHE) is the Navy's carrier-based 
Airborne Early Warning and Battle Management Command and Control 
system. The E-2D AHE provides theater air and missile defense and is 
capable of synthesizing information from multiple onboard and off-board 
sensors, making complex tactical decisions and then disseminating 
actionable information to Joint Forces in a distributed, open-
architecture environment.
    Utilizing the newly developed AN/APY-9 Mechanical Electronic Scan 
Array radar and the Cooperative Engagement Capability system, the E-2D 
AHE works in concert with surface combatants equipped with the Aegis 
combat system to detect, track and defeat air and cruise missile 
threats at extended range and provide Battle Group Commanders required 
reaction time.
    The E-2D AHE program is in FRP. On March 1, 2013, the Acquisition 
Decision Memorandum was signed and the Secretary of Defense 
certification for the fiscal year 2014-2018 MYP was sent to Congress. 
Initial operational capability (IOC) is on track for first quarter 
fiscal year 2015.
AV-8B Harrier
    The fiscal year 2014 President's budget requests $41.6 million in 
APN funds to continue the incorporation of Obsolescence Replacement/
Readiness Management Plan systems; electrical and structural changes; 
upgrades to air-to-air weapon system employment and integration 
components; inventory sustainment and upgrade efforts to offset 
obsolescence and attrition; Litening pod upgrades; and AV-8B F402-RR-
408 engine safety and operational changes.
    The fiscal year 2014 President's budget requests $35.8 million in 
RDTE,N funds to continue design, development, integration and test of 
various platform improvements such as: Engine Life Management Program, 
escape systems, Joint Mission Planning System, and block upgrades to 
various mission systems, communications systems, navigation equipment, 
weapons carriage and countermeasures, and the Obsolescence Replacement 
(OR)/Readiness Management Plan (RMP).
    The AV-8B continues to be deployed heavily in support of 
operational contingencies. Each MEU deploys with embarked AV-8Bs. The 
AV-8B, equipped with precision weapons, Litening targeting pods with a 
video downlink to Rover ground stations, and beyond visual range air-
to-air radar missiles, has continued to be a proven, invaluable asset 
for the MAGTF and joint commander across the spectrum of operations. By 
the end of 2013, the AV-8B will receive the H6.1 Operational Flight 
Program enabling full integration of the Generation 4 Litening 
Targeting pod. Based on current F-35B transition plans, the Harrier 
out-of-service date has been extended from 2022 to 2030. As a result, 
the AV-8B program must focus on sustainment efforts to mitigate 
significant legacy inventory shortfalls, maintain airframe sustainment, 
and address reliability and obsolescence issues of avionics and 
subsystems. Additionally, this aircraft must be funded to maintain 
combat relevance to include tactical datalink and sensor improvements 
in order provide continued operation in support of operational 
contingencies and transition qualified aircrew to the F-35. The current 
digital aided close air support technology installed on the AV-8B is 
obsolete.
    Operation Odyssey Dawn confirmed the expeditionary advantages of 
STOVL capabilities by placing the Harrier as the closest fixed-wing 
asset to Libya. Such dynamic support slashed transit times to the 
battlefield by two-thirds and kept close air support aircraft on 
station without strategic tanking assets. Operation Enduring Freedom 
has confirmed the sortie generation capability and multi-role nature of 
the AV-8B Harrier. Capability upgrades, obsolescence mitigation, and 
readiness initiatives must be funded to ensure the AV-8B remains 
relevant, healthy and sustained through 2030.
                        assault support aircraft
MV-22
    The fiscal year 2014 President's budget requests $ 43.1 million in 
RDT&E,N for continued product improvements and $1.49 billion in APN for 
procurement and delivery of 18 MV-22s (Lot 18). fiscal year 2014 will 
be the second year of the follow-on V-22 MYP contract covering fiscal 
years 2013-2017. The funds requested in the fiscal year 2014 
President's budget request fully fund Lot 18, procure long lead items 
for Lot 19 and provide the balance of required economic order quantity 
funding for the MYP. The Marine Corps continues to field and transition 
aircraft on time. The APN request includes $160.8 million to support 
the ongoing Operations and Safety Improvement Programs (OSIP), 
including correction of deficiencies and readiness.
    The follow-on MYP, which begins in fiscal year 2013, will procure 
at least 91 MV-22s over 5 years and includes significant savings of 
approximately $1 billion when compared to single year procurements. The 
stability of the MYP supports the Marine Corps' need to retire old 
aircraft and field new and better capabilities. This stability also 
benefits the supplier base and facilitates cost reductions on the part 
of both the prime contractor and sub-tier suppliers.
    Through introduction of the Osprey tilt-rotor capability into 
combat, the service has gained valuable insight with respect to 
readiness and operating costs. These improvements continue to have a 
clear effect on increasing aircraft availability and decreasing flight 
hour costs. At the close of fiscal year 2012, the mission capability 
rate of the MV-22 increased 8 percent over fiscal year 2011 and the 
cost per flight hour decreased 6 percent in the same period. To keep 
these improvements on track, a readiness OSIP was introduced into the 
fiscal year 2012 President's budget. This OSIP provides a stable source 
of crucial modification funding as the Ospreys continue to improve 
readiness and reduce operating cost.
CH-53K Heavy Lift Replacement Program
    The fiscal year 2014 President's budget requests $503.2 million 
RDT&E,N to continue engineering and manufacturing development (EMD) of 
the CH-53K. Since completing its critical design review in July 2010, 
the CH-53K program commenced system capability and manufacturing 
process demonstration, and started fabrication of the first five test 
aircraft (one ground test aircraft, four flight test aircraft). During 
fiscal year 2014, the program will assemble and check-out the first of 
these test articles needed to support developmental test activities and 
flight test of the CH-53K.
    The new-build CH-53K will fulfill land and sea based heavy-lift 
requirements not resident in any of today's platforms, and contribute 
directly to the increased agility, lethality, and presence of joint 
task forces and MAGTFs. The CH-53K will transport 27,000 pounds of 
external cargo out to a range of 110 nautical miles, nearly tripling 
the CH-53E's lift capability under similar environmental conditions, 
while fitting into the same shipboard footprint. The CH-53K will also 
provide unparalleled lift capability under high altitude, and hot 
weather conditions, greatly expanding the commander's operational 
reach.
    Maintainability and reliability enhancements of the CH-53K will 
improve aircraft availability and operational effectiveness over the 
current CH-53E with improved cost effectiveness. Additionally, 
survivability and force protection enhancements will dramatically 
increase protection for both aircrew and passengers, thereby broadening 
the depth and breadth of heavy lift operational support to the Joint 
Task Force and MAGTF Commander. Expeditionary heavy-lift capabilities 
will continue to be critical to successful land- and sea-based 
operations in future anti-access, area-denial environments, enabling 
sea-basing and the joint operating concepts of force application and 
focused logistics.
    The CH-53E aircraft currently in service continue to meet 
unprecedented operational demand but are approaching 30 years of 
service and growing ever more challenging to maintain. To keep the 
``Echo'' viable until the ``Kilo'' enters service, the fiscal year 2014 
President's budget requests $67.7 million APN for both near and mid-
term enhancements. These modifications include condition-based 
maintenance software upgrades, T-64 engine reliability improvement 
program kits, critical survivability upgrade, smart multifunctional 
color display and sustainment efforts such as Kapton wiring replacement 
and improved engine nacelles.
                      attack and utility aircraft
UH-1Y//AH-1Z
    The fiscal year 2014 President's budget requests $47.1 million in 
RDT&E,N for continued product improvements and $821.0 million in APN 
for 25 H-1 Upgrade aircraft: 15 UH-1Y and 10 AH-1Z aircraft. The 
program is a key modernization effort designed to resolve existing 
safety deficiencies, enhance operational effectiveness, and extend the 
service-life of both aircraft. The 85 percent commonality between the 
UH-1Y and AH-1Z will significantly reduce lifecycle costs and the 
logistical footprint, while increasing the maintainability and 
deployability of both aircraft. The program will provide the Marine 
Corps with 349 H-1 aircraft through a combination of new production and 
a limited quantity of remanufacturing.
    The H-1 Upgrades Program is replacing the Marine Corps' UH-1N and 
AH-1W helicopters with state-of-the-art UH-1Y ``Yankee'' and AH-1Z 
``Zulu'' aircraft. The new aircraft are fielded with integrated glass 
cockpits, world-class sensors, and advanced helmet-mounted sight and 
display systems. The future growth plan includes a digitally-aided, 
close air support system designed to tie these airframes, their 
sensors, and their weapons systems together with ground combat forces 
and capable DOD aircraft. Low-cost weapons such as the Advanced 
Precision Kill Weapon System II (APKWS II) will increase lethality 
while reducing collateral damage.
    The UH-1Y aircraft achieved IOC in August 2008 and FRP in September 
2008. The ``Yankee Forward'' procurement strategy prioritized UH-1Y 
production in order to replace the under-powered UH-1N fleet as quickly 
as possible. The AH-1Z completed its operational evaluation (OT-II3C) 
in June 2010, and received approval for FRP in November 2010. The AH-1Z 
achieved IOC in February 2011. As of March 30, 2013, 104 aircraft (74 
UH-1Ys and 30 AH-1Zs) have been delivered to the Fleet Marine Force; an 
additional 77 aircraft are on contract and in production. Lots 1-6 
aircraft deliveries are complete. The last two aircraft from Lot 7 (the 
first two AH-1Z build new (ZBN) aircraft) will deliver in fiscal year 
2014. Lot 8 deliveries are progressing on or ahead of schedule. All 
aircraft deliveries since Lot 3 have been completed ahead of the 
contracted schedule date by an average of 33 days.
    In December 2011, to address existing attack helicopter shortfalls, 
the Marine Corps decided to pursue an all ZBN procurement strategy and 
leave AH-1W airframes in the inventory rather than removing them from 
service to begin the remanufacture process. The transition to an all 
ZBN airframe strategy began with Lot 10 (fiscal year 2013) as reflected 
in the current Marine Corps POR. The previous mix of 131 remanufactured 
AH-1Z and 58 ZBN aircraft has been revised to delivery of 37 
remanufactured AH-1Z and 152 ZBN aircraft. The total aircraft 
procurement numbers remain the same at 160 UH-1Ys and 189 AH-1Zs for a 
total of 349 aircraft.
                       executive support aircraft
VH-3D/VH-60N Executive Helicopter Series
    The VH-3D and VH-60N are safely performing the executive lift 
mission worldwide. As these aircraft continue to provide seamless 
vertical lift for the President and Vice President of the United 
States, the Department is working closely with HMX-1 and industry to 
sustain these aircraft until a presidential replacement platform is 
fielded. The fiscal year 2014 President's budget requests an investment 
of $85.7 million to continue programs that will ensure the in-service 
presidential fleet remains a safe and reliable platform. Ongoing 
efforts include the Cockpit Upgrade Program for the VH-60N, 
Communications Suite Upgrade, Structural Enhancement Program and the 
Obsolescence Management Program. The VH-3D Cockpit Upgrade Program, a 
fiscal year 2012 new start program, will provide a common cockpit with 
the VH-60N and address a number of obsolescence issues. Continued 
investments in the in-service fleet will ensure continued safe and 
reliable execution of the executive lift mission. These technology 
updates for legacy platforms will be directly leveraged for the benefit 
of the ensuing replacement program (VXX).
VXX Presidential Helicopter Replacement Aircraft
    The fiscal year 2014 President's budget request includes $94.2 
million for continuing efforts on VXX, the follow-on program for 
Presidential helicopters.
    Significant progress has been made in the past year and the program 
requirements and acquisition strategy have now been approved. The 
acquisition approach includes full and open competition for integration 
of mature subsystems into an air vehicle that is currently in 
production. This strategy will enable the program to proceed directly 
into the EMD phase. Contractor proposals are expected this summer for 
the EMD effort, along with priced options for production. The milestone 
B review and subsequent contract award are planned to occur during 
fiscal year 2014. The first of the planned inventory of 21 aircraft 
could begin fielding as early as 2020.
                          fixed-wing aircraft
KC-130J
    The fiscal year 2014 President's budget requests $166.7 million for 
procurement of one KC-130J's included in the first year of the MYP 
request and continued product improvements of $47.6 million. Targeted 
improvements include air-to-air refueling hose reel reliability, 
aircraft survivability through advanced electronic countermeasure 
modernization, and obsolescence upgrades to the Harvest HAWK ISR/weapon 
mission kit.
    Fielded throughout our Active Force, the Marine Corps declared IOC 
for the KC-130J transition in 2005; bringing increased capability, 
performance and survivability with lower operating and sustainment 
costs to the MAGTF. Continuously forward deployed in support of 
Operations Iraqi Freedom and Enduring Freedom (OIF/OEF) since 2005, the 
KC-130J continues to deliver marines, fuel and cargo whenever and 
wherever needed. In 2012 the KC-130J remained in high demand, providing 
tactical air-to-air refueling, assault support, close air support and 
multi-sensor imagery reconnaissance (MIR) in support of OEF, Special 
Purpose MAGTF Afghanistan, and deployed MEUs.
    Continuously deployed in support of OEF since fielding in 2010, the 
bolt-on/bolt-off Harvest HAWK ISR/weapon mission kit for the KC-130J 
continues to provide the extended MIR and close air support required by 
Marine forces in Afghanistan. Three mission kits have been fielded to 
date, with three more kits on contract to deliver in fiscal year 2014. 
Funding included in the fiscal year 2014 budget request will be used to 
maintain operational relevance of this mission system through Hellfire 
P4 compatibility and the addition of a full motion video transmit and 
receive capability.
    The Marine Corps has procured 48 KC-130Js, 31 aircraft short of the 
79 aircraft POR. The 3 aircraft included in the fiscal year 2013 budget 
will complete the Active component (AC) requirement of 51 aircraft. The 
Marine Corps will use the AC backup aircraft to accelerate the Reserve 
component (RC) transition from the legacy KC-130T aircraft to the more 
capable, more efficient, KC-130J beginning in fiscal year 2015. 
Aircraft requested in the fiscal year 2014 President's budget request 
will further accelerate the RC transition. Delays in procurement would 
force the Marine Corps to sustain the KC-130T aircraft longer than 
planned at an increased cost.
P-8A Poseidon
    The fiscal year 2014 President's budget requests $317 million in 
RDT&E,N for integrated development and associated testing and $3.503 
billion for procurement of 16 FRP P-8A Poseidon aircraft which are 
scheduled to begin delivery in May 2016. APN funding supports advanced 
procurement (AP) for the subsequent FRP procurement lot. The P-8A 
Poseidon recapitalizes the maritime patrol anti-submarine warfare 
(ASW), anti-surface warfare (ASUW) and armed ISR capability currently 
resident in the P-3C Orion. The P-8A combines the proven reliability of 
the commercial 737 airframe and avionics that enables integration of 
modern sensors and robust communications. The program is on track for 
IOC in late 2013 when the first squadron will have completed transition 
and is ready to deploy. The P-8A program is meeting all cost, schedule, 
and performance parameters in accordance with the approved Acquisition 
Program Baseline.
    In August 2010, the P-8A program obtained Milestone C approval, 
authorizing the Navy to proceed with procurement of LRIP Lots 1, 2, and 
3 for six aircraft in fiscal year 2010, seven aircraft in fiscal year 
2011, and eleven aircraft in fiscal year 2012. The Navy has awarded 
contracts for all LRIP aircraft. All six LRIP Lot 1 aircraft have been 
delivered to Patrol Squadron 30 at Naval Air Station, Jacksonville, FL, 
and LRIP Lot 2 deliveries are now commencing. The first Fleet squadron 
(VP-16) has completed P-3C to P-8A transition training, and the second 
squadron transition (VP-5) is underway and on-track. Patrol Squadron 16 
continues preparations for the first operational P-8A deployment in 
December 2013. The P-8A SDD effort has completed initial operational 
test and evaluation (IOT&E), delivered software updates to address 
previously identified deficiencies, and initiated testing of these 
software updates in preparation for a first quarter fiscal year 2014 
follow-on test and evaluation period. Results of operational testing 
are being analyzed in preparation for release of the Beyond LRIP report 
and subsequent FRP decision review. The production configuration has 
been shown to be mature and stable throughout the integrated test and 
IOT&E phases. The program has completed proposal evaluations and 
expects to complete contract negotiations in time to award the fourth 
production lot in June 2013. As fleet deliveries of the Increment 1 
configuration accelerate, integration and testing of P-8A Increment 2 
capability upgrades continue. In particular, Phase I of Increment 2 
multi-static active coherent ASW capability is on-track for flight 
testing in fiscal year 2014. fiscal year 2013 began prototyping and 
development of the more extensive P-8A Increment 3 upgrades, which 
expand the P-8A evolutionary acquisition strategy to deliver the next 
level of required P-8A capability.
P-3C Orion
    In fiscal year 2014, $37.4 million is requested for P-3C airframe 
and mission systems sustainment. Over two-thirds ($26.7 million) is for 
wing modifications to support the Chief of Naval Operation (CNO) ``P-3 
Fleet Response Plan'', as well as supporting EP-3E requirements, which 
are executed within the P-3 Airframe Sustainment Program. The legacy P-
3C fleet continues to provide ASW, ASUW, and ISR support for joint and 
naval operations worldwide. The P-3C is being sustained to maintain 
warfighting capability and capacity until completion of P-8A transition 
in fiscal year 2018.
    The P-3C aircraft is well beyond the original planned fatigue life 
of 7,500 hours for critical components, with an average airframe usage 
of over 18,000 hours. Since February 2005, 174 aircraft grounding 
bulletins have impacted 131 P-3 aircraft. In December 2007, the Navy's 
ongoing RDT&E funded P-3 Fatigue Life Management Program determined 
that in addition to existing structural fatigue issues associated with 
the forward lower wing section (Zones 2-4), the lower aft wing surface 
(Zone 5) of the P-3 aircraft showed fatigue damage beyond acceptable 
risk resulting in the grounding of 39 P-3 aircraft. As of February 
2013, a total of 88 aircraft have been grounded for Zone 5 fatigue. P-3 
groundings due to known material fatigue will continue for the 
remainder of the P-3 program, and unknown fatigue issues will continue 
to present persistent risk until P-8A transition is complete. A return 
to pre-December 2007 aircraft availability numbers was achieved in 
December 2010 and 85 P-3C mission aircraft are available today. 
Preserving funding for Zone 5 and outer wing installations is critical 
to sustaining the minimum number of P-3Cs until replaced by the P-8A. 
The Navy will continue to closely manage the service life of the P-3C 
through transition to the P-8A Poseidon.
EP-3 Aries Replacement/Sustainment
    In fiscal year 2014, the President's budget request is $55.9 
million in APN for EP-3 Aries replacement/sustainment. The APN request 
supports the procurement and installation of multi-intelligence 
capabilities and modifications necessary to meet emergent classified 
requirements. These efforts are necessary to keep the platform viable 
until the EP-3 capabilities are recapitalized.
    The EP-3E Aries is the Navy's premier manned airborne intelligence, 
surveillance, reconnaissance, and targeting (AISR&T) platform. The 
joint airborne signals intelligence (SIGINT) common configuration 
includes SIGINT spiral upgrades. These upgrades, in conjunction with 
Secretary of Defense and the ISR Task Force surge efforts, are fielding 
a robust multi-intelligence capability inside the Future Years Defense 
Program. Multi-intelligence sensors, robust communication, and data 
links employed by the flexible and dependable P-3 air vehicle help 
ensure effective AISR&T support to conventional and non-conventional 
warfare across the current range of military operations. Operating 
around the globe, the EP-3E continues to satisfy critical joint, 
combatant commander, and Service airborne ISR priorities and 
requirements.
    The Navy is in the process of developing the AISR&T family of 
systems construct to recapitalize the EP-3 AISR&T capabilities within 
existing POR platforms: MQ-4C Triton, VTUAV, P-8A, H-60, and E-2D. The 
strategy has been further refined to focus on module systems and 
payloads required for the Navy to conduct AISR&T on a variety of 
vehicles, providing combatant commanders with scalable capability and 
capacity. The inclusive full-spectrum approach of the Navy's sea and 
shore-based manned and unmanned platforms aligns with the CNO's 
priorities.
                        unmanned aerial systems
MQ-4C Triton Unmanned Aerial System
    The fiscal year 2014 President's budget postpones the MQ-4C Triton 
(formerly known as BAMS for Broad Area Maritime Surveillance) LRIP 
until fiscal year 2015. The fiscal year 2014 President's budget 
requests $375.2 million in RDT&E,N to continue Triton SDD; $52.0 
million APN for procurement of long-lead materials for the first lot of 
LRIP aircraft; and $79.2 million in MILCON to refurbish a maintenance 
hangar at NAS Point Mugu, CA, as well as a forward operating base and 
hangar for Pacific operations at Andersen AFB, Guam. Though LRIP is 
delayed 1 year, Triton will start establishing five globally-
distributed, persistent maritime ISR orbits by providing operational 
ISR beginning in fiscal year 2016. The program is scheduled to perform 
First Flight this quarter, commencing a rigorous integrated flight test 
program, to support Milestone C planned for fiscal year 2015. The MQ-4C 
Triton is a key component of the Navy maritime patrol reconnaissance 
force. Its persistent sensor dwell, combined with networked sensors, 
will enable it to effectively meet ISR requirements in support of the 
Navy Maritime Strategy.
    The Navy procured two Air Force Global Hawk Block 10 UASs in fiscal 
year 2004 for demonstration purposes and to perform risk reduction 
activities for the Triton UAS Program. In April 2011, Navy accepted 
three additional Block 10 aircraft from the Air Force to be utilized as 
spare parts assets. These aircraft, known as BAMS-Demonstrators, have 
been deployed to CENTCOM's AOR for over 4 years. These demonstration 
assets are adequate to cover all Navy needs through the transition to 
Triton in fiscal year 2016.
MQ-8B Vertical Takeoff and Landing Unmanned Aerial Vehicle and 
        Associated Rapid Deployment Capability (RDC) Efforts
    The MQ-8 Fire Scout is an autonomous VTUAV designed to operate from 
all air-capable ships, carry modular mission payloads, and operate 
using the Tactical Control System and line-of-sight tactical common 
data link. The fiscal year 2014 President's budget requests $48.7 
million of RDT&E,N to continue development of an endurance upgrade (MQ-
8C), to continue payload and LCS integration with the MQ-8B, and 
integrate radar on the MQ-8B. The request includes $76.6 million of APN 
for the production of one Fire Scout MQ-8C aircraft, multiple ship 
control stations, and initial spares to support the MQ-8C rapid 
deployment capability. Procurement of ship-based control stations is 
aligned to both the LCS schedule and the outfitting of other ships to 
support Special Operations Forces (SOF) missions. Commonality of 
avionics, software, and payloads between the MQ-8B and MQ-8C has been 
maximized. The MQ-8B and MQ-8C use the same ship-based control station 
and other ship ancillary equipment.
    Fire Scout was deployed to Afghanistan in April 2011, and has 
amassed more than 4,300 dedicated ISR flight hours in support of U.S. 
and coalition forces. Successful deployments aboard USS Simpson, USS 
Klakring, USS Bradley, and USS Samuel B. Roberts have supported SOF and 
Navy operations since 2012. Fire Scout has flown more than 1,500 hours 
from frigates, performing hundreds of autonomous ship board take-offs 
and landings. The Fire Scout program will continue to support 
integration and testing for LCS-based mission modules.
    These unforeseen early deployments and high operational temp, 
combined with previously undiscovered and corrected reliability issues 
with the MQ-8B, have caused delays in IOT&E. Acquisition planning, 
which leverages investments in VTUAV rapid deployment capabilities, is 
in work to ensure Fire Scout will continue to support the LCS mission 
packages.
Unmanned Combat Air System Carrier Demonstration (UCAS-D)
    The fiscal year 2014 President's budget requests $21 million in 
RDT&E,N to complete the Navy UCAS-D efforts to research a tactical jet-
sized, carrier-suitable, low-observable-relevant, unmanned aircraft 
system. The fiscal year 2014 budget request is to complete the 
autonomous aerial refueling (AAR) demonstration with surrogate 
aircraft, the Navy UCAS capstone artifacts to capture all lessons 
learned, disposition of test articles, test beds, intellectual 
properties, and contract close-out efforts. The UCAS-D program will 
demonstrate UAS carrier operations and autonomous AAR, and mature 
required technologies to Technology Readiness Level-six (TRL-6) in 
support of potential follow on unmanned acquisition programs. The 
aviation/ship integration portion of the program is meeting all 
technical objectives, with surrogate aircraft flights in the vicinity 
of aircraft carriers completed in 2009 and 2010. Since then, the X-47B 
has completed envelope expansion testing, land-based carrier control 
area and catapult testing, and is now completing the land-based 
approach and trap build-up to conduct carrier qualification testing, to 
include catapult and arrested landings, in the summer 2013. The latest 
AAR testing period was completed in January 2012 utilizing a manned 
surrogate aircraft, and AAR development and testing will continue 
throughout 2013. The program is constrained by Navy CVN schedules and 
planning. Currently the program is working closely with Navy leadership 
to reduce risk and align program and CVN operational schedules to best 
accommodate demonstration objectives.
Unmanned Carrier Launched Airborne Surveillance and Strike System
    The fiscal year 2014 President's budget requests $146.7 million in 
RDT&E,N for UCLASS System efforts. The UCLASS system will enhance 
carrier capability and versatility for the Joint Forces commander 
through integration of a persistent and mission flexible unmanned 
aircraft into the carrier air wing no later than fiscal year 2020. The 
Joint Requirements Oversight Council issued a memorandum in December of 
2013, reconfirming the need for an affordable, adaptable carrier-based 
ISR platform with precision strike capability. The UCLASS system will 
provide persistent ISR with precision strike capabilities for missions 
ranging from permissive counterterrorism operations, to missions in 
low-end contested environments. The UCLASS system will also provide 
enabling capabilities for high-end denied operations from the carrier 
strike group. It will be sustainable onboard an aircraft carrier, as 
well as ashore, and will be designed to minimize the logistics 
footprint of the current carrier air wing. The UCLASS system will have 
the ability to pass command and control information along with sensor 
data to other aircraft, naval vessels, and ground forces. Sensor data 
will be transmitted, in either raw or processed forms, at appropriate 
classification levels, to exploitation nodes afloat and ashore. 
Interfaces will be provided with existing ship and land-based command 
and control systems, including ISR tasking, as well as processing, 
exploitation, and dissemination systems. The UCLASS system will achieve 
these capabilities through the use of a carrier-suitable, semi-
autonomous, unmanned air segment, a control system and connectivity 
segment, and a carrier segment.
Tactical Control Station
    The fiscal year 2014 President's budget requests $8.4 million in 
RDT&E,N for the Tactical Control Station (TCS). TCS provides a 
standards compliant, open architecture, with scalable command and 
control capabilities for the VTUAV system. In fiscal year 2014, TCS 
will continue to transition to the Linux operating system software to a 
technology refreshed control station, enhance the VTUAV Ocean 
Surveillance Initiative for ships automatic identification system and 
sensor track generation, and develop an interface to an ISR process 
exploit dissemination system. The Linux operating system conversion 
overcomes hardware obsolescence issues with the Solaris based control 
stations and provides lower cost software updates using DOD common 
application software. In addition, the TCS Linux upgrade will enhance 
collaboration with the Navy's future UAS common control station.
Cargo Unmanned Aerial System
    The fiscal year 2014 President's budget is requesting funding for 
continued Cargo Unmanned Aerial System (CUAS) deployment in fiscal year 
2014. CUAS operations started in November 2011, and have delivered over 
three million pounds of cargo in 1,300 flight hours to date. The CUAS 
is meeting rapid development capability goals and is also supporting 
the development of UAS concept of operations (CONOPs).
    The purpose of the Cargo UAS capability is to develop CONOPs to 
``get trucks off the roads'' in combat zones, minimizing the improvised 
explosive device threat to logistics convoys. The CUAS provides a low 
risk, persistent, 24-hour capability for dispersed forces on the 
battlefield. This capability mitigates the requirement for manned 
ground vehicles to resupply forces in remote locations. The CUAS also 
augments manned aviation assault support assets and airdrop methods 
when the weather, terrain, and enemy pose an unsuitable level of risk. 
CONOPs expansion in 2012 included autonomous cargo delivery to a way 
point and cargo retrograde from spokes back to the main base.
RQ-21A Small Tactical Unmanned Aircraft System
    The fiscal year 2014 President's budget requests $16.1 million in 
RDT&E,N ($5.0 million Navy, $11.1 million Marine Corps) and $66.6 
million in PMC for 5 RQ-21A systems which include 25 air vehicles that 
will address Marine Corps ISR capability shortfalls currently supported 
by service contracts. This Group 3 UAS will provide persistent ship and 
land-based ISR support for tactical-level maneuver decisions and unit 
level force defense and force protection missions. Milestone B and 
contract award occurred in July 2010. Milestone C and LRIP decisions 
are scheduled for the third quarter of fiscal year 2013. RQ-21A will 
enter into IOT&E no later than the fourth quarter of fiscal year 2014.
RQ-7B Marine Corps Tactical Unmanned Aircraft System
    The fiscal year 2014 President's budget requests $0.7 million in 
RDT&E,N to continue development efforts and government engineering 
support and $26.4 million in APN to support the continuation of 
congressionally-mandated tactical control data link retrofits for RQ-7B 
Shadow units. Marine Corps Shadow squadrons have seen continuous 
service in Iraq and Afghanistan since 2007. The Marine Corps received 
its 13th RQ-7B Shadow system in first quarter fiscal year 2012, 
completing baseline fielding for four squadrons. The Marine Corps 
Shadow systems are identical to Army Shadow systems, bringing 
interoperability and commonality between Army and Marine Corps unmanned 
aircraft units operating side-by-side in Afghanistan. An 18-month 
initiative to weaponize two Marine Corps RQ-7B systems with a laser-
guided projectile was started in the first quarter of fiscal year 2012.
                        strike weapons programs
Tactical Tomahawk BLK IV Cruise Missile Program
    The fiscal year 2014 President's budget requests $312.5 million in 
Weapons Procurement, Navy (WPN) for procurement of an additional 196 
BLK IV weapons and associated support, $26.1 million in OPN for the 
Tactical Tomahawk Weapon Control System (TTWCS), and $4.5 million in 
RDT&E for capability updates of the weapon system. WPN resources will 
be for the continued procurement of this versatile, combat-proven, 
deep-strike weapon system in order to meet surface and subsurface ship-
fill load-outs and combat requirements. OPN resources will address the 
resolution of TTWCS obsolescence and interoperability mandates. RDT&E 
will be used to initiate engineering efforts for image navigation, 
which provides an upgrade to reduce mission planning timelines and 
reduce reliance upon GPS navigation.
Tomahawk Theater Mission Planning Center
    Tomahawk Theater Mission Planning Center (TMPC) is the mission 
planning segment of the Tomahawk Weapon System. Under the umbrella of 
TMPC, the Tomahawk Command and Control System (TC2S) develops and 
distributes strike missions for the Tomahawk missile; provides for 
precision strike planning, execution, coordination, control and 
reporting; and enables Maritime Component Commanders the capability to 
plan and/or modify conventional Tomahawk land-attack missile missions. 
TC2S optimizes all aspects of the Tomahawk missile technology to 
successfully engage a target. TC2S is a Mission Assurance Category 1 
system vital to operational readiness and mission effectiveness of 
deployed and contingency forces for content and timeliness. The fiscal 
year 2014 President's budget requests $7.9 million in RDT&E and $45.5 
million OPN for continued TMPC system upgrades and support. These 
planned upgrades support integration, modernization and 
interoperability efforts necessary to keep pace with changes, retain 
capability and exploit capabilities of the Tomahawk missile and 
external organizations to include providing an alternate GPS denied 
navigation system (ImageNav), rewrite/update of Tomahawk planning 
system's unsupported legacy software code, and technology refreshes to 
reduce vulnerability to cyber attacks. These resources are critical for 
the support of over 180 TC2S operational sites: cruise missile support 
activities, Tomahawk Strike and Mission Planning Cells (5th, 6th, 7th 
Fleet), carrier strike groups, command and control nodes, surface and 
subsurface firing units and labs/training classrooms.
Sidewinder Air-Intercept Missile (AIM-9X)
    The fiscal year 2014 President's budget requests $39.2 million in 
RDT&E and $117.2 million in WPN for this joint Navy and Air Force 
program. RDT&E will be applied toward AIM-9X/BLK II developmental/
operational tests and requirements definition for Joint Staff directed 
insensitive munitions requirements, as well as initial AIM-9X/Block III 
development activities. WPN will be for production of a combined 225 
all-up-rounds and captive air training missiles and missile-related 
hardware. The AIM-9X/BLK II Sidewinder missile is the newest in the 
Sidewinder family and is the only short-range infrared air-to-air 
missile integrated on Navy/Marine Corps/Air Force strike-fighter 
aircraft. This fifth-generation weapon incorporates high off-boresight 
acquisition capability and increased seeker sensitivity through an 
imaging infrared focal plane array seeker with advanced guidance 
processing for improved target acquisition; a data link; and advanced 
thrust vectoring capability to achieve superior maneuverability and 
increase the probability of intercept of adversary aircraft.
Advanced Medium-Range Air-to-Air Missile (AIM-120)
    The fiscal year 2014 President's budget requests $2.6 million in 
RDT&E and $95.4 million in WPN for production of 54 tactical missiles 
and missile-related hardware. Advanced Medium-Range Air-to-Air Missile 
(AMRAAM) is a joint Navy and Air Force missile that counters existing 
aircraft and cruise-missile threats. It uses advanced electronic attack 
capabilities at both high and low altitudes, and can engage from beyond 
visual range as well as within visual range. AMRAAM provides an air-to-
air first look, first shot, first kill capability, while working within 
a networked environment in support of the Navy's theater air and 
missile defense mission area. Prior missile production delays due to 
rocket-motor anomalies are being addressed. We now anticipate AIM-120D 
production will recover for both the Air Force and the Navy in the mid-
2014 timeframe.
Small Diameter Bomb II
    The fiscal year 2014 President's budget requests $46 million in 
RDT&E for the continued development of this joint Navy and Air Force 
(lead) weapon and bomb-rack program. Small Diameter Bomb II (SDB II) 
provides an adverse weather, day or night standoff capability against 
mobile, moving, and fixed targets, and enables target prosecution while 
minimizing collateral damage. SDB II will be integrated into the 
internal carriage of both the Navy (F-35C) and Marine Corps (F-35B) 
variants of the JSF. The Joint Miniature Munitions Bomb Rack Unit (JMM 
BRU) BRU-61A/A is being developed to meet the operational and 
environmental integration requirements for internal bay carriage of the 
SDB II in the F-35B and F-35C. SDB II entered Milestone B in August 
2010 and successfully completed its Critical Design Review in January 
2011. JMM BRU will enter technology development in July 2013.
Joint Standoff Weapon
    The fiscal year 2014 President's budget requests $0.4 million in 
RDT&E for continued JSOW-C-1 test activity and $136.8 million in WPN 
for production of 328 all-up rounds. The JSOW-C-1 variant fills a 
critical gap by adding maritime moving-target capability to the highly 
successful baseline JSOW C program. JSOW C-1 targeting is achieved via 
a data-link and guidance software improvements.
Advanced Anti-Radiation Guided Missile
    The fiscal year 2014 President's budget requests $12.2 million of 
RDT&E for the development of telemetry and flight termination sections 
and the Block 1 follow-on development and test program and $111.9 
million of WPN for production of 143 all-up-rounds and captive training 
missiles. The AARGM cooperative program with Italy transforms the 
legacy High-Speed Anti-Radiation Missile (HARM) into an affordable, 
lethal, and flexible time-sensitive strike weapon system for conducting 
destruction of enemy air defense missions. AARGM adds multi-spectral 
targeting capability and targeting geospecificity to its supersonic 
fly-out to destroy sophisticated enemy air defenses and expand upon the 
HARM target set. Initial operational capability (IOC) on the F/A-18C/D 
aircraft was reached in July 2012 and forward deployed to U.S. Pacific 
Command. The program was approved for FRP on August 20, 2012, and the 
first FRP contract was awarded on September 10, 2012.
Hellfire Weapon System
    The fiscal year 2014 President's budget requests $33.9 million in 
WPN for 363 Hellfire all-up-rounds and training assets, to provide 
maximum operational flexibility to our warfighters. The Hellfire is an 
Army led program. The Navy continues to support legacy Hellfire weapons 
as well as procure and support technology enhancements that will 
provide the warfighter the flexibility to prosecute new and emerging 
threats. The Hellfire missile continues to be a priority weapon for 
current military operations as it enables our warfighters to prosecute 
military operations on urban terrain and other high valued targets of 
opportunity.
Advanced Precision Kill Weapon System II
    The fiscal year 2014 President's budget requests $32.722 million in 
PAN&MC, for procurement of 1,103 APKWS II precision guidance kits. 
Milestone C was achieved in April 2010. IOT&E was successfully 
completed in January 2012; declaring IOC in March 2012. The program 
received a favorable FRP decision in March 2012 and the FRP contract 
was awarded in July 2012. APKWS II provides an unprecedented precision 
guidance capability to Navy unguided rocket inventories improving 
accuracy and minimizing collateral damage. Program production is on 
schedule to meet the needs of our warfighters in today's theaters of 
operations.
Joint Air-to-Ground Missile
    The fiscal year 2014 President's budget requests $5.5 million in 
RDT&E for continued extended technology development (TD) of Joint Air-
to-Ground Missile (JAGM). JAGM is a joint department of the Army/
Department of the Navy pre-major defense acquisition program with the 
Army designated as the lead service. The Government utilized full and 
open competition to initiate the TD phase of the JAGM program. In the 
TD Phase, the two contractors completed a preliminary design review, 
wind tunnel and ground testing, and flight testing in support of 
initial Navy platform integration activities. The originally planned 
27-month TD phase is complete, the Under Secretary of Defense 
(Acquisition, Technology, and Logistics) provided approval to extend 
the JAGM TD Phase, and the Joint Chiefs of Staff validated the 
Department of the Navy's AH-1Z Cobra aircraft as a threshold platform 
for the JAGM program. The Services recognize that Hellfire capability 
and inventory issues need to be addressed and the requirement for JAGM 
remains valid. The extended TD Phase addresses affordability concerns 
with the JAGM missile, and discussions continue between the Navy, the 
Army, and the Office of the Secretary of Defense on the path forward.

    Senator Manchin. Thank you, Admiral Skinner.
    Now we'll hear from General Davis.

