    [Senate Hearing 113-173]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 113-173

     THE IMPACTS OF SEQUESTRATION AND/OR A FULL-YEAR CONTINUING RESOLUTION
                          ON THE DEPARTMENT OF DEFENSE

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

                                    HEARING

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               FEBRUARY 12, 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

                       Richard D. DeBobes, Staff Director

                    John A. Bonsell, Minority Staff Director

                                      (ii)

    ?

                                C O N T E N T S

                                   __________

                        CHRONOLOGICAL LIST OF WITNESSES

     The Impacts of Sequestration and/or a Full-Year Continuing Resolution
                          on the Department of Defense

                               february 12, 2013

                                                                       Page

    Carter, Hon. Ashton B., Deputy Secretary of Defense; Accompanied
      by Hon. Robert F. Hale, Under Secretary of Defense
      (Comptroller)..................................................     4
    Dempsey, GEN Martin E., USA, Chairman, Joint Chiefs of Staff.....    13
    Odierno, GEN Raymond T., USA, Chief of Staff of the Army.........    14
    Ferguson, ADM Mark E., III, USN, Vice Chief of Naval Operations..    20
    Amos, Gen. James F., USMC, Commandant of the Marine Corps........    25
    Welsh, Gen. Mark A., III, USAF, Chief of Staff of the Air Force..    31
    Grass, GEN Frank J., USA, Chief, National Guard Bureau...........    36

                                     (iii)

     THE IMPACTS OF SEQUESTRATION AND/OR A FULL-YEAR CONTINUING RESOLUTION
                          ON THE DEPARTMENT OF DEFENSE

                                  ----------

                           TUESDAY, FEBRUARY 12, 2013

                                           U.S. Senate,
                                   Committee on Armed Services,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 9:35 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, Nelson,
    McCaskill, Udall, Hagan, Manchin, Shaheen, Gillibrand,
    Blumenthal, Donnelly, Hirono, Kaine, King, Inhofe, McCain,
    Sessions, Chambliss, Wicker, Ayotte, Fischer, Graham, Blunt,
    and Lee.
        Committee staff members present: Richard D. DeBobes, staff
    director; and Leah C. Brewer, nominations and hearings clerk.
        Majority staff members present: Jonathan D. Clark, counsel;
    Creighton Greene, professional staff member; Gerald J. Leeling,
    counsel; Peter K. Levine, general counsel; Jason W. Maroney,
    counsel; Roy F. Phillips, professional staff member; John H.
    Quirk V, professional staff member; and William K. Sutey,
    professional staff member.
        Minority staff members present: John A. Bonsell, minority
    staff director; Steven M. Barney, minority counsel; Allen M.
    Edwards, professional staff member; Thomas W. Goffus,
    professional staff member; Ambrose R. Hock, professional staff
    member; Anthony J. Lazarski, professional staff member; Daniel
    A. Lerner, professional staff member; Lucian L. Niemeyer,
    professional staff member; and Robert M. Soofer, professional
    staff member.
        Staff assistants present: Jennifer R. Knowles, Kathleen A.
    Kulenkampff, and Lauren M. Gillis.
        Committee members' assistants present: Carolyn Chuhta,
    assistant to Senator Reed; Jeff Fatora, assistant to Senator
    Nelson; Jason Rauch, assistant to Senator McCaskill; Casey
    Howard, assistant to Senator Udall; Brian Nagle, assistant to
    Senator Hagan; Mara Boggs, assistant to Senator Manchin; Chad
    Kreikemeier, assistant to Senator Shaheen; Elana Broitman,
    assistant to Senator Gillibrand; Ethan Saxon, assistant to
    Senator Blumenthal; Marta McLellan Ross, assistant to Senator
    Donnelly; Karen Courington, assistant to Senator Kaine; Jim
    Catella, assistant to Senator King; Paul C. Hutton IV,
    assistant to Senator McCain; Lenwood Landrum, assistant to
    Senator Sessions; Todd Harmer, assistant to Senator Chambliss;
    Joseph Lai, assistant to Senator Wicker; Brad Bowman, assistant
    to Senator Ayotte; Peter Schirtzinger, assistant to Senator
    Fischer; Craig Abele, assistant to Senator Graham; and Brooke
    Bacak, assistant to Senator Cruz.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody.
        The committee meets this morning to consider the impacts of
    sequestration and a full-year continuing resolution (CR) on the
    Department of Defense (DOD).
        We welcome Deputy Secretary of Defense Ash Carter and
    Chairman of the Joint Chiefs of Staff General Martin Dempsey,
    who are accompanied at the witness table by the following
    friends and patriots: Under Secretary Defense, Comptroller,
    Robert Hale; Chief of Staff of the Army, General Ray Odierno;
    Vice Chief of Naval Operations, Admiral Mark Ferguson;
    Commandant of the Marine Corps, General James Amos; Chief of
    Staff of the Air Force, General Mark Welsh; and Chief of the
    National Guard Bureau, General Frank Grass.
        I would like to start by thanking all of you for your
    continued service to our Nation, and please convey our thanks
    to the soldiers, sailors, airmen, and marines at home and in
    harm's way around the globe. They and their families deserve
    our utmost support.
        Some Members of Congress and commentators in the press have
    said that we should let sequestration go into effect, that it
    would be better to severely cut the budget than to work out a
    deficit reduction agreement that would require compromise. I
    could not disagree more. Sequestration is arbitrary and
    irrational. It will not only weaken our security but, as
    Secretary Panetta said: ``It's not just defense, it's
    education, loss of teachers, it's child care. It's food safety,
    it's about law enforcement, it's about airport safety.''
        Now, if sequestration and a year-long CR go into effect,
    the impact on DOD will be devastating. For example, the Army
    requested $36.6 billion in its 2013 budget, but under the CR
    rules, it gets only the fiscal year 2012 amount of $30.6
    billion. Sequestration would cut an additional $6 billion.
    Because the Army has already spent $16 billion, it would only
    have $8 billion left to get through the rest of the fiscal
    year. Moreover, unexpectedly high operational demands will
    require that as much as $6 billion of the remaining funds be
    spent on overseas operations, leaving the Army with only $2
    billion for domestic operation and maintenance (O&M) during the
    next 7 months. It has budgeted for $20 billion. So it would
    have 10 percent of what it needs for O&M during the next 7
    months if the year-long CR and sequestration go into effect.
    That is just one of hundreds of examples.
        We are going to hear today that the Military Services are
    already taking near-term actions to mitigate the impacts of the
    CR and the impending sequester. For example, DOD has already
    instituted civilian hiring freezes, reduced or eliminated
    temporary and term employees, and deferred facilities
    maintenance and begun cancelling or postponing the maintenance
    of ships, aircraft, and ground vehicles. If sequestration is
    implemented, they will begin to implement additional actions,
    including furloughs for most civilian employees, cutbacks in
    flying hours, steaming hours, and other military training, and
    cancellation of contracts. In addition, hundreds of DOD
    investment programs, acquisition programs and research and
    development projects may become literally unexecutable.
        Even if many of the short-term actions are still reversible
    if we act promptly, they will have long-term costs, and the
    longer Congress postpones action, the higher those costs will
    be. For example, the Army informs us that if sequestration
    continues through the end of the fiscal year, two-thirds of its
    brigade combat teams will fall below acceptable readiness
    levels. The Air Force says it will not be able to support
    requirements outside of Afghanistan and will experience
    significant degradation in its air drop and refueling
    capabilities. The Navy says the USS Nimitz and George H.W. Bush
    carrier strike groups will not be ready for scheduled
    deployments later this year, resulting in an indefinite
    extension of the USS Truman and USS Eisenhower deployments,
    with the resulting impact, the negative impact, on morale and
    retention. By the end of the summer, DOD says it will be unable
    to pay its TRICARE bills and will be in a position of having to
    deny service to military members, families, and retirees.
        Now, there are bipartisan solutions to both the CR problem
    and the sequester threat. We cannot afford to look the other
    way and pretend there is not a huge, looming problem. A year-
    long CR and sequestration will undermine our national defense.
    The danger of the international situation was highlighted again
    yesterday when North Korea had a very provocative nuclear test.
    We cannot allow these actions, a sequestration and year-long
    CR, to occur in the middle of this kind of a world. It will
    create a huge and unconscionable problem for our men and women
    in uniform and their families, and it is incumbent on Congress
    and the President to find a solution together.
        Senator Inhofe and I have talked about how to work through
    this morning's schedule. At 11 o'clock, the Senate is currently
    scheduled to have perhaps four and maybe even five votes. We
    are going to have a very short question period after our
    opening statements and after our panel speaks. It is possible,
    at least, that we could finish by a few minutes after 11. If
    that does not happen, we would then adjourn for perhaps an
    hour, come back at perhaps 12 or so for about another hour. I
    hope that does not happen, but it very well may. We have a
    large committee and everybody here is very much interested in
    the solution to the sequestration and the year-long CR threat
    that looms before us. So that is the best we are going to be
    able to do this morning. It is the Senate at its full glory.
        I now call upon Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        There are 16 days remaining between today and March 1, 16
    days that will define our military strength for the coming
    decades. Just last week, the Secretary of Defense abruptly
    announced that he has indefinitely delayed the deployment of
    the Truman carrier strike group in the Middle East, denying the
    two carrier force presence our commander in the region has
    urgently requested over a long period of time.
        I am going to run through this pretty quick, Mr. Chairman.
    Admiral Winnefeld, Vice Chairman of the Joint Chiefs, recently
    made a statement. I want to make sure it gets in the record
    here. He said: ``I know of no other time in history when we
    have come potentially down this far, this fast, in the defense
    budget. There could be, for the first time in my career,
    instances where we may be asked to respond to a crisis and we
    will have to say that we cannot do it.''
        The Secretary of Defense, in the hearing that took place
    the other day on Benghazi, made it very clear that we do not
    have the assets necessary to carry out some of the things to
    adequately protect and defend and offer security to our people.
    This is something that is not acceptable. This is what
    government is supposed to be doing.
        DOD has absorbed almost $600 billion in cuts. We know all
    about that. With sequestration, with the CR problems that are
    there, we are looking at up to, over this period of 10 years,
    about $1 trillion in cuts and it cannot take place.
        Mr. Chairman, this hearing is absolutely critical to allow
    the Joint Chiefs to provide their frank and honest assessment
    about the impact to the Services, the loss of capabilities and
    readiness, and the mismatch between the resources and strategy.
    We are going to have to work together to ensure that the
    American people understand how serious this is. That is the
    reason for this hearing today.
        Last week, led by Senator Ayotte, Senators McCain, Graham,
    and I introduced a bill to mitigate the impact of sequestration
    through the end of the fiscal year and provide DOD with the
    flexibility it desperately needs to operate under the CR. It is
    not a perfect solution, but it is better than doing nothing.
        There is a growing concern that the President will not
    seriously negotiate with Congress on a compromise to
    sequestration until after it takes place on March 1st, and each
    Member of Congress hears of the pain affecting their
    constituents. But the real pain will be felt by the men and
    women serving our country who will see the resources they need
    to defend the Nation arbitrarily.
        That is what this hearing is all about. I will have
    questions, and one of them is going to be specifically--and I
    hope that you will be covering this request--not to hold back
    to show how tragic this is, show what increased risk, which is
    increased loss of lives, is going to result from this. That is
    what we expect in this hearing.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Secretary Carter?

        STATEMENT OF HON. ASHTON B. CARTER, DEPUTY SECRETARY OF
    DEFENSE; ACCOMPANIED BY HON. ROBERT F. HALE, UNDER SECRETARY OF
                         DEFENSE (COMPTROLLER)