 STATEMENT OF LT. GEN. CHARLES R. DAVIS, USAF, MILITARY DEPUTY 
  TO THE ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION

    General Davis. Chairman Manchin, Senator Wicker, 
distinguished members of this subcommittee: I do appreciate the 
opportunity. I know your time's precious here and I really look 
forward to being able to give you a quick update on Air Force 
combat aviation programs.
    Today, your Air Force proudly provides this Nation the 
ability to surveil and, if required, strike any spot on this 
planet, while defending our borders and protecting our allies. 
It is in this environment of fiscal uncertainty our focus 
remains on our five core missions of: air and space 
superiority; ISR; rapid global mobility; global strike; and 
command and control, and that's by which we deliver global 
reach, global power, and global vigilance.
    I will remind everyone that just a short time ago we put B-
2s over the bellicose nation of Korea and it was interesting to 
consider how they were probably sitting in their homes feeling 
that they had absolutely not a thing they could do about it 
during that period of time. That's the type of capability we 
want to be able to continue to deliver with your U.S. Air 
Force.
    In 2012, though, however, Air Force global precision attack 
aircraft flew over 28,000 sorties and 41,000 hours in support 
of overseas contingency operations. In support of these 
operations, our ISR airmen provided intelligence that shaped 
combat plans for 33 named operations, enabled the removal of 
700 enemy combatants from the fight, and built awareness for 
coalition forces in over 250 troops and contact engagements. 
Air Force Special Operations personnel executed over 1,600 
strike missions and 7,700 specialized mobility missions.
    On the home front, Air Force fighter, air refueling, and 
early warning aircraft have flown almost 64,000 total sorties 
supporting Operation Noble Eagle since September 11, 2001. As a 
testament to our total force, the Air National Guard and Air 
Force Reserve have flown more than 65 percent of these 
Operation Noble Eagle sorties and the Air National Guard today 
currently operates 17 of 18 air space control alert sites 
across the United States.
    The fiscal year 2014 budget attempts to retain this 
critical force structure and maintains the Air Force ability to 
rapidly respond to global mission demands. It evolved from a 
concerted effort to balance risk, modernization, and force 
structure reductions with a commitment to readiness and taking 
care of our people. Yet there is still considerable uncertainty 
in the fiscal year 2014 Air Force top-line level.
    The 2014 budget will not reverse the damage done by the 
fiscal year 2013 sequestration. Recovering the warfighting 
capability that we lost and improving readiness will certainly 
require some reduction in operations tempo and-or additional 
resources. Reduced flying hours will cause some units to cease 
flying operations, resulting in severe, rapid, and long-term 
combat readiness degradation. Today, for the first time I can 
remember, we have 12 squadrons, bombers and fighters, that will 
not fly for the rest of the fiscal year. It's about 18 percent 
of our flying hour, a 200,000-hour flying cut, by the end of 
the year.
    Cuts to the Air Force modernization programs will over time 
cost the taxpayer more money. Sequestration will not save the 
Air Force money. The resulting program inefficiencies and lost 
quantities will raise remaining unit costs and delay delivery 
of validated capabilities across our forces.
    Yet, despite some of these ongoing budget concerns, many of 
our fighters and weapons programs do have enhancements planned 
for 2014. These include the A-10, F-15, F-16, F-22, and 
Advanced Medium-Ranged Air-to-Missile weapons systems. For 
example, we will modernize a portion of our legacy F-15 and F-
16 fleet with advanced radars, countermeasures, and additional 
situation awareness systems.
    But I have to caution you on how we use the context 
``modernize'' in this discussion. These new systems and 
enhancements really only bring capabilities and technologies 
that have been in existence for years and in some cases fielded 
to our legacy fleet.
    More troubling to me is that half of our so-called 
``modernization'' budget really goes just to maintain current 
capability in the light of decreasing performance of these 
systems and adds really no new capability. We are in a 
situation today where primarily we are reacting to threats 
outside of our Nation to try to keep our systems at least on 
par with those. We are doing very little to bring new systems 
on right now to be able to stay in front of that threat and 
make the threat react to us. As an airman and a student of air 
power, I realize very plainly that the last thing we want 
somebody that conducts air space and air power to be is 
predictable, because if you become predictable you just become 
a target.
    So we have to be very careful as we navigate this uncertain 
way ahead to mitigate risk in critical areas like readiness, 
force structure, and modernization. We will continue to work 
with you and all the congressional committees to develop 
executable options. But personally I worry that our end result 
budget issues will threaten our ability to recapitalize our 
aging fighter and bomber fleets.
    We must be mindful of the fact that one nation that plays 
prominently in our defense strategy recently flew two brand-new 
advanced prototype aircraft within just a 22-month period. In 
times of robust budget, this took us about 9 years.
    Nonetheless, our objectives are to remain as ready as 
possible today, set a course for full-spectrum readiness, 
preserve a highly responsible and scaleable force, and overcome 
force structure and modernization challenges to provide the 
Nation with the world's most capable Air Force now and in the 
future.
    Thank you for these minutes and I look forward to your 
questions.
    [The prepared statement of General Davis follows:]
         Prepared Statement by Lt. Gen. Charles R. Davis, USAF
                            i. introduction
    Chairman Manchin, Ranking Member Wicker, and distinguished members 
of the subcommittee, thank you for the opportunity to provide you with 
an update on Air Force tactical aviation programs. Today our Air Force 
is engaged globally, supporting the combatant commanders requirements 
and executing our national strategy.
    In this environment of fiscal uncertainty our focus remains on our 
five core missions of air and space superiority, intelligence, 
surveillance, and reconnaissance, rapid global mobility, global strike, 
and command and control by which we deliver global reach, global power, 
and global vigilance. It is more important than ever to balance near-
term budget realities with modernization efforts for the mid- and long-
term. Today's discussion is focused on air and space superiority and 
global strike but covers all five core missions.
    Our force structure meets most combatant commander requirements, 
but the current fiscal environment will necessitate that we stand down 
13 fighter and bomber squadrons in fiscal year 2013. Multiple 
investment programs will be negatively impacted resulting in unit cost 
increases, terminations and schedule delays. Sequestration impacts are 
already occurring, and the fiscal year 2014 President's budget does not 
assume the costs of recovering the readiness impacts from even a 
partial year of sequestration. However 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 years 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.
    As we work together through these difficult times, our objectives 
are: to remain as ready as possible today, set a course toward full-
spectrum readiness, preserve a highly responsive and scalable force, 
and overcome force structure and modernization challenges to provide 
the Nation with the world's most capable combat Air Force now and in 
the future.
             ii. current environment and operations update
    Today, the Air Force flies and fights in air, space, and 
cyberspace--globally and reliably--as a valued member of our Joint and 
coalition teams. Over 28,000 airmen are deployed across the globe, 
including over 22,000 in the U.S. Central Command area of 
responsibility, with another 138,000 committed in place. to defend the 
homeland, command and control our nuclear forces, operate remotely 
piloted aircraft, and support other combatant commander requirements. 
The Air Force is an active partner in Department of Defense planning 
that will shift our emphasis from today's wars to a broader range of 
challenges and opportunities. The Department of Defense is currently 
reassessing the strategic guidance issued last year, but we anticipate 
continued emphasis on and planning for a rebalance to the Asia Pacific 
region. Our challenge is to provide soldiers, sailors, airmen, and 
marines who deploy in support of our global commitments with an Air 
Force that is capable, agile, flexible, ready, and technologically 
advanced.
    In 2012, Air Force global precision attack aircraft flew over 
28,000 sorties and 41,000 hours in support of overseas contingency 
operations. In support of these operations, our intelligence, 
surveillance, and reconnaissance airmen provided intelligence that 
shaped combat plans for 33 named operations, enabled the removal of 700 
enemy combatants from the fight and built awareness for coalition 
forces in over 250 ``troops-in-contact'' engagements. Air Force Special 
Operations personnel executed over 1,600 strike missions and 7,700 
specialized mobility missions. On the home front, Air Force fighter, 
air refueling, and early warning aircraft have flown almost 64,000 
total sorties supporting Operation Noble Eagle since September 11, 
2001. As a testament to the capability of our Total Force, the Air 
National Guard and Air Force Reserve have flown more than 65 percent of 
these Operation Noble Eagle sorties with the Air National Guard 
currently operating 17 of 18 aerospace control alert sites across the 
United States.
    Aviation is not without risk. In fiscal year 2012, there were 20 
Class A aviation mishaps, including ten destroyed aircraft and nine 
fatalities. This was an increase from the fiscal year 2011 numbers of 
15 Class A, 8 aircraft destroyed, and 2 fatalities respectively. 
Analysis of these events found trends similar to previous years, with 
the top two mishap factors being compliance and decisionmaking errors.
    There were 24 Class B aviation mishaps in fiscal year 2012, 
significantly down from 53 in fiscal year 2011. Similarly, Class C 
mishaps dropped to 443 from 482 the year prior. Additionally, fiscal 
year 2012 unmanned aerial system mishaps decreased across the board in 
Class A, B, and C mishaps from fiscal year 2011. Class A mishaps 
dropped from 15 to 13, Class B mishaps from 8 to 4 and Class C from 18 
to 17.
    As we undergo further updates to Defense Strategy, we must 
carefully balance our force between the Active and Reserve components. 
To get a better understanding of our Total Force mixture, we launched 
the Total Force Task Force, a team led by general officers from the 
active Duty, Guard and Reserve components. The Total Force Task Force 
is conducting a comprehensive review of Total Force requirements and 
will develop strategic options to ensure that the Air Force correctly 
balances the strengths of each component to sustain the capabilities 
required in the years ahead. The team is scheduled to present their 
findings by October 1, 2013.
    Additionally, the National Commission on the Structure of the Air 
Force, which is required by the National Defense Authorization Act for 
Fiscal Year 2013, will undertake a comprehensive study of the structure 
of the Air Force to determine whether, and how, the structure should be 
modified to best fulfill current and anticipated mission requirements 
in a manner consistent with available resources. The panel is scheduled 
to complete their report not later than February 1, 2014.
    The fiscal year 2014 budget request retains critical force 
structure and maintains the Air Force's ability to rapidly respond to 
global mission demands. It evolved from a concerted effort to balance 
risk, modernization and force structure reductions with a commitment to 
readiness and taking care of our people.
    However, sequestration forced the Air Force to implement immediate 
actions to mitigate a fiscal year 2013 topline reduction. A major 
impact of sequestration will be a marked decrease in readiness at the 
beginning of fiscal year 2014. Reductions in flying hours will cause 
unit stand downs, which will result in severe, rapid, and long-term 
unit combat readiness degradation. Within 60 days of a stand down, 
affected units will be unable to meet emergent or operations plans 
requirements. Depot delays will require the grounding of some of the 
affected aircraft. The deferments will result in idled production 
shops, a degradation of workforce proficiency and productivity, and 
corresponding future volatility and operational costs. Additionally, 
sequestration cuts to Air Force modernization will impact every one of 
our investment programs. These program disruptions will, over time, 
cost more taxpayer dollars to rectify contract restructures and program 
inefficiencies, raise unit costs, and delay delivery of validated 
capabilities to warfighters in the field. The impact to modernization 
programs reduces our Air Force's competitive advantage and decreases 
the probability of mission success in contested environments. The 
fiscal year 2014 budget request however, 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.
                 iii. force structure and modernization
Fighters
    Air Force fighter force structure is dependent on both fighter 
aircraft and rated manning. Two years ago, the Air Force determined 
through extensive analysis that a force structure of 1,200 primary 
mission aircraft and 2,000 total aircraft was required to execute the 
National Military Strategy with increased operational risk. Last year, 
due to new strategic guidance and fiscal constraints, the Air Force 
rebalanced our force structure across core functions. Analysis showed 
the Air Force could decrease fighter force structure by approximately 
100 aircraft with higher risk, resulting in the current fighter 
requirement of 1,100 primary mission aircraft and 1,900 total aircraft.
    The Air Force's fighter fleet is over 20 years old on average--the 
oldest in our history. Without service life extensions and capability 
upgrades, it will not be possible to manage risk. The Air Force is 
pursuing programs that will modernize and extend the service life of 
our remaining fleet. The F-35 is a key component in preserving future 
force structure and mitigating risk. Any further delay in the F-35 
program will create a serious shortfall (mid and far-term) in fighter 
capabilities and force structure. The Air Force is very concerned with 
recent budget reductions and continues to monitor how these cuts will 
affect risk. It is absolutely critical that 4th Generation sustainment 
and modernization efforts continue as programmed, the F-22 continues to 
modernize, and the F-35 matures and begins full rate production.
    In the fiscal year 2013 budget, the Air Force accepted risk in our 
Combat Air Forces by retiring or reclassifying aircraft from seven 
squadrons: five A-10 squadrons, one F-16 squadron, and one training/
support coded F-15 aggressor squadron. After reductions, we retained 
sufficient combat-coded fighter squadrons to maintain the capabilities 
and capacity required to meet the requirements of new strategic 
guidance at increased risk while providing a bridge to the fifth 
generation F-35.
    Manning these aircraft is a challenge we are aggressively working. 
Air Force mission success is dependent on fighter force structure 
manning. The Air Force is currently 200 fighter pilots short of the 
total manning requirement. Our projections indicate this deficit 
growing to approximately 900 by 2022, excluding any additional negative 
impact on flying training driven by sequestration. The shortfall 
evolved from force structure reductions that cut active duty fighter 
squadrons to a number that cannot sustain billet requirements. As a 
result, the Air Force is currently unable to produce and absorb the 
required number of fighter pilots across the total force. The Air Force 
is prioritizing available manpower at significant risk to institutional 
requirements. Projected impacts include reductions in air-operations 
expertise during the development of war plans and a limited ability to 
train and maintain combat readiness. Recent programming and policy 
actions raised production and absorption capacity by fiscal year 2028; 
however, even with these changes, the Air Force will only be able to 
sustain a fighter pilot inventory capable of meeting 82 percent of our 
overall requirement for fighter pilot expertise.
A-10
    The A-10 provides our Joint Force Commanders responsive, lethal, 
precise, and persistent firepower for close air support and combat 
search and rescue. It has been a steady, stellar performer in all 
recent conflicts. Notably, the A-10's very high operations tempo and 
advanced age present substantial sustainment challenges. Most notably, 
the wings on the aging aircraft must be replaced in order to keep the 
fleet flying through 2035 and beyond.
    Beginning in fiscal year 2013, the Air Force will retire 61 of the 
oldest A-10s. This will leave a fleet of 283 A-10s through 2035. The 
fiscal year 2014 budget request reflects our commitment to fund A-10 
modernization, sustainment, and life extension programs. Installation 
of the Helmet Mounted Cueing System, now underway, will provide 
increased situational awareness to the pilot. Operational flight 
program upgrades will provide the A-10 with new combat capabilities to 
employ a variety of smart weapons, improve situational awareness, and 
enhance target identification and designation capability. Production 
and installation of the new replacement wings are moving ahead at full-
rate production levels. Other critical updates include an upgrade to 
the A-10's transponder, allowing for secure, military-only identify 
friend or foe modes, and an improved engine turbine and aircraft 
monitoring system used to identify and monitor structural fatigues and 
stresses. Emphasis on the continued health and upgrade of the A-10 will 
ensure the aircraft continues to excel in the close air support role 
for the next 2 decades.
F-16
    Our primary multi-role aircraft, the F-16 comprises 50 percent of 
the current fighter fleet. The fiscal year 2014 budget request invests 
approximately $1.32 billion across the Future Years Defense Program 
(FYDP) for F-16 modernization, life extension, and continued 
sustainment to meet critical warfighter needs to 2025 and beyond. The 
majority of the efforts to accomplish this across the FYDP will focus 
on the Legacy Service Life Extension Program (SLEP) and Combat Avionics 
Programmed Extension Suites (CAPES) modernization program for 300 
aircraft. We believe we will have to SLEP and modernize more.
    Legacy SLEP will extend airframe structural service life by 
approximately 25 percent from the current 8,000 hours to 10,000+ hours, 
adding about 6 to 8 years. The fiscal year 2014 budget request adds $18 
million to continue design and development of structural modification 
kits for the Block 40-52 fleet to be responsive to the Air Force's 
total fighter requirement. Additionally, the Falcon Structural 
Augmentation Roadmap program, which replaces known life-limited 
structural components and maintains the original design airframe life 
of 8,000 actual flight hours, has been rephased to complete in fiscal 
year 2014.
    The fiscal year 2014 budget request adds $44 million in 
development, with a total of $489 million in development and 
procurement funding laid in across the FYDP for F-16 CAPES. This will 
allow for the development of capabilities for Active Electronically 
Scanned Array (AESA) radar, a new center cockpit display unit, data 
link enhancements and an improved electronic warfare defensive suite. 
These avionics upgrades must be done to keep the F-16 Block 40-52s 
relevant in a contested environment until replaced by the F-35 Joint 
Strike Fighter.
F-15 C/D
    The fiscal year 2014 budget request invests approximately $1.9 
billion across the FYDP on modernization and sustainment programs for 
the F-15C/D fleet. We project the F-15C/D fleet will remain viable 
until at least 2035, with potential for an airframe service life 
extension following full-scale fatigue testing. This test is underway 
and will conclude in 2014. The Air Force manages the fleet through 
scheduled field and depot inspections under an individual aircraft 
tracking program.
    We continue to modernize our F-15C/D fleet with AESA radars, a more 
capable aircraft mission computer, and a new electronic warfare self-
protection suite, the Eagle Passive/Active Warning Survivability System 
(EPAWSS). We expect these efforts to enable 175 F-15C/D aircraft to 
operate safely and effectively through at least 2035 as determined by 
the full-scale fatigue test.
F-15E
    The fiscal year 2014 budget request invests approximately $2.5 
billion across the FYDP for F-15E modernization and sustainment 
programs. This includes integrating the latest precision weapons to hit 
targets accurately and reduce collateral damage, and adding a helmet 
mounted cueing system for all front seat cockpits that will reduce the 
F-15Es time to engage a target. Finally, we are adding a state-of-the-
art AESA radar system that advances capabilities to identify and engage 
targets, a more capable aircraft mission computer, and a new self-
protection electronic warfare system (EPAWSS). The Air Force expects 
the F-15E to be an integral part of the Nation's force through at least 
2035. A full-scale fatigue test, due to be complete in 2015, will 
provide data regarding the feasibility of a service life extension.
Fifth Generation Fighters
    Vital elements of our Nation's defense and deterrent capability are 
fifth generation fighters like the F-22A and F-35. These advanced, 
state-of-the-art aircraft are absolutely essential to maintain our 
current global superiority that permit air, sea, and ground forces 
freedom of action. Each aircraft possess exclusive, complimentary and 
indispensable capabilities that provide synergistic effects across the 
spectrum of conflict. As future adversaries modernize, our legacy 
fourth generation aircraft will have limited capability to operate in 
an anti-access and area denial environment. Our Air Force must continue 
to invest in fifth generation weapon systems, and begin looking even 
further into the future, to ensure continued dominance of American 
Airpower.
F-22
    The F-22 Raptor is the only fielded U.S. fighter capable of 
operating in anti-access and area denial environments. F-22 attributes 
of stealth, super cruise, integrated avionics and sensors combine to 
deliver the Raptor's unique operational capability. F-22 modernization 
is required to counter advancing threats that specifically target F-22 
capabilities. Accordingly, F-22 modernization is consistent with 
Department of Defense Strategic Guidance to ``invest as required to 
ensure [the] ability to operate effectively in [anti-access and area 
denial] environments''. Focused on maintaining operational superiority 
against the evolving threat, the fiscal year 2014 budget request for F-
22 modernization investment includes $459.6 million in RDT&E in 
addition to $460.3 million in procurement in fiscal year 2014. 
Increment 3.1 is fielding now and is scheduled to be complete in fiscal 
year 2017, delivering advanced air-ground capabilities including 
synthetic aperture radar (SAR) ground mapping, threat geolocation, and 
Small Diameter Bomb (SDB) carriage. Increments 3.2A/B remain on track 
for fielding in 2014/2018 respectively, and will deliver advanced 
electronic protection and combat identification, AIM-120D and AIM-9X 
missiles, and significantly-improved ground threat geolocation.
    The Air Force Scientific Advisory Board Aviation Oxygen Generation 
System Study made 8 near-term and 14 long-term recommendations for 
corrective and mitigating actions to prevent hypoxia-like events that 
led to the fleet stand-down in May-September 2011. The Air Force 
completed all eight near-term actions to include replacement of the 
emergency oxygen system activation handle; modification of the pilot 
upper pressure garment and installation of an independent oxygen sensor 
and helmet-mounted pulse oximeter. Additionally, 9 of 14 longer-term 
recommendations were implemented, with the remaining 5 expected to be 
complete by November 2014. Most notably, the retrofit of the Automatic 
Back-up Oxygen System is on track for completion by 2015. The first 16 
Raptors at Elmendorf Air Force Base are expected to be complete by mid-
April. The F-22 is operating safely worldwide, and flew over 38,000 
hours since return to flight in September 2011. It has been over 12 
months since the last unknown-cause hypoxia-like event occurred.
F-35
    During fiscal year 2014, the Air Force will continue the balanced 
approach across the global precision attack portfolio by prioritizing 
investment in fifth-generation aircraft while sustaining legacy 
platforms as a bridge to the F-35 Joint Strike Fighter.
    The multi-role F-35A is the centerpiece of the Air Force's future 
fighter precision attack capability. In addition to complementing the 
F-22's world class air superiority capabilities, the F-35A is designed 
to penetrate air defenses and deliver a wide range of precision 
munitions. This modern, fifth-generation aircraft brings the added 
benefit of increased allied interoperability and cost-sharing across 
Services and eight partner nations. The fiscal year 2014 budget request 
includes $4.5 billion for continued development and procurement of 19 
F-35A, conventional take-off and landing (CTOL) aircraft. Aggressive 
risk management resulted in considerable concurrency cost reductions of 
approximately $1.7 billion. The program has made significant strides 
overcoming software development delays and technical issues.
    During calendar year 2012, the F-35 program team achieved a number 
of significant milestones, including: Milestone B approval, Low Rate 
Initial Production Lot 5 contract definitization, Lot 6 undefinitized 
contract action, an Operational Utility Evaluation, a ready for 
training declaration; the start of pilot training at Eglin Air Force 
Base, completion of over 1,100 test flights, first weapon separation 
test on an F-35A CTOL, and the delivery of 30 production aircraft to 
the Air Force and Marine Corps. These early production deliveries to 
our operational test and training fleet allows the Air Force to begin 
the necessary operational test and validation efforts of the (F-35) 
this year, while also building our initial cadre of instructors to 
train our future generations of combat-ready pilots and maintainers.
    In fiscal year 2013, the Air Force planned to procure 19 F-35A CTOL 
aircraft. As a result of sequestration, the Air Force will have to 
reduce the procurement quantity by at least three and potentially as 
many as five aircraft.
    The progress made so far and the steps we take today are crucial in 
our efforts for declaring F-35 initial operational capability (IOC). 
After last year's program rebaseline and Milestone B recertification, 
the joint services were tasked to provide Congress our updated IOC 
criteria and timeline estimates by June 1, 2013. The Air Force fully 
expects to have our IOC position to you by this suspense.
    One last area of F-35 development to address is the Autonomic 
Logistics Information System (ALIS). The Air Force understands ALIS is 
a necessary and integral element of the F-35 weapon system, and as 
such, is a top program priority. As designed, ALIS will tie F-35 
mission planning, operational flight, operation and maintenance 
training, debrief, tech and flight manuals, prognostic health 
management, and supply chain management into one seamless information 
system. Early flight operations at Eglin Air Force Base demonstrated 
ALIS initial capability to support training, flight, and maintenance 
efforts. Although there were deficiencies identified and addressed 
during these early flight operations, and significant challenges remain 
through development, the Air Force remains cautiously optimistic 
continued ALIS development will deliver the required F-35 sustainment 
elements.
Air-to-Surface Weapons
    All three mission areas (stand-off, direct attack, and penetrator 
munitions) in the air-to-surface munitions inventory are short of 
inventory objectives. The most critical are stand-off and penetrator 
weapons. Joint Air-to-Surface Standoff Missile (JASSM) and SDB weapons 
along with low observable platforms are force multipliers in an anti-
access and area denial environment and their shortage could increase 
friendly force attrition and drive a much higher level of effort 
enabling the attack of other critical targets. The shortage of 
penetrator weapons
    will result in some inability to target adversary critical 
capabilities and increase risk. Direct attack munitions shortages drive 
the use of non-preferred munitions that decrease effectiveness and 
result in increased time and Air Force attrition accomplishing 
combatant commander objectives.
Joint Air-to-Surface Standoff Missile and Joint Air-to-Surface Standoff 
        Missile-Extended Range
    JASSM and JASSM-Extended Range (ER) are currently the Nation's only 
stealthy, conventional, precision, launch-and-leave, stand-off missile 
capable of fighter and bomber aircraft employment. It is capable of 
penetrating next generation enemy air defenses to strike high value, 
hardened, fixed, or mobile targets.
    Currently, JASSM is in Lot 11 production with over 1,000 missiles 
delivered and JASSM-ER is in Lot 2 production. The fiscal year 2014 
procurement plans are to buy 182 missiles: 102 JASSMs and 80 JASSM-ERs. 
fiscal year 2014 also funds reliability efforts and the JASSM Weapon 
System Evaluation Program for flight testing of inventory assets. The 
Air Force is ramping-up the JASSM production to the most efficient rate 
(360 per year) by buying 224 missiles in fiscal year 2015 and 360 in 
fiscal year 2016 and beyond. While the range of JASSM is more than 200 
nautical miles, JASSM-ER's range is over twice that (over 500 nautical 
miles). JASSM-ER completed initial operational test and evaluation in 
January 2013 with 20 successful flight test shots out of 21, a success 
rate of over 95 percent. The Full Rate Production decision for JASSM-ER 
is December 2013, with a plan to transition to JASSM-ER only production 
in fiscal year 2017 and beyond at the maximum production rate of 360 
missiles per year.
Air-to-Air Weapons
    AIM-120D AMRAAM
    The AIM-120 Advanced Medium Range Air-to-Air Missile (AMRAAM) is 
the Department of Defense's premier beyond-visual-range missile to 
counter existing and emerging air vehicle threats, operating at high or 
low altitude with electronic attack capabilities. AMRAAM is a key 
enabler for gaining air superiority and air dominance providing F-22, 
F-16, F-15, and F/A-18 aircraft the ability to achieve multiple kills 
per engagement. The latest evolution of AMRAAM is the AIM-120D, which 
brings increased range and kinematics, improved high off-boresight 
targeting, and an enhanced two-way data link for improved accuracy and 
lethality at range. AIM-120D is an Acquisition Category 1C joint 
program, with the Air Force as lead service in partnership with the 
Navy. The AIM-120D Operational Test Readiness Review was successfully 
completed in May 2012 and the program is currently in dedicated 
operational testing. fiscal year 2014 plans are to complete dedicated 
operational testing, to include captive carry and free flight, and 
fielding on F/A-18 E/F and F-15 C/D aircraft. Force procurement for 
fiscal year 2014 is 199 units; along with a purchase of 54 units by the 
Navy. The program will continue to update the AMRAAM technical data 
package to ensure a viable, producible design through the expected 
production life of the AMRAAM program, and to maintain a robust 
supplier base capable of sustaining production for the life of the 
program.
Updates Requested by Congress
    CV-22
    Air Force Special Operations Command (AFSOC) uses the CV-22 
Osprey's unique long range, speed, and vertical take-off and landing 
(VTOL) characteristics to provide special operations warfighters with 
specialized air mobility. In 2012, CV-22s completed 1,022 Operation 
Enduring Freedom sorties, hauling over 135,000 pounds of cargo and 
extracting 299 detainees. In 2013, we will station aircraft at RAF 
Mildenhall, UK, the CV-22's first overseas squadron.
    The current CV-22 fleet stands at 32 aircraft with the final buy 
scheduled in fiscal year 2014 as part of the program's second multi-
year procurement. Current funding levels support the procurement of 
four fiscal year 2013 aircraft and the final three aircraft in fiscal 
year 2014. Declaration of full operational capability is scheduled 
following the delivery of the last CV-22 in fiscal year 2016, for a 
total of 49 operational AFSOC aircraft.
    The Joint V-22 Program Office is increasing CV-22's capabilities 
while executing an aggressive improvement program, which continues to 
make significant progress. Since fiscal year 2010, aircraft 
availability rates are up over 20 percent. Particular emphasis is being 
placed on improving CV-22 engine time-on-wing, which has already seen a 
62 percent increase since fiscal year 2010. These trends have continued 
in the first half of fiscal year 2013. In fiscal year 2014, we will 
start development of an improved engine inlet solution to address sand 
ingestion problems that severely degrade engine performance and 
necessitate costly engine removals and repairs due to operating and 
training in austere desert environments.
    Improvements to the CV-22 are being made in block increments and 
each block includes a number of modification upgrades installed as they 
become available. Retrofit modifications continue to bring the oldest 
CV-22s to the most current configuration. Sequestration reductions will 
delay installation of Block 20/C improvements on fielded aircraft. 
Future modifications and improvements to the CV-22 will make the 
aircraft even more reliable, productive, and cost-effective; thus 
ensuring the AFSOC's long range VTOL capability is available and will 
provide specialized air mobility wherever and whenever required.
Combat Rescue Helicopter
    The Air Force is the only Service with a dedicated force that is 
organized, trained, and equipped to execute personnel recovery. 
Advanced helicopter capabilities, high-end tactically trained aircrews, 
and Battlefield airmen who are trained in advanced battlefield trauma 
medicine allow these forces to provide lifesaving measures at the point 
of injury, anywhere in the world. These highly trained airmen support 
Air Force, joint, coalition and Special Operations Forces in a wide 
variety of mission areas. In addition to overseas contingency 
deployments, these airmen also serve as first responders during 
disaster relief and humanitarian assistance operations, making them 
some of the most highly stressed career fields in the U.S. military. 
Since 2001, our combat rescue forces saved over 7,000 lives and in 2012 
alone, they flew 4,500 missions saving 1,128 coalition, joint, and 
partner nation lives in some of the harshest environments in the world.
    The Air Force will continue to modify existing HH-60G helicopters 
to keep them viable until we can fully recapitalize the fleet with the 
combat rescue helicopter (CRH). This effort includes an operational 
loss replacement program that returns the HH-60G fleet to numbers 
capable of meeting our operational requirements. The operational loss 
replacement program is only a temporary bridge to allow us to meet 
operational demands until the entire fleet is recapitalized through 
CRH.
    The CRH will conduct day and night marginal weather combat search 
and rescue in order to recover downed aircrew and isolated personnel in 
hostile environments. The program replaces the legacy fleet of aging 
HH-60G Pave Hawks. CRH is in source selection for 112 in-production 
helicopters and training systems configured by the original equipment 
manufacturer to meet the warfighter requirement. Our fiscal year 2014 
budget supports contract award.
Command and Control
    Command and Control (C2), as a core function, is fundamental for 
all Air Force core functions. The C2 vision is to provide sufficiently 
robust, scalable, flexible, and rapidly deployable C2 capabilities, 
enabling commanders to fully exploit air, space and cyberspace 
capabilities. Underpinning the proper employment of Airpower is the Air 
Operations Center (AOC)--the senior element of the theater air control 
system (TACS) which serves as the focal point for planning, directing, 
and assessing air, space, and cyberspace operations to meet Joint Force 
Air Component Commander operational objectives and guidance.
    The C2 emphasis in the fiscal year 2013 budget complies with the 
Department of Defense's budget reduction goals while maintaining an 
adequate C2 capability. The fiscal year 2014 budget request supports 
the AOC, E-8C Joint Surveillance Target Attack Radar System (JSTARS), 
E-3 Airborne Early Warning and Control System (AWACS), and Three-
Dimensional Expeditionary Long-Range Radar (3DELRR) programs.
    Investments in JSTARS will sustain the fleet pending decisions from 
the airborne SAR/moving target indicator (MTI)/JSTARS Mission Area 
Analysis of Alternatives (AOA), while the E-3 AWACS will continue the 
Block 40/45 upgrades with the 3DELRR program pressing towards source 
selection for a new ground based sensor.
Air Operations Center
    The AOC provides operational-level C2 of air, space, and cyberspace 
operations. The AOC coordinates closely with superior and subordinate 
C2 nodes, as well as the headquarters of other functional and service 
component commands to integrate the numerous aspects of air, space, and 
cyberspace operations and accomplish its mission. To effectively 
integrate the TACS elements, the AOC develops and establishes theater-
wide C2 guidance of regular and irregular warfare, providing 
overarching direction to all the TACS elements. The baseline AOC 
Weapons System (Increment 10.1) requires modernization to enable 
collaboration, improve information accuracy, and provide enhanced 
system security against known and projected cyber threats. The 
sustainment of AOC Weapon System 10.1, and the continued development 
and successful fielding of AOC Weapon System 10.2 is critical to 
maintain joint interoperability and provide operational-level C2 to 
assigned and apportioned forces.
E-8C JSTARS
    The E-8C JSTARS is the world's premier airborne Command, Control, 
Intelligence, Surveillance, and Reconnaissance platform for air-to-
ground battle management operations. It provides long-endurance, all-
weather, surveillance and targeting of moving and stationary targets 
via GMTI and SAR technology.
    The Air Force completed the airborne SAR/MTI JSTARS mission area 
AOA in 2011, which concluded that the optimum choice for the future of 
Air Force MTI was to use a business jet class aircraft with an advanced 
radar and on-board battle management command and control (BMC2) suite. 
The AOA also concluded that upgrading the current E-8C fleet with an 
advanced radar and new BMC2 suite would be the next best solution, but 
has significantly high lifecycle costs. In the current fiscal 
environment, there is a lack of funding for a JSTARS replacement 
surveillance aircraft. The Air Force continues to fund the operations 
and support of the JSTARS platform to meet warfighter requirements. 
Critical near term diminishing manufacturing sources (DMS) issues have 
been addressed through the multifunctional information distribution 
system joint tactical radio system and prime mission equipment DMS 
efforts. It is currently estimated that DMS issues will not cause 
grounding of any JSTARS platforms until 2025+. These modernization 
efforts keep JSTARS viable to support the National Military Strategy.
    The JSTARS weapons system has been in continuous surge operations 
since 2004 and this level of tasking is expected to continue as 
combatant commander requirements for ground and maritime moving target 
surveillance continue to escalate. Current Global Force Management 
Allocation Plan (GFMAP) taskings and projected E-8C GFMAP allocations 
for fiscal years 2014-2015 will require continued deployment at these 
rates, limiting E-8C worldwide availability in support of emerging 
contingency responses.
E-3 Airborne Early Warning and Control System
    The 31 aircraft E-3 AWACS fleet is the Department of Defense's 
premier airborne surveillance and BMC2 weapon system. AWACS is a key 
airborne element of TACS and delivers combat effects of BMC2, 
battlespace awareness and decision superiority. As a rapidly deployable 
system, the E-3 is often the first surveillance and BMC2 capability in 
theater.
    The E-3 fleet has struggled to consistently meet Air Combat 
Command's mission capable requirement. Additionally, the depot is 
seeing increased corrosion in the fuselage and wings leading to 
expectations for increased aging aircraft issues in the next programmed 
depot maintenance cycles. System mission capable rates will likely 
deteriorate further when considering recent reductions to operations 
and sustainment budgets.
    AWACS, with its current modernization programs, is adequate for 
executing the National Military Strategy. Current modernization efforts 
focus on upgrading battle management mission systems through the 40/45 
upgrade, as well as cockpit avionics to provide the AWACS with the 
computing and communications architecture to participate in a net-
enabled battlespace, and avionics that are free from DMS issues to meet 
worldwide airspace navigation requirements.
    AWACS requires these future efforts to address adversary threats 
and effectively participate in coalition and joint networked 
battlespace. Future efforts include BMC2 enhancements and wide-band 
communications to allow for net centric operations and data exchange 
with other weapon systems and elements of the enterprise as well as 
sensor upgrades to detect low/very low radar cross section air target 
sets and improve operations in an electronic attack environment. Future 
capability enhancements will depend on the priority and phasing 
relative to other Department efforts and difficult choices may be 
required to live within funding constraints.
Three-Dimensional Expeditionary Long-Range Radar
    Fundamental to the Air Force's ability to provide unparalleled, 
expert, and sustained BMC2 is the ground-based Control and Reporting 
Center (CRC) weapon system, is the replacement of its 1970s-era 
technology primary sensor that is becoming unsupportable. The mission 
of the CRC is to provide persistent tactical level BMC2 to joint and 
combined air, land, and sea power assets in support of the Joint/
Combined Forces air component commander's objectives. The Three-
Dimensional Expeditionary Long-Range Radar is planned to be the 
principal Air Force long-range, ground-based sensor to detect, 
identify, track, and report aerial targets in support of theater 
commanders, with the full operational capability for 35 radars 
scheduled for 2025. Extensive operational analyses have resulted in 
well-defined requirements based on current and future threats and 
scenarios. After a $252 million cut to the program in the fiscal year 
2013 budget, the Air Force identified cost/performance trades to enable 
the program to move forward.
                             iv. conclusion
    The Air Force is still assessing the exact impacts of sequestration 
on Air Force total obligation authority in fiscal year 2014 and beyond. 
Any further reductions to our fiscal year 2014 budget request will 
drive additional risks to our readiness, force structure, and ability 
to modernize an aging aircraft inventory. In addition, the outcome of 
the strategic choices and management review may drive profound changes 
across the Department of Defense.
    As we navigate the uncertain way ahead, to mitigate risk in 
critical areas like readiness, force structure and modernization, we 
will continue to work with Congress to develop executable force shaping 
options, and ask support for another BRAC round to reduce excess 
infrastructure as a means to meet sizable budget reduction goals.
    Our sister Services and allies expect the Air Force to provide 
critical warfighting and enabling capabilities. We remain focused on 
delivering global power, reach, and vigilance through our core missions 
of air and space superiority, global strike, rapid global mobility, 
intelligence, surveillance and reconnaissance and global command and 
control. We look forward to working closely together as we address the 
challenges of near-term uncertainty to provide the ability to deliver 
combat air power for America when and where we are needed.

    Senator Manchin. I want to thank all three of you for your 
presentation, and without objection all prepared statements 
will be made a part of the record.
    With that, I will turn it over to Senator Wicker for his 
questions.
    Senator Wicker. Thank you very much.
    General Bogdan, let's start by talking about U.S. defense 
exports to our allies. I've been a big supporter of this. I 
believe robust defense trade increases interoperability with 
our allies and reduces unit costs and it helps support U.S. 
defense industrial base. I think it's a fact that we have 10 
partner countries that are slated to receive the F-35 
deliveries in the coming years: the United Kingdom, Turkey, 
Australia, Italy, the Netherlands, Canada, Norway, Japan, 
Denmark, and Israel.
    To what extent, General, have you kept our foreign partners 
informed and engaged as to the JSF program status and schedule?
    General Bogdan. Sir, our partners and our FMS customers are 
a vital part of the program, as you said, not only from the 
aspect of reducing costs to the U.S. Government, but the 
synergistic effect of having our allies flying the same 
airplane with us in the future with the same tactics and the 
same capabilities, that's priceless in some ways.
    It is difficult sometimes to ensure that information flow 
through the JSF program gets to everybody in an equal manner. 
It is difficult. What we do today in our program office is we 
have--each of the eight partner countries has a deputy national 
director who is located in the program office and they are part 
of our everyday operating procedures in the program office. We 
meet every day at 8:15 a.m., all of us, the leadership team, 
and they're included.
    Our FMS partners today, which are Japan and Israel, they 
have personnel who are located in Crystal City, VA, near where 
the JPO is, and once a week we meet with them to have 
discussions with them also.
    Probably the greatest challenge, however, sir, with our 
partners and something that is going to require a lot of effort 
in the future is, as we begin to produce and deliver airplanes 
to them, they need the information about the airplane that we 
in the United States have, and transferring a lot of that 
information to our partners is difficult because at times some 
of our ITAR restrictions prevent us from getting that 
information to them.
    Senator Wicker. For the record, tell us what ``ITAR'' 
means?
    General Bogdan. International Trafficking in Arms 
Regulation. Generally, the State Department has the purview 
over what can and can't be released, especially relative to 
industry.
    But as I was saying, probably the most difficult thing on 
the program right now having to do with the partners--and I 
think if they were here they would tell you--that access to 
information about the airplane and about the weapons system, 
because previously it had been marked United States-only, when 
it probably should have been marked differently, is an 
impediment to the program today.
    Senator Wicker. That decision to mark it as such was made 
by the State Department?
    General Bogdan. In most instances no, sir. The internal 
paperwork on the program was initially marked based on what 
Lockheed believed to be the appropriate rules for marking that 
paperwork. As we move forward in the program, we have 
recognized that I think both the JPO and Lockheed were being 
overly conservative, because there is information that we have 
to release to our partners now. We are systematically going 
back and fixing that.
    Senator Wicker. It's obvious you're working with our 
partners. Let me ask you about three. Canada, Italy, and the 
Netherlands have reduced their projected buys, am I correct?
    General Bogdan. That's correct, sir.
    Senator Wicker. What was the issue there? Assuming that we 
can get no new buyers, how much would the cancellation of say 
one foreign sale of an F-35 affect the unit cost for our 
government?
    General Bogdan. We'll take Italy for an example, sir. Italy 
was originally planning on buying somewhere upwards of 140 
airplanes. After the U.S. Department of Defense decided to 
flatten out our ramp rate over the last 3 years and remove 149 
of our airplanes from the forward portion of the buy to the 
back end, Italy reduced their buy from 140 down to 90 
airplanes.
    That has an impact on the unit cost of each and every 
airplane that we all buy, whether it's Italy or the Netherlands 
or the three Services. So the partners play an important role 
in keeping the production level of this program up.
    The Canadians similarly are relooking at the process that 
they used to determine whether they should have selected the F-
35. It's not so much that they are disputing whether the 
airplane is good for them or not. It's the process in which 
they came to that conclusion.
    But more to your point, sir, it is vital for us to keep the 
partners in this program. Without their support and without 
them buying airplanes--and our partners without the FMS 
customers are going to buy somewhere on the order of 660 
airplanes. Any one of those partners pulling out of the program 
will have a negative effect on how much it costs the Services 
to buy airplanes, and then there's the potential for what we 
call the death spiral, where you want to buy airplanes but 
someone drops out and the price goes up, so you can't buy as 
many, so now because you can't buy as many the price goes up 
again, and you continue on that spiral until you get to a point 
where you can't buy nearly as many airplanes as you wanted.
    Senator Wicker. Why don't we say this: You'll take for the 
record my sub-question about the unit cost----
    General Bogdan. Yes, sir.
    Senator Wicker.--about each sale affecting the unit cost.
    General Bogdan. I can get you that information.
    [The information referred to follows:]

    Unit cost is sensitive to the total quantity procured. Savings in 
the cost of the aircraft can be realized through bulk purchases and 
other economies of scale. The actual cost of an individual aircraft in 
any given Low Rate Initial Production (LRIP) lot is largely influenced 
by how many aircraft are being purchased, and how much production line 
learning has been achieved to that point. Additional purchases take 
advantage of economies of scale, but also provide additional learning 
opportunities, which in turn drive down costs even further. Likewise, 
aircraft reductions in any given LRIP lot would have the opposite 
effect.