        Dr. Carter. Thank you, Mr. Chairman, Senator Inhofe, all
    the members of the committee. I am going to be very brief
    because I think what you would like to get to and we would like
    to get to is the specifics of the impacts of these two budget
    circumstances that we face, first of all, sequestration, and
    the second, the possibility of the CR going on for the entire
    year.
        I thank you for this hearing, and I mean that from the
    bottom of my heart. We welcome an opportunity to describe these
    impacts. Secretary Panetta and I have been using the word
    ``devastating'' for 16 months now, and I testified last August
    to the consequences of sequestration if it was to occur. Now
    the wolf is at the door.
        You who know us, who understand us, and know national
    security inside and out by virtue of your service on this
    committee, are critical because I am hoping that when we
    describe what the consequences of these things are for national
    defense as we see it and give you the information that you
    need, that you can, in turn, communicate to your colleagues in
    Congress and that we can move in the direction of the
    comprehensive solution to both these problems that you
    referenced.
        To Senator Inhofe, absolutely we will provide that
    information. We are still--and we will continue to be for some
    months--working through the managerial consequences of this
    situation, and as we do, we will provide to this committee as
    complete information as we have, organized in any way you want.
    Today is a start in that regard.
        The problem comes in two tiers. The first is that
    sequestration, which is scheduled to kick in just 2 weeks from
    now, requires us to subtract from our budget for the remainder
    of fiscal year 2013 $46 billion, and as the chairman indicated,
    to do it in a way, the worst way managerially, namely, to take
    equal shares or proportionate shares from each and every part
    of the budget, which is obviously not what you would do if you
    were trying to be sensible from a managerial point of view.
        Second, the CR that we are operating under now, going into
    5 to 6 months, creates a different kind of problem for us. It
    has enough money in it overall, but as you indicated, Mr.
    Chairman, it does not have enough operations and maintenance
    money. You put those two things together and in this year there
    is a drastic shortfall in the funding that we need to do
    training. Training, in turn, impacts readiness, and readiness
    is our capacity to fight in other places in Afghanistan. We are
    protecting funding for Afghanistan.
        Under sequester, the President has decided to exempt
    military personnel from sequestration, and we have made some
    other limitations. In my direction to the Department, I have
    made some other limitations. We will protect wounded warrior
    programs. In addition to the wars, we will protect urgent
    operational needs. We will protect, to the extent we can,
    capabilities that are critical to our new defense strategy. But
    the reality is we cannot protect much of which is now of value
    to the country.
        So in the near term, what you have this year in the next
    few months is a true crisis in military readiness. If the caps
    imposed that accompany sequester are continued for the next 10
    years, as is the plan in the Budget Control Act (BCA), we are
    going to have to change our national defense strategy. Those
    cuts are too large, too sustained for us to implement the
    strategy that we crafted under the President's guidance just 1
    year ago.
        I understand, Mr. Chairman--and I have long understood--
    that DOD must contribute to the resolution of the Nation's
    fiscal situation, and that is why we have accommodated $487
    billion in cuts last year and before that, under Secretary
    Gates, made several hundred billion dollars of additional cuts
    in defense spending largely by removing unneeded or under-
    performing programs.
        We are also making, as you referenced Admiral Winnefeld as
    having said, an historic adjustment associated with the winding
    down of a decade dominated by the wars in Iraq and Afghanistan.
    We are making that adjustment as well.
        I also understand that the taxpayer deserves careful use of
    every dollar we do get, and that is why we have striven and we
    will continue to strive to get better buying power for the
    defense dollar and reform the acquisition system. But both the
    strategic approach to deficit reduction and efficient use of
    defense dollars will be undermined by sequestration.
        What is particularly tragic is that sequestration is not a
    result of an economic recession or an emergency. It is not
    because discretionary spending cuts are the answer to our
    Nation's fiscal challenge. You can do the math. It is not in
    reaction to a more peaceful world. You referenced the North
    Korean nuclear test this morning. It is not due to a
    breakthrough in military technology or to a new strategic
    insight. It is not because the paths of revenue growth and
    entitlement spending have been explored and exhausted. It is
    not because sequestration was ever a plan that was intended to
    be implemented. All this is purely the collateral damage of
    political gridlock.
        For our troops, for the force, the consequences are very
    real and very personal. I will give you a few examples. I told
    you that the President intends to spare military personnel
    spending from sequestration. But the troops will feel the
    effects of this very directly in other ways. For example, you
    referenced the cancellation of a carrier deployment. We had to
    do that because we had to recognize that we were going to run
    out of operations and maintenance funds in the Navy later in
    the year, and we made the decision to not deploy the carrier
    but instead keep it here in the United States so that we would
    have the capacity to deploy it later if we needed it. If we
    deploy it now, we would not have the capacity to have a carrier
    deployed there in the future. We had to make that decision. All
    of the sailors on that aircraft carrier were ready to go. Their
    families were ready to go. They had made plans for where they
    were going to live, for family care, schools, all those things
    that go with sending a loved one on a deployment. All that
    needed to change within a few days.
        Army units that are coming down--I visit them around the
    country--coming back from Afghanistan are used to being at the
    highest state of readiness, being trained and ready. What
    motivates them--what should motivate them is mission. By the
    end of the year--and I think General Odierno will detail this--
    they will not be training in the way that their profession
    requires them to. So it will have a big effect on our uniformed
    people.
        For our much maligned civilians, a lot of people think that
    DOD civilians are people who live in the Washington suburbs and
    get up in the morning and come in and go to work in an office
    building here. They are not. They are mostly people at depots
    and shipyards that are fixing our equipment. 44 percent of them
    are veterans. 86 percent of them do not even live in the
    Washington area. Later in the year in just 2 weeks' time, we
    are going to have to institute a process of furloughing them,
    which we will do consistent with the law and our requirements
    to you. But the net of it is that many of them will be
    furloughed for as many as 22 days before April 1st, say, and
    the end of the year; in other words, a fifth of their paycheck
    gone. That is a real human impact.
        I cannot be furloughed under the law because I am a
    presidential appointee, but I am going to give back a fifth of
    my salary in the last 7 months of the year if other people in
    the Department are getting sequestered. So there is a real
    human impact here.
        The last impact I would like to call to your attention is
    that on our defense industry. We depend on our defense industry
    because it, second only to the magnificent people we have in
    uniform, is what makes our military great. The effects of
    sequestration are going to be very significant on the defense
    industry, and we see it already. We depend upon them to be able
    to attract and retain science and technology talent. We need
    them to be financially successful. But many of our industry
    partners are beginning now to curb internal investment,
    maintain a very liquid position. The effects of this
    uncertainty are beginning to show up in terms of investor
    confidence in our industry, their ability to attract and retain
    workers, and the requirement to stretch programs, reduce buy
    rates. And all of that introduces the inefficiency into our
    procurement system.
        So for the force, military, civilian, and industry, the
    consequences are very direct and very devastating.
        I would just close with an appeal that I would ask you to
    convey to your colleagues in Congress. We need to deal very
    quickly and broadly with our deficit problems in a balanced way
    that the President can support and Congress can support. We
    need to detrigger sequestration. We need to pass appropriations
    bills for all our Federal agencies for that matter.
        I understand that there is probably not enough time to
    accomplish all of these far-reaching actions before
    sequestration is triggered on March 1st, but I would urge at
    least that Congress delay sequestration.
        But as I emphasized, the cloud of uncertainty hanging over
    our Nation's defense affairs is already having lasting and
    irreversible effects, and ultimately the cloud of sequestration
    needs to be dispelled and not just moved to the horizon.
    However this is done, the magnificent men and women of DOD and
    their families deserve no less. They need to know with
    certainty that we will meet our commitments to them.
        Our partners in the defense industry and their employees
    need to know that we are going to have the resources to procure
    the world-class capabilities they can provide and that we can
    do so efficiently.
        Perhaps most important, allies, partners, friends, and
    potential foes the world over need to know that we have the
    political will to implement the defense strategy we have put
    forward.
        Thank you.
        [The prepared statement of Mr. Carter follows:]

                  Prepared Statement by Hon. Ashton B. Carter

        Mr. Chairman, Senator Inhofe, members of the committee, thank you
    for holding this hearing on the effects of sequestration. I am not only
    pleased, but in fact eager, to testify before you. For over a year,
    Secretary Panetta and I, together with the uniformed leadership of this
    Department, have been warning of the devastating effects for national
    defense that will result from sequestration.
        Last August, I testified in detail to the impacts of sequestration
    that are specific to the Department of Defense (DOD), which include all
    the matters we will be discussing today in more detail, including
    furloughs, degraded readiness, maintenance cutbacks, and disrupted
    investment programs. I explained that these devastating effects would
    result from the size--and, for fiscal year 2013, the arbitrary nature--
    of the budget cuts that would be required under sequestration and the
    reductions in the discretionary caps mandated by the Budget Control Act
    of 2011.
        The consequences of sequestration and a lowering of the
    discretionary caps are serious and far-reaching. In the near-term,
    these reductions would create an immediate crisis in military
    readiness, especially if coupled with an extension of the Continuing
    Resolution (CR) under which we currently operate. In the long-term,
    failure to replace these large and arbitrary budget cuts with sensible
    and balanced deficit reduction would require this nation to change its
    defense strategy.
        I have long understood that DOD must contribute to the resolution
    of the Nation's fiscal situation. That is why we already accommodated
    $487 billion in budget reductions versus the fiscal year 2012
    President's budget, and managed to do so in a manner consistent with
    our new defense strategy for the new era that America is entering. This
    $487 billion reduction, now even larger, was on top of budget
    reductions that began under Secretary Gates, when we cancelled many
    unneeded and poorly performing defense programs.
        I also understand that the taxpayer deserves careful use of every
    dollar we are given. That is why we have striven and must continue to
    strive to get better buying power for the defense dollar.
        Both of these efforts will be severely undermined unless the budget
    uncertainty and cloud of sequestration that hangs over this Department,
    its uniformed and civilian employees, and the industry that supports
    us, is lifted.
        What is particularly tragic is that sequestration is not a result
    of an economic emergency or a recession. It's not because discretionary
    spending cuts are the answer to our Nation's fiscal challenge; do the
    math. It's not in reaction to a change to a more peaceful world. It's
    not due to a breakthrough in military technology or a new strategic
    insight. It's not because paths of revenue growth and entitlement
    spending have been explored and exhausted. It's purely the collateral
    damage of political gridlock.
        We have long argued that the responsible way to implement
    reductions in defense spending is to formulate a strategy first and
    then develop a budget that supports the strategy. If the Department
    were forced to operate under the mechanistic sequestration rules and
    the CR for the remainder of the fiscal year, it would achieve precisely
    the opposite effect by imposing arbitrary budget cuts that then drive
    changes in national security strategy.
        This is why I continue to urge Congress, in the strongest possible
    terms, to avoid sequestration by devising a comprehensive and balanced
    deficit reduction package that both the House and Senate can pass and
    that the President can sign. I also strongly urge Congress to pass
    fiscal year 2013 appropriation bills for all Federal agencies,
    including DOD.

                          HOW SEQUESTRATION WOULD WORK

        The American Taxpayer Relief Act of 2012 changed the dates and size
    of sequestration. The sequestration will now begin for the Department
    in about 2 weeks, on March 1, 2013; in addition, a second sequestration
    due to a breach in the discretionary spending caps for fiscal year 2013
    is scheduled to be implemented on March 27. Simply put, the combined
    effects of these two sequestrations will require the Department to cut
    roughly $46 billion from the annualized level of funding provided on
    the fiscal year 2013 CR, all in the last 7 months of the fiscal year.
        Sequestration cuts would apply to all of the DOD budget, including
    the wartime or Overseas Contingency Operations (OCO) portions, with
    only one significant exception. Exercising his statutory authority, the
    President indicated his intent to exempt all military personnel funding
    from sequestration. While I support the President's decision to protect
    our military personnel from sequestration, as a result, other DOD
    budget accounts must be cut by larger amounts to offset this exemption.
    We estimate that all other accounts would be reduced by roughly 8
    percent by the March 1 sequestration order, and by a total of about 9
    percent if both March 1 and March 27 sequestration orders occur. (The
    Office of Management and Budget would eventually calculate the precise
    sequester percentage and provide it in the sequestration order.)
        In addition to requiring a large and sudden reduction in defense
    spending for fiscal year 2013, the law requires that those reductions
    be accomplished in a rigid, across-the-board manner--account by
    account, and item by item. Cuts to the operating portions of the DOD
    budget must be equal in percentage terms at the level of appropriations
    accounts. (Examples of appropriations accounts in the operating budget
    include Army active operation and maintenance, Navy Reserve operation
    and maintenance, and Air Force Guard operation and maintenance.) For
    the investment portions of the budget, the dollar cuts must be
    allocated proportionally at a line item level of detail. More than
    2,500 programs or projects are separately identified as line items and
    would be reduced by the same percentage. Within each operating account
    or investment line item, managers could decide how best to allocate the
    reductions.
        The CR also plays a deleterious role in shaping the fiscal year
    2013 budgetary landscape. The CR provides funding for OCO at the level
    requested in the President's Budget for fiscal year 2013. However, the
    current CR directs that the base budget remain at the level enacted for
    fiscal year 2012. That provides sufficient total base budget dollars to
    DOD, but the dollars are in the wrong appropriations. Compared to our
    needs for fiscal year 2013, the CR provides too much funding in most
    investment accounts and insufficient funding in the Operation and
    Maintenance (O&M) accounts that sustain day-to-day operations and
    military readiness.