    Senator Wicker. How are things going with Singapore, 
General?
    General Bogdan. Singapore has shown tremendous interest. 
Every time I see anyone from the Singaporean Air Force, I can 
tell you that they are quite enthused about the airplane. I 
believe by this summer we will hear if Singapore is in the 
program.
    Senator Wicker. And South Korea, sir?
    General Bogdan. South Korea should make their decision by 
June of this year. They were originally scheduled to make their 
decision on three different airplanes that they were looking at 
in December. They extended that for 6 more months and we would 
expect by June to hear about what their decision is. We're 
cautiously optimistic.
    Senator Wicker. General Davis, that country you referred 
to, that's China, wasn't it?
    General Davis. Yes, sir, it was.
    Senator Wicker. Okay.
    Now, on the cutback of 18 percent of our training flights, 
that is a function of 9 percent being jammed into 6 months, am 
I correct?
    General Davis. Sir, that was 18 percent of our total flying 
hours, not just training hours.
    Senator Wicker. Total flying hours.
    General Davis. That was the direct result of the 
sequestration 9 percent cuts.
    Senator Wicker. Thank you for clearing that up.
    When we get to next year, is spreading it across 12 months 
going to ease that up a bit for us?
    General Davis. Sir, our 2014 President's budget is roughly 
flat compared to 2013.
    Senator Wicker. But in terms of the flying hours?
    General Davis. Sir, that's what I'm trying to get at. 
Because some of our investment programs start to grow in 2014, 
we will have to continue within the Air Force to figure out how 
we balance modernization with readiness. If we assume that that 
budget stays intact with no effect of the current Budget 
Control Act, we will be able to buy back a lot of those flying 
hours because we'll not have to pay that bill. So a lot of 
those training hours, a lot of those lost sorties, a lot of 
those combat squadrons that are no longer mission capable will 
come back. So we'll have to just assume to be able to get there 
that we get the full President's budget request for 2014.
    If we have to deal with anything else in 2014, we'll have 
to work that on a real-time basis.
    Senator Wicker. Let me squeeze in, General Bogdan, the 
hacking of our U.S. computer networks by the Chinese. How 
confident are we going forward about our ability to secure 
classified and sensitive data within these programs?
    General Bogdan. Sir, I will tell you within DOD and within 
the JSF program, I think over the last few years we have 
implemented some fairly robust procedures to keep F-35 data 
within the confines of DOD. I am a little less confident about 
our industry partners, to be quite honest with you.
    I can tell you from our partners' standpoint, they 
recognize the huge responsibility that they have with the fifth 
generation technology that we're giving them, and each and 
every partner I know is taking security to the same level that 
DOD is. So I would tell you on the partner side and on the U.S. 
Services side I'm pretty confident that we have a robust 
layered system in place to prevent that. I would tell you I'm 
not that confident outside DOD.
    Senator Wicker. Tell us what you need to help you work with 
industry on this, and thank you for your service.
    General Bogdan. I will take that for the record, sir.
    [The information referred to follows:]

    The F-35 program continues to work aggressively with our industry 
partners to ensure that F-35 data is appropriately protected in all 
data mediums. I appreciate the critical role that Congress plays in 
influencing the direction of our cyber security efforts. The continued 
emphasis on cyber security issues related to the Department of Defense 
by congressional members during interactions with industry further 
emphasizes the importance of this key issue area. In addition, industry 
can further support acquisition programs by applying industry best 
cyber security practices and methods across all acquisition programs 
without explicit direction from the Government.

    Senator Manchin. Thank you, Senator.
    At this time we'll hear from Senator Blumenthal.
    Senator Blumenthal. Thank you all for being here today and 
thank you for your extraordinary service to our country in an 
area that is critical to our national security.
    If I may, General Davis, I think if I have it correctly you 
outlined that the Air Force is about 200 fighter pilots short 
of your total manning requirement. Am I correct in that 
recollection?
    General Davis. Sir, that number is correct.
    Senator Blumenthal. Could you explain to us what you view 
as the primary causes for that shortfall, if I may refer to it 
that way, whether it's recruiting and retention or funding for 
training or where you see the causes are?
    General Davis. Sir, in short it is the direct result of 
drawing down force structure. Now let me explain. The airmen in 
your Air Force bring a wide variety of expertise, not only in 
flying fighters and bombers, but also in command and control of 
the air in defense of everything. So we have very specific 
billets all throughout the Air Force that requires that 
expertise that a fighter pilot either learned from operational 
deployments, brought from weapons school as our premier 
instructors, or something.
    So we depend on their expertise to do a lot of fairly 
important jobs throughout the Air Force: running air operations 
centers, helping command and control battles. So as we draw 
down force structure and cockpits become less available, we 
have no ability to absorb these individuals out of pilot 
training, put them into a fighter squadron, get them some 
experience so that they are now useful in an air operations 
center over in the Middle East. So as a result, it perpetuates 
itself. If we can't bring them in, we can't fill the slots and 
the shortfall continues to grow.
    So again, it goes back to what we're able to fly and how 
many cockpits we're able and how much training opportunity 
we're able to give these individuals.
    Senator Blumenthal. So if I can put it in terms that might 
be understandable to the average American, not that your 
explanation hasn't been absolutely clear, but if I were giving 
it to the Rotary Club, we're not providing enough aircraft for 
training, enough slots where our pilots coming out of schools 
can have the kind of useful experience that gives them the 
ability to be sufficiently expert in the air to have them fly 
for us?
    General Davis. Senator, that's exactly right. It's a matter 
of getting them expertise so they can contribute to the battle.
    Senator Blumenthal. I heard what you said about that other 
country, which we now know is China, and I wonder if you could 
expand on that a little bit? What exactly have they done within 
this short period of time that you cited?
    General Davis. Sir, within about 22 months they flew 
variants--and we can all debate the relevancy of those two 
airplanes--the J-20 and the J-31, which were essentially, if 
you look at them, they look very much like a version of the F-
35 and very much a version of the F-22. You asked General 
Bogdan about hacking networks. There's no doubt that a large 
amount of our unclassified data probably made it into those 
designs in some shape, form, or fashion.
    The fact that that country could find the resources and the 
engineers to build two prototypes, two flying high performance 
aircraft prototypes, in 22 months--and if you look a little bit 
further within the intelligence, it wasn't just those two 
airplanes. They flew a variety of airplanes in about a 3-year 
period, to include an airlifter which looked very much like our 
C-17, a helicopter, and other training aircraft.
    So they have shown that they have acquired the beginnings 
of a little bit of agility within the acquisition system that 
we need to be mindful of, because, while we may think we're 
comfortable and able to do things as we please, we're seeing 
that other countries that we didn't care too much about in how 
they produced weapons are starting to show that they have 
capabilities. That's why I brought that up.
    Senator Blumenthal. I appreciate your raising it with us, 
and I find it somewhat alarming that the keystone to our air 
superiority for the next decades can be so easily, in effect, 
reproduced, which is probably a polite way of putting it, by 
the Chinese in so short a period of time. Should I not be 
reacting that way to what you've just said?
    General Davis. Sir, I think we all need to be mindful of 
the fact that they can go produce airplanes of a fighter, if 
you will, variation in a short period of time. I would caution 
the fact that probably the underpinnings behind that shell that 
you see flying around may not be anywhere near the capabilities 
that General Bogdan will bring with the F-35 or what we have 
with the F-22 or the F-18E/F.
    Just the fact they can produce and deliver prototypes. 
There was a period in our time where we had nine different X-
plane variants sitting on the ramp at Edwards Air Force Base at 
the same time. We produced 30-something X variants between 1947 
and 1987 roughly. So now we've kind of set back on our laurels 
and built some very exquisite, very capable designs that are 
going to dominate the air, I have no doubt. But we now have 
another country that I think we need to pay attention to a 
little bit differently than we have in the past.
    Senator Blumenthal. So they right now, they have 
reengineered or managed to in effect reproduce the shell at 
least, but we don't know whether the flying capabilities and 
the attack abilities are commensurate with what we would regard 
the F-35?
    General Davis. Sir, that would be my personal opinion of 
how I'd characterize that.
    Senator Blumenthal. Thank you.
    Thank you, Mr. Chairman.
    Senator Manchin. Thank you, Senator.
    I just have a few questions and then Senator McCain has 
joined us.
    I'd like to ask each of the witnesses how will implementing 
the reductions from sequestration affect each of your programs? 
I think we've heard an overture on both of that. I might ask, 
how would you be able to manage these adjustments if you had 
flexibility? That's a big word we're all using on both sides of 
the aisle, Democrats and Republicans. But basically still 
meeting the goals of the cuts that have to be made, but doing 
them with some discretion that you might have and flexibility, 
if that would help you? If anybody can speak to that, whoever 
wants to start? General Bogdan?
    General Bogdan. Yes, sir. Flexibility would be a wonderful 
gift for the F-35 program. If the sequestration were to take 
place precisely as it was defined across the board, my program 
would have problems. I would lose money in development and that 
means that I may not be able to deliver the capability that the 
warfighter needs on time. I would lose money in production, 
which means we will lose airplanes in fiscal year 2013, which 
has an effect on all the remaining airplane prices in 2013 and 
possibly 2014 and beyond. I lose some part of my money that I 
use for spares and sustaining and maintaining airplanes in the 
field, which means today my operations at Eglin, where I'm 
training pilots and I'm training maintainers, would also have 
to slow down.
    So without flexibility each of those pots of money will 
take a hit and the program will be degraded in those areas. 
With flexibility, the Services can decide how much money from 
each of those pots do they really need to take, and at least we 
can keep the program balanced. We may not be able to keep it 
all at the same level, but at least in those different areas we 
can keep it balanced. So from my point of view it would be a 
great gift to have.
    Senator Manchin. We're talking about still the $42.5 
billion that needs to be reduced from defense and non-defense 
between now and the end of September.
    General Bogdan. That's correct, sir.
    Senator Manchin. But with that flexibility, you, DOD, would 
make the adjustments accordingly of whether are high priorities 
or lower hanging fruit would be priorities. You don't have that 
discretion today.
    General Bogdan. I do not have as much discretion as I would 
like, sir.
    Senator Manchin. I got you, sir.
    Admiral?
    Admiral Skinner. Senator, thanks for the question. As my 
Chief of Naval Operations (CNO) and the Secretary have 
testified before, we lost about $6 billion out of our 
investment accounts, another $4 billion out of readiness. We 
have some authority that came in with the Public Law 113-6 that 
allowed us some authorities. Those authorities were allocated 
by DOD. But the flexibility beyond those authorities to move 
money to handle our more pressing needs would be, as General 
Bogdan said, a great gift.
    The ability to go in and selectively fix our investment 
programs that required fixing on a priority basis, the ability 
to move money out of our investment accounts and handle our 
more pressing readiness needs, for example our depot inductions 
of airframes and engines, and in this case for the Navy's ship 
maintenance--when we have those types of maintenance events, if 
we miss them they're missed forever, until the next time around 
we come in with the cycle. So the ability to handle that would 
be a great gift.
    Senator Manchin. General Davis?
    General Davis. If we had the ability to put those cuts in 
the areas that we thought we could most handle the risk and 
take the force structure adjustments that we needed to, I think 
that would be certainly a benefit to anything we want to do in 
the Air Force.
    When the public law was passed and the bill was passed, 
certain key programs that we worried very much about were made 
whole, notably the KC-46 tanker. That was one that was on a 
fixed price contract we were worried greatly about about 
whether we would have the ability to move the money in. But 
even with that one being fixed, we have no doubt that with the 
money we've lost out of the Air Force F-35 production lines, we 
will lose some number of airplanes yet to be determined. Since 
we have no ability to put that money back in and fix that, we 
know that every other airplane--where Senator Wicker was 
going--every other airplane everybody else buys will go up by 
some small amount. So again, there the inefficiency starts to 
grow.
    So we would like to be able to have some flexibility to 
pick the right spots. We had enough, I would say, engineering 
change dollars and other money that we were trying to work 
through simply because of the fact we had slowed down spending 
across all Air Force programs in the continuing resolution. So 
when we finally had to take the cut with the 2013 numbers, I'll 
tell you the results were probably not as drastic, certainly in 
investments. They were terrible in O&M, as I've talked about 
the lost flying hours.
    Just say this happens to continue and the Budget Control 
Act continues through 2014. None of that flexibility exists. So 
every single program will feel it very painfully in a very 
deliberate fashion. So the flexibility would help on that.
    Senator Manchin. Thank you all.
    General Bogdan, in 2010 Secretary of Defense Gates at that 
time withheld $614 million of Lockheed Martin's performance 
fees on the JSF after performance targets were missed. 
Secretary Gates said: ``I will withhold $614 million in 
performance fees from the lead contractor since the taxpayers 
should not have to bear the entire burden of getting the JSF 
program back on track.''
    So I would ask, what has happened to the $614 million fee? 
How much has Lockheed earned back and how much did they lose, 
and how much is there left for the company to earn?
    General Bogdan. Yes, sir. I'll try and go through this and 
try and avoid doing math in public here. But you are right, 
there was $614 million of fee left post-Nunn-McCurdy breach 
when we rebaselined the program. Immediately as we came out of 
the Nunn-McCurdy breach, the Secretary of Defense took $190 
million of that money and just took it away and said: Lockheed, 
you will never have the opportunity to earn that money again. 
So right off the bat he took $190 million.
    Over the next 3 years from 2010 to 2012, there was award 
fee in the total of about $101 million that Lockheed could have 
earned. They only earned $34 million of that. So if you do the 
math, the $190 million we took away, the $101 million they 
could have earned over the last 3 years, what's left today is 
$337 million.
    When we came out of the Nunn-McCurdy breach, all of the fee 
on this program for the development was in what we call award 
fee. Award fee is a subjective fee, meaning that I, as the PEO, 
take a look at Lockheed's performance and get to decide how 
much they're going to get.
    We transitioned the contract from award fee in 2012 to what 
we call incentive fee. So every bit of that $337 million now is 
in what we call incentive fee and there is very little 
subjectivity. It's things that Lockheed has to do and has to 
perform over the next 4 years to earn that money.
    Let me give you an example. There's $100 million of that 
$337 million that's broken up. If they deliver the 2B 
capability on time, they get $40 million. If they deliver the 
3I capability on time with all the capability, they'll earn $25 
million. If they deliver the 3F capability on time with all the 
capability, they'll earn $35 million. That's $100 million of 
the remaining $337 million.
    I've taken the last $237 million that's left over, I put it 
at the end of the contract, and I've said to Lockheed Martin: 
You must deliver me a weapons system that meets each and every 
one of the system spec requirements. You must do that on time, 
and you must do it within the budget I have remaining on the 
development program. If you don't meet those criteria, you will 
not earn a penny of that $237 million. That's where we have it 
today, sir.
    Senator Manchin. Thank you, sir.
    At this time I want to turn it over to Senator McCain.
    Senator McCain. I thank the witnesses.
    General Bogdan, about I guess it was a couple months ago 
you wrote, made some statements that were, I felt, rather 
interesting, where basically you questioned the commitment of 
Lockheed Martin to seeing this program through without profit 
being the sole motive. I don't know if that's an awkward 
description of your statement, but I thought it was a very 
strong one and I was impressed by it. Would you care to explain 
to the committee what you were saying there?
    General Bogdan. Yes, sir. My comments were directed at 
Lockheed Martin and Pratt & Whitney, and my intention was to 
put them on notice that I needed to make sure that they were 
committed in the long term to reducing costs on this program. 
At the time when I made that comment, I was not so sure. Doing 
business with both companies has been difficult. It is getting 
better. I was seeing behaviors in which I thought over the next 
30 or 40 years were not sustainable for a relationship between 
us and either one of those industry partners. So fundamentally 
this was a shot across the bow to them, letting them know that 
I was watching and I was waiting for behavior changes.
    Now, having said that, there are some things that I can 
tell you, not necessarily directly related to my comments, but 
over the past 9 months have seemed to taken hold on the program 
which I am appreciative of. First and foremost, there have been 
significant leadership changes in Lockheed Martin over the last 
few months all the way up and down the F-35 chain. The deputy 
program manager, the program manager, the president of Lockheed 
Martin Aero, and the CEO have all changed out. I would tell you 
that those four individuals in those positions now have a 
different culture and a different attitude than when I first 
walked in on this program 9 months ago. That is a good thing.
    The other thing I have noticed, and whether it was as a 
result of my comments or not doesn't matter because it's good 
for the government anyway, Lockheed Martin and Pratt & Whitney 
are beginning to share in the risks of this program. For 
example, the last contract we negotiated in Low Rate Initial 
Production (LRIP) 5, Lockheed Martin has to pay for half of all 
our concurrency costs.
    Senator McCain. Could I point out that part of that was 
finally congressional mandate.
    General Bogdan. Yes, sir. I was going to get to that part. 
The concurrency part was a cost share. The part about the 
overruns on the price of the production was clearly a 
congressional mandate for us to start forcing the contractors 
to take some responsibility for production cost overruns, and 
we appreciate that. We do.
    So there have been signs that Lockheed and Pratt & Whitney 
do indeed want to sell us 3,164 airplanes and almost 4,000 
engines. But the jury is still out. There's a long way to go. 
There's two-thirds of the testing to go. There's only 10 
percent of the production is done. So I will be continuing to 
monitor this.
    Senator McCain. GAO gives you pretty favorable marks for 
your latest activities and that is encouraging. But you know, I 
look at the sustainment costs. GAO reports that procurement 
would average $12.6 billion a year through 2037. The DOD Cost 
Assessment Program Evaluation Office estimates that JSF 
operating and sustainment costs would exceed $18 billion a 
year. That's $30 billion a year for this one program. Is that 
affordable?
    General Bogdan. I guess I can't answer the affordability 
question. I'll look to my service brethren to answer that. But 
more to your point, sir, you are exactly right. For our 
partners, for the Services, for our FMS customers, if we don't 
start today in reducing the overall operating and sustaining 
costs of this airplane, it could spend--it could become very, 
very expensive.
    Senator McCain. Maybe I could ask our other two witnesses 
if they have a view, and maybe not. I would point out in this 
GAO report in 2001 it was going to be $69 million per aircraft 
and now in March 2012 it's $137 million per aircraft. That's 
pretty remarkable.
    Admiral and General, do you have any comments?
    Admiral Skinner. Senator, it's in the best interests of the 
Department of the Navy and I think of DOD to drive the 
production cost of this aircraft down. We're encouraged by 
the----
    Senator McCain. Have you seen any signs of that?
    Admiral Skinner. Yes, sir, we have. We've seen signs that 
the production costs over the LRIP lots negotiated to date and 
projected to be negotiated in the future are coming down the 
learning curve and are getting more affordable.
    But to your point, the numbers that you quoted earlier in 
your question, they're a little hard to swallow. So what we 
need to do is we need to do everything in our power to 
cooperate with the program office and to drive the production 
costs down, and then conversely the sustainment costs of our 
jets and how we operate them.
    General Davis. Senator, along with what Admiral Skinner 
said, we've shown in the Air Force that on budget issues you 
can make any program unaffordable as you decrease quantities. 
So there's a component here. The cost needs to go down----
    Senator McCain. I think we learned that lesson from the F-
22.
    General Davis. Sir, we learned it from the F-22 and also 
from the B-2, I think. As we tool up for a much larger program 
and we start to have issues that are somewhat related to this 
and we have budget issues that drive down the quantities, each 
one goes up.
    As I mentioned, the three to five airplanes we are possibly 
to use out of our buy for fiscal year 2013, $3, $4, $5, $7 
million impact to every other airplane not bought, simply 
because quantity has changed. So there is that aspect of it.
    The other aspect of it I will say is that we're all 
concerned about what the hourly flying cost of the airplane 
will be as it's computed now. But as we've learned over time on 
F-18s and certainly in the Air Force on F-16s and F-15s, for a 
lot of reasons if we end up constraining that flying hour cost 
to whatever our budget is none of our legacy fighters right now 
would be funded to 100 percent of their availability or 100 
percent of their spares requirement. So we deal with that----
    Senator McCain. Sooner or later, that gets into the 
efficiency of the pilots.
    General Davis. Yes, sir, it most certainly does. We fully 
fund the airplanes and the pilots that are in contact in the 
AOR and the folks back home will suffer for that a little bit. 
We would like that suffering to be minimal, but----
    Senator McCain. Not to mention the effect of sequestration, 
obviously.
    Thank you. Thank you, General.
    The program, General Bogdan, is two-thirds only--it still 
needs two-thirds of its developmental testing. Isn't that a 
significant risk, particularly in the area of software 
development? I notice in your statement that you were, 
``moderately''--you had ``moderate confidence.'' None of us 
around here seem to like the word ``moderate.''
    General Bogdan. Yes, sir, so let me explain. Software is 
the number one challenge on the program. When I use the word 
``moderately confident,'' what I am speaking about is I am 
moderately confident that the initial warfighting capability of 
the airplane that we intend to deliver to the U.S. Marine Corps 
in 2015 will be there with the full capability in 2015.
    I am less confident that the final capability of the 
airplane, which is due to be delivered at the end of 2017, will 
happen in 2017 with the full capability. So the tough years for 
us are 2016, 2017, and the beginning of 2018 for the software.
    What I see today for 2013, 2014, and then 2015 for the 2B 
capability, the initial capability, is a software process that 
is improving. We have lots of metrics that we can show you, and 
that in part is what causes me to say I'm moderately confident 
up to 2015. I can honestly tell you, beyond 2015 I don't have a 
great answer right now because there's a lot of things that 
have to happen between now and 2015 to give me more confidence 
in 2017, not the least of which is I have to finish the flight 
test on this initial 2B software, as we call it.
    Senator McCain. My time has expired, but let me just say, 
we appreciate what all three of you have done. General Bogdan, 
I think you've gotten a hold of this program in a way that 
certainly the GAO is satisfied with the progress that's being 
made. But the three of you together represent many years of 
experience in the business, and the thing that bothers us the 
most--well, let me say the thing that bothers me the most is 
the whole acquisition system where we have so many years and so 
many cost overruns, and we don't seem to have lessons learned.
    General Davis was just mentioning the B-2 and the F-22 and 
the cost overruns associated with that. Now, I understand the 
tanker is doing pretty well. Is that right, General Davis?
    General Davis. Yes, sir, it is.
    Senator McCain. So what are we doing with the tanker, which 
I understand is a much simpler--it's a flying gas station and I 
understand it's much simpler than a tactical fighter weapons 
system. But somewhere along the line we have to have people 
like you tell us the lessons learned so we don't keep repeating 
them, so we don't keep seeing this movie over and over again.
    I would argue that there are some of us that have a long 
record of being staunch defenders of national defense and 
spending what it takes and believe we live in a dangerous 
world, but we have to be able to go back to our constituents 
and say: They're doing a lot better than they did in the F-22 
and the F-35 and the sensing devices along the Mexico border, 
where Boeing blew about $787 million. These cost overruns, the 
American people make it hard for us to have credibility when we 
speak for a strong national defense.
    So maybe at some time we ought to have a hearing, Mr. 
Chairman, on the lessons learned in these failures. I don't 
know if legislation is necessary. We passed an acquisition 
reform bill that Senator Levin and I authored and we have 
placed restrictions on cost overruns. But at least in the eye 
of our constituents, we aren't doing nearly the job that we 
should.
    So I don't know if you have any comment on that or not, but 
I hope that you'll understand from our side of the dais it's a 
greater and greater challenge for us to continue to support 
these weapons systems when we are having the cost overruns that 
we have.
    Thank you, Mr. Chairman, for allowing me this time.
    Senator Manchin. Absolutely. While the Senator is still 
here, I'd like to follow up because when these programs--I'm 
understanding when these programs are coming to life there is a 
competitive process you go through, like the so-called fly-off. 
The companies that are competing have to build prototypes and 
I'm sure that's where they got their cost estimate thinking it 
would be a $69 million project per unit.
    I think, to follow up on what the Senator was asking, how 
did we let the control--how did we lose control of that cost? 
They had a plane, they built a plane, they basically 
demonstrated it. You picked one over the other, I'm sure, 
however that process goes. You had pretty much a flying 
prototype, and they could have figured out what their cost was 
to get that prototype flying on that one unit, and then they 
would estimate over the life if there's going to be 3,000 or 
more where that cost, the competitive cost, could be.
    That's usually a business--that's the way businesses in the 
real world operate. But I think what we're doing--and the 
Senator was being quite kind in saying, how come the military 
doesn't use that same process? If it was your pocket and you 
were paying, or your stockholders, that you were investing 
their money, you wouldn't operate that way. We're not blaming 
any of you directly. We're saying we would have--and I think 
the Senator's suggestion about having a hearing strictly on the 
process of how we got here--I heard him. I've been here 2\1/2\ 
years and I look to Senator McCain as being a champion in 
leading not only the defense of our Nation, but also just the 
common sense of getting the bang for your buck. It's hard to 
look the taxpayers in the eye and say we've done it.
    He's a staunch defender, but it's going to be pretty hard 
to say let's keep pouring the money to it when they're saying 
it was $69 million, now you're $137 million. How did you double 
the cost and nobody had to pay the penalty for that and they're 
still doing business, if you will.
    I'm not saying that for any other reason, but I think that 
we will call a hearing on that and we would like for you to be 
prepared to show us the turn of events so that it basically has 
a template, because if it happened with the B-2, if it's 
happened with the F-22, it's happened with the Strike Fighter, 
and the only thing that's come in relative to the cost has been 
the tanker, I mean, pretty soon----
    Admiral Skinner. We've had good luck with the F-18, sir.
    Senator Manchin. You've had good luck with that?
    Admiral Skinner. Yes, sir.
    Senator Manchin. With that being said, how are we going to 
maintain this aircraft, this F-35? We look at it from the 
standpoint--let me just--we'll come back to that.
    If the Chinese Government can produce in 22 months a 
competitive aircraft, there had to be piracy or espionage, had 
to be.
    Senator McCain. Both.
    Senator Manchin. Both. Are we doing anything on that line? 
I mean, if they're going to go ahead and copy what we have, 
they ought to at least help pay a little bit for it. That's 
all. That's a fair request, don't you think, Senator?
    Have we pinpointed it? Has their government been put to the 
task of--it's very obvious what they've done. I don't know if 
you have any comment on that or if you could comment on that.
    Admiral Skinner. We'll take that one for the record, 
Senator.
    [The information referred to follows:]

    With regard to the question of whether we, the Department of 
Defense (DOD), are investigating and prosecuting persons involved in 
the illicit acquisition and transfer of protected research and critical 
technologies by the People's Republic of China, the following 
information is provided by the Naval Criminal Investigative Service 
(NCIS).
    DOD counterintelligence, led by the military department 
counterintelligence organizations, aggressively and collaboratively 
engage in detecting, identifying, mitigating and defeating efforts by 
foreign intelligence elements (FIE), including the People's Republic of 
China (PRC), to illicitly acquire or exploit protected research and 
critical technologies. Working closely with the Federal Bureau of 
Investigations (FBI), Commerce, and other U.S. Government elements, the 
Department of the Navy aggressively investigates and prosecutes 
individuals or entities, foreign and domestic, involved in attempts to 
compromise critical research, development, and acquisition, and fielded 
sensitive technologies. Some recent examples of successful 
investigations involving the PRC include:
    Stolen U.S. Military night vision & optics to China and England--On 
November 4, 2011, Phillip Andro Jamison, a former Gunner's Mate Petty 
Officer First Class in the U.S. Navy stationed aboard Naval Amphibious 
Base Coronado, was sentenced to serve 30 months in prison for violating 
the Arms Export Control Act. Jamison pleaded guilty on April 28, 2011. 
On September 9, 2010, he was indicted for trafficking in stolen 
government property, interstate transportation of stolen goods and 
exporting defense articles without a license. The indictment alleged 
that Jamison, while assigned to work at his unit's armory, stole more 
than 280 items from the U.S. Navy between October 2008 and September 
2009 and then sold these items to customers via eBay, an Internet 
auction and shopping website. The indictment further alleged that 
Jamison illegally exported to Hong Kong and England combat-grade night 
vision devices, riflescopes and laser aiming devices without first 
obtaining the required export licenses from the State Department. 
Jamison admitted stealing the items and illegally exporting some of the 
technology to Hong Kong. The investigation was conducted by ICE and 
NCIS.
    Telecommunications equipment from China to Iraq--On April 10, 2007, 
Andrew Huang, the owner of MacAndrew's, Inc, an international export 
company, pleaded guilty in the District of Connecticut to one count of 
making false statements to the FBI. Huang was charged in 2006 with 
operating as a representative for the Chinese Electronic System 
Engineering Corporation, the technology procurement arm of the 
Government of China. According to court documents, Huang allegedly 
helped broker the illegal sale and transfer of millions of dollars 
worth of telecommunications equipment from China to Iraq between 1999 
and 2001. Huang was sentenced to 2 years probation and a $5,000 fine. 
The investigation was conducted by the FBI, U.S. Immigration and 
Customs Enforcement, NCIS, Internal Revenue Service, and BIS.
    In addition to the above, NCIS is currently engaged in a number of 
classified investigative and operational efforts to identify, 
prosecute, or otherwise frustrate FIE efforts, including those 
involving the PRC, to illicitly acquire protected information or 
technologies. NCIS can provide additional, more specific information at 
the appropriate classification should the committee so desire.
    Despite these efforts, the United States remains a primary and 
lucrative target for FIE engaged in the collection of such information 
and technologies. Successful efforts by FIE results in significant loss 
to the U.S. economic and military global advantage. In addition to 
losses through fraud and theft, we contend with a wide array of other 
techniques such as skilled elicitation efforts directed against our 
scientists and engineers; exfiltration of sensitive or proprietary data 
through cyber penetrations; espionage using insiders; and loss of 
critical information through carelessness. Additionally, NCIS employs 
an aggressive counterintelligence functional services effort to include 
briefings, debriefings, insider threat awareness and 
counterintelligence defensive awareness training.

    Senator Manchin. Do you know if there's any proceedings on 
anybody because of these programs that you've seen being able 
to accelerate to the point they have? Are we investigating? 
Have we prosecuted anybody? Are we on the tail of anybody?
    Admiral Skinner. Sir, not to my knowledge at least. I won't 
speak for General Bogdan or for General Davis, but not to my 
knowledge. We have concentrated mainly in the Department of the 
Navy on protecting our data and providing information assurance 
for our data within our own lifelines in the government and 
then subsequently with the contractors that we work with to 
develop and produce these weapons systems.
    Senator Manchin. This amazing speed of 22 months, would it 
be part of the hacking system that we've been able to monitor 
and watch what is going on? Probably.
    Admiral Skinner. Yes, sir.
    Senator Manchin. I just have just one more. Senator, thank 
you.
    We mentioned the statement, I think, that--all of you have 
mentioned, we talked about the F-35 life cycle over 50 years 
would be approximately $1 trillion. General Bogdan, you said we 
must start today to tackle long-term cycle costs of that 
weapon. Can you describe what concrete steps that you're taking 
other than what you've already just testified to? Is there 
anything that you might have missed or that you'd like to add 
to the testimony?
    General Bogdan. Yes, sir. One of the first things we've 
done is we've taken a look at the overall sustainment costs and 
broken it down into different elements. We're trying to 
identify areas where the JPO and the contractors can actually 
work to reduce costs, and I'll talk about those. But there are 
areas of the long-term operations and support costs that fall 
within the Services' purview to deal with. For example, how 
much flying time do you give each pilot relative to how much 
time is used in the simulator? That ratio can greatly change 
how costly your airplane is over the life of the airplane.
    So the first thing we're doing is we're trying to separate 
out those things that the JPO and industry can work on and 
those things that the Services can take a look at and work on, 
so that we cannot work at cross-purposes.
    The second thing we're doing in the JPO today is we're 
injecting competition into those long-term sustainment 
activities. I learned a very good lesson as the PEO for the KC-
46 program that we just spoke about, what good competition can 
bring. It is a good. So we are--there are various areas like 
the supply chain, like the Avionics Lostitics Interaction 
System administration, like developing and delivering support 
equipment, like running our training centers for our pilots and 
our maintainers, those are things that industry, not just 
Lockheed Martin and Pratt & Whitney, have great capability and 
capacity to do for us. There's no reason in the world why we 
should not open that up and find the best companies that can 
give the government the best value to do those things, and 
we're doing that today, and we should start seeing over the 
next few years some of those competitions come about and we 
should see some of the estimated costs of doing that come down.
    The last thing we're doing on the program today is, we have 
about 6,000 hours of flying total on the fleet today. We are 
starting to gather real information about the reliability and 
the maintainability of the airplane and what parts on the 
airplane are failing at a greater rate than we expected, which 
parts are coming off the airplane and taking too long to 
repair. We call that a reliability maintainability program and 
we have a robust one going on in the JSF right now to identify 
those cost drivers and then to do something about it. Either we 
redesign a part or we qualify a second source to make that part 
for us or we figure out the best way to repair that part 
quicker and cheaper. Maybe it's organic standup of that repair 
capability.
    Those steps over the next 4 or 5 years ought to make at 
least a dent in that huge $1.1 trillion number that we hear 
about. So I'm committed to do everything I can for the 
partners--they watch this every day--the Services--they watch 
it every day. Our FMS customers watch it every day, and they're 
all worried, and I think they should be and I'm working on it.
    Admiral Skinner. Senator, if I may, from a Service 
perspective we've made great progress over the course of the 
last 3 years. We have a process in place led by the JPO that 
allows us to generate those numbers. We have common 
definitions. We have common cost allocation strategies across 
the Services that we've all agreed to.
    I know the Navy and the Marine Corps are doing exactly 
referred to in his first point, which is we're going through 
exactly how we fly our aircraft today and how we train our 
pilots. We look at the capabilities of the F-35B and C. We take 
a look at the high-fidelity simulation that is being provided 
by the program. We determine how many weapons that each one of 
our pilots need to drop a year to maintain proficiency, how 
many air-to-air missiles they have to shoot, how many landings 
they have to make per sortie.
    All of that information needs to be fed into General 
Bogdan's model in order to come up with an accurate sustainment 
number. We're in the process of going through that information 
in great detail and providing that data to his databases over 
the course of the next few months.
    So already we've noticed some discrepancies in our initial 
data that we submitted to the program and what we think we 
would be doing in the future. So we should see some progress in 
that area from a Service perspective, at least the Department 
of the Navy Service perspective.
    General Davis. Sir, the lesson we have to learn through 
this is that the F-35 is not an F-16, it's not an F-18. 
Unfortunately, a lot of the models we use, a lot of the 
decisions we make about what the cost per flying hour, is still 
modeled very much on how we fly F-16s and F-18s. We've learning 
from the F-22 that very little beneficial training is 
accomplished in open air because the airplane is just, it's 
just too smart. It sees everything, it knows everything. It's 
an easy flight in the cockpit. The F-35 is going to be the same 
way.
    So you're going to have to train differently in a different 
fashion, notably, as has been mentioned a couple times, with 
some very high-fidelity sims, which would be a lot cheaper to 
use than the airplane and get a lot higher quality training out 
of that. I think we, all Services, are just coming to grips 
that this is going to be a different animal when we get it 
fielded and get it operational.
    The same way we've put personnel on the flight line, the 
same way we've managed and ordered spares, the same way we've 
practiced weapons deliveries and weapons employment is just not 
going to work for this airplane, and we're going to have to 
come to grips with that. But we won't be able to until we get 
enough of our operational guys out there flying it and enough 
of our operational maintainers out there telling us how to do 
it.
    Every airplane I've seen fielded in the Air Force has been 
fielded with an idea of how it's software was going to be used, 
until you turned it over to the lieutenant or a captain that 
had had some experience in a true situation, and basically 
every operational concept of our airplanes, or at least the 
software and the weapons systems on it was significantly 
revised after it was put in an operational context. So we'll 
see how that goes and what that does for us.
    Senator Manchin. Let me thank all of you for your 
testimonies today and I appreciate so much your cooperation and 
helping us and working with us on this subcommittee. I tell 
you, we will be a very active subcommittee. I want to make sure 
you all know you have our full support. But we want to learn 
also and try to be constructive in the support that we have, 
not destructive. I know that happens an awful lot in this 
political toxic atmosphere we have from time to time. But we 
have a good subcommittee here and I think it really supports 
what you do. We just want to make sure that the citizens are 
getting the investments and getting return on investments.
    I've always said there's two things we can do through tax 
dollars. We can spend it or invest it. We've done a good job of 
spending a lot of money and we just have to start investing it 
a little bit wiser now. So you can help us, I think, make sure 
our investments are better spent.
    We will keep the hearing record open for 5 days to allow 
members to submit additional questions. If there is no further 
questions, I want to thank you all again. This hearing stands 
adjourned.
    [Questions for the record with answers supplied follow:]
             Questions Submitted by Senator Joe Manchin III
                       tactical aircraft programs
    1. Senator Manchin. General Bogdan, the F-35 is scheduled to enter 
Initial Operational Test and Evaluation (IOT&E) in January 2018. This 
is the key phase during which the aircraft must demonstrate it is 
operationally effective. What key technical and performance issues must 
the aircraft demonstrate in the next 4 years before you'd be willing to 
enter the aircraft into this phase?
    General Bogdan. The operational test and evaluation (OT&E) for 
Block 2 is scheduled to be held in 2015. This OT&E will validate the 
requirements for the U.S. Marine Corps and Air Force Initial Operating 
Capability (IOC) which require the aircraft to perform the following 
missions:
    USMC: Air Interdiction (Strike), Close Air Support, Offensive 
Counter Air, Defensive Counter Air, and Armed Reconnaissance/Assault 
Support Escort
    USAF: Limited Strategic Suppression of Enemy Air Defenses (SEAD)/
Destruction of Enemy Air Defenses (DEAD), Limited Tactical SEAD/DEAD, 
Air Interdiction (Strike) and Close Air Support.
    In order to perform these missions, the aircraft should demonstrate 
the following operational capabilities:

         Basic and combat air maneuvers,
         Stealth,
         Full combat range,
         Full multi spectral sensor/multi ship fusion,
         AIM-120, GBU-12, JDAM employment
         Electronic protection/electronic attack/combat identification
         High resolution synthetic aperture radar maps
         Ground moving target indicator/tracker
         Electronic support measures
         Limited countermeasures
         Full infrared distributed aperture system
         Limited air-to-ground infrared targeting and air-to-air 
        infrared search and track
         Variable message format, Link 16 and multifunction advanced 
        data link

    The OT&E for Block 3 is scheduled for 2017-2018 and will validate 
the requirements for Navy IOC which require the aircraft to be able to 
perform the following missions: strategic SEAD/DEAD, Tactical SEAD/
DEAD, Air Interdiction (Strike), close air support, offensive counter 
air, defensive counter air, anti-surface warfare and combat search and 
rescue.
    In order to perform these missions, the aircraft should demonstrate 
the following operational capabilities:

         Basic and combat air maneuvers,
         Stealth,
         Full combat range,
         Full multi spectral sensor/multi ship fusion,
         AIM-120, AIM-9X, GBU-12, JDAM, JSOW employment
         Electronic protection/electronic attack/combat identification
         High resolution synthetic aperture radar maps
         Ground moving target indicator/tracker
         Electronic support measures
         Advanced automated countermeasures
         Full infrared distributed aperture system
         Limited air-to-ground infrared targeting
         Air-to-air infrared search and track
         Variable message format, Link 16 and multifunction advanced 
        data link

    In addition, the Block 3 OT&E will fully validate the following F-
35 Program Key Performance Parameters: combat radius, F-35C recovery 
speed, F-35B performance (short takeoff distance on a flat deck carrier 
and on a United Kingdom carrier equipped with a ski jump and vertical 
landing bring back weight), net readiness, radio frequency signature, 
force protection, mission reliability, sortie generation rate, and 
logistics footprint (C-17 loads, volume and weight).