                            WHAT SEQUESTRATION MEANS

        If sequestration is triggered, we will be required to make cuts of
    $46 billion from virtually every category of the budget, except for
    military personnel. Moreover, these cuts must be accommodated in the
    last 7 months of fiscal year 2013. The impact of these cuts will be
    compounded by the misallocation of funding under the CR.
        The combined effects of sequestration and the CR will be especially
    problematic for the Operation and Maintenance accounts, which most
    affect military readiness. So allow me to focus on O&M, and in
    particular on the O&M in the base budget for Active Forces, since this
    portion will be heavily impacted. As part of the overall cut of the $46
    billion cut caused by the two sequestrations, these O&M accounts will
    be reduced by $13 billion from the annualized CR level. We must
    obviously protect the O&M dollars for our men and women in combat,
    which under sequestration rules we can only do by cutting base-budget
    O&M disproportionately--this results in an additional shortfall of $5
    billion in active base-budget dollars.
        Then the CR comes into play. If it is extended in its current form
    throughout the year, it exacerbates problems because it does not
    provide enough dollars in O&M--adding an additional shortfall of $11
    billion.
        Next, we are anticipating higher-than-expected wartime operating
    costs due to factors such as unexpectedly high operating tempo,
    increased transportation costs associated with difficulties experienced
    with Pakistan grounds lines of communication, and an expanded Persian
    Gulf presence to deal with contingencies in the region. This will add
    another $5 billion to $6 billion to the shortfall in active O&M
    dollars.
        The cumulative effect of adding all these factors is a DOD-wide
    shortfall of about $35 billion compared to our fiscal year 2013 budget
    request (about 23 percent of that request) just in base-budget O&M
    dollars for Active Forces. Some Services will experience base-budget
    O&M reductions much larger than 23 percent. The Army, for example, has
    a greater share of wartime operating dollars to protect and is also
    experiencing higher-than-expected use of wartime operating funds.
        Greatly adding to our concern is that we would have only about 7
    months to accommodate these formidable shortfalls. The result in the
    near-term will be a readiness crisis.

     NEAR-TERM ACTIONS IN RESPONSE TO THE POSSIBILITY OF MARCH 1 SEQUESTER
                                AND YEAR-LONG CR

        Because the prospect of these developments is now all too real, and
    because the time in the fiscal year to absorb them is slipping away, on
    January 10 I authorized all Defense components to begin taking
    immediate actions to slow spending in order to prevent even more dire
    consequences later in the year. I directed each of the Defense
    component heads to report back to me by February 1 with a list of
    proposed actions and an implementation plan. I subjected the plans to
    three ground rules: first, protect wartime operations, urgent
    operational procurement needs, and wounded warrior programs; second,
    protect, whenever possible, key features of the new defense strategy
    and acquisition efficiencies; and third, ensure, to the extent
    feasible, that these near-term actions are reversible if action is
    taken to formulate a balanced deficit reduction deal that averts these
    developments.
        Let me provide you some examples of the steps that are now being
    taken:

        1.  Most Services and defense agencies will institute civilian
    hiring freezes, with exceptions for mission-critical activities. DOD
    hires between 1,500 and 2,000 people per week. It is important to note
    that this freeze will disproportionately affect veterans, who make up
    44 percent of the DOD civilian workforce. Hiring freezes will also be
    felt across the Nation, since 86 percent of DOD's civilian jobs fall
    outside the Washington, DC, metro area.
        2.  Most Services and defense agencies will begin laying off a
    significant portion of our 46,000 temporary and term employees, again
    with exceptions for mission-critical activities.
        3.  Most Services and defense agencies will curtail facilities
    maintenance. More than $10 billion in funding--mostly to contractors
    and small businesses--would be affected, translating into lost jobs in
    the private sector. The Air Force, for example, plans to cut facilities
    maintenance projects by about half, including cuts to 189 projects at
    55 installations in 26 States.
        4.  As of March 1, Services will begin cancelling ship and aircraft
    maintenance work for the third and fourth quarters. It is estimated
    that about 25 ships and 470 aircraft will be affected unless we can
    reverse these actions.
        5.  The Army and other Services are curtailing training not
    directly related to missions.
        6.  The Army has directed a reduction of 30 percent in base
    operating services relative to fiscal year 2012 levels and other
    Services are also limiting base support.
    additional actions that will need to be taken should sequestration and

                              A YEAR-LONG CR OCCUR

        We are taking these steps now reluctantly, since they are obviously
    harmful, because we can no longer be confident that the March
    sequestrations and a year-long CR will be avoided, and by acting now we
    can make the damage in later parts of the year somewhat less severe.
    While these near-term actions will cushion the blow in later months,
    they are not nearly enough to accommodate a year-long CR or
    sequestration. If these unfortunate developments actually come to pass,
    in March we will have to take more drastic and irreversible actions.
    Accordingly, I also directed all Defense Services and agencies to
    provide me by February 8 with a list of actions that they would take in
    the event that either budget contingency occurs. We are still
    formulating these plans, which are complex and require input from
    thousands of activities. We do not yet have complete information, but I
    can provide examples of the actions that the Defense components have
    proposed to meet budgetary targets in fiscal year 2013:

        1.  All the Services and agencies are likely to have to furlough
    most DOD civilian employees for an average of 1 day per week for up to
    22 weeks. This action will seriously harm our ability to do important
    work, which will, in turn, harm national security: civilians fix our
    ships and tanks and planes, staff our hospitals, handle contracting and
    financial management, and much more. During this period, furloughs will
    result in a 20 percent cut in pay for civilians who support our
    national defense--which will affect their morale. Senate-confirmed
    political appointees like me cannot be furloughed under the law. But if
    our employees are furloughed, I intend to give back to the Treasury the
    same portion of my salary, and I encourage all of us--executive branch
    and legislative branch--to do the same. In addition, these furloughs,
    like other spending cuts, will adversely affect economies in the
    communities where our civilians live and work. Savings from furloughs
    will be critical to meeting budgetary cuts by the end of the year.
    However, it is important to note that even if all 800,000 civilian DOD
    employees are furloughed to the maximum extent permitted by law, the
    savings of $4 billion to $5 billion will still leave us $41 billion
    short of our $46 billion total target. Thus, much more cutting of DOD
    spending will result, affecting many defense workers who are not direct
    DOD employees.
        2.  The Army will curtail training and reduce maintenance for units
    that are not scheduled to deploy to Afghanistan. This could put
    readiness for future contingency operations elsewhere at risk. By year
    end, about two-thirds of Active and most Reserve Brigade Combat Teams
    (excluding those in Operation Enduring Freedom) will be at reduced
    readiness levels. As part of accommodating sequester cuts, the Army may
    have to cancel up to five full-spectrum training rotations at its
    premier training centers.
        3.  The Air Force will be forced to cut flying hours sharply and
    will reduce remaining weapon system sustainment funding by about 30
    percent. Current planning suggests that most flying units (especially
    later-deploying units) will be below acceptable readiness standards by
    the end of fiscal year 2013. As a result, the Air Force will be
    substantially less able to respond on short notice to contingencies,
    which is one of their key missions.
        4.  The Navy and Marine Corps will be forced to cut back on
    readiness and fleet operations. That could include a reduction of one-
    third in operations of Navy ships and aircraft in the Asia-Pacific
    region and gaps in availability of Marine Amphibious Ready Groups.
        5.  DOD would be short between $2 billion and $3 billion in funds
    needed to pay for costs in the Defense Health Program. If we protect
    the operations of our in military treatment facilities, in order to
    maintain health readiness for Active-Duty Forces, then it is possible
    that DOD might not have enough funds to pay TRICARE bills toward the
    end of the fiscal year.
        6.  DOD will have to make cuts of roughly 9 percent in each of more
    than 2,500 investment line items. These cuts will disrupt programs, add
    to unit costs, and damage the defense industry.

        Overall, these actions will seriously disrupt programs and sharply
    degrade readiness. The acute effects on O&M and readiness are of
    particular concern to the Secretary and me and the Department's senior
    military leaders. The Chairman of the Joint Chiefs of Staff, the Vice
    Chairman, and all the Joint Chiefs recently signed a ``28-star letter''
    stating: ``The readiness of our Armed Forces is at a tipping point. We
    are on the brink of creating a hollow force.''

     LONGER-TERM EFFECTS OF SEQUESTRATION AND REDUCTIONS IN DISCRETIONARY
                                      CAPS

        So far I have focused on the effects of sequestration and the CR in
    fiscal year 2013. But current law also reduces the budgetary limits for
    defense spending by about $50 to $55 billion in each year from fiscal
    year 2014 through fiscal year 2021. These lower caps would constitute a
    second long-term budget cut as large as the one DOD has already carried
    out. Cuts of this magnitude will require that we substantially modify
    and scale back the new defense strategy that the DOD leadership,
    working under the guidance of the President, so carefully developed
    just a little more than a year ago.
        Last year, we emphasized that we were at a strategic turning
    point--a transition from the era of Iraq and Afghanistan to the
    security challenges that will define our future.
        The new strategy has five pillars:

             First, we said that our force has to be leaner, but
            also agile, ready, and technologically advanced. In other
            words, we wanted to absorb the lessons we learned over the last
            decade of war--the lessons of counterinsurgency, improvised
            explosive devices, rotational presence intelligence and
            operational integration, adaptability--and apply them to the
            challenges of the future to create a new post-Iraq and
            Afghanistan concept of readiness for each of our Services.
             Second, we said that we would continue our focus on
            the Middle East, which will remain an enduring commitment of
            the United States, but also execute our so-called rebalance to
            the Asia-Pacific region, where so much of our future security
            and economic interests lie.
             Third, we said we would strengthen our global
            alliances and partnerships to achieve shared objectives and to
            build the capacity of our security partners.
             Fourth, we said we would ensure that the U.S. military
            remains capable of confronting aggression and defeating any
            opponent anywhere, anytime.
             Fifth, we said we would continue to invest, even in
            hard budgetary times, in future-focused capabilities and
            technologies, like cyber and space, as well as special
            operations.

        If the budget cuts described were sustained for the full 9 years,
    we would need to make substantial changes to our strategy that will
    directly diminish our military strength. Large reductions in force
    structure would almost certainly be necessary. These force structure
    changes would not happen instantly; in order to meet the new budget
    levels, we would almost certainly be forced to gut our acquisition
    programs in the near-term. This would cancel or significantly delay
    most of our major modernization programs until after the force
    reductions are achieved years from now. On top of this, we would have
    little choice but to reduce military compensation and reduce civilian
    personnel costs.
        The resultant force would not be able to rapidly respond to major
    crises in the world or to be globally positioned to deter our
    adversaries. To protect the most warfighting capability possible, this
    Department would need relief from constraints on how the Department
    manages non-warfighting costs, including such authorities as BRAC.
        Just as sequestration and the reductions in the discretionary caps
    will have devastating effects on the Nation's defense force, it will
    also be harmful to the defense industry upon which we depend. The
    quality of the weapons systems produced by our defense industry is
    second only to the quality of our people in uniform in making our
    military the greatest in the world. As such, a technologically vibrant
    and financially successful defense industry is in the national
    interest. The act of sequestration and longer-term budget cuts, and
    even the prolongation of uncertainty, will limit capital market
    confidence in the defense industry, and companies may be less willing
    to make internal investments in their defense portfolio. The impact
    will be even greater on our subcontractors, who lack the capital
    structure to withstand turmoil and uncertainty. Of note, 60 to 70
    percent of our defense dollars are subcontracted, and many of our
    subcontractors are small businesses. Above all, sequester will cause a
    spike in program inefficiency by stretching out programs and driving up
    unit costs.
        Already, we saw the threat of sequestration drag on GDP growth in
    the fourth quarter of 2012, and consumer confidence took a hit over 2
    months through January. According to private sector and CBO forecasts,
    sequestration impacts could reduce GDP growth in 2013 by over half a
    percentage point. That lost growth would deprive American workers of
    hundreds of thousands of jobs.
        In the long run, national security rests on a strong economy, and
    also on non-defense functions--like education, especially science,
    technology, engineering, and math (STEM)--provided in other parts of
    the Federal budget. While not part of this hearing, the drastic nature
    of sequestration would obviously be harmful to these functions too.
        Finally, we must be mindful that the world watches--our friends and
    enemies watch--and continued turmoil and uncertainty take a toll on our
    international reputation for excellence and resolve in national
    security affairs.