    2. Senator Manchin. General Bogdan, what is your current thinking 
on whether the Joint Program Office (JPO) must buy a new helmet?
    General Bogdan. To mitigate F-35 Helmet Mounted Display System 
risk, an alternate helmet (BAE) is being pursued in case the primary 
helmet (Rockwell Collins) does not meet the performance required for 
the F-35 missions or proves to be unaffordable. Currently, both helmets 
are being developed with a planned fly-off in 2014. Down-select is 
planned after the fly-off, but the selection may be made earlier based 
upon risk reduction efforts underway.

    3. Senator Manchin. General Bogdan, what is the test plan for this 
year as the JPO pursues its dual path of developing a second helmet?
    General Bogdan. The Rockwell Collins helmet that is currently 
integrated on the F-35 has completed a dedicated test period consisting 
of over 45 flights. Testing will continue throughout the year on this 
helmet consisting of weapons work, expanded envelope work, and night 
operations. The next generation of the Rockwell Collins helmet will 
begin integration/qualification work later this year with a planned 
first F-35 flight in early 2014. The BAE helmet is not as far along in 
its development and will continue with qualification this year with its 
first F-35 flight planned for the spring of 2014.

    4. Senator Manchin. General Bogdan, of all the issues the F-35 must 
overcome, is a helmet among the top three?
    General Bogdan. Yes, I would consider the helmet to be among the 
top three of all of the F-35 issues. My other two priorities are long-
term affordability and software development.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker
                        uh-1 replacement program
    5. Senator Wicker. General Davis, the Air Force has long stated its 
need to replace its 40-plus-year-old UH-1N fleet, yet you recently 
cancelled its replacement program, the Common Vertical Lift Support 
Platform (CVLSP). As I understand, the UH-1N aircraft provides support 
for the nuclear missile security mission as well as myriad utility 
missions. However, the Air Force cancelled the CVLSP program when it 
was deemed unaffordable. As the committee understands, the Air Force 
target unit price for that program was $20 million per copy. It has 
recently been reported that one of the Air Force UH-1N user commands, 
Air Force Global Strike Command, is looking at the new Combat Rescue 
Helicopter (CRH) program as a possible option to replace the UH-1N. 
Yet, the CRH platform is in the same category as what was previously 
deemed unaffordable for the CVLSP requirement. Could you please help me 
understand the requirements for the current UH-1N missions, not only 
for the support provided to Air Force Global Strike Command but for all 
of the mission sets supported by the UH-1N?
    General Davis. Air Force Global Strike Command is not attempting 
UH-1N fleet replacement via the CRH program. Instead, Air Force Global 
Strike Command will continue to sustain the existing UH-1N fleet for 
the foreseeable future and look for opportunities to acquire excess 
aircraft from other DOD organizations at low/no cost to the Air Force.
    The Air Force's UH-1N is flown by five major commands, which 
include multiple unique mission sets: Air Force Global Strike's 
intercontinental ballistic missile (ICBM) helicopter security support, 
the Air Force District of Washington's National Capital Region mass 
passenger transport, Pacific Air Forces' Operational Support Airlift, 
Air Education and Training Command's Air Force Survival School and UH-
1N Formal Training Support and Air Force Material Command's flight test 
support. In addition to the UH-1N's military-specific mission sets, the 
UH-1N also supports the Department of Homeland Security National 
Response Plan and the National Search and Rescue Plan.
    The current requirements for the various missions of the UH-1N are 
documented in the Joint Requirements Oversight Council's approved CVLSP 
Capability Development Document. Although these requirements are no 
longer tied to a specific acquisition program (i.e., the CVLSP), the 
requirements for the UH-1N mission set remain valid.

    6. Senator Wicker. General Davis, have the Air Force requirements 
been reviewed and validated since the cancellation of the CVLSP?
    General Davis. No, the CVLSP requirements were last formally 
reviewed and validated before cancellation of the program by the Joint 
Requirements Oversight Council's approval of the CVSLP's Capability 
Development Document in February 2010.

    7. Senator Wicker. General Davis, what basis did the Air Force use 
to determine that the CVLSP program was unaffordable when deciding to 
terminate the program?
    General Davis. Since issuance of new Defense Strategic Guidance in 
January 2012, the Air Force has sought to differentiate between those 
investments that need to be made today and those that can be deferred. 
The CVLSP program was terminated in fiscal year 2013 after a cost-
benefit analysis determined that upgrading helicopter security was 
deferrable, with additional risk. Ongoing modifications at ICBM launch 
facilities, including the installation of remote visual assessment 
cameras, reinforced concrete headworks, and faster maintenance access 
hatches adequately address the risk of emerging threat technologies and 
methods. Air Force Global Strike Command, the field expert, assessed 
the priorities of the nuclear enterprise and offered to restructure or 
terminate CVLSP. The Air Force chose termination and acceptance of 
additional security risk. The termination provided the Air Force with 
$134 million in savings in fiscal year 2013 and $950 million over the 
Future Years Defense Program to use for other more immediate 
priorities.

    8. Senator Wicker. General Davis, I understand that the Air Force 
issued its recent request for information (RFI) in part because of 
lingering concerns over the sustainability of the UH-1N fleet. It is my 
sense that it is potentially less costly and certainly less risky to 
replace the UH-1N with a new modern aircraft than to do one, two, or a 
series of modifications to a 40-plue-year-old airframe. Please detail 
the findings and recommendations of the Air Force's RFI on UH-1N 
Modernization. Specifically, please address the cost of UH-1N 
modification versus replacement cost. In doing so, please consider 
those items outlined in the RFI including, but not limited to, speed, 
range, endurance, survivability, and sustainability.
    General Davis. In the case of the UH-1N, as stated in the original 
RFI, ``in terms of mission capability rates the UH-1 remains one of the 
most reliable platforms within the USAF inventory.'' The purpose of the 
Air Force's RFI on UH-1N Modernization was to determine the feasibility 
of sustaining and making modest modernization enhancements to the 
platform via low cost options. The industry day presentations 
reaffirmed that the robust helicopter industry and the large number of 
UH-1's operating globally will enable the Air Force to effectively 
sustain the UH-1N until such a time that it can be replaced with an 
aircraft that provides all required capabilities.
    Air Force Global Strike Command has determined that the most cost 
effective way ahead includes safety and simulator modifications 
totaling just over $500,000 per aircraft in the near term. Follow-on 
improvements to the forward looking infrared radar and secure 
communications at $100,000-$200,000 per aircraft yield a total cost of 
less than $1 million per aircraft over a 10-year period. Compared to 
the previously assessed cost of the CVLSP program, or any other new 
helicopter acquisition, this approach is far more cost effective for 
the Air Force.

    9. Senator Wicker. General Davis, the Air Force recently acquired 
26 legacy UH-1 platforms from the Marine Corps to help mitigate their 
sustainment issues with the UH-1N fleet. When the Army and the Marine 
Corps faced similar issues with their UH-1 fleets, they opted for new 
replacement aircraft, the UH-72 and the UH-1Y, respectively. By our 
accounting, that leaves the Air Force as the only remaining Department 
of Defense (DOD) operator of the UH-1N with a concerning path for 
sustainment. Could you please discuss the current operational 
availability of the UH-1N fleet and discuss any risk you foresee to 
maintaining adequate readiness levels?
    General Davis. The rationale for acquiring 26 excess Marine Corps 
helicopters was to replace 3 crash-damaged aircraft and for Air Force 
District of Washington's 1st Helicopter Squadron's approved fleet 
growth of 8 additional aircraft. The remaining excess Marine Corps 
aircraft will be held in storage to allow flexibility for future 
operations replacement or sustainment needs. The current UH-1N aircraft 
availability is 73.7, meeting the Air Force Global Strike Command-
established standard of 73.7. The future aircraft availability rate is 
projected to continue to meet or exceed the 73.7 percent requirement. 
We expect to maintain adequate readiness levels for the foreseeable 
future.

    10. Senator Wicker. General Davis, could you elaborate on the 
effectiveness of the current UH-1N training and supply chains?
    General Davis. UH-1N initial and upgrade training is performed by 
Air Education and Training Command, at Kirtland AFB, NM. UH-1N 
crewmember production is meeting or exceeding requirements for fiscal 
year 2013. However, resource reductions, as a consequence of 
sequestration, could reduce UH-1N crewmember production below 
requirements in the future
    The UH-1N supply response time has averaged 7.7 percent for the 
past 36 months, beating the Air Force Global Strike Command standard of 
10 percent. We expect to maintain adequate supply response time levels 
for the foreseeable future.

    11. Senator Wicker. General Davis, the committee has some knowledge 
of approaches the other Services have taken to remedy similar issues 
with the UH-1 fleet. The Army in particular operates the UH-72 which to 
my understanding is the lowest cost and most reliable helicopter in DOD 
production and has significantly greater mission performance capability 
than the UH-1N. At under $6 million per copy it would seem that the UH-
72 or a similar alternative could provide a very low-cost solution for 
the Air Force. Has the Air Force evaluated the UH-72 or other potential 
replacement aircraft for any of the missions performed by the UH-1N? If 
so, I would be interested in the Air Force's findings. If not, when 
will you consider such alternatives?
    General Davis. The USAF informally evaluated the UH-72 as a 
candidate for the CVLSP program, which was intended to be a replacement 
for the UH-1N fleet. UH-72 capabilities fall short of the stated 
mission requirements for the UH-1N replacement, and the UH-72 
manufacturer did not indicate any interest in proposing the UH-72 as a 
candidate for the CVLSP program. The CVLSP program was canceled in the 
fiscal year 2013 President's budget.

                              flying costs
    12. Senator Wicker. General Bogdan, a year ago, DOD's Cost 
Assessment Program Evaluation (CAPE) office said it would cost more 
than $1 trillion to operate and support F-35s over the next 50 years. 
The cost estimate includes categories such as engine spares, contractor 
manpower, depot maintenance, component repair, indirect base support, 
mission personnel, and fuel. The costs are then projected out 50 years 
using inflation to come up with then-year dollars. I believe this is 
the first big aircraft program that DOD has tried to project costs for 
over a 50-year period. What is the current estimated 50-year operation 
and support costs of the F-35?
    General Bogdan. The operational and support (O&S) cost estimate for 
the 2012 Selected Acquisition Report (SAR) remained the same as the 
2011 SAR [$1.1 trillion in then-year dollars (TY$).] However, the 
Department will update the estimate for the annual Defense Acquisition 
Board (DAB) review of the F-35 program in the fall of 2013.
    The current F-35 JPO O&S estimate is $857 billion (TY$).
    The O&S estimate supports three aircraft type/model/series for 3 
U.S. Services (Air Force/Marine Corps/Navy), 2,443 aircraft total, over 
a 55 year span of operations.

    13. Senator Wicker. General Bogdan, do you believe this is a good 
number or a bad number?
    General Bogdan. The current O&S cost estimate was based on the 
knowledge available to the program and the CAPE at the time it was 
developed nearly 2 years ago. We have learned much about the aircraft 
since then (7,000+ hours, 5,000+ flights) and the Services have also 
learned much about how to operate the aircraft. The previous cost 
estimate did not factor in this new knowledge. Additionally, 
significant work has been done by the program to refine and reduce this 
estimate and make the F-35 O&S cost more affordable. That said, 
significant effort remains to continue to find cost efficiencies and 
reduce this number even further. Affordability remains my number one 
priority, and I expect these cost estimates to continue to go down over 
the next several years as the program matures.

    14. Senator Wicker. General Bogdan, how does that number compare to 
the F-16, F-18, F-15, and A-10?
    General Bogdan. The F-35 program is the first program to attempt to 
calculate costs out for 55 years. It is also the first to attempt to 
estimate a total life cycle cost for a fleet of over 2,400 aircraft. 
These alone make the program estimate significantly different from 
legacy aircraft. Significant work is being done by the F-35 program 
office, the CAPE and the Services to normalize the cost estimates 
across a number of areas so that a better comparison can be made 
between the F-35 and other aircraft.

    15. Senator Wicker. General Bogdan and General Davis, Air Force 
Secretary Donley said on April 23 that the F-35A will cost more per 
hour to fly than the F-16 it replaces. Secretary Donley then said the 
Air Force and the other fast jet-flying Services are trying to 
normalize how they project the F-35's costs. Will it cost more to fly 
the F-35 than the F-16? And if so, why?
    General Bogdan. Despite ongoing cost reduction initiatives, it is 
reasonable that the F-35 costs more to operate and sustain than certain 
legacy aircraft given the significant increase in capability.
    The F-16C/D costs were developed by the Air Force Cost Analysis 
Agency and have been normalized for comparison to the F-35 cost 
estimate. The 2012 SAR cost per flying hour (CPFH) for the F-16C/D is 
$24,899. The F-35A CPFH was not updated for SAR 2012; therefore it 
remains at $31,923. Significant work is being done by the F-35 program 
office and the Services to reduce the F-35A CPFH.
    General Davis. Yes, it will cost more to fly the F-35 than the F-
16. As stated in the 2012 SAR, the projected, steady-state F-35A CPFH 
is approximately $31,923 and the actual F-16 C/D CPFH is $24,899. The 
CPFH includes costs associated with unit level manpower, unit 
operations, maintenance, sustaining support and continuing system 
improvements.
    The F-35A CPFH is 28 percent higher than the F-16 because we 
estimate higher F-35A costs for fuel, consumables, depot level 
repairables, contractor support and modifications. The F-35, however, 
offers a significant capability improvement over legacy aircraft. 
Compared to the legacy fleet, the F-35 offers unmatched levels of 
survivability and lethality required to maintain the advantage against 
new and evolving threats. Our legacy fleet offers little margin in 
capability advantage over current and future adversaries and is rapidly 
approaching the point where further modification cannot increase 
capability enough.

    16. Senator Wicker. General Bogdan and General Davis, do you 
believe we have an accurate estimate of the future flying costs of the 
F-35?
    General Bogdan. I believe we are getting closer to an accurate 
estimate of the future flying costs of the F-35A, but the work is not 
yet done. As we field and operate more aircraft, we will be able to 
collect greater amounts of actual data that will allow us to refine our 
cost estimates.
    General Davis. The F-35A CPFH contained in the SAR is our best 
estimate given all available information. In the 2012 SAR, the 
projected, steady-state F-35A CPFH is approximately $31,923. As the 
program progresses, we will collect actual operational data which we 
will use to refine the CPFH estimate.

              sequestration and tactical aircraft programs
    17. Senator Wicker. Admiral Skinner and General Davis, our fleet of 
strike fighter aircraft continues to age along with the cost to operate 
and maintain those aircraft. Sequestration will impact our ability to 
maintain our aircraft as well as procure new weapons and weapons 
systems. I see a growing readiness and acquisition bow wave that will 
degrade the combat capabilities of our Services, negatively impacting 
our national security. In 2011, the Air Force established a 2,000-
aircraft strike fighter requirement to execute the National Military 
Strategy with increased operational risk. Last year, the Air Force 
reduced the requirement by 100 aircraft with higher risk. This year, 
because of sequestration, the Air Force will ground 12 combat-coded 
squadrons to include F-22s from the 1st Fighter Wing that are deployed 
to the Pacific right now. What is the impact of sequestration on our 
tactical aircraft programs?
    Admiral Skinner. Sequestration will have a large negative impact on 
the DON TACAIR fleet. Reduction of funding will potentially preclude 
capability upgrades or existing DON tactical aircraft, reduce 
sustainment and support for our existing DON TACAIR fleet, and reduce 
DON F-35 procurement. The aging fleet of DON TACAIR aircraft is already 
experiencing increased ``out of service'' time due to increased depot 
maintenance backlog and increased depot turnaround times that will be 
exacerbated by sequestration. Adequate funding is necessary to allow 
DON TACAIR aircraft to maintain a tactical advantage in the current and 
projected threat environment.
    General Davis. As of July 3, 2013, the following combat coded 
squadrons are stood down: 6.5 combat-coded fighter squadrons, 2 combat-
coded AWACS squadrons, 2.66 combat-coded bomber squadrons, and 18 
training squadrons. Additionally, two fighter squadrons are flying at a 
reduced rate and are qualified for basic aircraft proficiency, but not 
for tactical employment. 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 rotationally stand down units, or fly them at a reduced rate, 
similar to the actions we've taken in fiscal year 2013.
    Reductions in flying training are leaving immediate and lasting 
impacts on our readiness. Response times and preparedness for going 
into harm's way are negatively impacted.
    Additionally, while the Air Force remains committed to our highest 
priority major acquisition programs (i.e. F-35, KC-46, and Long-Range 
Strike Bomber), we are assessing our overall priorities to meet 
national strategy missions within the constraints of the current fiscal 
environment. In general fiscal year 2013 sequestration has delayed 
capability delivery due to extended schedules which will likely result 
in increased life cycle costs. Continued sequestration in fiscal year 
2014 and beyond will further increase these impacts.
    Ultimately, without increased funding and decreased operations 
tempo, sequestration reductions will lead to a hollow force. This 
increases risk to both the warfighter and any civilian population we 
should be protecting.

                        impacts of sequestration
    18. Senator Wicker. Admiral Skinner and General Davis, does the 
fiscal year 2014 budget include additional funding to make up for the 
fiscal year 2013 impacts of sequestration?
    Admiral Skinner. The 2014 presidential budget submission does not 
contain additional funding to make up for the impacts of the 2013 
Sequestration.
    General Davis. The fiscal year 2014 request does not fix the fiscal 
year 2013 bow wave. The Air Force requests full support of the fiscal 
year 2014 PB to fund the requirements to execute the Air Force mission 
and the flexibility to reprogram or realign funds to fix mission 
critical requirement as a result of the bow wave from fiscal year 2013.
    While we will have unfunded requirements in fiscal year 2014 as a 
result of deferred workload and training necessitated caused by the 
implementation of sequestration in fiscal year 2013, the full impact is 
still being assessed. The Air Force has made every effort to minimize 
impacts to readiness and people, but the bow wave of reductions, 
deferments and cancelations challenge the strategic choices made in the 
fiscal year 2014 request. It is clear that more reductions will drive 
additional risks to our readiness, force structure, and ability to 
modernize our aging aircraft inventory.

    19. Admiral Skinner and General Davis, the fiscal year 2014 budget 
does not include sequestration. Have you looked at the impact of fiscal 
year 2014 sequestration on these programs?
    Admiral Skinner. The fiscal year 2014 President's budget submission 
has not been assessed for impacts of a fiscal year 2014 sequestration. 
Navy is working with the Office of the Secretary of Defense in the 
Strategic Choices and Management Review (SCMR) to inform the major 
decision 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. In the event sequestration is allowed to 
occur in 2014, we will work with the Department to make the necessary 
adjustments to continue to provide combatant commanders with ready and 
capable naval forces while, to the extent practicable, protecting our 
research base and ensuring that our people are properly resourced.
    General Davis. Funding at the level submitted in the fiscal year 
2014 President's budget is necessary to fund the most mission critical 
requirements. This level of funding combined with additional 
flexibilities will allow us to address bow wave requirements due to 
sequestration in fiscal year 2013. Given the continuing uncertainty of 
the fiscal year 2014 fiscal outlook, we have initiated a review to look 
at a range of options under various budget scenarios that we could face 
in fiscal year 2014.

    20. Senator Wicker. Admiral Skinner and General Davis, what is the 
impact of furloughs on these programs?
    Admiral Skinner. Navy civilians play a critical role in our 
Nation's efforts in war and peace. Furloughs will have adverse effects 
on the livelihood, morale, and productivity of our civilians and may 
adversely impact the Navy's ability to retain this skilled and talented 
workforce. In broad terms, we will see impacts to many aspects of Naval 
Aviation programs, to include, lower readiness levels as aviation depot 
throughputs are reduced; extended weapon system test and evaluation 
timelines as the availability of flight hours on test-ranges are 
decreased; and potential force modernization delays as longer 
acquisition timelines may result. However, the true impact of furloughs 
on tactical/unmanned aircraft and strike weapons programs will not be 
known until after the furlough occurs. There is still uncertainty as to 
how many days personnel will be furloughed and who may be exempt. 
Additionally, there are unknown secondary and tertiary ripple effects 
that will not be fully understood for some time until after the 
furlough takes place, to include, the long-term cost impacts due 
extended program development timelines driven by reduced civilian 
manning/capacity.
    General Davis. The 32-hour work week will create schedule delays or 
increased risk in at least 224 programs. For example, the 
implementation of a furlough has a direct, negative impact on the KC-46 
program critical design review; with civilians comprising 60 percent of 
an already small, selectively manned unit, a cut of 11 working days 
puts the CDR at risk. 80 programs are at risk for completing fiscal 
year 2013 close out actions and/or fiscal year 2014 start-up risk and 
40 programs may realize source selection delays. In addition, 50 
programs will see contract requests for equitable adjustments or missed 
milestones and there will be contracting action delays in 136 of these 
programs of record.

    21. Senator Wicker. General Bogdan, DOD appears to have prioritized 
the F-35 program with regards to sequestration and fiscal year 2014 
budget cuts, but it too has been impacted. What are the impacts and 
what would be the impact of sequestration in fiscal year 2014?
    General Bogdan. Sequestration reductions in fiscal year 2013 in our 
research, development, test, and evaluation accounts significantly 
increase the risk to the development program and may result in deferral 
of some Block 3F capabilities.
    Civilian furloughs will also impact the development program. The 
JPO estimates that the 11-day fiscal year 2013 furlough will put the 
flight test program at least 1 month behind our planned schedule.
    In the Procurement accounts, the sequestration reductions will 
likely result in the inability to procure all authorized aircraft in 
Low Rate Initial Production (LRIP) lot 7. The reductions in fiscal year 
2013 will result in a reduction in the number of aircraft the U.S. 
Services buy (approximately three F-35As, one F-35B, and one F-35C). 
This will also increase the unit cost of the aircraft remaining in the 
total procurement profile for both the Services and the partner 
nations.
    If sequestration continues into fiscal year 2014, there is a 
significant risk of not being able to deliver the full Block 3F combat 
capability and a reduction in the number of aircraft the Services can 
buy. This production cut will increase overall unit costs and has the 
potential to cause our partners to reevaluate the number of aircraft 
they intend to procure.

    22. Senator Wicker. General Davis, in your written testimony, you 
state the Air Force is 200 pilots short of the total manning 
requirement with the number to grow to 900. Does this take into account 
potential increase in airline hiring due to anticipated retirement of 
senior pilots in the coming years?
    General Davis. Our pilot inventory projections do include decreased 
retention over the next few years due to airline hiring. We continue to 
closely monitor airline hiring trends and update retention estimates as 
circumstances change.

    23. Senator Wicker. Admiral Skinner, are the Navy and Marine Corps 
forecasting any pilot shortages?
    Admiral Skinner. Since PB14 did not include sequestration, the Navy 
and Marine Corps are not forecasting any pilot shortages with the PB14 
budget submission.
    If sequestration leads to a Military Personnel, Navy (MPN) 
reduction in conjunction with force structure reductions (i.e. remove 
all squadrons from a carrier air wing (CVW) and all squadron 
personnel), then it is unlikely that Navy or Marine Corps will 
experience pilot shortages.

                   f-35 joint strike fighter program
    24. Senator Wicker. General Bogdan, Admiral Skinner, and General 
Davis, why do we need the F-35?
    General Bogdan and Admiral Skinner. The F-35 provides a fifth 
generation fighter aircraft to the U.S. Navy, Marine Corps, Air Force, 
and partner nations 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.
    The survivability and lethality of the F-35 is enhanced by very low 
observable stealth characteristics, fusion of onboard and off-board 
passive and active sensors and real-time integration with other F-35s, 
DOD and allied assets, which provide a ``first detect/first shot'' 
capability throughout the battlespace. The F-35 will provide a 
significant additive value when brought to bear in a joint/combined 
warfighting arena.
    General Davis. It is a fundamental truth of the modern battlefield 
that to win the fight, you must ``own the skies.'' This means 
protecting your own forces, while also holding the adversaries' dearest 
targets at risk. This was a hard lesson learned during World War II, 
Korea, and Vietnam, and used to our advantage in Operations Desert 
Storm, Allied Force, Enduring Freedom and Iraqi Freedom. Without it, 
our troops in combat, whether in the air, on the ground, or on the 
seas, are put at undue risk, and our chances of ultimately achieving 
victory are diminished. Owning the skies is difficult to achieve, and 
requires vigilance in maintaining this advantage through continued 
investment and development in more capable aircraft, weapons and 
mission systems. This is more than something simply tasked as a 
requirement within the Defense Planning Guidance; it is something our 
joint warfighters expect from their Air Force.
    Our potential adversaries know this truth as well, and they 
continue to seek ways to prevent us from achieving it. Applying lessons 
from previous conflicts, they are investing in advanced technology for 
their planes, weapons, and air defense systems that rival our own 
capabilities and, in some cases, surpass them. We are also faced with 
operating a fighter fleet that is smaller and older than at any time in 
our Service's history. With the threat becoming more capable, and our 
own fleet at its oldest and smallest, the challenges to our ability to 
control the skies in any future conflict continue to grow.
    To meet these challenges, we are investing in fifth generation 
fighters to ensure we field a fleet that supports the mission-essential 
requirement to own the skies. Fifth generation fighters like the F-35 
have the capabilities needed to achieve unmatched levels of 
survivability and lethality, which are required to maintain our air 
advantage against the most challenging threats. These capabilities 
include improved stealth, high maneuverability, advanced electronic 
attack and protection, fused sensors for enhanced situational 
awareness, advanced precision weapons, and multi-role capabilities. 
Together, they provide our airmen the best tools available to ensure 
they never have to face a ``fair fight in the sky,'' and they will 
continue to own the skies in their mission to support and protect the 
joint warfighter.

    25. Senator Wicker. General Bogdan, Admiral Skinner, and General 
Davis, what is the threat that is driving procurement of this aircraft 
and why can't we just purchase move F-16s and F/A-18 Super Hornets?
    General Bogdan and Admiral Skinner. Emerging threats, particularly 
anti-access/area denial (A2/AD) capabilities that are presently being 
fielded in China and other nations require all the services' and 
international partners to develop and procure a fifth generation 
capability. The ability to survive and remain lethal in these threat 
environments is critical to our warfighter's operational success. In 
addition to enhanced survivability and lethality, F-35's integrated 
active and passive sensor suite will bring increased situational 
awareness not only for F-35 pilots, but other U.S. and coalition assets 
networked via near real-time data links.
    F-16s and F/A-18E/Fs remain highly capable strike and fighter 
aircraft and will be operated for many additional years. However, these 
aircraft have reduced operational effectiveness when facing advanced 
A2/AD threat systems. To maintain the United States' ability to 
function in this increased threat environment, a force that includes 
fifth generation aircraft, like the F-35, is needed.
    General Davis. Potential adversaries are developing newer planes, 
weapons, and air defense systems to challenge our ability to ``control 
the skies'' in any potential future conflict. They are developing and 
fielding aircraft that rival or out-perform our legacy fleet with 
improved speed and agility, the latest and most advanced radars, 
avionics and electronic jamming, employing highly advanced and lethal 
air-to-air weapons and levels of signature reduction never seen before 
outside the United States. We are seeing the worldwide proliferation of 
air defense systems with advanced early warning and target tracking 
radars that are digital, agile, and equipped with better protection 
against jamming. These advanced air defense systems are integrated into 
robust and networked command and control centers, able to target and 
engage unprecedented numbers of targets at greater ranges. We are also 
seeing strategic and tactical surface-to-air-missiles with increased 
range, maneuverability, target tracking capability and lethality. 
Ultimately, we are seeing these types of systems evolve in both 
complexity and capability, being sold worldwide, and being used 
together to form integrated air defense systems that challenge our air 
advantage.
    While our current fourth generation fleet, such as the F-16, 
secured a generation of air advantage in previous conflicts, they will 
be severely challenged in future scenarios against evolving threats. 
Our legacy fleet is rapidly approaching the point where additional 
capability enhancements may be unable to ensure operational success 
within acceptable levels of risk. In particular, the Air Force relies 
on signature reducing ``stealth'' technologies to break adversary kill-
chains and negate engagements by advanced threats. Signature management 
can't be simply ``added on,'' but from inception must be incorporated 
into optimized aircraft designs and materials.
    While our fourth generation fleet is decreasingly able to survive 
and operate in these high-threat environments, they will remain a 
critical part of our inventory for many years, complementing our fifth 
generation fleet in reduced threat scenarios. Even in these reduced 
threat scenarios, we have to honor the proliferation of advanced 
threats by making targeted investments to increase our survivability 
and lethality. This also means the Air Force is carefully choosing 
modernization efforts that maximize the cooperative capabilities 
between our fourth and fifth generation fleets to enable mission 
success.

    26. Senator Wicker. General Bogdan, Admiral Skinner, and General 
Davis, DOD plans to procure a total of 2,443 Joint Strike Fighters 
(JSF) at a cost of approximately $323 billion (Air Force: 1,763 F-35As; 
Marine Corps: 340 F-35Bs (STOVL); and Navy: 340 F-35Cs). Has there been 
any change to these numbers?
    General Bogdan and Admiral Skinner. The SAR 12 cost estimate to 
procure 2,443 F-35s (Air Force: 1,763 F-35As; Marine Corps: 340 F-35Bs 
(STOVL); and Navy: 340 F-35Cs) is $331.4 (TY$B). This is a decrease 
from the SAR-11 cost estimate of $335.7 (TY$B) to procure the same 
total of 2,443 F-35s.
    General Davis. The estimated cost to procure 2,443 F-35s has 
changed. The 2012 SAR cost estimate to procure 1,763 F-35As, 340 F-35Bs 
and 340 F-35Cs is $331.4 billion (TY$). This is a decrease from the 
2011 SAR cost estimate of $335.7 billion (TY$) to procure the same 
number of aircraft, and is the result of revised escalation indices, 
revised procurement profiles, lower labor rates and more accurate cost 
estimating based on actual data.

    27. Senator Wicker. General Bogdan, Admiral Skinner, and General 
Davis, there has been more information in the press on this program 
than any other program I can remember in recent history. Overall, the 
information about the JSF program is negative. It has become the poster 
child of how not to run an acquisition program. However, a recent 
Government Accountability Office report notes that the program is now 
turning the corner with labor hours decreasing and aircraft deliveries 
accelerating. What has changed since 2010 and why should this committee 
support the funding requested in the fiscal year 2014 President's 
budget?
    General Bogdan and Admiral Skinner. In March 2010 the original 
Milestone B certification for the F-35 program was rescinded following 
a critical Nunn-McCurdy breach. At that point, the program suffered 
from uncontrolled cost growth and an unrealistic development schedule.
    The program undertook a complete bottom up reassessment and 
reorganization. The PEO position was elevated from a two-star to a 
three-star flag or general officer. Key replan activities included 
development of an integrated master schedule (IMS), execution of a 
schedule risk assessment (SRA), and completion of the integrated 
baseline review (IBR). These incorporated the 2010 technical baseline 
review's recommendations including revised flight test rates, longer 
software development spans, new systems engineering processes, and 
reestablished technical performance measurement. This plan estimated 
the time and resources realistically required for the development 
program to deliver Block 3 capabilities. The F-35 development program 
is now resourced with realistic planning factors to complete the 
required Block 3 capability testing. Re-plan activities also 
scrutinized production processes, particularly attention to 
manufacturing quality metrics, including supplier quality, assembly and 
test. The program now has oversight into the contractor's supplier risk 
management process to timely identify problems in the supply chain.
    The DAB reviewed the F-35 development, production, and sustainment 
technical status and cost estimates in February 2012 and on March 28, 
2012, OUSD (AT&L) signed an Acquisition Decision Memorandum that 
officially recertified the program and granted MS B approval.
    Since the March 2012 recertification, the program has largely 
maintained the planned schedule and cost estimates while addressing the 
normal technical issues that occur during the development of a program.
    The fiscal year 2014 budget includes $8.4 billion for continued 
system development and procurement of 29 F-35 aircraft. The F-35 will 
form the backbone of U.S. air combat superiority for generations to 
come. It will replace the legacy tactical fighter fleets of the Air 
Force and Marine Corps and provide a complementary capability to the 
Navy's Super Hornet. The F 35 will provide a dominant, multirole, 
fifth-generation aircraft, capable of projecting U.S. power and 
deterring potential adversaries. For our international partners and 
foreign military sales customers who are participating in the program, 
the F-35 will become a linchpin for future coalition operations and 
will help to close a crucial capability gap that will enhance the 
strength of our security alliances.
    The fiscal year 2014 funding is crucial to finishing development to 
meet the Marine Corps, Air Force, and Navy initial operating capability 
timelines to provide warfighting capability to the fleet. The program 
continues to drive down procurement costs while attacking the long-term 
life cycle costs of the F-35 weapon system to affect affordability--
fiscal year 2014 funds are critical to ensure both progress on 
production learning curves as well as capabilities that reduce 
maintenance and sustainment costs. The program must also sustain 
currently fielded aircraft in an effective and economical fashion.
    General Davis. In March 2010 the original Milestone (MS) B 
certification for the F-35 program was rescinded following a critical 
Nunn-McCurdy breach. At that point, the program suffered from 
uncontrolled cost growth and an unrealistic development schedule.
    The program undertook a complete bottom up reassessment and 
reorganization. The Program Executive Officer position was elevated 
from a two-star to a three-star leadership position. Key initiatives 
included development of an IMS, execution of a SRA, and completion of 
the IBR. These incorporated the 2010 Technical Baseline Review's 
recommendations including revised flight test rates, longer software 
development spans, new systems engineering processes, and reestablished 
technical performance measurement. This plan estimated the time and 
resources realistically required for the development program to deliver 
Block 3 capabilities. The F-35 development program is now resourced 
with realistic planning factors to complete the required Block 3 
capability testing. Production processes were also scrutinized with 
increased attention to manufacturing quality metrics, including 
supplier quality, assembly and test. The program now has oversight into 
the contractor's supplier risk management process to enable timely 
identification of problems in the supply chain.
    The DAB reviewed the F-35 development, production, and sustainment 
technical status and cost estimates in February 2012. On March 28, 
2012, the Under Secretary of Defense for Acquisition, Technology, and 
Logistics signed an Acquisition Decision Memorandum that officially 
recertified the program and granted MS B approval.
    Since the March 2012 recertification, the program has largely 
maintained the planned schedule and cost estimates while addressing the 
normal technical issues that occur during the development of a program.
    The fiscal year 2014 budget includes $8.4 billion for continued 
system development and procurement of 29 F-35 aircraft. The Air Force 
plans to increase the production ramp rate for the F-35A from 19 
aircraft in fiscal year 2014 to 60 aircraft in fiscal year 2018. The F-
35 will form the backbone of U.S. air combat superiority for 
generations to come. It will replace the legacy tactical fighter fleets 
of the Air Force and Marine Corps and provide a complementary 
capability to the Navy's Super Hornet. The F-35 will provide a 
dominant, multirole, fifth-generation aircraft, capable of projecting 
U.S. power and deterring potential adversaries. For our international 
partners and foreign military sales customers who are participating in 
the program, the F-35 will become a linchpin for future coalition 
operations and will help to close a crucial capability gap that will 
enhance the strength of our security alliances.
    The fiscal year 2014 funding is crucial to finishing development to 
meet the Marine Corps, Air Force, and Navy initial operating capability 
timelines to provide warfighting capability to the fleet. The program 
continues to drive down procurement costs while attacking long-term 
life cycle costs. The program was able to negotiate a lower unit price 
in LRIP lot 5 than was originally projected. This continues the trend 
of actual unit costs being lower than original projections. fiscal year 
2014 funds are critical to ensure both progress on production learning 
curves as well as capabilities that reduce maintenance and sustainment 
costs. The program must also sustain currently fielded aircraft in an 
effective and economical fashion.

    28. Senator Wicker. Admiral Skinner and General Davis, what is the 
current cost of each version of the aircraft?
    Admiral Skinner. LRIP 5 (fiscal year 2011) contract prices 
(including engines) for each variant are as follows:

         Air Force - $120 million per aircraft
         Marine Corps - $153 million per aircraft
         Navy - $140 million per aircraft

    General Davis. The contract prices (including engines) for LRIP Lot 
#5 (awarded in December 2012) are as follows:

         F-35A (Air Force) - $120 million per aircraft
         F-35B (Marine Corps) - $153 million per aircraft
         F-35C (Navy) - $140 million per aircraft

    The average unit recurring flyaway cost for the F-35A is $76.8 
million (BY12$) based on the purchase of 1,763 F-35As.

    29. Senator Wicker. Admiral Skinner and General Davis, has the cost 
of the aircraft increased or decreased as production continues?
    Admiral Skinner. The unit recurring flyaway (URF) cost continues to 
decrease in each LRIP.
    General Davis. The URF cost continues to decrease as production 
continues. Figures 1 and 2 illustrate the actual/projected conventional 
take-off and landing air vehicle and F135 engine URF from LRIP Lot #1 
through LRIP Lot #11. The curves for both show a steady URF decrease.
      
    
    

    30. Senator Wicker. Admiral Skinner and General Davis, what is the 
projected flyaway cost of each version of the F-35 when it reaches full 
rate production?
    Admiral Skinner. The F-35s (including engines) purchased in fiscal 
year 2018 and delivered in fiscal year 2020 are projected to cost:

         Air Force - $85 million
         Marine Corps - $110 million
         Navy - $100 million

    General Davis. The first full-rate production lot of F-35s 
(including engines) (purchased in fiscal year 2018 and delivered in 
fiscal year 2020) are projected to each cost:

         F-35A (Air Force) - $85 million
         F-35B (Marine Corps) - $110 million
         F-35C (Navy) - $100 million

    31. Senator Wicker. General Davis, the last 2 budgets slowed 
planned production from 40 and 50 aircraft per year to 30 aircraft per 
year. What is the impact of continuing to push procurement to future 
years?
    General Davis. The actual cost of an individual aircraft in any 
given LRIP lot is largely influenced by how many aircraft are being 
purchased, and how much production line learning has been achieved to 
that point. If jets are moved out of early LRIPs into later LRIPs, the 
speed at which the production line becomes more efficient is slowed and 
it takes longer to reap the benefits of production line learning. 
Aircraft in earlier LRIP lots are therefore more expensive than 
planned, which in turn drives all participants in the program to 
reassess the number and timing of their aircraft purchases.

    32. Senator Wicker. General Davis, does it save on concurrency 
costs?
    General Davis. While pushing procurement to future years saves on 
concurrency costs in the short run, it also causes aircraft production 
costs to be more expensive than planned. Additionally, doing this must 
be balanced with maintaining a valid and cost efficient production 
line. DOD recognized the need to balance a ramp up in production with 
the costs incurred by concurrency changes and flat-lined the planned 
production of F-35 aircraft in 2012-2014. This ensured that concurrency 
costs were minimized to the best extent possible and that our ability 
to learn from work that had already taken place in the production 
program did not suffer.
    Note: This question is related to SASCA-02-031.

    33. Senator Wicker. General Davis, how does it impact overall 
costs?
    General Davis. Pushing production of aircraft into the future years 
slows down learning so that the production line takes longer to reach 
peak efficiency. This lag results in overall higher costs to the 
program, as it takes longer to reduce the cost of the aircraft.
    Note: This question is related to SASCA-02-031.

    34. Senator Wicker. General Bogdan, what is concurrency in this 
program?
    General Bogdan. Concurrency on the F-35 is the overlap in the 
development, testing and production phases of the acquisition program. 
Essentially, concurrency introduces risk that aircraft we build in 
early LRIP lots will require post-production modifications and 
retrofits due to discoveries we make during qualification, flight and 
ground tests. Additionally, the fixes developed for these discoveries 
must also be ``cut-in'' to the production line to correct aircraft not 
yet produced. One example is the 496 Bulkhead where we discovered 
cracking during structural and durability tests. That issue was 
identified during LRIP 2 and the fix delivered to production at LRIP 4. 
We now have to retrofit the short take-off and vertical landing (STOVL) 
jets that were produced in LRIP 2 & 3 with the corrected component 
(planned to begin in 2014).
    The specific costs associated with concurrency are production 
labor, material delta costs, retrofit kit production and labor/
infrastructure costs for installing the retrofit. The nonrecurring 
engineering costs associated with developing a fix are part of the 
system development and demonstration (SDD) program costs. Planned and 
scheduled block upgrades to each aircraft are handled separately and 
are not considered concurrency costs. Concurrency costs will phase out 
with the completion of SDD.

    35. Senator Wicker. General Bogdan, have the concurrency costs 
increased or decreased?
    General Bogdan. We have just completed the Second Report to 
Congress on F-35 concurrency costs. In that new report, you will note 
that the F-35 program concurrency estimate has decreased significantly 
from when we last reported in September 2012. Overall, we estimate 
concurrency costs have reduced from $2.8 billion to $1.7 billion. The 
primary reason for the decrease is a change from using parametric 
estimating to higher fidelity, discrete estimating techniques based on 
known F-35 information. The new cost model reflects a detailed 
engineering approach informed by the remaining F-35 qualification, 
flight test, and ground test events. It accounts for technical issues 
affecting air vehicle performance, mission systems required for combat 
operations, and aircraft structures. Additionally, the actual cost of 
concurrency is being reduced as the result of accelerating our 
durability testing and reducing the time it takes to engineer solutions 
and get them into the production line. We have seen a reduction in this 
process of approximately 5 months (18 months to 13 months) and continue 
to work to reduce it further.

    36. Senator Wicker. General Bogdan, how do the projected 
concurrency costs compare to actual concurrency costs?
    General Bogdan. Our estimated concurrency costs in 2013 are 32 
percent below our previously projected estimates.

    37. Senator Wicker. General Bogdan, the F-35 recently went through 
an operational test and evaluation and performed poorly. Can you 
explain the test, what was tested, and why the aircraft performed so 
poorly?
    General Bogdan. The Air Force recently conducted an operational 
utility evaluation (OUE), for which the Office for the Director, 
Operational Test and Evaluation wrote a report. This test was to assess 
the readiness for the Air Force to start F-35A training operations. The 
ability of the Air Force to conduct the training syllabus and achieve 
useful training was tested.
    The OUE Report concluded that the Block 1A.1 System is suitable for 
the purpose of conducting Air Education Training Command's F-35A 
training syllabus. However, the report also cited concerns with the 
effectiveness of some elements of the System. The JPO is aware of and 
agrees with the concerns related to the conduct of training. Specific 
concerns raised by the report included comments on the limitations of 
flight series data (FSD), use of the pilot training aid (PTA), 
discomfort in use of the simulator helmet, and courseware correction 
processes. Continuous improvements in these areas are underway, 
including incremental updates to FSD, planned software updates to the 
PTA, an update to the simulator helmet that follows the air vehicle 
development plan, and additional courseware updates by Block. Once 
fielded these improvements should completely address the concerns 
raised by the OUE report.

    38. Senator Wicker. General Bogdan, can you tell me the status of 
the helmet (jitter, night vision acuity, and latency), tail hook, 
lightning protection, Autonomic Logistics Information System (ALIS), 
fuel dump, and short-takeoff/vertical landing (STOVL) operations?
    General Bogdan. Helmet: Issues faced by the Rockwell Collins helmet 
over the past year were ``green glow,'' or insufficient helmet display 
contrast; latency of the displayed information; ``jitter,'' or lack of 
stability of the displayed symbology as the aircraft maneuvers; night 
vision acuity; and alignment of the displayed symbology. Last year, the 
program made significant progress against these challenges using 
dedicated helmet flight testing of over 45 flights to identify and 
analyze acceptable helmet performance. As a result of testing, the 
program has mitigated the effects of four of these helmet issues. More 
work is planned this summer to ensure that the night vision camera is 
effective for Marine Corps operations. The next generation Rockwell 
Collins helmet will begin integration/qualification work later this 
year, with its planned first F-35 flight in early 2014. The BAE helmet 
is not as far along in its development and will continue with 
qualification this year, with its first F-35 flight planned for the 
spring of 2014.
    Tail Hook: The F-35 program is completing design work on the 
redesigned F-35C arresting hook and expects to conduct ground testing 
at Lakehurst, N.J., in the fourth quarter of 2013. Technical planning 
is underway for the first Carrier Sea Trials in the third quarter of 
2014.
    Lightning Protection: The program has completed the design work for 
F-35 lightning protection and is currently working to incorporate the 
fix into production.
    Autonomic Logistics Information System (ALIS): ALIS 1.0.3 has been 
fielded and is in use by the operational U.S. Marine Corps squadron at 
Yuma and other locations. The F-35 program office is working to rapidly 
respond to feedback from the field and has a number of data management 
fixes underway. We expect improved usability and functionality by the 
fall of 2013 and continue to work on future releases of capability.
    Fuel Dump: The final production configuration has been identified, 
is being confirmed through flight testing and is expected to be 
finalized by the end of-summer 2013.
    STOVL Operations: The F-35B continues to perform well in both 
testing and operational activities. The aircraft has achieved over 400 
vertical landings, over 400 slow landings and over 700 short takeoffs.

    39. Senator Wicker. General Bogdan, on February 22, 51 F-35s were 
grounded after a routine inspection revealed a crack on a turbine 
blade--heat due to an engine operating longer than usual at a high 
temperature caused the crack. No other cracks were found. Why did this 
happen and what is the impact?
    General Bogdan. The F135 engine turbine blades are manufactured to 
very high tolerances, but there are allowances for minor imperfections. 
As you identified, this aircraft had been operating in a severe test 
environment, going much longer in these extreme heat conditions than in 
a normal operational aircraft. The combination of this extreme test 
environment and an allowable manufacturing imperfection caused this 
crack.
    After extensive inspections on all engines in the F-35 fleet, no 
other cracks have been found. Additional analysis indicates that only 
one additional test asset has been operated near the extreme usage 
levels of the original asset. None of the operational jets have been 
operated near this level of stress. Analysis has also shown that the 
type of minor imperfection discovered in this turbine blade is rare in 
the fleet. Nevertheless, additional work is being done to assess what 
the impact of this crack is to the overall projected lifetime of the 
engine and if additional engineering work is needed to mitigate the 
risk. This work is currently underway and should be completed by the 
end of the summer.

    40. Senator Wicker. General Bogdan and Admiral Skinner, the Marine 
Corps has announced their plans to reach IOC next year, 2014. Some do 
not believe the F-35B can reach IOC using Block 2B software installed 
in the aircraft. What is Block 2B software and can the Marine Corps 
reach IOC using that software?
    General Bogdan and Admiral Skinner. The Marine Corps plans to 
achieve IOC between July 2015 (objective date)) and December 2015 
(threshold date). Though Block 2B software is necessary to enable the 
aircraft mission system functionality required for IOC it is one of 
many requirements the Marine Corps requires to declare IOC. Training, 
manning, sustainment support, aircraft performance envelop, facilities 
and infrastructure, L Class ship alterations, and an ability to sustain 
IOC once declared are equally important aspects. Block 2B software 
provides for the control precision guided weapons, sensor utilization, 
and mission system management capabilities to execute close air 
support, limited offensive and defensive counter air, air interdiction, 
assault support escort, Armed Reconnaissance, and limited Suppression 
of Enemy Air Defense missions in concert with Marine Air Ground Task 
Force (MAGTF) resources and capabilities. The F-35B with Block 2B 
software and the other essential elements needed to declare IOC will 
provide the Marine Corps with a complimentary TACAIR combat capability 
for the MAGTF. Block 3 will leverage our Block 2B capabilities and 
optimize our TACAIR effectiveness and will generate unprecedented 
strategic and operational agility within our MAGTF's to counter a broad 
spectrum of threats and win in operational scenarios that cannot be 
addressed by current legacy aircraft.

    41. Senator Wicker. Admiral Skinner, the first operational squadron 
stood up at Yuma, AZ, in November 2012 and the first delivery of 
aircraft to Nellis Air Force Base occurred at the end of February 2013. 
How many F-35s have been delivered and are they all currently flying?
    Admiral Skinner. As of June 10, 2013, there have been 22 F-35A and 
19 F-35B JSF aircraft delivered to U.S. training and operational 
forces. For the Department of the Navy, the F-35B aircraft have been 
delivered to the following 3 locations: 11 to VMFAT-501 for training 
our initial F-35B pilots at Eglin AFB; 6 to VMFA-121, our first 
operational squadron; and 2 F-35B aircraft on loan to Developmental 
Test at Edwards AFB in preparation for Operational Test and Evaluation. 
As a matter of routine operation and maintenance, not all aircraft fly 
on a daily basis, but all are in a flyable state that supports the 
operations at each of the locations.

    42. Senator Wicker. Admiral Skinner, what is the current status of 
the squadron at Yuma?
    Admiral Skinner. The squadron at MCAS Yuma, VMFA-121, is in the 
transition process of accepting aircraft from the factory, standing up 
maintenance capabilities, and conducting initial flight operations. As 
of 10 June 2013, VMFA-121 has received 6 aircraft with another 10 
anticipated to be delivered by the end of September 2013, bringing the 
squadron up to their full complement of 16 F-35B aircraft.

                       international partnerships
    43. Senator Wicker. General Bogdan, I have been an ardent champion 
of U.S. defense exports to our allies, friends, and partners abroad. 
Robust defense trade increases interoperability with our close allies 
and partners, reduces unit costs for our own military, and helps 
support a U.S. defense industrial base facing significant budget 
uncertainty here at home. 10 countries (the United Kingdom, Turkey, 
Australia, Italy, the Netherlands, Canada, Norway, Japan, Denmark, and 
Israel) are slated to receive JSF deliveries in the coming years. 
Several foreign partners, like Canada, Italy, and the Netherlands, have 
already reduced their projected buys or are reported to be considering 
doing so. Assuming there are no new buyers, how much would the 
cancellation of one foreign F-35 affect the unit cost of an American F-
35?
    General Bogdan. Unit cost is sensitive to the total quantity 
procured. Savings in the cost of the aircraft can be realized through 
bulk purchases and other economies of scale. The actual cost of an 
individual aircraft in any given LRIP lot is largely influenced by how 
many aircraft are being purchased, and how much production line 
learning has been achieved to that point. Loss of purchases will limit 
the ability of the program to take advantage of economies of scale, as 
well as reducing learning opportunities, which would drive the cost up. 
As an example, when one partner reduced its purchase from 130 aircraft 
to 90 aircraft, the unit cost went up 1 percent, which equates to over 
$1M per jet. Specific numerical impact is largely dependent on the 
country in question and the time at which the decision was made and 
cannot be generalized.

    44. Senator Wicker. General Bogdan, when a foreign partner reduces 
its buy, are we bound to return any portion of the money they invested 
in development or is that considered a sunk cost?
    General Bogdan. When a foreign partner reduces its purchases, we 
are not bound to return any portion of the money provided by that 
country for development.

    45. Senator Wicker. General Bogdan, the Marine Corps B model of the 
F-35 is the most expensive version. If Singapore orders 75 Bs, as they 
are reportedly about to, how much will that reduce the unit cost of an 
American F-35B?
    General Bogdan. The specific amount of the reduction in unit cost 
is dependent on the years in which Singapore may decide to purchase 
aircraft and can only be calculated after their order is finalized.
    Unit cost is sensitive to the total quantity procured. Savings in 
the cost of the aircraft can be realized through bulk purchases and 
other economies of scale. The actual cost of an individual aircraft in 
any given LRIP lot is largely influenced by how many aircraft are being 
purchased, and how much production line learning has been achieved to 
that point. Additional purchases take advantage of economies of scale, 
but also provide additional learning opportunities, which in turn drive 
down costs even further. Likewise, aircraft reductions in any given 
LRIP lot would have the opposite effect.

    46. Senator Wicker. General Bogdan, what is the status of the 
potential sale to South Korea?
    General Bogdan. The U.S. Air Force and the F-35 JPO are in the 
final weeks of completing requirements under the competitive process 
laid out by the Korean Government beginning in January 2012. The 
proposed sale of the F-35A has been reported to Congress and a draft 
letter of offer and acceptance has been presented to the Korean 
Government for consideration. It is anticipated that a final decision 
by the Korean Government will be made this summer.

    47. Senator Wicker. General Bogdan, what other countries have asked 
for formal briefings on the F-35?
    General Bogdan. The F-35 JPO has briefed a number of countries 
including Belgium, Spain, United Arab Emirates, Finland, and 
Switzerland.

    48. Senator Wicker. General Bogdan, what plane do you consider the 
toughest international competitor for F-35, and what is the current 
cost differential between the two?
    General Bogdan. The leading international competitor for the F-35 
is largely based on the requirements the countries' are trying to fill. 
Each country currently looking to purchase an advanced fighter aircraft 
has different requirements and limitations. This changes what is viewed 
as the leading competitor. There are a number of options available on 
the international market including the Typhoon, Rafale and Su-30MK, but 
there is no reliable way to compare costs between them all, given the 
proprietary nature of sales negotiations.

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


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

                              ----------                              


                         WEDNESDAY, MAY 8, 2013

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

                           ARMY MODERNIZATION

    The subcommittee met, pursuant to notice, at 9:32 a.m. in 
room SR-222, Russell Senate Office Building, Senator Joe 
Manchin III (chairman of the subcommittee) presiding.
    Committee members present: Senators Manchin, Blumenthal, 
Donnelly, and Wicker.
    Majority staff member present: William K. Sutey, 
professional staff member.
    Minority staff member present: Ambrose R. Hock, 
professional staff member.
    Staff assistant present: Daniel J. Harder.
    Committee members' assistants present: Mara Boggs, 
assistant to Senator Manchin; Ethan Saxon, assistant to Senator 
Blumenthal; Marta McLellan Ross, assistant to Senator Donnelly; 
and Joseph Lai, assistant to Senator Wicker.

     OPENING STATEMENT OF SENATOR JOE MANCHIN III, CHAIRMAN

    Senator Manchin. The subcommittee will come to order and we 
will get started. First of all, let me say to all of you, thank 
you. Thank you for being here and we appreciate it very much. 
So good morning and again thank you.
    The Subcommittee on Airland meets today to receive 
testimony on Army modernization programs in review of the 
fiscal year 2014 budget request. I look forward to hearing from 
the Army today along with my friend and colleague Senator 
Wicker.
    After a decade of war in Iraq and Afghanistan, I'm always 
inspired by the American soldier. Today's Army is seasoned by 
years of combat in the harshest conditions against a ruthless 
enemy. The soldiers of our Army have performed with remarkable 
professionalism, courage, and no small measure of sacrifice. 
This is true of the Army leaders, our soldiers, and their 
families as well. I ask all Army leaders here with us today, 
wherever, whenever you have a chance, to please thank our 
soldiers and their families on our behalf, and our Nation is 
deeply grateful.
    The subject of today's hearing, Army modernization, merits 
particular attention because of an exceptionally challenging 
fiscal environment and the many initiatives over the last few 
years to reorient and restructure the Army's acquisition 
policies and programs. No doubt the Army is wary of being 
reminded that its modernization efforts have not enjoyed a 
great deal of success over the past 15 years, as strategies, 
plans, and investment priorities appear to evolve with each 
change in Department leadership. Army modernization has had 
many names over the years, in the past 15 years, from 
``Digitization'' to ``Force 21'' to ``Army After Next'' to 
``Interim Force'' to ``Objective Force'' to ``Future Combat 
Systems'' to ``Modularity and Capability Sets'', to what is now 
known as a ``Balanced Equipment Modernization Strategy'', in 
which the Army will remain on track to equip a smaller force 
without sacrificing its decisive edge.
    Yet, despite this turmoil and heartbreaking loss of time 
and money, the Army always finds a way to give our soldiers the 
equipment they need to get the job done. This doesn't mean we 
should not insist upon more stability and efficiency in Army 
modernization, but it's quite remarkable how American soldiers 
always accomplish the mission. This has been a hallmark of the 
American soldier in every one of our Nation's wars.
    This year's hearing examines an Army modernization program 
complicated by the scope of strategic changes, the challenges 
of fiscal realities, and the natural uncertainty as our wars 
wind down and our national priorities shift. We look forward to 
our witnesses' testimony to address the underlying questions of 
how the fiscal year 2014 budget request, linked to likely 
changes to this year's appropriation and looking forward into 
the near future, keeps our Army the best in the world, ready 
today and tomorrow for whatever the Nation may ask it to do.
    We look forward to this hearing, how Army requirements, 
acquisitions, and modernization strategies support the Army we 
have today and will have in 2017; how, given the uncertainty 
about the availability of resources and the necessary changes 
to the Army's size and structure, will the Army ensure that 
equipment readiness, reset, and modernization programs are 
appropriately prioritized, with tradeoff and risks managed, 
while at the same time stable, achievable, and affordable.
    In this regard, the witnesses can paint a picture for this 
subcommittee of how the Budget Control Act, sequestration, 
continuing resolutions (CR), and a pending reprogramming 
request all figure into the dangers of an unstable, 
unachievable, and unaffordable modernization program. How will 
the Army identify and manage the inevitable and growing 
strategic risk to the Army's combat and tactical vehicle 
industrial base during times of declining budgets?
    The Army's fiscal year 2014 modernization objective is to 
maintain the technological advantage no matter where our wars 
are fought. The base request, however, is $1.7 billion, almost 
7 percent, less than last year's request. The Army is accepting 
measured risk to accommodate a tightening fiscal environment 
and manage precarious readiness shortfalls begun and carried 
forward from last year.
    These reductions for fiscal year 2014 are compounded by 
modernization reductions started last year and likely further 
reductions in a reprogramming request that we understand is 
currently under review by the Department of Defense (DOD). 
Clearly, the readiness of today's soldiers is Army leadership's 
most important duty. It is not a question of balance at the 
ground level. Units must be manned, trained, and equipped to 
support operations in Afghanistan and other unforeseen 
contingencies. The Nation plans for and resources the Army to 
be ready, and therefore it is a strategic imperative that it 
should always be so.
    The Army is truly in transition during the period of 
declining funding, yet must continue to equip soldiers for what 
we ask them to do today. Frankly, the future, as is common in 
periods of declining resources, is less important. But this 
subcommittee's oversight responsibility is to ensure that the 
tradeoffs, although necessary, are reasonable, realistic, and 
manage risk in an appropriate manner relative to our defense 
strategy and the Army's needs.
    We welcome the witnesses who join us here today. Lieutenant 
General William Phillips is the Army's principal officer 
responsible for research, development, and acquisition. As 
such, he has policy and program oversight of how the Army buys 
new and maintains current equipment. Lieutenant General James 
O. Barclay is the Army's principal officer responsible for 
matching available resources to meet the Army's requirements 
for mission success and to support soldiers by managing current 
force needs and future force capabilities. We want to thank you 
both for your many years of service to the Nation and the Army. 
General Barclay, we are particularly grateful that you could 
join us today and share your family's joy and pride in the safe 
return home of your son from his deployment to Afghanistan.
    Now, my good friend Senator Roger Wicker will give his 
opening statement.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Mr. Chairman, for a profoundly 
insightful and appropriate opening statement, and I join you in 
your sentiments.
    I thank our witnesses, General Barclay and General 
Phillips. I appreciate your service and echo the appreciation 
that this subcommittee has for your sons, General Barclay, and 
for all the sons and daughters of Americans who've served with 
capability and bravery in our military service.
    Mr. Chairman, today we are here to discuss Army 
modernization as part of the fiscal year 2014 budget. Our Army 
is battle-tested after a decade of sustained combat operations. 
America's soldiers demonstrate every day that they are the best 
led, best trained, and most professional land force in the 
world.
    It's the responsibility of us in Congress and on this 
subcommittee to do what's necessary to enable the Army to 
maintain its hard-won combat superiority. Unfortunately, as the 
chairman mentioned, the budget request before us today falls 
short of that goal. The Army's base request for its 
modernization accounts is $1.7 billion below the Army's fiscal 
year 2013 request, 7 percent lower than last year.
    The Army's fiscal year 2014 budget request cannot be 
reviewed without looking at the Army's cumulative budget 
situation. Prior to the passage of the CR in March, the Chief 
of Staff of the Army, General Odierno, informed the committee 
that the Army was facing a $17 to $18 billion deficit in its 
operation and maintenance (O&M) accounts for the current fiscal 
year. Even with the passage of the CR, Secretary McHugh and 
General Odierno testified before the Senate Armed Services 
Committee that the Army still faces a combined fiscal year 2013 
shortfall of over $15 billion because of the combined effects 
of sequestration and the unexpectedly high overseas contingency 
operations (OCO) expenditures.
    To address this critical O&M shortfall, the Army is being 
forced to raid accounts within its own budget. I'm deeply 
concerned that these cuts will fall on Army modernization 
accounts and have debilitating effects on the Army's future 
readiness.
    The Army is facing significant challenges in its 
modernization accounts. I want to highlight three issues that 
are of concern to me. First, we must continue to support the 
Army's effort to network the soldier. This network is the 
centerpiece of the Army's equipment modernization program and 
the key enabler in its efforts to integrate Army operations 
with the joint force. By providing real-time networked 
information to decisionmakers and warfighters at all levels, 
the Army can become even more agile, adaptable, and capable 
than it already is. While the Army has made great progress in 
two of its major networking programs, namely the Warfighter 
Information Network Tactical and the Distributed Common Ground 
System, I still have concerns with the progress being made in 
the hand-held and vehicular radio programs.
    Second, the Army faces the dual task of modernizing its 
rotorcraft fleet and sustaining America's rotorcraft industrial 
base amid financial constraints. This is very important. As I 
stated earlier, the President's request is $1.7 billion below 
the fiscal year 2013 request. It appears the Army's aviation, 
ammunition, and Ground Combat Vehicle (GCV) programs will bear 
the brunt of these cuts. Perhaps the witnesses can address 
these in their testimony.
    The Army also had to make some difficult decisions 
regarding the Apache and it continues to struggle with the 
decision on how to proceed with the Armed Aerial Scout (AAS) 
program. I strongly believe the Army must make the maintenance 
of our fragile rotorcraft industrial base an integral part of 
its long-term modernization strategy. In March, the Army 
exercised admirable agility when it opted to keep existing 
production lines open by accepting delivery of select Apache 
helicopters to future contractor-funded retrofits. I applaud 
the Army's foresight for this decision. Likewise, the impact of 
the eventual decision to replace or upgrade the Kiowa Warrior 
platform will no doubt be felt for decades to come. As such, 
this decision must be carefully considered within the framework 
of the long-term viability of the rotorcraft industrial base.
    Third, the Army's combat vehicle procurement program should 
be rooted in requirements and prioritized accordingly. The 
written testimony submitted by our witnesses indicates that the 
GCV, the Armored Multipurpose Vehicle, and the Joint Light 
Tactical Vehicle (JLTV) are the Army's priority combat vehicle 
programs. At the same time, the Army is also addressing a 
longstanding capability gap with the Paladin Integrated 
Management Program, the self-propelled artillery, as well as 
tackling the challenge of resetting vehicles returning from 
Afghanistan.
    I believe all members of the subcommittee will want to 
understand fully the witnesses' program prioritization, given 
our current fiscal environment.
    So, Mr. Chairman, let me conclude by once again observing 
that you and I agree on many of the issues that we have both 
talked about. Let me observe that our Army continues to perform 
with remarkable courage, professionalism, and effectiveness 
despite incredibly hard circumstances. It's our responsibility 
to ensure that they have the resources to execute their mission 
in the defense of our Nation.
    Thank you.
    Senator Manchin. Thank you, Senator.
    Let me say also to General Barclay that I know you have two 
sons that have served, and we mentioned your one son just 
returning. I want you to know this committee is still wishing a 
speedy recovery for your second son, who was severely injured 
in 2006. I hope he's doing well and I hope the family is doing 
well also, sir.
    Senator Wicker, thank you, and I understand that you're 
going to have to join the Subcommittee on Seapower hearing 
already in progress. So we're going to break from protocol if 
you don't mind to quickly accommodate Senator Wicker. Senator 
Donnelly, if you have a scheduling conflict let me know.
    Senator Wicker.
    Senator Wicker. Thank you, Mr. Chairman.
    Let the record reflect that the ranking member of the 
Subcommittee on Seapower, the distinguished senior Senator from 
Arizona, just came in, realized he was in the wrong room, and 
is scurrying over to the Subcommittee on Seapower hearing, 
which is obviously not already in progress, unless it's in 
progress without his presence.
    I will soon try to join Senator McCain in that hearing.
    Senator Manchin. He was wondering what we were doing 
sitting in the seats.
    Senator Wicker. Right. It's terrible that we have so many 
things scheduled on top of each other. We're not going to be 
able to hear the distinguished president of South Korea when 
she addresses the joint meeting. But we're doing the best we 
can.
    Let me say this, gentlemen. I want to start with the Light 
Utility Helicopter (LUH) and AAS, and say that I have concerns 
with the Army's delayed efforts to acquire the new scout 
helicopter and its impact on the industrial base. Have I 
emphasized that enough? After the Comanche and Armed 
Reconnaissance Helicopter program terminations, one would 
expect the Army to move forward quickly on a path that 
addresses the critical scout requirements identified by the 
Army.
    Accordingly, I am distressed about the Army's decision to 
cut Lakota production early. This decision could shut down 
existing production lines when the Army has not made a final 
decision on a replacement or modernization plan for its aging 
OH-58 Kiowa Warrior Armed Reconnaissance Helicopter fleet.
    Last year, the Army conducted a Voluntary Flight 
Demonstration (VFD) for its proposed Kiowa Warrior replacement 
program, known as the AAS. This demonstration was supposed to 
help inform the decision on a solution to the Kiowa 
replacement. In March, Congress was briefed on the outcomes of 
the flight demonstration, which determined that more time would 
be needed before the Army can determine whether to replace or 
modernize the existing fleet.
    As such, I question the Army's proposal to cut and 
eventually terminate procurement of the Lakota. I believe we 
have an obligation to maintain the vitality of our industrial 
base and to preserve industrial base competition until the Army 
determines a path forward on AAS.
    So first to you, General Barclay, and then to General 
Phillips. My understanding is the Army could field a 
nondevelopmental aircraft for its reconnaissance helicopter, 
which means the helicopter can be produced in a short 
timeframe. Considering where the Army is with the decision to 
produce a new scout helicopter, wouldn't it be better, and 
wouldn't we be better served in terms of national security, 
keeping the Lakota production line warm until the Army is ready 
to field a new scout helicopter? General Barclay?
    General Barclay. Thank you, Senator, for the question. 
First of all, if you look at the two different programs, one is 
the LUH program. The LUH program is a non-combat, off-the-shelf 
procurement that we used or procured to cover those shortfalls 
as we started moving our combat aircraft into theater. That was 
the reason that we purchased this. It can only operate in 
permissive environments. We only use it in the Homeland to 
cover those mission sets and we do not deploy that.
    Our decision to reduce the number--we've actually completed 
all the buy except for 31 aircraft that we are not going to 
buy, and those 31 are only for the Active component. We will 
complete the buy for all of the Army National Guard (ARNG) and 
U.S. Army Reserve (USAR) for their requirements for the LUH.
    You're linking that with the industrial base, with the 
manufacturer of that helicopter, which as I said is a 
commercial, not a combat aircraft. When we link that, they were 
one of the ones that came in on the VFD. We conducted that. I 
think we had five different ones that came in that we reviewed. 
What we have done now that we have gone back and briefed all of 
those industry partners in the rotary wing industry about how 
they fell out and what the results were based on their 
demonstration of the aircraft they brought to the table.
    We have taken that information internally within the Army 
and we're laying that out against what the requirement for the 
future is, which is an AAS. As we look at that, we're basing 
that against what the uncertain times are with our fiscal 
constraints, where we can go in the future, and what we can 
afford to do.
    So the Army is in the decision process now of making that 
decision, hopefully some time later this summer or early next 
fall, on whether we're going to procure or go for a procurement 
of an AAS, which will be a new developmental program, or 
whether we're going to do a service life extension program on 
the current Kiowa Warrior fleet we have now.
    Senator Wicker. You're going to give us a comprehensive 
briefing at a date certain, or can we expect that late summer, 
early fall?
    General Barclay. That's the timeline we're on now. I think 
based on where the Chief and the Secretary are on that and us 
gathering the information, we're looking at a late summer to 
early fall decision from the Army leaders on the path ahead, on 
which path.
    But regardless of whether we buy a new AAS or we do a 
service life extension on the current, we still have what's 
called the OH-58F Cockpit and Sensor Upgrade Program (CASUP) 
for the current fleet we have, and we have to continue that. 
That allows us to address safety and obsolescence issues with 
the current fleet we have, which will bridge us to either 
decision we make, to procure new or to Shelf-Life Extension 
Program the current fleet. We need to continue that program.
    So it's really all linked together here as we move forward, 
Senator. I'll let General Phillips address the acquisition 
side.
    General Phillips. Senator, great question. Just a quick 
comment. The LUH at the end of the day has been a great 
aircraft for the Army, is still a great aircraft, and it met 
the mission requirements that General Barclay just described in 
the Active and the Reserve component. But that aircraft is 
really designed for a permissive environment only, so that's 
flying in continental U.S. operations essentially.
    We are working with and have worked with EADS North 
America. We've met with the president of EADS just recently and 
continue to work with him on the production schedule. Last week 
they actually came forward and talked to us a little bit about 
foreign military sales (FMS) and the potential for continuing 
production using FMS and the facility in Mississippi.
    At the same time, we have gone forward with the VFD, as 
General Barclay just described. The results of that essentially 
are this: we didn't find a single aircraft that was out there 
that can meet the Army's requirements. So if we were to go 
forward with an AAS, it would essentially be a development 
program, and that decision when it's made, probably mid-summer, 
sir, as we just described, we'll bring that decision forward to 
Congress and to you, sir.
    Senator Wicker. You do concede that the mission of flying 
in a permissive environment has a vital national security 
function, do you not?
    General Barclay. Yes, sir, it does. Again, as I've stated, 
on the LUH, we have bought all those requirements less 31 for 
the Active component. The Active component had a very small 
number of the total aircraft LUH that were bought. That was 
basically to cover the gaps we had because of the Blackhawks 
that we had to take out of the homeland and move forward into 
the fight.
    Now as we're drawing down--with Iraq we're out--we're 
drawing down in Afghanistan, we now have those aircraft back. 
So based on the fiscal uncertainty and where we were with the 
budget and stuff, it was prudent to make the decision to not 
purchase the last 31 aircraft for the Active component. The 
rest, as I say, the rest of those aircraft for the ARNG and 
USAR, which perform those missions--some of them are down 
performing the mission on the southwest border. They perform 
all those types of missions here that respond to the States and 
the Governors and the like.
    Senator Wicker. Thank you.
    Mr. Chairman, you've been very accommodating. I have a 
question for the record about the Apache helicopter supply 
chain problems and I will submit that to the record, and ask 
your leave so that I can go to the other subcommittee, with my 
deepest appreciation.
    Senator Manchin. Absolutely, Senator Wicker.
    Also, my dear friend Senator Donnelly has to do the same. 
If he may ask his questions now and, sir, I will stay here and 
we'll conduct the meeting as intended. But thank you for your 
indulgence.
    Senator Donnelly.
    Senator Donnelly. Mr. Chairman, thank you.
    Generals, thank you so very much. I just recently got back 
Saturday night from Afghanistan. The pride you can take in all 
of our servicemembers is breathtaking, the job they are doing.
    I wanted to ask about the next generation of warfighting 
vehicles, the JLTV. It is very critical in my mind that we 
continue forward with this program, and I just wanted to get an 
update on the JLTV as to where we are now and what effect 
sequestration will have on it.
    General Phillips. Sir, great question. As was mentioned 
earlier, JLTV is one of the top modernization programs for the 
Army. We have to have that vehicle. We intend to buy about 
49,000. The Marines are teamed with us. The first vehicles that 
will come off the production line when we make that production 
contract will essentially go to the Marines because of their 
need. It's critical for both of us and it is a joint program. 
We have issued a contract for engineering, manufacturing, 
development. There are three strong industry partners.
    Senator Donnelly. One of them happens to be from my 
hometown.
    General Phillips. Yes, sir, and I'm very familiar with AM 
General and the great work that they've done for the Army for 
many years.
    We're high on getting that program through the development 
process and into production, when we can achieve Milestone C, 
get through all the testing, and then issue that production 
contract.
    I want to emphasize this, though. Sequestration has an 
impact on every modernization program that we have this year, 
and in fiscal year 2014 it may have an even greater effect. 
What it has done to the JLTV program, and we're trying to 
mitigate this to the best we can, is potentially move back some 
of the testing by about 3 months, maybe up to 4 months. So sir, 
for JLTV today the impact of fiscal year 2013 is about a 3-
month slip at most, we think. We'll do our best to try to 
mitigate that and bring it in.
    Senator Donnelly. Obviously my primary concern is 
protecting our warfighters.
    General Phillips. Yes, sir.
    Senator Donnelly. I also wanted to ask you about what the 
Army's intent is in regards to modernizing tactical radios to 
improve communications on the battlefield?
    General Phillips. Sir, the Joint Tactical Radio System 
(JTRS) program--just a slight bit of history. The Army took 
this program on about 4 years ago from the Office of the 
Secretary of Defense (OSD); it was a joint program managed by 
them. We put a general officer in charge of JTRS, the first 
time a general has really managed the program from the very 
beginning. We have realigned every family of radios within the 
JTRS program.
    What we found as we looked with industry partners, those 
that were a part of the program of record and those that were 
not, is in many cases the industry partners that were not a 
part of the program of record had actually done better in 
developing better radios, that were cheaper, better capability, 
and met almost all of our requirements in most cases.
    So we're going forward with a full and open competitive 
strategy for three of the key radios of that entire family, and 
we think we have the right strategy going forward, sir.
    Senator Donnelly. This next question, I know this is 
something our chairman is very interested in as well, I would 
just like to know, in regards to sequestration, if you had 
flexibility would that be helpful to you?
    General Barclay. Yes, sir, it would. Again, the challenges 
we're facing this year with reprogramming and how we're looking 
at that and the limits. Again, we were given some flexibility, 
more so than we have had in previous years. But we think as we 
move into the future, it still being very uncertain and unknown 
about what those amounts are going to be, we would like to have 
that flexibility where we could then move--because to us the 
challenge is the short-term decisions we're making will have 
long-term impacts. If we can have at least some type of ability 
to project out and know that we have the ability or flexibility 
to make and move and change, then that allows us to take care 
of some of these programs, because right now we're just 
reacting and having to try to sustain as much as we can, 
without having a clear picture of the future. So yes, sir, 
flexibility would be a tremendous help, sir.
    Senator Donnelly. Thank you very much. General Barclay, 
thank you for your family's service and, General Phillips, for 
your service and your family's service as well.
    Thank you, Mr. Chairman.
    Senator Manchin. Thank you, Senator Donnelly.
    For the record, Senator Donnelly's statements and questions 
and also Senator Wicker's will be entered into the record.
    With that, we're going to go ahead and get started with our 
opening comments from today's witnesses. So we'll start with 
General Barclay, if you would.