                         SEQUESTRATION MUST BE AVOIDED

        My testimony today makes clear that sequestration, especially if
    accompanied by a year-long CR, would be devastating to DOD--just as it
    would to every other affected Federal agency. The difference is that,
    today, these devastating events are no longer distant problems. The
    wolf is at the door.
        If we end up with an extended CR, we will need help from Congress
    in modifying the CR to get the dollars in the correct appropriations.
    We will also need Congress to support our efforts to use the
    reprogramming process to shift money so as to meet our highest
    priorities.
        But additional flexibility at this late date would do little to
    offset the devastating effects of sequestration since cuts of this
    abruptness and magnitude cannot be absorbed without significant and
    damaging cuts in nearly every budget category. Congress needs to deal
    quickly and broadly with our country's deficit problems in a balanced
    way that the President can support. Then Congress needs to detrigger
    sequestration and pass appropriations bills for all Federal agencies.
    Given that there is not enough time to accomplish these far-reaching
    actions before sequestration is triggered on March 1, I would urge that
    Congress at least delay sequestration. But as I have emphasized, the
    cloud of uncertainty hanging over the Nation's affairs is already
    having lasting and irreversible effects. Ultimately, the cloud of
    sequestration needs to be dispelled, not just moved to the horizon.
        However it is done, we need relief from the twin evils of
    sequestration and a year-long CR. The magnificent men and women of this
    Department, and their families, deserve no less. They need to know with
    certainty that we will meet our commitments to them. Our partners in
    the defense industry, and their employees, need to know that we are
    going to have the resources to procure the world-class capabilities
    they can provide, and that we can do so efficiently. Perhaps most
    important, allies, partners, friends, and potential foes the world over
    need to know that we have the political will to implement the defense
    strategy we have put forward.
        Again, I want to thank the committee for providing us an
    opportunity to highlight our grave concerns. I welcome your questions.

        Chairman Levin. Thank you, Secretary Carter.
        General Dempsey.

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

        General Dempsey. Thanks, Mr. Chairman, Senator Inhofe,
    distinguished members. Thanks so much for holding this hearing
    on such an important readiness matter.
        If sequestration occurs, it will severely limit our ability
    to implement our defense strategy. It will put the Nation at
    greater risk of coercion, and it will break faith with the men
    and women in uniform. We have and will continue to be part of
    the Nation's economic recovery. We are committed to remaining
    responsible stewards of the Nation's treasures as we work to
    build an affordable and unrivaled joint force for 2020.
        To do this, we need budget certainty. That is, we need the
    antithesis of sequestration: a steady, predictable funding
    stream.
        We also need the time to implement reductions in a
    responsible manner over a manageable timeline.
        Finally, we need the flexibility to transfer and reprogram
    money to our highest priorities. Readiness loses when major
    portions of the budget are untouchable. Everything needs to be
    on the table.
        Personally I believe we should resist kicking this problem
    further down the road. Failing to act is a choice of itself,
    one that will eventually require a progressive contraction of
    security commitments around the world and a less proactive
    approach to protecting our interests.
        When I testified before this committee last year, I said
    that if we fail to step off properly on this budget, we will
    reduce our options and, in so doing, increase our risk. Our
    military power will be less credible because it will be less
    sustainable. Now we are only a few days away from making that a
    reality.
        We can do better. Our Nation, our servicemembers, and their
    families expect us to do better. More importantly, a turbulent
    world that relies on American leadership demands that we do
    better.
        Thank you.
        [The prepared statement of General Dempsey follows:]

                Prepared Statement by GEN Martin E. Dempsey, USA

        Chairman Levin, Senator Inhofe, distinguished members of the
    committee, thank you for this opportunity to address the impacts of the
    current budget uncertainty on our force.
        To be brief, military readiness is in jeopardy due to the
    convergence of unprecedented budget factors. We need help from our
    elected leaders to avoid hollowing out the force and compromising our
    Nation's security. Specifically, we need passage of a regular 2013
    Defense Appropriation, and we need sequestration to be canceled.
        The prospect for sequestration in fiscal year 2013 and commensurate
    reductions in spending caps from fiscal year 2014 to 2021 comes while
    we are under a Continuing Resolution, while we are just beginning to
    absorb the $487 billion reduction mandated by the 2011 Budget Control
    Act, and while we are still fighting and resourcing operations around
    the globe. Potential reductions of this magnitude require us to
    carefully and deliberately evaluate trade-offs in force structure,
    modernization, readiness, and compensation--we can only do this with
    budget certainty, flexibility, and time.
        You will hear today from the Joint Chiefs regarding the immediate
    budget implications specific to each of the Services. Many of these
    consequences may seem extreme, but they are very real. In fact, what
    they are sharing with you is just the beginning. If sequestration and
    outyear cap reductions are allowed to occur--requiring us to reduce
    spending by an additional $500 billion for a cumulative reduction of $1
    trillion over the next 10 years for the Joint Force--it will severely
    limit our ability to implement our defense strategy; it will put the
    Nation at greater risk of coercion; and it will break faith with the
    men and women who serve this nation in uniform.
        Approximately one third of these cuts would come from our force
    structure. The other two-thirds of the reductions would occur in our
    modernization, compensation, and readiness accounts. We will have much
    less of everything and therefore be able to provide fewer options to
    our Nation's leaders.
        Our current security challenges are more formidable and complex
    than those we faced in downturns following war in Korea, Vietnam, and
    the Cold War. There is no foreseeable ``peace dividend'' on our
    horizon. The security environment is increasingly competitive and
    dangerous. End strength caps in the 2013 National Defense Authorization
    Act restrict our ability to manage our force, and therefore inhibit our
    ability to reduce spending as quickly and as responsibly as in past
    draw downs. Unlike past downturns that followed periods of significant
    modernization, much of our equipment is older or aging. Health care
    costs are approaching unsustainable levels.
        Taken together and in context, these factors will make it much
    harder for us to preserve readiness after more than a decade of
    fighting in Iraq and Afghanistan. We must reset and refit, and in many
    cases replace, our war-torn equipment. We must retrain our personnel on
    a broader range of military skills that atrophied, while also
    developing new skills and capabilities that are essential to our
    ability to address emerging threats.
        We have and will continue to be part of the Nation's economic
    recovery. We are committed to being responsible stewards of taxpayer
    dollars. We are working to build a Joint Force for 2020 that is
    affordable while maintaining our decisive advantages.
        To do this, we need your help. First, we need budget certainty.
    That is, we need the antithesis of sequestration--namely, a steady,
    predictable funding stream. We can manage the transition--the military
    embraces change. One of Joint Force 2020s underlying assumptions is
    that we will need to get smaller but stay strong. I am convinced that
    we can restore the versatility of our force at an affordable cost.
        Second, we need the time to deliberately evaluate trade-offs in
    force structure, modernization, compensation and readiness. Two rounds
    of sequestration are scheduled in March totaling $46 billion in fiscal
    year 2013 reductions--the force cannot absorb these cuts without some
    long-term damage.
        Finally, we need flexibility to allocate our resources to our
    highest priorities. When we are not allowed by legislation to touch
    individual pieces of the budget, readiness accounts inevitably pay the
    price. Everything needs to be on the table. This should include
    military and civilian force reductions, basing, the balance of the
    Active and Reserve components including the National Guard, and
    military pay and compensation. Adequate flexibility will also require
    support for follow-on reprogramming authority.
        We cannot afford to further postpone a solution to this crisis.
    Failing to act is a choice in itself, one that will eventually require
    a progressive contraction of security commitments around the world, the
    abandonment of allies, the breaking of promises, and a less proactive
    approach to protecting our interests.
        During posture hearings last year, I testified before this
    committee that if we fail to step off properly on the budget, we will
    reduce our options and increase our risk. Our military power will be
    less credible because it is less sustainable. Now, we are only days
    away from making that risk a reality. We can do better. Our Nation,
    servicemembers, and their families deserve better--and an uncertain and
    turbulent world that relies on American leadership requires it. Thank
    you.