  STATEMENT OF LTG JAMES O. BARCLAY III, USA, DEPUTY CHIEF OF 
                    STAFF OF THE ARMY (G-8)

    General Barclay. Chairman Manchin and the rest of the 
members of the committee here and distinguished members of the 
committee: Thank you for this opportunity to discuss the Army's 
fiscal year 2014 President's budget and as it relates to our 
modernization plan. On behalf of Secretary McHugh and General 
Odierno, I'd like to take this opportunity to thank you for 
your steadfast support and commitment to our Army and our 
soldiers.
    In your letter of invitation to come over and testify, you 
asked that we address modernization and its relationship to 
planned end strength and force structure changes. I want to 
assure you that, although we're entering an incredibly 
turbulent time for equipping our units, our number one priority 
remains supporting our warfighters in Afghanistan. We owe these 
brave soldiers nothing less.
    Over the next 3 years, we not only have to deploy and 
redeploy units still in combat or coming home from combat, we 
also have to retrograde theater equipment that is there and get 
it home in order to sustain our equipment on hand (EOH) 
statuses. We're also reorganizing our brigade combat teams. We 
have to keep Korea Force ready to fight and reestablish our 
global and regional response force.
    To do all this, we have to do it with substantially less 
money than we had planned, due to sequestration. Failure to get 
this right will impact the equipment modernization and 
readiness of our units for years to come.
    Throughout our history, we have drawn down our Army after 
every war. What is different this time is that we are drawing 
down our Army before the war is over. The previous drawdowns 
have resulted in a less-than-ready and hollow force. The 
effects on our equipment modernization will be dramatic because 
in the near term we cannot reduce force structure in a rapid 
manner, nor can we reduce the cost of the war quickly enough to 
pay the Army's share of the sequestration bill. Therefore, 
modernization is going to be taxed twice, once for its 
proportional share and then again to pay for those war costs 
and to meet the upcoming costs in the future.
    Sequestration will result in delays or changes to every one 
of our modernization programs, to include the GCV, the network, 
our aviation systems, the JLTV, and in most cases increasing 
their costs. It will also create an inability to reset our 
equipment employed in the past 12 years of war, resulting in 
significant delay in equipment readiness for six divisions.
    All of these effects are in addition to the changes that we 
made in the 2014 President's budget request that we're here to 
discuss.
    You also asked that we review the 2014 OCO request which 
the administration will present to Congress in the next few 
months. Since this request is not yet final, it's hard to 
provide the specifics on it as we are still working the details 
to try to meet those goals of what those costs are. But I would 
like to point out that the costs of the war do not go down 
immediately as our soldiers return. We've proven in Iraq that 
as we're retrograding the costs go up as you're closing down 
combat outposts and forward outposts, that those costs rise, 
and you're also retrograding equipment, and also the reset 
aspect of this.
    In fact, we're going to need your support for funding for 
the reset and replacement of our equipment for 3 years beyond 
the return of our forces from Afghanistan. Failure to do this 
would have a catastrophic effect to unit readiness.
    We're all aware of the strains on the Federal treasury and 
the desire to reduce war funds as soon as our soldiers return 
home. I would ask that you support future requests for the 
critical reset of our equipment.
    In March of this year, Secretary McHugh and General Odierno 
published their Army equipment modernization strategy. This 
strategy focuses on our efforts to support our soldiers and 
small unit formations while maintaining our advantage to be 
able to deter and defeat potential adversaries. We'll do this 
by identifying achievable requirements, applying best practices 
in acquisition and sustainment, and seeking incremental 
improvements, while harnessing network-enabled capabilities to 
solve our near-term needs, all the while investing in military-
unique revolutionary and evolutionary technologies to solve 
future needs.
    The key to this strategy is procuring equipment that is 
versatile and tailorable, yet cost-effective and affordable. 
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, and body armor and advanced individual protection 
equipment, that provide lethality and force protection to the 
soldier on the ground.
    In order to provide our soldiers with an unparalleled 
advantage, we intend to enhance our equipment with incremental 
improvement by integrating technologies and applications that 
empower, protect, and unburden soldiers and the formations by 
improving our network in order to enable decisionmaking across 
the joint force, while improving our vehicle fleet capabilities 
by increasing the lethality and mobility, all the while 
optimizing survivability and sustainability, and also improving 
our aviation platforms.
    Even without the effects of sequestration, the shift in the 
defense strategies and the previous reductions in the defense 
budget have caused the Army to make tough choices, resulting in 
significant changes to almost 100 of our acquisition programs. 
We have restructured almost 40 programs. We've slowed 
deliveries in about 50 programs and made the decision to 
accelerate very few.
    As we determine the effects of sequestration in 2013 and 
beyond, I am certain other programs will have to be adjusted as 
well. I'd like to emphasize once again to the committee that 
the effects of sequestration on our modernization account will 
be felt. Within the Army, in addition to the approximately 10 
percent across the board reductions, we will have to reprogram 
modernization dollars to pay for operations in Afghanistan. 
Equipment that we thought we were going to have and that our 
plans were based upon will not be procured or reset.
    In conclusion, sir, I've been the Army G-8 for 10 months, 
and it is an honor for me to be here before you today 
representing the great men and women of our Army. Every day in 
peace and war, our soldiers, along with our airmen, sailors, 
marines, and coast guard personnel, defend our Nation and all 
that is asked of them. The state of our Nation's finances as 
well as the financial struggles of our citizens are also on our 
minds. We know that they are struggling financially, yet they 
steadfastly provide our soldiers with the resources they need, 
and we are grateful.
    Our commitment to you is that we spend each and every 
dollar wisely and only ask for that which we truly need. The 
Secretary and the Chief have made this perfectly clear in their 
equipment modernization strategy, as they have challenged us to 
be both cost-effective and affordable.
    I look forward to answering your questions today and 
working with you in the future.
    Senator Manchin. Thank you, General Barclay.
    [The prepared statement of General Barclay follows:]
          Prepared Statement by LTG James O. Barclay III, USA
                              introduction
    Chairman Manchin, Ranking Member Wicker, distinguished members of 
the Subcommittee on Airland, thank you for this opportunity to discuss 
the Army's fiscal year 2014 President's budget as it pertains to Army 
modernization. On behalf of our Secretary, the Honorable John McHugh, 
and our Chief of Staff, General Ray Odierno, I would like to take this 
opportunity to thank you for your steadfast support and commitment to 
your Army and our soldiers.
    The generous support of the American people and Congress over the 
past 11-plus years of conflict has provided us the resources necessary 
to defeat our Nation's enemies, while protecting our soldiers and 
sustaining the force. It has also allowed us to modernize the Army, 
while reducing pre-2001 equipment shortages. We have significantly 
increased modernization levels over the past 11 years in all of our 
Army components.
    Equipment shortages have been reduced significantly, particularly 
in the Army National Guard (ARNG) and U.S. Army Reserve (USAR). In 
2001, the Active component (AC) had 85 percent of its equipment on 
hand, the ARNG had 81 percent on hand, and the USAR had 75 percent on 
hand. As of 2012, AC equipment on hand stood at 91 percent, ARNG at 89 
percent, and USAR at 86 percent. The Army today is better modernized 
and equipped than at any time in recent memory.
    Yet today's fiscal realities endanger the progress we have made in 
equipping. If the reductions in discretionary caps from fiscal year 
2014 to fiscal year 2021 as outlined in current law--known as 
sequestration--take effect, the Army may lose balance between end 
strength, readiness, and modernization resulting in a hollow force.
    To provide a guide for equipping our Army during these uncertain 
fiscal times, we have developed a flexible Army Equipment Modernization 
Strategy (AEMS). The AEMS is designed to account for normal cyclical 
downturns in defense spending that occur after every war. The 
reductions caused by sequestration, however, are occurring much sooner 
and at a much steeper rate than anticipated. As a result, all 
acquisition priorities and many equipment modernization programs may 
face unanticipated schedule or cost impacts in the out years.
                        equipment modernization
    The AEMS focuses our efforts on supporting our soldiers and small 
unit formations with the network, vehicles, and other enablers, while 
maintaining our advantages 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 needs, while 
(2) investing in military-unique revolutionary and evolutionary 
technologies to solve future needs. The key to this strategy is 
procuring equipment that is ``versatile and tailorable'' yet cost-
effective and affordable.
    As a part of this strategy, the Army provides a wide range of 
capabilities as an indispensable member of the Joint Force. Every day, 
the Army maintains deployable contingency forces, employs forward-based 
capabilities, and conducts multilateral exercises with partners and 
allies. The Army also provides humanitarian assistance when necessary. 
Army forces set theaters for the combatant commanders, constantly 
maintaining the critical logistical, communications, intelligence, 
medical, and inland ground transportation infrastructure to support all 
U.S. Armed Forces plans and contingencies. Army units provide space, 
air, and missile defense capabilities for the Joint Force. We build and 
operate communication networks that connect our own units, the joint 
community, and interagency and multinational partners. Soldiers provide 
essential logistics infrastructure, delivering food, fuel, ammunition, 
materiel and medical support that sustain joint operations ranging from 
combat to humanitarian assistance. In addition, the Army collects and 
analyzes the intelligence that informs our actions and measures our 
progress, and provides the majority of the forces in U.S. Special 
Operations Command.
    We will take advantage of government and commercial technologies to 
buy and integrate mature incremental improvements in the near-term, 
while investing in revolutionary and evolutionary technologies for the 
future. Through this approach, we will become more efficient, pursuing 
smaller procurement objectives, leveraging the results of experiments 
and demonstrations.
    For example, the Network Integration Evaluation (NIE) provides the 
Army with valuable soldier-driven evaluations and assessments of 
network technologies, while also aiding in the development of tactics, 
techniques, and procedures for network capability. NIE also informs the 
Army's capability requirements, and better informs industry on how to 
refine and mature new and existing capabilities. Several industry 
systems that participated in prior NIEs incorporated soldier feedback 
into updated versions featuring both software and hardware 
enhancements. NIE provides insights from multiple organizations and 
stakeholders simultaneously, yielding better information to 
decisionmakers faster. Unfortunately under sequestration, the Army may 
be forced to reduce the scope of NIE, resulting in fewer systems, 
vehicles, and industry participation, which will in turn result in 
fewer operational test scenarios and less data collected. This will 
ultimately delay the production and fielding of some acquisition 
programs.
                      capability-based portfolios
    The Army manages equipment modernization through capability-based 
portfolios. The strategy for each portfolio is different and is 
dependent on many factors to include the modernization level within the 
portfolio, the threat gaps across the portfolio, and the status of the 
industrial base. Each portfolio will look out over the near, mid, and 
far term to determine investments and divestments across the Army.
    In order to provide our soldiers with unparalleled advantage, our 
equipment portfolios will incorporate incremental improvements by 
integrating technologies and applications that empower, protect, and 
unburden soldiers and formations by improving our network in order to 
enable decisionmaking across the Joint Force; improving our vehicle 
fleet capabilities by increasing lethality and mobility while 
optimizing protection and sustainability; and improving our aviation 
platforms with digitization and additional procurement of unmanned 
aviation systems.
                       the soldier and the squad
    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, and body armor and 
advanced individual protection equipment, providing lethality and force 
protection to the soldier on the ground. Tactical overmatch will be 
created by a suite of small-unit systems including unmanned aircraft 
systems, ground-based robots, counter-improvised explosive devices, and 
the latest surveillance systems. The Army equipment modernization goal 
is to build outwards from the soldier and squad and to sustain our 
advantages in mobility; logistics; and command, control, 
communications, computers, and intelligence at the tactical, 
operational, and strategic levels.
    Planned improvements for dismounted soldiers include a mission 
command system that allows soldiers to see each other's positions, 
collaboratively mark hazards, and provides on-the-move broadband voice, 
data and video. This unprecedented situational awareness, coupled with 
advanced sensors and lightweight small arms systems, will ensure that 
our soldiers are unmatched on the battlefield.
    One of our highest priorities is to off-load weight and complexity 
from the soldier, easing physical, training, and maintenance burdens, 
standardizing mechanical and software interfaces and developing 
consistent cognitive and physical ergonomics that maximize safety and 
resilience. In the near term, the soldier and squad portfolio will 
prioritize the modernization of existing weapons, leveraging ``off the 
shelf'' technologies, and invest in the development of new weapons. In 
the area of protection and mobility, the Army will incrementally 
improve ballistic protection against existing enemy weapons while 
lightening the soldier's load. For example, the female size Generation 
III Improved Outer Tactical Vest continues to provide the same 
unsurpassed ballistic protection of existing Army body armor, while 
providing eight additional sizes in conjunction with other 
modifications designed to provide a better fit.
                            mission command
    Our Mission Command portfolio is an integrated and interoperable 
network that connects all echelons from the soldier to the Joint Task 
Force. It is designed to provide the right information from a myriad of 
sensors and data sources, in time to enable soldiers to make sound 
tactical decisions. The network also provides the squad connectivity to 
other Army and Joint assets, allowing access to multiple firepower, 
intelligence, and combat support systems even in the most demanding 
physical terrain and complex human environments. The result is our 
smaller forces are empowered with network-enabled capabilities. Our 
fiscal year 2014 budget request will provide four Brigade Combat Team 
sets of Warfighter Information Network-Tactical (WIN-T) Increment II, 
Joint Battle Command-Platform, Nett Warrior, Rifleman Radio, Mounted 
and Dismounted tactical networking radios, and the Maneuver Network 
Vehicular Radio for Capability Set fiscal year 2015, while continuing 
to develop WIN-T Increment 3, which includes an aerial layer and 
increased bandwidth. WIN-T funding was increased in the President's 
budget request for fiscal year 2014 to acquire additional quantities 
needed to support testing and networking on-the-move capability. The 
WIN-T Increment 2 networking on-the-move capability was recently 
validated by 3rd Brigade, 10th Mountain Division in a Mission Rehearsal 
Exercise.
                      ground movement and maneuver
    The Ground Movement and Maneuver portfolio provides soldiers the 
protected mobility required to deliver them safely to, on, and from the 
battlefield. The Army's priority combat and tactical vehicle programs 
are the Ground Combat Vehicle (GCV) and the Armored Multipurpose 
Purpose Vehicle (AMPV). We will continue to make the necessary 
adjustments in the GCV program--particularly as budget uncertainty 
continues--to ensure that we deliver an effective and affordable 
replacement for the aging Infantry Fighting Vehicle variant of the 
Bradley. We will select one contractor in the Engineering and 
Manufacturing Design phase of the GCV program, saving significant Army 
Research, Development, Test, and Evaluation (RDT&E) resources that we 
will reinvest in other modernization programs.
    In the case of AMPV, it is a model program for cost constraints--
utilizing mature technologies, strict cost limits, and rigorous 
analysis of requirements. Replacing our Vietnam-era M113 Personnel 
Carrier is crucial to our Armored Brigade Combat Teams by providing 
survivable, network enabled combat support vehicles with the necessary 
protection and mobility.
    Abrams funding in fiscal year 2014 provides continued RDT&E funding 
for Abrams Engineering Change Proposal (ECP) development, which will 
buy back power deficiencies, improve protection, and provide the 
ability to accept future network and protection upgrades. Abrams 
procurement funding supports continued armor production, safety 
modifications, and operational field modifications.
    Fiscal year 2014 funding for the Bradley Family of Vehicles program 
includes procurement of ECP 1 for track and suspension upgrades, 
transmission upgrades to ensure the vehicle can be safely operated at 
full combat weight and completing fielding of Operation Desert Storm-
Situational Awareness variants to the Army National Guard.
    In regard to Stryker, the Army has validated the enduring 
requirement for the Double V-Hull (DVH) Stryker configuration and an 
analysis is being conducted to determine distribution of the current 
DVH vehicles within the nine Stryker Brigade Combat Teams.
                   tactical wheeled vehicle strategy
    Our objectives are to progressively modernize the Tactical Wheeled 
Vehicle fleet to improve performance, payload, and protection, and 
integrate the Mine Resistant Ambush Protected Family of Vehicles into 
our force structure. Currently, the Army is moving forward with 
developing the Joint Light Tactical Vehicle (JLTV) with the Marine 
Corps to fill capability gaps in the light vehicle fleet by carefully 
balancing performance, payload, and protection. All JLTV are produced 
armor-capable, and when armored can provide the same level of 
protection as the Mine Resistant Ambush Protected All Terrain Vehicle 
(M-ATV), better network integration than the High Mobility Multipurpose 
Wheeled Vehicle (HMMWV) and better mobility and transportability than 
the M-ATV.
    Affordability is at the forefront of all decisions in this 
portfolio. Solutions must carefully balance protection against cost and 
mobility. Additionally, our strategy will take advantage of the young 
fleet age and divest tens of thousands of wheeled vehicles to reduce 
sustainment costs.
                                aviation
    The Army has a continuing requirement for a light, armed helicopter 
for manned, armed aerial reconnaissance, surveillance, and light attack 
missions. Currently this role is filled by the OH-58 Kiowa Warrior. The 
Army is currently considering whether to compete a new start Armed 
Aerial Scout program or to recapitalize the OH-58.
    To address obsolescence and safety concerns until a viable 
replacement is procured, the Army is investing in the Cockpit and 
Sensor Upgrade Program for the Kiowa Warrior. It is a priority Army 
aviation program due to the persistent high operational demand for this 
capability and the need to modernize 1970s platforms.
    The Army will procure remanufactured AH-64Es and will defer the 
procurement of new build AH-64Es beyond fiscal year 2019, pending a 
review of attack helicopter force structure. Both the Kiowa Warrior and 
the Apache AH-64E platforms have been instrumental in both theaters, 
and modernizing and remanufacturing them enhances our battlefield 
capabilities while also reducing overall costs to the taxpayer. 
Finally, the CH-47F multi-year procurement contract II, will fill all 
Army, Army National Guard and Army Reserve Chinook requirements.
                   fiscal realities and modernization
    Fiscal realities have caused the Army to make tough choices by 
delaying, restructuring, and terminating programs in fiscal year 2014. 
We will continue to revalidate modernization requirements, reexamine 
programs' affordability and cost effectiveness, and determine if there 
are alternatives that can satisfactorily meet the need at less cost.
    In addition, the Army is continuously assessing its requirements 
and resourcing processes. We have instituted processes in several large 
programs, which involve the acquisition and requirements communities 
working in close collaboration to screen requirements, and identify 
areas where risk can be mitigated by adjusting requirements to avert 
unnecessary cost or schedule impacts. The focus is on discerning the 
true ``must-have'' capabilities in pursuit of affordable and achievable 
programs. The GCV and the JLTV are two recent examples. In the case of 
the GCV, high risk requirements were eliminated, and in the case of the 
JLTV, requirements were prioritized to give industry the needed 
flexibility to perform on budget.
                            closing comments
    The goal of our Equipping Modernization Strategy is to ensure 
soldiers are equipped for the current fight as well as future 
contingencies. Although we are a force in transition during a period of 
declining resources, we must continue to provide the Army with the best 
equipped, most modernized, and most capable force that will prevail on 
any battlefield against any enemy. In some cases this requires the 
procurement of newly designed combat vehicles that incorporate the 
lessons learned from more than 11 years of conflict, and the ability to 
incorporate new networked technologies. In other cases it requires 
modernizing equipment to account for new power, weight, or 
obsolescence, and in some cases it only requires resetting existing 
equipment to roll back years of excessive wear and tear as it returns 
from Operation Enduring Freedom.
    These continue to be challenging times for our Nation and for our 
Army, and I assure you, the members of this subcommittee, that the 
Army's senior leaders are working hard to address these challenges and 
to meet the needs of the Nation now and in the future.
    Mr. Chairman, 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, Army civilians, and their families. I look forward to 
your questions.

    Senator Manchin. General Phillips.

 STATEMENT OF LTG WILLIAM N. PHILLIPS, USA, PRINCIPAL MILITARY 
DEPUTY TO THE ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION, 
  LOGISTICS, AND TECHNOLOGY, AND DIRECTOR, ACQUISITION CAREER 
           MANAGEMENT, AND CHIEF INTEGRATION OFFICER

    General Phillips. Good morning. Chairman Manchin, Ranking 
Member Wicker, and distinguished members of the subcommittee, 
thank you for the opportunity to testify on the Army's 
modernization and acquisition program for fiscal year 2014. On 
behalf of our Army, I thank you for your steadfast support to 
provide our courageous men and women in uniform with world-
class weapons, systems, and equipment. Sir, at the end of the 
day our Army is the most equipped in the world, and that 
doesn't happen by chance. It happens because of a lot of hard 
work and dedication from many, to include the members of this 
committee. So, sir, we thank you.
    Upfront, I would also like to extend my sincere 
appreciation for your support for a number of critical 
acquisition programs, to include the award of multi-year 
contracts. This action alone will save taxpayers over $2 
billion on the Chinook and Blackhawk programs alone.
    Our Army and our Army acquisition face unprecedented fiscal 
and budget challenges. Sequestration is having a devastating 
effect on Army modernization. To best meet the physical 
challenges we face, the Army has focused on driving 
affordability and cost-effectiveness in every decision we make 
and on every program. We remain committed to our modernization 
strategy, which begins with the soldier, the most effective 
weapon in the battlefield. The soldier and squad are the 
foundation of our Army and the centerpiece of our modernization 
programs. We will equip our squads for tactical overmatch in 
all situations. We will connect soldiers to the network and we 
will provide vehicles that improve mobility, lethality, and 
survivability. We will provide the soldier and the squad with a 
range of equipment, including individual and crew-served 
weapons, next-generation optics, night vision devices, and the 
world's best body armor. Our squad formation's tactical 
superiority will be enabled by a suite of small unit systems 
including unmanned aerial systems, ground-based robots, 
counter-improvised explosive devices (IED), and the latest 
surveillance systems.
    We will connect the soldier to the Army's network to create 
greater situational awareness and overwhelming superiority. It 
provides the squad connectivity with the joint assets as well.
    Our combat and tactical wheeled vehicle fleets are being 
developed to connect this more capable squad with the network. 
Our future vehicle fleets will also provide increased lethality 
and mobility to squads while optimizing survivability through 
the use of armor packages that can be scaled to meet mission 
requirements.
    Our modernization efforts are designed to prepare the 
entire force for a complex and uncertain battlefield by putting 
a squad with precise information and overmatch capability in 
the right place at the right time to accomplish their mission.
    For Army aviation, we will continue to successfully modify, 
upgrade, and remanufacture existing platforms to extend the 
life of our aircraft and keep our air crews safe. We will 
continue to invest in science and technology for the future 
fleet of aviation as well.
    Mr. Chairman, I would like to briefly address the defense 
industrial base. The upcoming end of combat operations and the 
changing fiscal environment are prompting the Army's commercial 
and organic industrial base to adjust to a new reality of 
reduced requirements and constrained resources. Of great 
concern to the Army are the likely long-term effects, to 
include the loss of critical skills, the loss of suppliers at 
all tiers, and an increase in the number of single-point 
failures in the supply chain affecting Army logistics and 
industrial base operations. The Army is aggressively evaluating 
how best to identify and preserve critical industrial base 
capabilities.
    Mr. Chairman, the Army continues to prioritize sound 
program management, acquisition that drives affordability, 
executable requirements, and achievable acquisition strategies. 
We have taken specific steps to avert the leading causes of the 
past program cancellations. In addition, the Army has fully 
embraced the DOD Better Buying Power initiatives to address 
cost and schedule and schedule risk in programs and achieve 
better value for taxpayers. In 2012 alone, we achieved $370 
million in should-cost initiatives that went across over 300 
programs. During my 3 years in this position, we have made 
significant improvements in the Army acquisition process.
    In closing, Mr. Chairman and distinguished members of the 
subcommittee, these are difficult and challenging times. I 
thank you again for your steadfast and strong support of our 
courageous men and women in uniform. Sir, I look forward to 
your questions.
    [The prepared statement of General Phillips follows:]
           Prepared Statement by LTG William N. Phillips, USA
                              introduction
    Chairman Manchin, Senator Wicker, and distinguished members of the 
Subcommittee on Airland, we thank you for this opportunity to discuss 
the fiscal year 2014 budget and overseas contingency operations 
requests as they pertain to Army Modernization as well as your 
steadfast support and shared commitment in this endeavor on behalf of 
the Secretary of the Army, the Honorable John McHugh and the Army Chief 
of Staff, General Ray Odierno. I would also like to thank you for help 
in providing the Army the means to award multi-year contracts through 
the passage of the Appropriations Bill which funds the Department of 
Defense through the rest of the fiscal year. This alone will save the 
taxpayer over $2 billion in cost avoidance. We are pleased to represent 
U.S. Army leadership, members of the Army Acquisition workforce, and 
the more than 1 million courageous men and women in uniform who have 
deployed to combat over nearly 12 years, who have relied on us to 
provide them with world-class weapon systems and equipment to ensure 
mission success.
                 army equipment modernization strategy
    As we look to the future, our priority is to maintain the best 
equipped Army in the world and to ensure we are postured to fight and 
win the next conflict. We recognize the need to shape the Army with an 
understanding of both our national security obligations, the strategic 
rebalancing to the Asia-Pacific region, and current fiscal constraints. 
The theme of our Equipment Modernization Strategy is ``versatile and 
tailorable, yet affordable and cost-effective.''
    The centerpiece of this strategy is the soldier and squad, ensuring 
that we continue to maintain advantages in mobility, logistics, command 
and control, and intelligence. The soldier and squad must be enabled 
through the network, facilitating decisionmaking across the Joint 
Force, and delivering this capability with focused investments in key 
enabling technologies. The Soldier and Squad Investment Plan provides 
our small units with a range of equipment including individual and 
crew-served weapons, next generation optics and night vision devices, 
and body armor and advanced individual protection equipment, providing 
lethality and force protection to the soldier on the ground. Our combat 
and tactical vehicle fleets are also being developed to network this 
more capable squad, provide increased lethality and mobility, while 
optimizing survivability through the use of armor packages that can be 
scaled to meet mission requirements. In the same manner, aviation 
improvements will provide our forces with greater mobility and 
responsiveness. Currently the Army is conducting a comprehensive study 
of the tactical wheeled vehicle fleet. At the completion of this study 
and pending force structure decisions, the Army will update its 
Tactical Wheeled Vehicle Strategy.
    This approach helps achieve the optimal balance between 
obsolescence of existing capabilities, innovation, and overmatch 
capabilities through new technologies and weapon systems. As a result, 
our approach must be agile and strategic moving forward, reflecting the 
need to modernize equipment in key portfolios, leveraging mature 
capabilities where appropriate, and addressing the needs of the 
Industrial Base. Maintaining technological advantage over our 
adversaries will be paramount, so our strategy must include a balanced 
investment between mature technologies for system upgrades, and 
research investments between evolutionary and disruptive technologies.
    To achieve this strategy within our fiscal constraints, we must 
make focused investments in capability. As such, we are engaged in a 
detailed assessment of our various equipment portfolios to determine 
our future investment, sustainment, and divestiture posture. This will 
be the first time we have projected out 30 years, ensuring that we 
understand the threat and associated capability gaps, and from that 
developing our investment strategy across Science and Technology and 
Acquisition Programs of Record. Alignment across this process, as well 
as affordability, will be key. Maintaining critical Industrial Base 
sectors and preserving the capacity to surge when the need arises will 
also be a priority.
    Our approach must consider rapid changes in technology, and where 
our traditional process does not suffice, we must institutionalize new 
processes for rapid acquisition that allow us to be responsive to the 
threat and agile in delivering new capability. We will leverage the 
government, academic, and commercial sectors to deliver this 
capability, and will continue to execute efforts like the Network 
Integration Evaluations (NIE). These evaluations ensure a holistic 
approach to integration that assesses the latest, innovative 
technologies while creating efficiencies across our test programs.
    Key principles within our Equipment Modernization Strategy include:

         Fostering competition to reduce cost and improve 
        quality
         Reducing complexity to the soldier to use and maintain 
        equipment, thus reducing our training requirement
         Emphasizing interfaces and interoperable standards 
        with our joint and coalition partners
         Divesting equipment as a means to modernize with 
        limited resources
         Balancing modernization with changing threats, 
        missions, and technologies, as we manage impacts on training 
        and sustainment
         army network and ground systems modernization programs
    The President's budget for fiscal year 2014 supports the 2013 Army 
Equipment Modernization Plan, which identifies the Army's highest 
modernization priorities. Nearly half of them are associated with the 
network, which the Army is committed to developing and fielding as a 
single entity. Network modernization seeks to provide the same basic 
capabilities from home station to the lone dismounted soldier in 
theater. The Army is also striving to become hardware agnostic by 
focusing on software applications that meet our unique needs. These 
applications must be able to operate on existing hardware, and meet 
requirements for interoperability with other applications.
    A major contributor to the successful development of new network 
capabilities is the NIE, conducted on a semi-annual basis at Fort 
Bliss, TX. Our latest NIE just began on May 4 and is scheduled to 
conclude on May 27, 2013. The NIE provides an operational venue to 
evaluate and integrate new commercial technologies and network 
capabilities for possible inclusion into the network before it is 
fielded to operational units, thereby relieving those units of the 
integration burden. Resources have been added to the fiscal year 2014 
budget request to allow procurement of commercial products evaluated 
and recommended for fielding based on NIE results.
Warfighter Information Network-Tactical
    Warfighter Information Network-Tactical (WIN-T) provides a secure 
and reliable broadband network that supports tactical communications 
(voice, data, and video), enabling mission command while on-the-move. 
It features the latest technology to plan, manage, fight, and defend 
the network. This capability will be delivered in incremental stages. 
WIN-T Increment 1 fielding was completed in fiscal year 2012 and the 
budget request supports planned technology upgrades to enhance 
interoperability with subsequent increments. WIN-T Increment 2, which 
delivers a mobile network capability from company level to theater, is 
currently being fielded to deploying units. The budget will procure 
WIN-T Increment 2 equipment for four Brigade Combat Teams and two 
Division Headquarters. The budget request supports WIN-T Increment 3 
continued development of the full networking capability, including 
additional connectivity via employment of an airborne tier.
Family of Network Tactical Radios
    The Family of Network Tactical Radios, to include the former Joint 
Tactical Radio System and the Mid-Tier Networked Vehicular Radio 
programs, is the future deployable mobile communications family of 
tactical radios, providing advanced joint tactical end-to-end 
networking data and voice communications to dismounted troops, 
aircraft, and watercraft platforms. The fiscal year 2014 budget request 
provides an interoperable family of advanced single and dual-channel 
radios providing soldiers, sensors, and platforms with tactical, lower 
tier networking communications capability.
Ground Combat Vehicle
    Ground Combat Vehicle (GCV) is the Army's replacement for Bradley 
Infantry Fighting Vehicles in Armored Brigade Combat Teams (ABCTs). 
Modernization imperatives include improved protection, mobility, and 
capacity for a full nine soldier infantry squad, and sustainment; 
built-in growth capacity; and network integration. The fiscal year 2014 
budget request will allow the refinement of the GCV requirements set, 
close out the Technology Development phase, and allow the awarding of 
an Engineering and Manufacturing Development (EMD) contract.
Stryker
    The Stryker Double V-Hulls (DVH) have provided exceptional 
protection in Afghanistan and are directly contributing to saving the 
lives of soldiers. The Army is procuring DVH Strykers through new 
production and flat bottom Stryker exchange. As of December 2012, 
remaining new production consists of nine Anti-Tank Guided Missile 
Variants scheduled for completion June 2013. Fifty-two Stryker DVHs 
were completed in April 2013 though the exchange process. The Army has 
validated the enduring requirement for the DVH Stryker configuration 
and an analysis is being conducted to determine distribution of the 
current DVH vehicles within the nine Stryker Brigade Combat Teams. The 
Army has approved Phase II of the Stryker Engineering Change Proposal 
(ECP) effort (design, prototype build, and test) focused on improving 
electrical and engine power, enhancing the suspension and integrating 
an in-vehicle network. A production decision for Phase II is projected 
for the fiscal year 2017 timeframe.
M1 Abrams
    The Abrams tank remains the best tank in the world as a result of 
significant improvements over the last two decades. The Army will have 
produced enough tanks to fully meet its requirement to equip all ABCTs 
by June 2013. Currently the average age of the fleet is 3 to 4 years 
old. A slow-down in Abrams Tank production has already begun and will 
likely continue until the next major recapitalization of the Abrams 
tank resumes in the fiscal year 2019 timeframe. The Army is assessing 
mitigation alternatives, including the affordability of accelerating 
production of the Abrams ECP improvements with the next Abrams 
recapitalization, to provide a sustaining workload at the Anniston Army 
Depot and Joint Systems Manufacturing Center for the foreseeable 
future. In the meantime, the Army continues to aggressively apply 
mitigation measures to preserve critical skills and the vendor/supplier 
base.
M2 Bradley
    The Army will have produced enough Bradley vehicles to fully meet 
its requirements to equip all ABCTs by September 2013. At this point, 
the average Bradley A3 and Operation Desert Storm-Saudi Arabia fleet 
age is 4 years old. The Army awarded the contract to convert and 
digitize 61 M3 Cavalry Fighting Vehicle variants to the standard M2 
Infantry Fighting Vehicle in the second quarter of fiscal year 2013. 
The Army has two ECP efforts planned for the Bradley. ECP 1 began in 
fiscal year 2014 and includes mobility improvements (improved track and 
suspension) to restore lost platform capability due to survivability 
enhancements. ECP 2 is scheduled to begin in fiscal year 2017 and 
includes size, weight, power, and cooling improvements to accommodate 
inbound technologies (improved engine, transmission and alternator, 
network and power improvements). The Army will conduct an analysis to 
determine the right combination of field modifications, production at 
York, and work at the depot to complete the planned ECPs.
Paladin Integrated Management
    The Paladin Integrated Management (PIM) program replaces the 
current M109A6 Paladin and M992A2 Field Artillery Ammunition Supply 
Vehicle by incorporating Bradley common drive train and suspension 
components with a new chassis design. PIM addresses a longstanding 
capability gap in the self-propelled artillery portfolio brought about 
by an aging fleet and the termination of prior modernization efforts. 
The budget request supports continued PIM Developmental Testing and Low 
Rate Initial Production of 18 PIM systems and non-recurring costs for 
the production contract.
                rotorcraft acquisition and modernization
    The past decade of conflict has identified challenges faced by 
rotary wing aircraft conducting operations in high, hot conditions, 
limits to aircraft/passenger survivability, and high operational costs. 
The Army's recent aviation modernization investments maximize AH-64 and 
UH-60 fleet performance.
OH-58D/F Kiowa Warrior
    The OH-58D Kiowa Warrior provides essential aerial reconnaissance 
and security of ground maneuver forces and has the highest operational 
demand of any Army rotary wing aircraft. The budget request supports 
the OH-58F Cockpit and Sensor Upgrade Program (CASUP) and continues OH-
58D fleet upgrades to include manned-unmanned teaming, weight 
reduction, and resolution of current obsolescence issues. To address 
long-term obsolescence in the Kiowa Warrior, the OH-58F CASUP improves 
avionics through modernization of: interoperability; Aircraft 
Survivability Equipment; armament and sensors; digital cockpit display, 
improved processor; navigation guidance; and communication and 
identification. The OH-58F CASUP capability improvements are largely 
centered on the Nose-Mounted Sensor, which will replace the much less 
capable Mast-Mounted Sensor. Additionally, CASUP will fully integrate 
several aircraft systems that are currently federated, redesigns, and 
replace the entire aircraft wiring harness, and add a capability to 
integrate future digital weapon systems.
Improved Turbine Engine Program
    Improved Turbine Engine Program (ITEP) is the next generation 
engine being developed to reduce fuel usage, increase performance, 
improve reliability, and lower maintenance. The ITEP is striving for a 
25 percent specific fuel consumption decrease, 35 percent production 
and maintenance cost decrease, 65 percent horsepower to weight increase 
with 20 percent engine life design increase, and may incorporate a 
condition-based maintenance plus package.
CH-47F/MH-47G Chinook
    The Army is fully committed to the procurement of 533 Army CH-47F 
Chinook and U.S. Special Operations Command MH-47G aircraft, which are 
meeting or exceeding all expectations in theater. The Army plans to 
sign a second 5-year multi-year contract to procure the CH-47F Chinook, 
which will yield a cost avoidance of 19.2 percent, or $810 million.
UH-60 Black Hawk
    The Black Hawk program continues to move forward with continued 
investments in modernization to keep the Blackhawk fleet relevant 
through 2035. Current modernization efforts include cockpit 
digitization and development and integration of the Improved Turbine 
Engine. The Army awarded the 8-year multi-year contract for Black Hawk, 
which has realized a cost avoidance of 15 percent, or $1.4 billion.
Armed Aerial Scout
    The Army conducted a Voluntary Flight Demonstration (VFD) from June 
to November 2012 to determine if industry had an aircraft readily 
available that could satisfy Armed Aerial Scout (AAS) requirements. 
Five submissions for potential AAS solutions provided aircraft for 
demonstration. The Army is currently reviewing information obtained 
through the VFD and industry responses to Requests for Information. The 
Army will consider the limitations of the Kiowa Warrior, potential 
capabilities of the AAS, and affordability in developing its 
recommendation to the Under Secretary of Defense (Acquisition, 
Technology, and Logistics). The Army projects that it will make a 
recommendation in the third quarter fiscal year 2013.
    As budgets decline, we recognize that it will be difficult to 
resource Army Aviation at the same level in the future. We continue to 
successfully modify, upgrade, and remanufacture existing platforms to 
extend the life of our aircraft and keep our aircrews safe.
                        defense industrial base
    The Army's Commercial and Organic Industrial Base (OIB) will adjust 
to a new environment of constrained resources and reduced demand. The 
current fiscal environment poses a number of concerns for the Army to 
include the possible loss of critical skill sets, the loss of suppliers 
at all tiers, and an increase in the number of single point failures in 
the supply chain affecting Army logistics and OIB operations. The Army 
is evaluating how to leverage facility modernization efforts to 
preserve needed capabilities in the OIB. We continue to work with the 
Office of the Secretary of Defense (OSD) on the sector-by-sector/tier-
by-tier (S2T2) survey to evaluate impacts on all DIB sectors.
    The Army produces Industrial Base Baseline Assessments that assess 
current operations, risks, and issues in the Army Industrial Base. The 
Army has implemented long-range facilities and construction planning 
for arsenals and ammunition plants, which include modernization 
projects to upgrade facilities, and modernizing equipment and 
manufacturing processes. Phase 1 of the S2T2 survey is complete, with 
initial data from the Army Industrial Base under review to determine 
critical impacts to skills, manufacturing capabilities, and expertise 
the Army needs.
    The Army is also conducting a comprehensive Combat Vehicle 
Portfolio Industrial Base Study through A.T. Kearney, a global 
management consulting firm. The 21-week study, expected to be completed 
in June 2013, is assessing the commercial and organic combat vehicle 
industrial base, viable strategic alternatives, and sustainment of the 
combat vehicle industrial base in a constrained fiscal environment.
                       acquisition transformation
    The Army continues to prioritize affordability, sound program 
management, and achievable requirements in our acquisition efforts. The 
Army has taken specific steps to address and avert the leading causes 
of program cancellations in the past. Requirements and acquisition 
strategies in our major programs (GCV, for example) have been carefully 
tailored to mitigate risk and facilitate achievable results. An Army 
blue ribbon panel review in 2010 recommended long-term improvements to 
our processes. Implementation is nearly complete on this effort (55 of 
63 recommendations have been implemented to date). The Army has also 
embraced OSD Better Buying Power initiatives designed to address cost 
and schedule risk in programs and achieve better value for the 
taxpayer.
    Ongoing improvements include revising our requirements development 
process to facilitate cost-informed decisions on a collaborative and 
timely basis. The Army is also revising requirements approval processes 
to focus on truly ``must-have'' capabilities in an effort to control 
costs. We are also expanding the use of multi-year contracts to achieve 
efficiency, increasing our emphasis on mature technologies, and 
improving the availability of analytic research in acquisition 
decisions to achieve best value for the Army.
    The Stryker program is one example of the effective application of 
``should-cost'' estimates, incentivizing efficiency, and lower overall 
costs. The Army achieved considerable savings combining the DVH and the 
Nuclear, Biological, Chemical Reconnaissance Vehicle buys, while 
pursuing efficiencies gained in test methodology. Existing test data 
was effectively utilized and test events were also combined to achieve 
efficiency.
                            closing comments
    These are challenging times for the Nation and our Army. The next 
several years will be pivotal for Army ground systems and rotorcraft. 
The resources provided to the Army to conduct ongoing operations while 
modernizing and posturing for the next generation of warfighter 
capabilities will determine our continued ability to accomplish our 
mission and meet future commitments. To execute these plans, we need 
your continued advice and support.
    We can assure the members of this subcommittee that your Army's 
senior leaders remain focused and are working hard to address current 
challenges and the needs of the Army now and in the future. We will do 
this with affordability as our watchword as we endeavor to remain good 
stewards of our Nation's resources.
    Mr. Chairman, members of the subcommittee, we thank you again for 
your steadfast and generous support of the outstanding men and women in 
uniform, our Army civilians, and their families.

    Senator Manchin. Thank you both, General Barclay and 
General Phillips.
    Let me just start out with an observation. Being one of the 
newer members of the Senate, coming from the State ranks, being 
a governor before and being involved in the public process, if 
you will, the sequestration is taking on a whole new life of 
its own. My estimation is it's going to be here for 10 years. 
With that being said, I think if you look at the overall 
objective, it was supposed to be a draconian measure, which it 
really is, but I think it's more draconian in the way it's 
administered versus the amount of money that's involved.
    With that, they're talking $1.2 trillion over 10 years, to 
be fairly equal, if you will, half of it from defense and half 
of it from non-defense. That would be $500 to $600 billion over 
the 10-year period. So that's about $60 billion a year. Right 
now, since it started a little bit later this year, it's going 
to be deferred to the end of the back of the 10-year program, 
so you have $42.5 billion.
    I think Senator Donnelly asked a question which I think 
everybody has answered the same as you, let us manage. Let us 
manage, and that's what you're asking for. It makes all the 
sense in the world. I'm sure over the years there's been 
programs that you have been required as a mission statement 
that you're going to do whether you thought it was the right 
program or not, and you have always carried out your mission, 
and I appreciate that.
    What I'm saying--this is just me speaking for myself--is 
that I believe that we should be working with you more than 
telling you what to do and finding out what works and what 
doesn't work and let you make recommendations on some 
consolidation cuts and eliminations that need to be done. I 
think if I were you, I would plan along those lines. That's 
just my input, if you will.
    If you're looking at over the 10-year period, you're going 
to have DOD spend over $6 trillion over a 10-year period, 
asking for a $600 billion reduction in that. So I would look 
forward to the long-term planning. That's just my estimation in 
what I'm seeing, unless we get a budget that really works. If 
we do get a budget that works, it'll probably be along those 
same lines, I would estimate. So that's my input on that.
    So my questions would be along these lines. This is to both 
of you. If you agree on our policies--no matter whether you do 
agree on our policies in Iraq and Afghanistan, I think there's 
one thing that all of us can agree on, that the soldiers have 
sacrificed dearly and stepped up when so many others wouldn't. 
As the wars come to a close, I'm reminded of Eisenhower's 
words: ``Neither a wise nor a brave man lies down on the tracks 
of history to wait for the train of the future to run over 
him.'' Pretty wise. He had a lot of wise words way back then, I 
think, and they're still true today.
    Our soldiers have learned many lessons in Afghanistan. I 
think we know that too many husbands, wives, brothers, sisters, 
and daughters have been lost or severely injured, and we want 
to make sure that they're not forgotten and the lessons that 
we've learned should be learned and not repeated.
    So I guess my question to both of you, whoever wants to 
start out on this: What do you think we have learned from 
Afghanistan and Iraq that we should heed in the future as this 
dangerous world unfolds in front of us?
    General Barclay. I'll start with this and then I'll let 
General Phillips as he goes forward. You can probably 
categorize the different areas where we have learned. Every 
time we go into a conflict, whether it's small, large, or 
medium, we always have lessons that we learn, and they fall out 
in different areas, whether it's on the training venue, new 
ways to do better adaptive training to meet the actual mission 
set. As we know, first going into Iraq we thought we had one 
type of mission going in and it quickly morphed into another 
type of mission, so we had to change our training strategy. So 
how we have become adaptive in looking at our training 
capabilities, how we turn the training centers around and 
develop them, where in the past they were revolving around the 
old type of warfare, decisive action, we quickly changed them.
    On the equipping side, I think we've learned several good 
lessons. I think the Mine Resistant, Ambush Protected (MRAP) 
vehicle is a great example of where--typically, where it takes 
us anywhere from 9 to 12 to 14 years to field and get something 
out, we saw we had a need, we had the requirement because of 
the IEDs to protect these kids--as you mentioned, mine was one 
of those that was in an up-armored HMMWV. We didn't have MRAPs 
at that time. So that was something that we were able to turn 
in a very rapid manner outside, around the normal processes, 
and get that piece of equipment into the hands of soldiers and 
protect them better. So I think that was really one of the 
prime key success stories when you look at our acquisition 
processes and being able to get around how that normally takes 
us the time it takes us to put something into the hands of 
soldiers.
    Then again, I think as we look at soldier development and 
individual leader development, it's hard to always categorize 
that, but if you look at where our Army is now as a combat-
proven force and that piece of having that experience is 
something that we have to ensure we continue to count on and 
use as we move forward into the future, because that's 
something that you cannot discount. You've heard the Secretary 
and the Chief talk about the fact that we have a combat-
seasoned, hardened force that is ready and flexible and 
adaptable to handle anything in the future.
    General Phillips. I would add just a couple of things. At 
the end of the day, our soldiers are just remarkable on the 
field of battle. They're the most devastating weapon in terms 
of engaging with the enemy and destroying them. Today it's 
really one Army. I think one of the things we learned over the 
last 12 years of war is it doesn't matter whether you're 
Reserve, Active, National Guard. You can't go to Afghanistan, 
and, sir, I know you've been over there, but you can't go to 
Afghanistan and look at a soldier and tell what State they're 
from or whether they're in the Active, Reserve, or National 
Guard. It's one Army today, and they get the same training, 
same equipment, that the Active Force does. That's important.
    Jim just described really what I think is the big lesson 
for us on the acquisition side, which is agility in how we 
deliver programs, especially when it comes to soldier 
protection and survivability. We've learned a lot from rapidly 
equipping forces, from the Joint Improvised Explosive Device 
Defeat Organization and others. We have a very deliberate, 
formal acquisition process and I think we do rapid acquisition 
very well. In some cases, somewhere in the middle is where we 
maybe should be in terms of improving our processes and make 
sure we can deliver capability quicker. That's one of the 
lessons learned.
    Also on the industrial base. I think at Lake City, the 
ammunition plant that was back in 2000, 2001, making about 300 
million rounds a year, and we didn't have enough ammunition to 
go to war initially in Afghanistan. We reversed that and we did 
it quickly. At one point Lake City was making 1.3 to 1.4 
billion rounds.
    So as we come out of this final phases of Afghanistan, 
sustaining an initial industrial base capability and making 
sure that's reversible is so critical.
    I'll mention one other topic for me, sir, because I'm a 
contracting officer by trade. I've been doing this in the Army 
since 1985. We've learned a lot from contracting operations in 
Iraq and Afghanistan, a lot of hard lessons learned. We can't 
lose our focus on the importance of contracting in any future 
endeavor that we might get in, whether it's low on the spectrum 
of combat operations, up to major combat operations, we have to 
be ready.
    Senator Manchin. I need to learn a lot more about the 
contracting, but at face value it doesn't make economic sense, 
when you look at the amount of money that we've spent on 
contracting or private contractors versus what the soldiers 
have done in the past and probably could do today. But I know 
there's a rationale, and I'd love to learn more about that.
    But I've looked at the graph and bar charts starting from 
post-Korea to post-Vietnam, post-Cold War, and now as we wind 
down to a post-Iraq and Afghanistan. The numbers just don't add 
up for me. But I'm happy to sit down with both of you and maybe 
you can help me better understand.
    What I will say is that the strategic guidance shifts away 
from the large-scale nation-building operations. I never 
thought our mission or goal was nation-building over in Iraq or 
Afghanistan. It's going to regionally aligned forces, 
conducting more regular, rational missions. If we're going to 
get out of that nation-building mentality and go back to war on 
terror and defend our country against terrorism, whatever it 
may be, how are you positioning yourselves? Are we taking 
assets out of the area that's not going to be needed for 
nation-building and will be used here? Will it be scrapped? 
Will it be lost?
    A lot of people believe we just leave stuff; it has very 
little value to it, so it's better to leave it behind or give 
it to whoever in those nations than it is to bring it home. 
Maybe you can bring me up to speed on that.
    General Barclay. Sir, I'll start with this. As far as our 
equipment retrograde coming out of theater, there's roughly 
about $28 billion worth of equipment in Afghanistan. We see the 
requirement as somewhere around $21 to $22 billion of that that 
we need to bring home. That's important, that we retrograde. We 
cannot just leave it there on the battlefield. It's important 
to our units and ensuring that we can keep their EOH 
percentages up.
    Over the last 10 years we have done a great job, with the 
support of Congress, in being able to raise our EOH and our 
readiness levels of all of our components. If you look back, 
when we started this war the EOH for the Active Force was in 
the high 80s, the Guard was in the low 80s, the Reserves in the 
70 percent. We are all now--the Active Force is sitting at 
about 91 percent of EOH, the National Guard at about 88 to 89, 
the Reserves about 86.
    To get all of us above 90, we need to bring that equipment 
home and reset that. That's very critical to our way ahead.
    It also then ties into the uncertainty of the fiscal 
environment, because if you don't bring it home then you're 
going to have to replace it and you'll spend more dollars by 
buying new and trying to figure out how you're going to equip 
those forces and ensure that they can do the mission sets that 
they're given. So that's very critical to us, that we get the 
money to reset that equipment also when we bring it home from 
theater.
    Senator Manchin. Let me ask this question. I know we talked 
about the contracting, and there are certain things that I 
believe are best done by contractors, whether it's 
manufacturing. I don't believe, from the retrofitting or 
refurbishing--I've seen what the National Guard units can do in 
my own State of West Virginia, the amount of money that can be 
saved by them doing it, whether it's simple retrofitting the 
tires or rebuilding HMMWVs or whatever it may be.
    I don't know what direction you are going there. Is that 
mostly a contract item? When you speak of contractors, are we 
talking about contractors that are manufacturing, refurbishing, 
or basically fighting?
    General Phillips. None of our contractors are fighting that 
we have under contract.
    Senator Manchin. Or security.
    General Phillips. Some of them are potentially doing 
security.
    Senator Manchin. Most of those, General, would mostly be 
retired service people?
    General Phillips. Some might be, sir. But it would be a 
combination in terms of your private security contractors.
    General Barclay. Sir, I will add, though, if you look now, 
based on the fiscal uncertainty and sequestration and the CR, 
the cuts, the Secretary of the Army has allowed those units now 
that are back home to increase their borrowed military 
manpower. We're restricted by how much we can use. DOD gives us 
the levels. But we have some variances.
    Senator Manchin. What do you mean by ``borrowed manpower''?
    General Barclay. In other words, we use soldiers to do 
those things that normally we would have contractors do on 
bases, whether it's mowing the grass, pulling KP in the mess 
hall, pulling security as gate guards now, picking that up, 
where in the past it had been contractors. So we are putting 
soldiers on some of those tasks that had been done by 
contractors.
    General Phillips. Sir, I would just add, the Army spent 
$108 billion last year on contracts. A lot of that was money 
from other Services as well and other agencies, not just pure 
Army money. But a majority of that money goes to services 
contracts. Under the Strategic Choices Management Review 
process today, we are undergoing a significant review of how we 
execute services contracts, not just in the Army but across all 
DOD. Those results of those reviews will come forward as well, 
sir.
    Senator Manchin. We're being joined by Senator Blumenthal 
and we appreciate having him here. I know everybody's kind of 
cutting their times back and forth. We're just going through 
the questioning period, Senator Blumenthal. So if you want to 
go through yours, then let me know when you're prepared to ask 
any of your questions, we'll get right to you.
    Senator Blumenthal. I'm ready, Mr. Chairman.
    Senator Manchin. You're ready to go. You came ready, didn't 
you, sir?
    At this time we'll have Senator Blumenthal ask his 
questions.
    Senator Blumenthal. Thank you to both of our very 
distinguished Army generals for being here today, and thank you 
for your excellent service over many years to our country.
    I would like to focus on the Improved Turbine Engine 
Program (ITEP) that addresses the Blackhawk and Apache 
helicopter requirements. I'm sure you're familiar with it, and 
the next generation of future vertical lift helicopters. I 
wonder if you could explain the value of the ITEP engine in 
meeting our current and future operational requirements and 
your plans to have the flyoff, which I understand will test the 
prototypes?
    General Barclay. Sir, I'll start that and General Phillips 
may add in. The Army is committed to the ITEP engine. It's very 
important. It's not only important to our future, but it's also 
important to our current fleet of aircraft.
    The goal of this engine program is, based on where we want 
to go with it, a 25 percent reduction in fuel consumption. Then 
we're also planning on a 65 percent improvement in overall 
power capability once it gets on the platforms, and then a 20 
percent improvement in design life, with 35 percent less 
production and maintenance costs.
    We're looking to put that in the current fleet of Apaches 
and Blackhawks. We have roughly 3,600 rotary wing aircraft in 
the Army and the Apaches and Blackhawks, they make up around 
3,000. So if you're looking at replacing, that's about 75 to 80 
percent of your rotary wing fleet that engine could go into.
    So it's critical not only, as I said, currently, but then 
again because of the future technology and the improvements in 
those areas. We can tie that then to our future vertical lift 
program, which we're looking at probably somewhere in the mid- 
to late-30s, that program will come in, because the power gain 
in this engine, plus the fuel savings and maintenance costs, 
make it a viable candidate as it can continue to improve in 
technology as it moves forward to be an engine possibly on that 
platform.
    So the ITEP engine is very important to us. Again, the 
concern is in this fiscal uncertainty and the sequestration 
stuff, all of our programs are taking cuts. Again, as we look 
out to the future and trying to take those programs that are 
into development in science and technology, we're weighing what 
the cost-benefits are, and the importance of bringing them.
    But, sir, I will tell you that both of us are Army aviators 
and we can tell you that is something that we think the Army 
needs to stay committed to in the future.
    Senator Blumenthal. The benefits long- and even short-term 
would more than justify the costs, as I understand what you're 
saying.
    General Barclay. Yes, sir.
    Senator Blumenthal. Even in a time when we're cutting 
budgets, we ought to be mindful of those cost savings and the 
cost-effectiveness of this program.
    General Barclay. Yes, sir. That again, as you're looking to 
the future, those future dollars you can save, it's worth 
investing dollars today to get those savings in the out-years. 
This is one of those programs, as I said, will not only start 
providing you--for us, we're looking probably somewhere in the 
mid-2020 timeframe to where we can start fielding, based on 
where the schedule is now, but then also moving on out into the 
late 2030s as we're looking at future types of aircraft.
    So again, this is future savings, so the dollars we're 
investing today we think are worth it.
    General Phillips. Sir, I would just add that ITEP is 
absolutely critical to Army aviation mid-term and long-term for 
future vertical lift, as General Barclay just described. We're 
moving forward with a Milestone A decision to formally begin 
this program very quickly, probably in the next 90 days or so. 
So we're committed to ITEP.
    Senator Blumenthal. Thank you.
    With respect to the Blackhawk program, the 65, which I 
understand is the number for 2014--am I correct about that 
number, 65 Blackhawks?
    General Barclay. Sir, I think you are. We're going to 
procure 65 as part of the multi-year contract VIII, which is 
the fiscal year 2012 through 2016 multi-year contract. So it's 
65 now.
    Senator Blumenthal. Does that number satisfy your needs and 
requirements, General?
    General Barclay. Sir, to be very honest with you, that's 
the minimum number that we can do to keep the multi-year 
program going. Again, these multi-year programs have brought 
great savings, not only the Blackhawks, but the Chinooks, great 
savings to our Army. So we're at the lower end to sustain that 
multi-year contract.
    Where we were going to complete some of the Mike model 
fieldings, because of the fiscal constraints we are extending 
all these programs, bringing them down to the lowest 
procurement numbers. So you're going to see, I think now we're 
forecasting, where we thought we would be done around 2024, 
2025, we're looking now to 2026, 2027, before we will complete 
that.
    That also has an impact on the A to L conversions we're 
doing for some Blackhawks. We're trying to convert the rest of 
those. We're not going to buy all Mikes, so that A to L 
conversion is going to also slow down. All this is moving into 
the after the mid-20s to complete these.
    Senator Blumenthal. As I understand your answer, and you 
alluded to it earlier, going below 65 would entail significant 
risk to the program?
    General Phillips. Sir, I would add the way that we designed 
the contract with Sikorsky, as General Barclay just mentioned, 
has saved $1.2 billion by having a multi-year contract. So, 
sir, thanks to you and this committee for allowing us to go 
forward with a multi-year contract--great value for taxpayers 
and helps us sustain that important industrial base.
    But the Blackhawk program in particular, I would just add 
is absolutely critical to the aviation modernization strategy. 
But as we look at sequestration in fiscal year 2014 and out, 
the pressure on the Blackhawk program, the Chinook program, and 
every other program really is going to be significant as we 
look at all those programs. As we bring forward the 
reprogramming action that you'll see very soon, as the Army 
looks at the $5 billion of transfer authority that we've been 
given, underneath that many of the modernization programs that 
we currently have will be listed in that reprogramming action. 
That's to cover the $7.8 billion in OCO and OMO funding that 
has to, in some way, cover those costs of the war in 
Afghanistan. We have to get after that.
    So we are very concerned in fiscal year 2014 and out about 
the impacts of sequestration, not just on aviation, but other 
platforms. But we will do everything possible to sustain the 
multi-year contract with the Blackhawk and the Chinook program. 
We would like that also for the Apache program as well.
    Senator Blumenthal. Thank you. I agree with you that these 
modernization programs are absolutely vital to our defense and 
national security needs. You can be assured of my support, my 
continuing support at the very least, and I hope the committee, 
the subcommittee's and the committee's as well.
    Let me turn, if I may, to a different topic. I know you've 
covered a lot of ground in this hearing already, so forgive me 
if we're repeating some of it. But mobile electric power, which 
has been very useful in Afghanistan, again very cost-effective, 
a lot of this equipment in Afghanistan I believe may be coming 
back, and I wonder if you could talk about the equipment coming 
back and what you intend to refurbish or replace in terms of 
mobile electric power. Either you, General Phillips, or General 
Barclay.
    General Phillips. Sir, I would just add that we have a 
program manager that is working very closely with the forces in 
Afghanistan. We've done some incredible work on operational 
energy to put more efficient generators into Afghanistan, 
generators that reduce the need for fuel, less maintenance, 
less sustainment, et cetera, getting soldiers and convoys off 
the road, incredible work that we've done on that end in 
particular.
    For particular generators that may or may not come back, 
sir, I don't have any specifics on that. We'd have to get back 
with you with some of those that we may or may not----
    General Barclay. Sir, we can take that for the record and 
get back to you on the generators. I answered a question 
earlier on broad numbers. We know there's about $28 billion 
worth of equipment in theater. About $21 to $22 billion we need 
to retrograde back, and that's across the spectrum, to fill our 
EOH numbers against the units' requirements.
    But for specifics like the generator sets, we can get back 
to you, sir.
    [The information referred to follows:]

    The Army is currently replacing the family of Tactical Quiet 
Generators (TQGs) with the Small Tactical Electric Power (STEP) 
systems, the Advanced Medium Mobile Power Sources (AMMPS), and the 
Large Advanced Mobile Power Sources (LAMPS) which are significantly 
enhanced by weight reduction (up to 10 percent), noise reduction (2 
dBA) and improved fuel consumption (up to 21 percent).
    The Army estimates it will return and reset 395 small, 173 medium, 
and 29 large TQGs currently in theater. The Army is currently working 
on a cost benefit analysis to determine if it is more economical to 
bring back AMMPS from theater or procure new ones.
    The Army will replace roughly 29,171 small, 37,049 medium, and 859 
large TQGs with STEP, AMMPS and LAMPS respectively.

    Senator Blumenthal. Thank you. I'd appreciate that 
additional information.
    Finally, let me just return, or really continue, on the 
equipment issue. I don't know whether the unmanned helicopters 
that have been used for supply of our forward operating bases 
in many instances are under your command, but I wonder if you 
could talk about that program, if you have any knowledge of it.
    General Barclay. Sir, that's not an Army program; that's a 
Marine Corps program. All of our Unmanned Aircraft Systems are 
unmanned. We do not have the resupply cargo one. That is a 
Marine program that they're testing and working with what they 
have in theater, trying to develop that.
    Senator Blumenthal. Do you have plans for either 
experimenting with that kind of program or----
    General Barclay. Currently we do not, sir. That is not a 
requirement that we have in the Army.
    Senator Blumenthal. Thank you.
    Thank you very much to both of you again for your 
information here today, and thank you, Mr. Chairman.
    Senator Manchin. Thank you, Senator.
    Let me, just a couple clarifications, and then if you have 
any closing statements or comments we'd love to hear from you. 
The OCO, some people refer to that as ``loco money'', because 
if you look at the accounting procedures of how that happens 
it's kind of hard to really get a handle on.
    But with that being said--and I don't mean that in a 
disparaging way at all--but to use the $85 billion that was 
required for the sequestering on defense and nondefense, to 
come out of the OCO money. Did you follow that at all, and how 
much damage would that have done if we start pulling money out 
of OCO?
    General Barclay. Sir, with sequestration, I can get the 
numbers back to you, but there were some parts of that OCO that 
was cut based on----
    Senator Manchin. We know that, and I think there's a 
requirement of $8.5 billion that you requested.
    General Barclay. Well, we had $7.8 billion in shortfall the 
Army has----
    Senator Manchin. Right.
    General Barclay.--against our OCO. That was part of that 
$18 billion, and that $7.8 billion is the remaining left in OCO 
and OMO costs that we're trying to cover. Part of that will be 
the reprogramming action that's coming in, and that will cover 
about $5 billion of our $7.8 billion shortfall.
    Senator Manchin. If I'm hearing you accurately, you're 
saying even with 2014, as we approach 2014 for the drawdown and 
leaving Afghanistan, it's going to be quite expensive for us to 
do it right.
    General Barclay. Yes, sir. We know that the costs don't 
become less as you're retrograding. Historically, we can show 
coming out of Iraq that your costs go up in your last 12 to 14 
months.
    Senator Manchin. Do you have any accounting at all on how 
many contractors that are still in Iraq and how many we still 
have in Afghanistan? Do you have any idea?
    General Phillips. Sir, I can get you the exact numbers. 
Very few in Iraq. We look at those numbers periodically.

    As of May 1, 2013, the Department of Defense (DOD) had 
approximately 102,556 contractor personnel supporting the mission in 
Afghanistan. As of May 8, 2013, DOD had approximately 11,748 contractor 
personnel supporting the mission in Iraq.
    The number of contractors in Afghanistan is reported by the U.S. 
Forces-Afghanistan, Operational Contract Support Drawdown Cell, while 
the source of the number of contractors in Iraq is the DOD Synchronized 
Predeployment and Operational Tracker.

    Senator Manchin. As far as Iraq goes, we don't have much of 
a presence left in Iraq?
    General Phillips. For contractors, it would be----
    Senator Manchin. Or military?
    General Barclay. No, sir. It's a very small number.
    General Phillips. Afghanistan, sir, I believe it's a little 
over 100,000 contractors that are over there today.
    Senator Manchin. We have more contractors than we do men 
and women in uniform, correct?
    General Phillips. Yes, sir. It's about 1.3 or 1.4 to 1 in 
terms of what contractors are doing, base support, life 
support, mess hall operations.
    Senator Manchin. I understand, and that's my problem, but 
I'm just trying to get a handle on that.
    But can you give me your evaluation on Iraq? Do you have 
any thoughts on Iraq, where we are today with the country and 
with what we've spent and what we've sacrificed there? Just a 
fair evaluation from a military standpoint?
    General Barclay. Sir, I'd like to take that for the record 
and get back to you.
    [The information referred to follows:]

    Sir, what we need is a full contingent of Gray Eagles that would 
outfit our 10 divisions with maybe some spare assets available as 
necessary. But the reduction, I don't know, I have to research this. 
Some of that reduction might be due to sequestration.
    The Army had requested 19 aircraft and associated ground support 
equipment in the fiscal year 2013 President's budget request. The 
Appropriations Act funded the 15 aircraft and associated ground support 
equipment. The fiscal year 2014 President's budget requests 15 aircraft 
and associated support equipment. With the late appropriation, the Army 
did not have an opportunity to modify the President's budget 2014 
request to adjust for the loss of four aircraft and associated ground 
support equipment from the fiscal year 2013 Appropriation. During the 
budget briefings to the professional staff members, the Army requested 
committee support to permit the Army to purchase four additional 
aircraft with fiscal year 2014 funding by shifting some other 
requirements into fiscal year 2015. The House Armed Services Committee 
has supported that request. These adjustments will allow us to complete 
our purchase of 152 aircraft and associated ground support equipment 
that supports the Chief of Staff of the Army's equipping strategy.

    Senator Manchin. I don't want to put you on the spot. I 
know it's very delicate.
    General Barclay. Sir, if 2 years ago when I was working in 
the G-3 operations side and watching the day-to-day operations, 
I probably would have been more up to date on all this.
    Senator Manchin. Let me just say for the general public--
and I'll just use my little State of West Virginia, a very 
hawky State. We think that Iraq's not in any better shape today 
than it was when we got there, and that we don't have any more 
influence or control, or maybe not as much or even less than 
what we had before, and Iran has a better foothold than we do.
    I want to be accurate when I speak to my constituents from 
a military standpoint if I could some time. So I'd be happy to 
talk to you about that.
    General Barclay. Sir, again, we'll take that for the 
record. I'll get General Huggins, the G-3, and we'll come over 
and set up with you.
    Senator Manchin. Sure. If you can do that, I would 
appreciate it, General.
    General Barclay. We'll give you an update from our 
perspective, and also the G-2, General Laguerre, who can give 
you more of an insight from the intel picture.
    Senator Manchin. This is one of the things; what did we 
learn from our past experiences--Korea, Vietnam, Cold War? You 
have to learn from every experience. This has been quite costly 
in so many ways, human suffering and loss of life and also 
money involved, invested by our country.
    General Barclay. We'll take that on, sir.
    Senator Manchin. Okay. The other thing--go ahead.
    General Phillips. Could I just make one statement?
    Senator Manchin. Sure thing.
    General Phillips. Just to make clear, I mentioned the 
Strategic Choices Management Review that's ongoing. The Army's 
leading the Services contracts piece of that I mentioned 
earlier. I wasn't clear, but the intent under Secretary Hagel's 
leadership is to look deeply at how all of the Services are 
using Services contracts and contractors and to come forward 
with better strategies to be more efficient, more effective, 
less costly, and only ensure that we're contracting for those 
things that the Services truly need. So you'll see some changes 
coming forward with that review.
    Senator Manchin. I felt that and that's why I supported 
Secretary Hagel as much as I did, for that reason.
    If I could go back to the Apache transmission, that 
Northstar of Canada, and I understand the financial problems. 
It just doesn't make a lot of sense contractually from a 
business standpoint of where we are in that whole procurement: 
Boeing being responsible for a complete project, a complete 
platform being delivered, General Phillips, and now we're 
accepting it, I understand, we're accepting the delivery, and 
then we're allowing them to come back and retrofit it with the 
transmission.
    How much of a risk factor is in that? Just on face value it 
doesn't make like it's a good business arrangement.
    General Phillips. Sir, I want to assure you and the 
committee that this is a good business arrangement.
    Senator Manchin. It is?
    General Phillips. It's very good for the taxpayer, simply 
from this perspective. If you look at the Apache industrial 
base--and I was in the plant back in 1985 when it first started 
in Mesa.
    Senator Manchin. Right.
    General Phillips. I've been out there periodically. I've 
flown the aircraft. World's greatest attack helicopter. If you 
look at the extensive industrial base that has supported that 
from the very beginning, it's about 300 companies over 41 
States. Even in the State of West Virginia there's companies 
that support the Apache production.
    Senator Manchin. Right.
    General Phillips. About 20,000 people across the United 
States and elsewhere in the world support the production of 
that aircraft. If we were to stop production of the Apache 
program, it would impact the production line and it would 
impact many of those 300 companies and 20,000 workers, and then 
you would start laying workers off, and that would cost the 
taxpayers more.
    The other piece I would emphasize is this doesn't cost the 
government anything, to allow Boeing to have a rotatable pool 
of transmissions to take the aircraft off the production line. 
We do all the test flights. That reduces the timeline to accept 
the aircraft. Then they may sit on the ramp for a period of 
time, and then we actually put another transmission in the 
aircraft and we take them away.
    Also there is FMS, sir. It's important for our allies. 11 
countries today fly the Apache program. Korea just signed for 
another 36. It's important that we keep the production line 
going.
    We are working closely with Boeing and Northstar. I had the 
president of Boeing Mesa or the vice president of Boeing Mesa--
--
    Senator Manchin. Do you think contractually Boeing has full 
responsibility and the U.S. taxpayer and DOD is held harmless, 
with the contractual arrangement you have with Boeing?
    General Phillips. Sir, it would cost us nothing, not one 
penny.
    Senator Manchin. I know that. But I'm saying the liability 
factor.
    General Phillips. Boeing is responsible for their sub-tier 
contractor, which is Northstar, sir, as you mentioned, and 
they're responsible for the management of that, and they've 
taken on that responsibility. We've allowed them to have this 
rotatable pool of----
    Senator Manchin. You feel confident there's no liability? 
They don't have any protections through their subcontracting 
agreement that would hold them harmless?
    General Phillips. Sir, Boeing is fully accountable today 
under the contract to deliver a complete aircraft. What this 
does is it essentially allows us to sustain that important 
industrial base.
    By the way, sir, I'd just add, the aircraft industrial base 
as a whole is one of the strongest in the Nation in terms of 
capability, and we want to sustain that strength.
    Senator Manchin. The bottom line on the Lakota is we all 
probably have strategically something being manufactured in our 
State. But I think we've gotten to where the rubber hits the 
road. We can't force you to do something that doesn't make 
sense.
    General Phillips. Yes, sir.
    Senator Manchin. I can't be worried about if the taxpayer 
support something that's not needed. I think we've gone beyond 
that point, and now we have to get down to is it needed, is it 
something strategic, is it an asset that has value? That's why 
we have to look to you for expertise. So we're asking you 
questions that might seem a little bit out of the ordinary or 
redundant, but I don't have a problem, if my State's doing 
something, that we can do it better and we can make it more 
cost-effective for our country, we want to do that.
    But I understand the Lakota is off-the-shelf. When I was 
Governor, I flew in the Bells and did everything, so I 
understand. You can probably go and buy this off the shelf for 
the mission that you want it to be used for, correct?
    General Barclay. For the permissive environment. That's why 
we bought it off the shelf----
    Senator Manchin. That's right.
    General Barclay.--because it could do that mission.
    Senator Manchin. So you don't feel compelled to keep that--
--
    General Barclay. It can't perform the mission of the AAS. 
The question is, you can't take a permissive aircraft, non-
combat aircraft, and put it into a combat environment.
    Senator Manchin. Exactly.
    General Barclay. So that's the challenge with that 
airframe. But again, as I said, we have met the requirements 
again that the National Guard and Reserve component needed, so 
all those requirements across the States have been met. We made 
that decision purposely that it would only impact the Active 
component because we can cover that small, 31-aircraft number 
with the Blackhawks as we redeploy.
    Senator Manchin. I just think that you truly have a window 
here to bring to us a common sense business plan that makes 
sense and that we can defend and not perpetuate just because of 
where we come from and who does what. I would urge you to do 
that, because you're going to be held accountable for the money 
and also for the sequestration or basically the whole financial 
atmosphere that we're in right now, and it's going to be for 
some time.
    So with that being said, I have a lot of little questions 
here, but we can talk about that when you come over. If I can 
sit down and talk to you on the contracting and also on the 
evaluation of Iraq and where we are and what it looks like it's 
going to end up in Afghanistan, I would be very appreciative to 
hear your comments. If you would come to my office, I would 
appreciate that.
    If you have any closing statements at all, we'd be happy 
to, any comments for the record that you want to put in.
    General Barclay. Sir, I just want to make one short 
comment. We've talked about, and you have addressed it, but the 
challenges of the future. We're dealing with 2013 issues now 
and I know you're aware of what the Secretary and Chief talked 
about, and all of those things that we pushed off and have not 
been able to do in 2013 because of the cuts then rolled into 
2014, which then will roll into 2015.
    It's a cascading effect, and that's why it's critical as we 
look ahead to allow us to have some of that flexibility so we 
can start doing more than just year to year, because again it 
pushes. We've already diverted reset from 2013 that we couldn't 
afford because of sequestration, which now rolls into 2014. So 
again, we've been telling everyone that it's 3 years after we 
come home, but as we keep pushing that it could go again. So I 
just want to reiterate that that's a----
    Senator Manchin. I'm giving you my best evaluation and 
observation: if the $1.2 trillion that is sequestered over 10 
years is supposed to accomplish and achieve, we will end up 
doing that. This is my observation. You can talk to other 
people. I think it'll happen in some way, shape, or form.
    If we know it's going to happen, then we should allow you 
for that planning over a 10-year period with a budget request 
and what you think it requires to run DOD to defend this 
Nation, keep the strength of our Nation, and the defense of our 
Nation as a high priority, to be able to do it in the most, I 
think, the most common sense fashion. That's what I'm looking 
for.
    But I don't see anybody going back, because if we put a 
grand bargain together, it'll still have cuts to defense.
    General Barclay. Yes, sir.
    Senator Manchin. If we don't put it together, we're forced 
to buy what we weren't able to do on our own. Right now, with 
the toxic atmosphere we have, coming to any type of agreement 
makes it very difficult. The quicker we can acknowledge and let 
you start your 10-year planning, long-term planning, and let's 
work with you and start eliminating things, start consolidating 
things, and start making sure that we have the assets and the 
resources that are needed for our country, we'll be a much 
better country.
    So I hear you loud and clear, and we'll look forward to 
meeting with you.
    So, without any further comments--General Phillips?
    General Phillips. Sir, I would just like to thank you, Mr. 
Chairman, and this committee for your extraordinary support for 
our courageous men and women in uniform. Thank you.
    Senator Manchin. I can't speak enough accolades from this 
committee or the Senate as a whole and I think Congress as a 
whole. It's just amazing what you continue to do and the 
sacrifices that are made for this country and the people in 
this country. I just want you to know it's not going unnoticed 
and it's not going unappreciated, and it'll always be the first 
and foremost thing we speak about.
    My State of West Virginia is extremely proud to be part of 
this, and the people that have served are extremely proud to be 
a part of the greatest military might the world has ever seen, 
and we want to make sure we stay that way, but we want to make 
sure we also put you in a common sense position that we don't 
make irrational decisions and we learn from our mistakes.
    But thank you so much and God bless you all. Thank you.
    This hearing is adjourned.
    [Questions for the record with answers supplied follow:]
               Questions Submitted by Senator Bill Nelson
           retrograde and modernization of vehicle restraints
    1. Senator Nelson. General Phillips and General Barclay, as the 
Army brings back all of this war materiel from Afghanistan and goes 
through the process of retrograde and repairing that equipment, the 
Service is looking closely at the lessons learned from the current 
conflict. As an example, the prevalence of improvised explosive devices 
has produced changes in vehicle armor and fire suppression. It could 
produce further changes in the way vehicle restraints are designed. I 
urge the Army to use the retrograde opportunity to ensure that vehicle 
restraint systems are modernized to reduce the injuries encountered in 
future conflicts. Can you share your thoughts on the current state of 
vehicle restraints and will they need modernization?
    General Phillips and General Barclay. The Army is committed to 
maximizing soldier safety in our Tactical Wheeled Vehicle (TWV) fleet. 
Based on lessons learned during the conflict, the Army has already 
incorporated or may incorporate the following vehicle restraints into 
its TWV fleet based on available resources:

    1.  Mine Resistant, Ambush Protected (MRAP): The MRAP program has 
upgraded the seating and restraints in a majority of the variants that 
were originally fielded. The current seating/restraint configuration 
represents the latest and most advanced seating and restraints 
available and were incorporated as part of the MRAP All-Terrain 
Vehicle's (MATV) Underbody Improvement Kit upgrade and the MaxxPro 
Dash's MaxxPro Survivability Upgrade. All Army MRAP enduring 
requirement platforms (with the exception of the MaxxPro Long Wheeled 
Base (LWB) Ambulance) will be equipped with this seating/restraint 
system. These specific seats are not dimensionally configurable to the 
ambulance mission and therefore efforts are currently underway to 
identify the best performing seating/restraint system for the MaxxPro 
Ambulance. This `best solution' will be integrated into the MaxxPro LWB 
Ambulance during reset activities.
    2.  Route Clearance Vehicles: All Panther vehicles will have highly 
capable Gunner Restraint Systems installed. All joint explosive 
ordnance rapid response vehicles were upgraded from a push to release 
automotive four point harness to a rotary/cam release four point 
harness, and also added gunner restraints and blast attenuating seats 
with 5-point cam release inertial locking seat belts. RG-31 vehicles 
already have 5-point seat restraints and blast attenuating rear crew 
seats. During RG-31 recapitalization, the Gunner Restraint System will 
have the restraint pass-through hole on the gunner stand modified to 
allow for better restraint travel, and the existing Objective Gunner 
Protection Kit (OGPK) bearing will be replaced by the slew bearing in 
order to better restrain the OGPK. The Husky Seat Upgrade kit installed 
in Operation Enduring Freedom (OEF) incorporates a 5-point harness to 
increase soldier comfort and safety. The Army is considering including 
this seat upgrade for the Husky Program of Record fleet.
    3.  Heavy Tactical Vehicles (HTV): The Army began installing and 
fielding underbody armor kits (C-kits) for the Heavy Expanded Mobility 
Tactical Truck and Heavy Equipment Transport vehicles in OEF starting 
in August 2011 in response to urgent warfighter requirements for 
increased underbody blast protection. C-Kits for Line Haul Tractors and 
Palletized Load System are in development. C-kits include blast 
attenuating seats that utilize 5-point restraint systems integrated 
into the seat structure. Restraint systems integrated into the seat 
structure have been proven to increase survivability in underbody blast 
events vice a traditional 3-point restraint system anchored to the cab 
B-pillar. Future armor solutions for HTVs that include blast 
attenuating seats will utilize seat restraints that are integrated into 
the seat structure. Additionally, blast attenuating floor mats were 
also incorporated into each C-kit to complement the seat and restraints 
and to reduce the chance of injury to the occupant's legs.
    4.  Family of Medium Tactical Vehicles (FMTV): The restraints used 
in FMTV production meet all FMTV live fire testing requirements and are 
compatible with Federal Motor Vehicle Safety Standards and U.S. 
Department of Transportation requirements. No modernization of 
restraint systems is projected in remaining production of the FMTV 
(approximately 3,000 trucks). However, based on user feedback, the 
Product Office developed a restraint system to improve soldier comfort. 
Drawings have been produced for this configuration and are in the 
Technical Data Package for future recapitalization efforts, should 
additional funding become available.
    5.  Light Tactical Vehicles: Regarding crew restraints, as part of 
the Modernized Extended Capacity Vehicle-Automotive and Modernized 
Extended Capacity Vehicle-Survivability efforts, the product office is 
considering airbag integration to restraints as well as other parts of 
the vehicle to mitigate the likelihood of injuries sustained during 
blast and rollover events. The High-Mobility Multipurpose Wheeled 
Vehicle currently has a three-point restraint system for the occupants, 
excluding the gunner position. Improved seats with energy absorbing 
features as well as five-point restraints are being evaluated to assess 
improved occupant protection capabilities that are available for 
vehicle integration onto existing platforms. Regarding gunner 
restraints, the vehicles are currently equipped with the Gunner 
Restraint System but the product office is considering upgrading 
vehicles with the Improved Gunner Restraint System to be common with 
the MRAP family of vehicles.
    6.  Joint Light Tactical Vehicle: The program office is evaluating 
advanced blast attenuating seats with energy absorbing features as well 
as five-point restraints to assess improved occupant protection 
capabilities. Each of the three Engineering and Manufacturing 
Development vendors must select these components and integrate them 
into their vehicles to meet soldier protection requirements and remain 
within overall affordability goals for the vehicle. The program intends 
to periodically evaluate upgrades to these key safety components during 
production and sustainment.

                      joint tactical radio system
    2. Senator Nelson. General Phillips and General Barclay, despite 
the Army certifying in November that they would move to competition 
during full-rate production of the Joint Tactical Radio System (JTRS), 
a third low-rate initial production (LRIP) buy of 3,100 radios is 
scheduled for delivery in January 2014. This LRIP would be from General 
Dynamics and not open to competition. A 2013 Government Accountability 
Office report states that, ``The Manpack radio has not yet demonstrated 
an Army-defined reliability requirement enabling it to have an 86 
percent chance if completing a 72-hour mission without an essential 
function failure. Department of Defense (DOD) test officials reported 
that the radio was not operationally effective or suitable based on the 
recent testing that concluded in May 2012. In October 2012, DOD testers 
reported that the Manpack radios only demonstrated a 64 percent chance 
of meeting reliability requirements under benign conditions.'' In light 
of the performance issues associated with the Manpack radio, it would 
seem that competition on production would be beneficial and enhance 
quality. Can you speak to your commitment to compete the JTRS?
    General Phillips and General Barclay. The Army remains committed to 
conducting a full and open competition for the Handheld, Manpack, and 
Small Form Fit (HMS) radio. The competition will be open to current and 
new industry partners in compliance with the 2012 National Defense 
Authorization Act (NDAA). The Army has already initiated the 
solicitation process by releasing a draft Production Requirements 
Document and Request for Information (RFI) to industry.
    Industry feedback was that the interested new industry partners 
could not be ready to submit production-representative prototypes for 
government qualification testing prior to January 2014. In order to 
prevent a break in the current program production, the Army is planning 
to increase the total LRIP from the currently qualified industry 
partners to 10 percent of the planned acquisition objective while the 
new industry partners prepare for the required qualification testing.
    According to industry feedback to the RFI, conducting the 
qualification testing prior to January 2014 would likely result in only 
the two currently qualified producers responding to the solicitation.

    3. Senator Nelson. General Phillips and General Barclay, if the 
performance of the Manpack radio is lacking, why would you continue 
procurement in a non-competitive manner with an additional LRIP?
    General Phillips and General Barclay. The PRC-155 is currently the 
only National Security Agency certified two-channel manportable radio 
capable of operating the required waveforms. Performance and 
reliability of the PRC-155 have improved since the 2012 Defense 
Operational Test and Evaluation operational assessment, as verified by 
government testing conducted by the Electronics Proving Ground (EPG) 
Distributed Test Team. The Army has requested additional procurement, 
under LRIP of the PRC-155 radio until our industry partners can be 
ready for a full-and-open competition.

    4. Senator Nelson. General Phillips and General Barclay, the Army 
has been struggling with developing the JTRS radio variants for many 
years. What was the catalyst for the change in strategy to move to 
commercially available alternatives to address the JTRS requirements?
    General Phillips and General Barclay. The 2012 NDAA mandated a 
change in acquisition strategy for the HMS program. The 2012 NDAA 
directed the Army to conduct a full-and-open competition for HMS radios 
in full rate production. The previous HMS acquisition strategy planned 
to compete full rate production orders among the current two qualified 
program of record vendors.
    The Army acknowledges that industry has made significant 
technological improvements in software defined radios over the past 
several years due in large part to the efforts to fill operational gaps 
in Afghanistan and Iraq. An assessment of the radio market identified 
potential vendors other than the program of record vendors that are 
able to compete with their hardware operating government-owned 
waveforms.

                             manpack radios
    5. Senator Nelson. General Phillips and General Barclay, DOD test 
officials reported that the Manpack radio was not operationally 
effective or suitable. In previous testing, the Manpack demonstrated 
poor reliability, achieving only 162 hours of mean time between 
essential function failures versus a requirement of 477 hours. Despite 
reliability deficiencies, the Office of the Secretary of Defense 
authorized additional LRIP quantities of Manpack radios. What is the 
Army doing to address the shortcoming in reliability, operational 
effectiveness, and suitability?
    General Phillips and General Barclay. The contract to procure the 
PRC-155 Manpack Radios is a firm, fixed price contract which requires 
the contractor to correct the deficiencies noted in the 2012 Department 
of Operational Test and Evaluation operational assessment as well as 
those documented during structured government testing conducted at the 
EPG. The contractor must correct all these deficiencies at no expense 
to the government. The corrected deficiencies are being verified by a 
series of government tests conducted at EPG, and ultimately will be 
verified by an operational Verification of Corrected Deficiencies to be 
conducted by the Army Test and Evaluation Command in Fiscal Year 2014.

    6. Senator Nelson. General Phillips and General Barclay, what 
strategies are in place to help ensure that the Army manages the 
inherent risk in procuring additional radios that have not met 
reliability thresholds?
    General Phillips and General Barclay. The contract to procure the 
PRC-155 Manpack Radios is a firm, fixed price contract which requires 
the contractor to correct the deficiencies noted in the 2012 Department 
of Operational Test and Evaluation operational assessment as well as 
those documented during structured government testing conducted at the 
EPG. The contractor must correct all these deficiencies at no expense 
to the government. The corrected deficiencies are being verified by a 
series of government tests conducted at EPG, and ultimately will be 
verified by an operational Verification of Corrected Deficiencies to be 
conducted by the Army Test and Evaluation Command in Fiscal Year 2014. 
The contractor is required to retrofit any required modifications to 
all LRIP PRC-155 radios at no expense to the government.

                            rifleman radios
    7. Senator Nelson. General Phillips and General Barclay, the Army 
is in a similar situation with Rifleman radios in buying additional 
radios that have not come close to meeting reliability requirements. A 
July 2012 Acquisition Decision Memorandum (ADM) authorized competitive 
full-rate production of the Rifleman radio and approved additional LRIP 
quantities. What is the Army doing to ensure that radios procured in 
response to the July 2012 ADM are more reliable than earlier radios?
    General Phillips and General Barclay. Since July 2012 and during 
LRIP, General Dynamics and Thales have continued to develop the 
Rifleman radio and have upgraded radio software four times. Additional 
testing since July 2012 has stressed upgraded radio reliability and 
functionality. The Army will not be able to independently attest to the 
reliability of systems of new industry partners prior to the full and 
open competition. During the full and open competition for production 
of the Rifleman radio, all competitors will undergo Qualification 
Testing for requirements such as call/message completion, range, 
battery life, weight and Soldier Radio Waveform backwards compatibility 
prior to contract award. Initial Operational Test and Evaluation to 
measure reliability will be conducted after contract award and prior to 
a full rate production decision.

    8. Senator Nelson. General Phillips and General Barclay, one of the 
Rifleman radio's key performance parameters is Position Location 
Information (PLI), the ability to automatically transmit a soldier's 
position location to team and squad leaders. The soldier's PLI is 
calculated using a Global Positioning System (GPS) receiver embedded in 
the Rifleman radio. To address concerns about the spoofing of 
commercially-based GPS receivers providing misleading information, DOD 
policy generally requires all user equipment acquired after October 1, 
2006, to employ the military's Selective Availability/Anti-Spoofing 
Module (SAASM). However, due to cost and power constraints of SAASM, 
the first increments of the Rifleman radio were granted a waiver to 
employ commercial GPS. What is the status of this waiver?
    General Phillips and General Barclay. A February 23, 2012, 
memorandum for Assistant Secretary of the Army (Acquisition, Logistics 
and Technology) from the DOD Chief Information Officer approved the 
Army's request to use commercial GPS Standard Positioning Service (SPS) 
receivers in Rifleman radios. The waiver is valid through fiscal year 
2016 for a quantity of 70,000 radios. The Army's waiver request is 
supported by a risk mitigation strategy. The Army is authorized to use 
the Rifleman radios GPS SPS capability as long as the Army Deputy Chief 
of Staff G-3/5/7 is willing to accept the residual risks associated 
with SPS use.

    9. Senator Nelson. General Phillips and General Barclay, how many 
Rifleman radios will be procured under this waiver?
    General Phillips and General Barclay. The Army plans to procure 
approximately 41,827 radios through fiscal year 2016 under this waiver 
and may procure up to 70,000 Rifleman radios.
    LRIP 1 authorized the procurement of 6,250 Rifleman radios. The 
LRIP 2 authorized the procurement of 13,077 Rifleman radios for a total 
of 19,327 radios. The Rifleman radio procurement contract will be an 
Indefinite Delivery/Indefinite Quantity contract that will provide the 
potential for the Joint Services to procure up to 150,000 Rifleman 
radios over 5 years. The Army plans to procure approximately 7,500 
radios per year (22,500 during the waiver period through fiscal year 
2016 for a total of 41,827 radios (19,327 LRIP radios, 22,500 
production radios). In accordance with the Waiver to Procure GPS SPS 
Receivers for Rifleman radio dated February 23, 2012, the entire waived 
quantity of 70,000 radios will be available and may be procured by the 
Army pending the availability of funding.

    10. Senator Nelson. General Phillips and General Barclay, what are 
the Army's current plans to develop and incorporate a SAASM-based 
solution into future increments of the Rifleman radio?
    General Phillips and General Barclay. The Army is required to use 
GPS Precise Positioning Service (PPS) signals to meet the PLI Key 
Performance Parameter in the Joint Requirements Oversight Council 
approved Rifleman Radio Capability Production Document. The Army 
requested the GPS waiver for the Rifleman radio since there is not an 
affordable SAASM-based solution into that can be embedded in the 
Rifleman radio. The Army views use of GPS SPS as an interim solution to 
meet the operational requirement until an affordable and operationally 
effective PPS capability is available. The Army is not funding the 
development of improved PPS technology through the Program of Record. 
The program manager is continuously assessing the state of PPS 
technology size, weight, power, and cost and all radios must 
demonstrate the ability to incorporate a PPS capability into their 
design in order to qualify for participation in the full and open 
Rifleman radio contract award. The program manager will determine, 
based on the state of the technology and the Army's position on 
operational risk acceptance, whether to incorporate this capability in 
future procurements.
                                 ______
                                 
             Questions Submitted by Senator Joe Manchin III
            modernization of army reserve and national guard
    11. Senator Manchin. General Barclay, a widely recognized outcome 
of a decade of war in Iraq and Afghanistan is the increased reliance of 
all Active components of the Armed Forces on their Reserve component 
counterparts. The Reserve components have always been part of the 
operational force. They are organized and equipped to provide personnel 
and units available for deployment in support of operations around the 
world. However, there is talk now of the Reserve component as an 
operational reserve rather than a strategic reserve. Operational 
reserve is not a doctrinally defined or agreed upon military term, but 
it implies a reserve capability relevant to the support of a theater 
commander's conduct of missions and on timelines at the operational 
level of war. A further implication, again nowhere defined in doctrine 
or in policy, is that the Reserve component, as an operational reserve, 
may be needed at a higher than perhaps traditional level of readiness 
prior to mobilization. What in the Army's view does it mean for the 
Reserve component to be an operational reserve?
    General Barclay. ``Operational reserve'' is a shorthand term used 
to describe the imperatives outlined in the DOD Directive entitled 
``Managing the Reserve Component as an Operational Force'' and further 
codified in the Army Total Force Policy. The Army interprets these 
directives as an imperative not to lose the gains made in Reserve 
component readiness, equipment, and experience by continuing to employ 
Reserve component forces to meet combatant commander operational 
requirements in a fashion that is predictable and sustainable, within 
the resources afforded to us. Prudent use of those resources allows the 
Army to minimize challenges to interoperability between the Reserve and 
Active component during future crises, while providing valuable 
leadership development and experience to members of the Reserve 
component. This improves their overall capability and increases the 
deterrence value of the Total Army.

    12. Senator Manchin. General Barclay, what considerations do you 
take into account in determining the pace and scope of modernization 
and equipping the Army's Reserve components?
    General Barclay. The Army's equipping guidance complies with DOD 
Directive 1200.17, which states the ``Reserve components will be 
equipped to provide the operational capabilities and strategic depth 
required of an operational force.'' This means they will be 
``consistently and predictably equipped'' and that the ``priority for 
the distribution of new and combat-serviceable equipment, with 
associated support and test equipment, shall be given to units 
scheduled for mission deployment or employment first, regardless of 
component.'' The pace and scope of equipment modernization for the Army 
is defined by the Army Equipment Modernization Strategy (AEMS) and 
equipment programming priorities are addressed by the Army as a whole 
which factor in overall equipment age, interoperability, and deployment 
needs.
    Other considerations regarding the Reserve components include 
ensuring equipment loaned to other components is replaced, and 
sufficient equipment for domestic missions is on hand. Ensuring 
equipment loaned from the Reserve components to the Active component 
results in the development of a replacement plan and a memorandum of 
agreement signed by both the losing and gaining components, as directed 
by DOD Instruction 1225.06 ``Equipping the Reserve Component''. For 
domestic missions, the Army develops equipment fielding plans that 
provide the Army National Guard (ARNG) and U.S. Army Reserve (USAR) 
with equipment that has been deemed critical to the execution of 
Homeland Defense and Defense Support to Civilian Authorities missions. 
The Army's goal is to equip these units to no less than 80 percent of 
their Critical Dual-Use (CDU) requirement.
    Army leadership recognizes that the Reserve components play a 
critical role in meeting Army force requirements and that the Reserve 
components are an essential part of the Total Force. The Army ensures 
that Reserve component equipping requirements are addressed in all 
equipment distribution and modernization plans.

    13. Senator Manchin. General Barclay, how would you characterize 
the last 10 years of modernization efforts for the Army's Reserve 
components?
    General Barclay. The Reserve Forces have been critical to the 
success of the Army over the past 10 years. The decision to make the 
Reserves an operational vice strategic force has resulted in near 
parity for equipment on hand (EOH) and comparable improvements in 
modernization. The EOH levels for individual components as of December 
2012 are: the Active component (AC) at 91 percent, ARNG at 89 percent, 
and the USAR at 86 percent. The modernization levels for the individual 
components as of December 2012 are as follows: AC at 72 percent, ARNG 
at 71 percent, and the USAR at 65 percent. Shortages of modernized 
equipment still exist and the Army, as a whole, works together to 
improve modernization levels across the force, regardless of component. 
To mitigate shortages, the Army moves equipment and uses Theater 
Provided Equipment/Army Preposition Stocks to provide each deploying 
soldier or unit, regardless of component, the most modern equipment.

    14. Senator Manchin. General Barclay, how would you describe the 
Army's process for requirements determination, prioritization, 
programming, and execution of the Reserve component's modernization 
strategy?
    General Barclay. The Army uses established processes found in 
Chairman of the Joint Chief of Staff's Instruction 3170.01H (10 January 
2012): Joint Capabilities Integration and Development System to 
determine the required capabilities for both the Active and the Reserve 
components.
    Equipment programming priorities are addressed by the Army as a 
whole, not by component. The Army's highest programming priorities are 
focused on improving soldier capabilities, enabling the network to 
conduct mission command, and remaining prepared for decisive action. 
These high priority requirements apply to both the Active and Reserve 
components. A special emphasis is placed on resourcing systems for the 
Reserve components that have a CDU mission for defense support to civil 
authorities, such as trucks and communications equipment
    Developing materiel capabilities is accomplished in accordance with 
DOD Instruction 5000.02, Operation of the Defense Acquisition System. 
The procedures used are the same for all components.
    Execution involves the actual distribution and redistribution of 
equipment, based on Army priorities, and is achieved through a 
collaborative process with all stakeholders--Active and Reserve. The 
overall process has undergone a significant improvement in transparency 
for all stakeholders. The Army tracks procurements and deliveries to 
components and reports progress annually to Congress using the 
Equipment Transparency Report.

    15. Senator Manchin. General Barclay, what are the current agreed-
upon modernization strategy and priorities for the USAR and ARNG and 
are these priorities documented? If so, where?
    General Barclay. The Army organizes, mans, trains, and equips the 
Active and Reserve components as an integrated operational force to 
provide predictable, recurring, and sustainable capabilities. The Army 
Equipment Modernization Plan and the AEMS provide the agreed-upon 
strategy and priorities for the Total Force, which encompasses the AC, 
the USAR, and the ARNG. The Army's equipping strategy ensures that the 
procurement and equipping processes enable the total force to perform 
its missions regardless of component. This strategy focuses our efforts 
on supporting soldiers and small unit formations while maintaining our 
advantages to deter and defeat potential adversaries. The key to this 
strategy is procuring equipment that is versatile and tailorable, yet 
cost-effective and affordable. The Army Equipment Modernization Plan 
2014 summarizes the Army Research, Development, and Acquisition for 10 
capability portfolio areas and the Science and Technology portion of 
the fiscal year 2014 President's budget request. The plan reflects the 
Army's modernization priorities: the soldier and squad, the network and 
enhanced mobility, protection, and lethality.

    16. Senator Manchin. General Barclay, in your view, what risks do 
the Budget Control Act and sequestration pose to achieving this 
strategy?
    General Barclay. Sequestration is dramatically affecting Army 
modernization programs. The resources provided to the Army to conduct 
ongoing operations while modernizing and posturing for the next 
generation of warfighter capabilities will determine our continued 
ability to accomplish our mission and meet future commitments.
    While the Army today is better modernized and equipped than at any 
time in recent memory, ``fiscal realities endanger the progress we have 
made in equipping.''
    The fiscal reductions caused by sequestration are occurring much 
sooner and at a much steeper rate than anticipated. As a result, all 
acquisition priorities and many equipment modernization programs may 
face unanticipated schedule or cost impacts in the out-years, including 
the modernization of the USAR and ARNG.
    Budget Control Act funding reductions will require cancelling or 
reducing depot-level equipment maintenance, including the reset of 
materiel returning from deployment.
    The fiscal realities of sequestration have caused the Army to make 
tough choices in almost 100 of our acquisition programs. Among the 
changes in the President's fiscal year 2014 budget request is the 
restructure of over 35 programs, the delay of 50 programs, and the 
removal of funding from nearly 10 others. The Army re-examined the 
affordability of some programs and is assessing options for less-costly 
alternatives to others.

    17. Senator Manchin. General Barclay, what are the risks to your 
highest priority Reserve component modernization programs?
    General Barclay. A lack of adequate funding needed to procure 
modernized equipment and to maintain the industrial base is the primary 
risk the Army faces in an era of constrained resources; specifically, 
the Army needs additional funding to accomplish its highest 
modernization priorities.
    The priorities for the total Army force are to enhance soldiers for 
broad Joint mission sets. The Army will accomplish this by providing 
advanced technologies that help protect and unburden the soldier, 
enabling the network for Mission Command by using commercial 
technologies to build a safe and reliable network, the Army will 
facilitate the decisionmaking abilities of leaders and soldiers. 
Remaining prepared for decisive action, the Army will support the Joint 
warfighter by addressing capability gaps in vehicle fleet lethality and 
mobility while optimizing survivability and sustainability
    In addition to these overarching modernization priorities, the Army 
also recognizes the need to support the Reserve component's domestic 
requirements and does this by resourcing CDU capabilities that also 
support the title 10 mission.
    As the Army moves forward in retrograding deployed forces and 
equipment, we will need resources to restore equipment used in combat 
operations to an acceptable level of readiness through reset 
operations, which is a combination of repair, replacement, 
recapitalization, and the resources allocated for second destination 
transportation costs.

             balancing people, readiness, and modernization
    18. Senator Manchin. General Phillips and General Barclay, defense 
leaders have said that the costs of military pay and benefits are 
crowding out funds necessary for readiness and modernization of the 
force. The Chief of Staff of the Army talks about balancing resources 
for people, readiness, and modernization. Without a clear understanding 
of the risks and tradeoffs associated with each, a balanced approach 
may seem imprecise, somewhat indecisive, and perhaps risks allowing a 
hollow force to emerge. The Army must manage risk and make tradeoffs to 
field a trained and ready force regardless of its size or funds 
available to buy new systems or develop next generation technologies. 
How is the Army identifying and managing the distribution of risk 
between personnel, training, and modernization?
    General Phillips and General Barclay. The size and the steepness of 
cuts required by sequestration make it impossible to downsize the force 
in a deliberate, logical manner that allows the Army to sustain an 
appropriate balance of readiness, modernization, and end strength. 
Therefore, in the near term, the full weight of the sequester will 
primarily fall on the modernization and readiness accounts, where such 
drastic cuts will take years to overcome.
    If we backload the budget reductions into the later years of the 
sequester period, that would better allow the Army an opportunity to 
properly plan and to sustain the balance we need in these uncertain 
times.

    19. Senator Manchin. General Phillips and General Barclay, have you 
done any analysis to determine the red flags that signal that the Army 
is becoming hollow?
    General Phillips and General Barclay. Yes. The Army has an enduring 
requirements analysis process for Army units to report their readiness, 
per Army Regulation 220-1, on a monthly basis using the Unit Status 
Report (USR). The USRs are reviewed at each higher level of command and 
are briefed to the Vice Chief of Staff of the Army on a monthly basis 
in the Strategic Readiness Update (SRU) process and the Planning, 
Programming, Budgeting, and Execution Process.
    The SRU reports are the Army's authoritative source on unit 
readiness and will flag readiness deficiencies in multiple areas--
reduced resources for manpower, training, EOH, equipment readiness, and 
modernization efforts--that would lead to a hollow force.

    20. Senator Manchin. General Phillips and General Barclay, can you 
explain what those indications are and how you will know in time to 
take the action necessary to avoid the consequences of hollowness?
    General Phillips and General Barclay. An indicator of hollowness is 
a force that lacks the right balance between end strength, 
modernization, equipment readiness, and unit training. The Army is 
seeing these indicators now. Our ability to train our soldiers and 
sustain our equipment is becoming limited. This constrains the Army's 
ability to ensure that it is able to deploy effectively and meet future 
requirements, while exposing our soldiers to unnecessary risk as they 
execute their mission.
    A loss of the balance between end strength, modernization, 
equipment readiness, and unit training eliminates our ability to 
sustain `appropriate' levels of readiness in support of our current 
defense strategy. If we continue along the current path of fiscal 
uncertainty we will be unable to avoid the consequences of a hollow 
army.

    21. Senator Manchin. General Phillips and General Barclay, when you 
program for equipment for the Army, do you plan to buy 100 percent of 
the requirement? If not, why not?
    General Phillips and General Barclay. Given the current fiscal 
environment, projected drawdown of forces, and the rate of 
technological change, buying 100 percent of our equipment requirements 
is not always the best course of action. For example, technology may 
change before production lines can produce enough equipment to fill the 
entire Army requirement. Another example may be the case of a major 
acquisition program where the Army can't afford to buy 100 percent of 
the requirement within a narrow band of time. In both cases the Army 
may use an incremental acquisition approach where it buys smaller 
quantities more often to take advantage of technology opportunities.
    Instead of procuring 100 percent of the requirement, the Army has 
developed an equipping strategy that establishes goals and metrics for 
achieving an affordable balance between requirements and resources. The 
strategy is based on two lines of operation: equip units for their 
missions, and increase readiness by redistributing equipment.
    Equipping units for their missions provides increasing levels of 
equipment as units move through the Army Force Generation (ARFORGEN) 
cycle and prepare for deployment.
    Increasing readiness by redistributing equipment requires careful 
management of equipment inventories to include ``friction'' equipment, 
such as filling equipment sets, equipment in reset, and equipment in 
transit over strategic distances.

    22. Senator Manchin. General Phillips and General Barclay, how does 
this not negatively impact readiness?
    General Phillips and General Barclay. Due to the declining fiscal 
resources, we can't afford to procure equipment for every unit, forcing 
prioritization of equipment allocations. Instead, we will mitigate 
readiness impacts through various management techniques.
    First, the Army moves equipment and uses Theater Provided Equipment 
and Army Proposition Stocks to provide each deploying soldier or unit, 
regardless of component, the most modern equipment available.
    Second, we currently have a very high level of EOH at the aggregate 
level across all components. While the Army is just under 90 percent of 
its' required EOH, at the individual unit level we either have too much 
or not enough. Part of the reason for misaligned equipment is that we 
have equipment sets in Afghanistan, equipment in transit, and equipment 
in depot maintenance being recapitalized or reset. Additionally, 
because of the pace of combat operations and units deploying with 
mission-tailored equipment packages, we have many units with equipment 
excess to their authorizations that must be redistributed.
    Third, the Army has established goals, metrics, and priorities for 
achieving an affordable balance of equipment distribution using an 
ARFORGEN based resourcing model. ARFORGEN provides for a minimum 
quantity of equipment to support home station training and an 
increasing level of equipment as a unit prepares to, and eventually 
deploys.

    23. Senator Manchin. General Phillips and General Barclay, do you 
need to reduce the size of the Army below 490,000 in order to properly 
equip it?
    General Phillips and General Barclay. The Army does not have to 
reduce the AC below 490,000 to properly equip it. The Army currently 
has the highest levels of EOH and is the most modernized it has ever 
been. Equipment will not drive force reductions; budget reductions in 
the Budget Control Act and the full implementation of sequestration 
through fiscal year 2021 will drive force reductions over time, as 
previously stated in testimony. In the near term, the full weight of 
sequestration will fall on the modernization and readiness accounts. 
Once implemented, these drastic cuts will take years to overcome.

                m1 abrams and m2 bradley production gaps
    24. Senator Manchin. General Phillips, please explain the logic 
behind the Army's plans for 3- to 4-year production gaps for M1 Abrams 
tanks and M2 Bradley fighting vehicles?
    General Phillips. The Abrams tank remains the best tank in the 
world as a result of significant improvements over the past 2 decades 
while reducing the number of tank variants in the fleet from six to 
two. The Army is currently funded to produce enough M1A2 System 
Enhancement Package (SEP) v2 tanks to fully meet its current force 
structure requirements, with production ending in December 2014. At 
this point, the Abrams tank fleet will only be 3- to 4-years-old on 
average. The Army's Two-Variant Fleet Strategy for Abrams tanks 
(M1A2SEP v2 and M1A1 Situational Awareness [SA]) is fully 
interoperable. The Abrams tank fleet strategy has been carefully 
synchronized with the Armored Brigade Combat Team (ABCT) force 
structure strategy and will be fully implemented in fiscal year 2015. 
Pending future force structure decisions, the notion of pure-fleeting 
the ARNG with the Abrams M1A2SEP v2 tank would not only cost 
approximately $2 billion in a fiscally constrained environment, but 
would also result in placing several hundred recently modernized M1A1 
SA tanks into long-term storage.
    The current slow-down in U.S. Army Abrams tank production will 
likely continue until the next major recapitalization of the Abrams 
tank in 2019. The Army is continually assessing mitigation alternatives 
to provide a sustaining workload at the Joint Systems Manufacturing 
Center (JSMC) in Lima, OH, for the foreseeable future, and this 
includes Foreign Military Sales (FMS). We also recognize that FMS 
inherently fluctuates and is influenced by the overall global economic 
environment. However, currently there is every indication that both 
``Firm'' and ``High Potential'' Abrams tank FMS production will 
maintain a minimal level of sustaining work flow through fiscal year 
2016.
    In the near term, the Army is aggressively identifying mitigation 
measures that may be needed to preserve critical manufacturing skills 
and the supplier base. Specifically, we have extended our fiscal year 
2012 production of 67 M1A2SEP v2 tanks for 2 years through December 
2014. With the fiscal year 2013 congressional add of $181 million, the 
Army is considering a range of options that could further extend 
production of the Abrams M1A2SEP v2 tank for approximately 12-18 months 
or help provide significant work for critical and fragile Tier II and 
III suppliers. We anticipate reporting our specific mitigation approach 
by the end of June 2013.
Bradley Fighting Vehicle:
    The Bradley Fighting Vehicle has performed well in the wars in Iraq 
and Afghanistan. The high priority placed on the Ground Combat Vehicle 
(GCV), which is slated to replace the Infantry Fighting Vehicle variant 
of the Bradley family of vehicles, is a testament to the importance of 
the armored-troop-carrying and direct engagement fighting vehicle with 
its multiple functional configurations. From Operation Desert Storm to 
the present, as the threat has adapted, the Army has upgraded the 
Bradley with improved lethality, armor, fire controls, communications, 
and situational awareness. With the fiscal year 2013 congressional add 
of $140 million, the Army is considering a range of options that could 
extend production of the M2A3 Operation Iraqi Freedom variant via 
conversion from M3A3s for approximately 2 years and help provide 
significant work for critical and fragile suppliers.
Army Industrial Base Study:
    The Army is conducting a comprehensive study and analysis into the 
current state of manufacturing within the overall combat vehicle 
industrial base network. The analysis and planning for the future use 
of JSMC is being accomplished within the context of this complex 
network. We anticipate providing our preliminary findings in a separate 
report primarily focused on the Supplier Base and Critical 
Manufacturing Skills portion of the industrial base study by the end of 
June 2013, with the final report forthcoming in December 2013.

    25. Senator Manchin. General Phillips, what courses of action are 
you studying to adequately deal with the potential loss of industrial 
capability or capacity associated with these production gaps?
    General Phillips. For Abrams and Bradley, the Army supports 
maintaining an industrial base (IB) and remains especially attuned to 
any impacts on critical suppliers and needed expertise as the Army 
faces reduced budgets.
    The Army is working to establish ways to measure the ability of its 
IB to sustain essential capabilities. The Army will ensure that 
industrial base reversibility cost and risk are carefully managed by: 
(1) continuing ongoing efforts to determine the health of IB sectors 
critical to support programs; (2) identifying and assessing current 
status of organic and commercial critical manufacturing and maintenance 
capabilities required to meet future contingency investment and 
regeneration requirements; and (3) identifying supply chain issues in 
design, manufacturing and sustainment that can present risk to critical 
capabilities. Some of the mechanisms in place are:

    1.  The Industrial Base Baseline Assessments (IBBA), which aim to 
assess the health of selected IB areas critical to the Army. IBBAs 
include sector and subsector assessment of programs identified as 
critical by Program Executive Offices (PEO) and Life Cycle Management 
Commands, and determine the impact of reductions in funding to program 
requirements.
    2.  The Sector-by-Sector/Tier-by-Tier (S2T2) IB analysis, which 
establishes early warning indicators of risk, particularly at lower 
tiers, to strengthen the supply chain and to mitigate potential points 
of failure. The S2T2 analysis uses fragility and criticality criteria 
to identify and assess vulnerable firms in the commercial IB supply 
chain and to develop courses of action to mitigate risk.

    In the near term, the Army is aggressively identifying mitigation 
measures that may be needed to preserve critical manufacturing skills 
and the supplier base. Specifically for the Abrams tank, we have 
extended our fiscal year 2012 production of 67 M1A2SEP v2 tanks for 2 
years through December 2014. With the fiscal year 2013 congressional 
add of $181 million to the Abrams tank, the Army is considering a range 
of options that could further extend production of the Abrams M1A2SEP 
v2 tank for approximately 12-18 months or help provide significant work 
for critical and fragile Tier II and III suppliers. With the fiscal 
year 2013 congressional add of $140 million, the Army is considering a 
range of options that could extend production of the M2A3 Operation 
Iraqi Freedom variant via conversion from M3A3s for approximately 2 
years and help provide significant work for critical and fragile 
suppliers. We anticipate reporting our specific mitigation approaches 
to Abrams and Bradley by the end of June 2013. The Army is conducting a 
comprehensive study and analysis into the current state of 
manufacturing within the overall combat vehicle industrial base 
network. The analysis and planning for the future use of the JSMC in 
Lima, OH, is being accomplished within the context of this complex 
network. We anticipate providing our preliminary findings in a separate 
report primarily focused on the Supplier Base and Critical 
Manufacturing Skills portion of the IB study by the end of June 2013, 
with the final report forthcoming in December 2013.
    It is through these efforts that the Army is actively monitoring 
the IB and addressing challenges of critical and fragile elements to 
identify systemic and fundamental issues that will highlight 
unacceptable risk areas that need immediate attention.

    26. Senator Manchin. General Phillips, have you performed any 
analysis of the potential readiness or operational impact of the loss 
of industrial capacity or capability to support fielded and deployed 
weapons systems? If not, why not, and if so, what are your findings?
    General Phillips. Yes. To date we have had no issues that would 
prevent us from sustaining either fleet. The Abrams tank remains the 
best tank in the world as a result of significant improvements over the 
past 2 decades while reducing the number of tank variants in the fleet 
from six to two. The Army is currently funded to produce enough M1A2SEP 
v2 tanks to fully meet its current force structure requirements, with 
production ending in December 2014. At this point, the Abrams tank 
fleet will only be 3- to 4-years-old on average. The Army's Two-Variant 
Fleet Strategy for Abrams tanks (M1A2SEP v2 and M1A1 SA) is fully 
interoperable. The Abrams tank fleet strategy has been carefully 
synchronized with the ABCT force structure strategy and will be fully 
implemented in fiscal year 2015. The Bradley Fighting Vehicle has 
performed well in Iraq. From Operation Desert Storm to the present, as 
the threat has adapted, the Army has upgraded the Bradley with improved 
lethality, armor, fire controls, communications, and situational 
awareness.
    We are working mitigation efforts to minimize potential impacts in 
the near-term. The ongoing PEO GCS Industrial Base study, with A.T. 
Kearny assisting, will help us determine what our current and future 
industrial base needs are and will also help us develop viable 
strategic alternatives to sustain the GCVs base within a constrained 
fiscal environment. We anticipate providing our preliminary findings in 
a separate report primarily focused on the Supplier Base and Critical 
Manufacturing Skills portion of the IB study by the end of June 2013, 
with the final report forthcoming in December 2013.

    27. Senator Manchin. General Phillips, how do you intend to manage 
this risk?
    General Phillips. For Abrams and Bradley, the Army supports 
maintaining an industrial base and remains especially attuned to any 
impacts on critical suppliers and needed expertise as the Army faces 
reduced budgets.
Abrams Tank:
    The current slow-down in U.S. Army Abrams tank production will 
likely continue until the next major recapitalization of the Abrams 
tank in 2019. The Army is continually assessing mitigation alternatives 
to provide a sustaining workload at the JSMC in Lima, OH, for the 
foreseeable future. In the meantime, the Army continues to aggressively 
apply mitigation measures to preserve critical skills and supplier 
base. Specifically, we have extended our fiscal year 2012 production of 
67 M1A2SEP v2 tanks for 2 years through December 2014. With the fiscal 
year 2013 congressional add of $181 million, the Army is considering a 
range of options that could extend production of the Abrams M1A2SEP v2 
tank for approximately 12-18 months and help provide significant work 
for critical and fragile suppliers. We also recognize that FMS 
inherently fluctuates and is influenced by the overall global economic 
environment. However, currently there is every indication that both 
``Firm'' and ``High Potential'' Abrams tank FMS production will 
maintain a minimal level of sustaining work flow through fiscal year 
2016. The Army is conducting a rigorous and detailed Industrial Base 
Study that includes JSMC, which should help us identify other potential 
mitigation courses of action. We anticipate providing our preliminary 
findings in a separate report primarily focused on the Supplier Base 
and Critical Manufacturing Skills portion of the industrial base study 
by the end of June 2013, with the final report forthcoming in December 
2013.
Bradley Fighting Vehicle:
    The Bradley Fighting Vehicle has performed well in the wars in Iraq 
and Afghanistan. The high priority placed on the GCV, which is slated 
to replace the Infantry Fighting Vehicle variant of the Bradley family 
of vehicles, is a testament to the importance of the armored-troop-
carrying and direct engagement fighting vehicle with its multiple 
functional configurations. From Operation Desert Storm to the present, 
as the threat has adapted, the Army has upgraded the Bradley with 
improved lethality, armor, fire controls, communications, and 
situational awareness. With the fiscal year 2013 congressional add of 
$140 million, the Army is considering a range of options that could 
extend production of the M2A3 Operation Iraqi Freedom variant via 
conversion from M3A3s for approximately 2 years and help provide 
significant work for critical and fragile suppliers.

          management of strategic risk in the industrial base
    28. Senator Manchin. General Barclay, a major tenet of both the 
2010 Quadrennial Defense Review and the 2012 Defense Strategic Guidance 
is protection of the Nation's defense industrial base. However, DOD 
funding reductions in fiscal year 2013 and fiscal year 2014 have 
reduced the Army's modernization investment accounts and acquisition 
strategy. How do you take into account industrial base issues in 
programming for Army modernization?
    General Barclay. The Army's assessment of essential capabilities 
and capacities of its industrial base is a dynamic process. We 
continuously re-examine skills and capabilities needed in the 
industrial base to preserve the ability to ramp up to meet urgent needs 
in the event of future contingency operations. These assessments are 
dependent on which programs the Army will pursue based on risk, 
affordability, cost effectiveness, and fiscal planning guidance.
    The Army Organic Industrial Base Strategic Plan is our primary 
management framework of maintaining a viable and relevant industrial 
base for organic assets and commercial industry. This plan identifies 
several specific goals and objectives to support the Army's 
modernization plan.
    In addition, the Army continues to employ and improve criteria to 
actively monitor the defense industrial base to assess any approach of 
irreversible loss of capacity or capability. These efforts include: (1) 
S2T2 analysis; (2) establishing metrics to feed consumption data to 
display areas of risk; (3) a study of the combat vehicle industry; (4) 
protecting critical portions of the industrial base; (5) conducting an 
IBBA; and (6) holding Organic Industrial Base Corporate Boards to 
provide strategic guidance and direction for the Army's Industrial Base 
efforts as part of the U.S. Army Materiel Command's ``Materiel Core 
Enterprise.''
    The Army continues to develop and implement plans to modernize and 
upgrade the industrial base, even as resources are declining. These 
plans are in various stages of approval for Army ammunition plants, 
depots, and arsenals.

    29. Senator Manchin. General Phillips, what in your view, is the 
risk that the loss of design and manufacturing capability and capacity 
in the industrial base could undermine the concept of reversibility?
    General Phillips. Loss of design and manufacturing capability and 
capacity in the industrial base could present a serious challenge to 
the Army's ability to quickly make a course change in response to 
dynamic conditions. However, the Army is undertaking and participating 
in initiatives to help ensure that design and manufacturing capability 
and capacity in the industrial base remain strong.
    The Army will ensure that the risk of loss of design and 
manufacturing capability and capacity in the industrial base is 
carefully managed by: (1) continuing ongoing efforts to determine the 
health of industrial base sectors critical to support Army and Joint 
Services programs; (2) identifying and assessing the current status of 
organic and commercial critical manufacturing and maintenance 
capabilities required to meet future Army contingency investment and 
regeneration requirements; and (3) identifying supply chain issues in 
design, manufacturing, and sustainment that can present risk to 
critical Army capabilities.
    As one of the key components of the Army Organic Industrial Base 
Strategic Plan, capacity, infrastructure, and workforce are sized to 
sustain joint core depot and critical manufacturing capabilities. These 
capabilities include the essential facilities, equipment, and skilled 
personnel necessary to ensure that the Army and other Service organic 
depots are a ready and controlled source of technical competence and 
have the resources necessary to meet the readiness and sustainment 
requirements of weapon systems supporting mobilization, national 
defense contingency operations, and other emergency requirements. Depot 
and arsenal workforces and infrastructures will be sized and adjusted 
accordingly over time to sustain core depot and critical manufacturing 
capabilities to support warfighting equipment during current and future 
contingency operations.
    The Army is participating in a DOD-wide effort to assess the health 
of and risk to the industrial base on a S2T2 basis. The Army is also 
incorporating mitigative strategies involving the FMS program to 
address identified risks. The FMS program allows Army vendors to 
diversify and balance military with commercial business so they can 
weather the lean years and be in position to compete when the Army 
starts investing in the next generation of products or recapitalizes 
current platforms. Sales under the FMS program also help to sustain 
highly-skilled jobs in the Defense industrial base by maintaining and 
extending production lines, thereby strengthening reversibility.

    30. Senator Manchin. General Phillips, which areas of the 
industrial base are the greatest areas of concern?
    General Phillips. We are most concerned with the loss of critical 
skills and manufacturing capabilities but the Army is taking several 
actions to support a strong and viable commercial and organic 
industrial base.
    In the commercial industrial base, the Army is working with the 
Office of the Secretary of Defense and the Army Materiel Command to 
assess critical manufacturing capabilities and seeking innovation 
within the supply chain sectors through responsible investment. The 
Army is also analyzing the challenges of critical and fragile elements 
of the commercial industrial base to identify systemic and fundamental 
issues that can be resolved through engagement across the public and 
private sectors. For example, the Army continues its engagement in the 
S2T2 industrial base analysis that: (1) establishes early warning 
indicators of risk, particularly at lower-tiers; (2) strengthens the 
supply chain to mitigate potential points of failure; and (3) improves 
coordination among Services to ensure a viable industrial base is 
maintained.
    The Army is conducting a comprehensive Combat Vehicle Portfolio 
Industrial Base Study through A.T. Kearney, a global management 
consulting firm. The 21-week study, with a final report to be submitted 
to Congress later this year, is assessing the commercial and organic 
combat vehicle industrial base, viable strategic alternatives, and 
sustainment of the combat vehicle industrial base in a constrained 
fiscal environment.
    The Army is also engaged in IBBAs that aim to sustain those areas 
critical in supporting Army and Joint Services programs by: (1) 
conducting sector assessments of programs identified as critical by 
PEOs and Life Cycle Management Commands; (2) determining the impact of 
reductions in funding to program requirements; and (3) developing 
recommendations which enable the industrial base to sustain current and 
future warfighter requirements.
    The Army's strategy for ensuring that its organic industrial base 
remains viable and relevant includes: (1) establishing modern 
facilities, equipment, and skill sets at the same rate that the Army 
modernizes its weapon systems; (2) ensuring capabilities and capacities 
are sustained to support current and future contingency operations; (3) 
investing to ensure that facilities are capable of maintaining core 
competencies and critical manufacturing capabilities; and (4) 
prioritizing funding to achieve the desired end state of viable and 
relevant organic industrial base facilities.

                         multi-component units
    31. Senator Manchin. General Barclay, last March, Army leaders 
indicated an interest in creating units that combine Active and Reserve 
Forces. That would be, for example, an Active or Reserve component 
brigade headquarters with perhaps two AC battalions and a National 
Guard battalion assigned. What is the Army's current thinking on the 
creation of multi-component (MC) formations?
    General Barclay. A MC unit provides personnel and or equipment from 
more than one Army component (AC, ARNG, USAR) into a cohesive fully 
capable Army unit to the maximum extent possible within statutory and 
regulatory constraints. A MC unit has unity of command and control 
similar to that of single-component units and status does not change a 
unit's doctrinal requirement for personnel and equipment. There are 
currently 37 MC units in the Army. The Army is examining the role of 
the MC unit in the future operational environment with the intent of 
expanding its use as a way to mitigate AC end strength reductions 
without reducing capability or capacity.

    32. Senator Manchin. General Barclay, have you done any cost 
analysis to determine incremental increases or savings associated with 
such a force structure? If so, what are your findings?
    General Barclay. The Army is in the process of conducting the 
analysis to determine what incremental funding changes are associated 
with utilizing MC units. The Army will pursue a MC structure only if it 
is operationally feasible and provides a means for cost savings.

    33. Senator Manchin. General Barclay, I understand that during the 
Cold War the Army used National Guard combat brigades to round-out to 
complete the structure of a division, or round-up to reinforce or add a 
brigade to the structure of a division. What is the Army's assessment, 
positive and/or negative, of MC formations from past experience?
    General Barclay. The Army assesses that the traditional Cold War 
round-out MC unit design is best suited for total mobilization, when 
100 percent mobilization of the Reserve component for the duration of 
the emergency is authorized. During the Gulf War, the decision to 
activate the round-out/up brigades was made long after the initial 
force flow, which did not allow sufficient time for the activated 
Reserve component brigades to train to the required standard and deploy 
prior to the start of ground combat operations. Since then, demands of 
the modern battlefield led the Army to use unit rotations, rather than 
the individual replacement policy used in past conflicts. Over the last 
decade, the Army has successfully formed and deployed MC organizations 
on a rotational basis numerous times, but the differing requirements 
for Active and Reserve components to remain at home station between 
deployments did not allow for habitual command relationships within 
these organizations. This nontraditional manner of forming MC units 
allowed the Army to moderate the stress on high-demand AC capabilities. 
The Army is studying ways to take advantage of the benefits of MC 
capable units while avoiding the challenges that faced such units in 
the past.

    34. Senator Manchin. General Barclay, what is different now or 
suggests that MC formations will work today if they did not work well 
enough to continue in the past?
    General Barclay. In the past, we designed MC units with a Cold War 
mentality. We assumed that these units would mobilize, assemble, train, 
and deploy for the duration of the conflict. This traditional MC design 
is ill-suited to deploying forces on a rotational basis, as we have for 
the past decade, since Reserve component units require a longer period 
between deployments. Despite this initial challenge, the Army had 
numerous positive experiences with MC designs performing well during a 
decade of continuous warfare. The lessons learned from these 
experiences have led the Army to explore an enhanced MC design which 
will better allow for Active and Reserve component units to integrate 
into a single unit and meet the demands of the modern battlefield. This 
new design will focus on creating habitual relationships between AC 
units and multiple Reserve component units such that there will always 
be Reserve component units and personnel available to partner with 
their AC counterpart while avoiding undue stress on the Reserve 
component.

    [Whereupon, at 10:47 a.m., the subcommittee adjourned.]

                                 
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