        Chairman Levin. Thank you very much, General Dempsey.
        Secretary Hale, do you have anything at this point? Okay,
    thank you.
        General Odierno.

    STATEMENT OF GEN RAYMOND T. ODIERNO, USA, CHIEF OF STAFF OF THE
                                  ARMY

        General Odierno. Thank you, Mr. Chairman, Ranking Member
    Inhofe, and other distinguished members.
        Nearly 18 months ago, you charged me with leading our Army
    and providing you with my best military advice. Over the course
    of my 36-year career, I have commanded at every level,
    including division, corps, and theater command in combat. I
    know what it takes to prepare this Nation's sons and daughters
    for war. I know what it takes to grow leaders in our Army. I
    know what is required to send soldiers into combat, and I have
    seen firsthand the consequences when they are sent unprepared.
    I began my career in a hollow Army. I do not want to end my
    career in a hollow Army.
        Today the global environment is the most uncertain I have
    seen in my 36 years of service. It is unpredictable and
    dynamic. We simply do not know when we will have to deploy
    soldiers to fight again. But history tells us that we will. We
    owe it to them to ensure they have the proper resources to be
    ready when needed.
        The fiscal outlook which the U.S. Army faces in fiscal year
    2013 is dire and, to my knowledge, unprecedented. In addition
    to the $170 billion in cuts to the Army levied by the BCA of
    2011, the combination of the CR, a shortfall in overseas
    contingency operation funds for Afghanistan, and the sequester
    in fiscal year 2013 has resulted in a $17 billion to $18
    billion shortfall to the Army's O&M accounts, as well as an
    additional $6 billion cut to other programs. All of this will
    come in the remaining 7 months of this year.
        The fiscal year 2013 fiscal situation will have grave and
    immediate readiness impacts on all forces not serving in
    Afghanistan or forward in Korea, impacts which will have a
    significant impact well into fiscal year 2014 and beyond. Just
    a few of the actions we will be forced to take are, for
    example: we will curtail training for 80 percent of ground
    forces. This will impact our units' basic warfighting skills
    and to do shortfalls across critical specialties, including
    aviation, intelligence, engineering, and even our ability to
    recruit soldiers into our Army.
        We have directed an immediate Army-wide hiring freeze, and
    we will terminate an estimated 3,100 temporary and term
    employees.
        We will furlough up to 251,000 civilians for up to 22 days.
        We will cancel third and fourth quarter depot maintenance
    which will result in the termination of an estimated 5,000
    employees and a significant delay in equipment readiness for 6
    divisions at an estimated $3.36 billion impact to the
    communities surrounding our depots.
        For fiscal year 2014 and beyond, sequestration will result
    in the loss of at least an additional 100,000 personnel,
    soldiers from the Active Army, the Army National Guard, and the
    U.S. Army Reserve. Combined with previous cuts, this will
    result in a total reduction of at least 189,000 personnel from
    the force, but probably even more than that. These reductions
    will impact every Army base and every installation in the Army.
        Sequestration will result in delays to every 1 of our 10
    major modernization programs, the inability to reset our
    equipment after 12 years of war, and unacceptable reductions in
    unit and individual training. These cuts will be felt across
    the entire country.
        Since 2008, the total Army budget will have been reduced by
    37 percent. If sequestration is enacted, it will be greater
    than 45 percent.
        In my opinion, sequestration is not in the best interest of
    our national security. It will place an unreasonable burden on
    the shoulders of our soldiers and civilians. We will not be
    able to execute the DOD Strategic Guidance as we developed last
    year.
        I understand the seriousness of our country's fiscal
    situation. We have and we will continue to do our part, but the
    significance of these budget reductions will directly impact
    our ability to sustain readiness today and into the future. We
    simply cannot take the readiness of our force for granted. If
    we do not have the resources to train and equip the force, our
    soldiers, our young men and women, are the ones who will pay
    the price potentially with their lives. It is our
    responsibility, DOD and Congress, to ensure that we never send
    soldiers into harm's way that are not trained, equipped, well-
    led, and ready for any contingency, to include war. We must
    come up with a better solution.
        Thank you so much for allowing me to testify in front of
    you today.
        [The prepared statement of General Odierno follows:]

               Prepared Statement by GEN Raymond T. Odierno, USA

        The fiscal outlook which the U.S. Army faces today is dire and, to
    our knowledge, unprecedented. The Army has been in a state of
    continuous war for nearly 12 years--the longest in our Nation's
    history. Today we have more than 81,000 soldiers committed to
    operations around the world with approximately 58,000 in Afghanistan.
    Nearly 1.5 million soldiers have deployed and more than half a million
    have deployed multiple times, some as many as four, five, and six
    times. More than 4,800 soldiers have given their lives on behalf of
    this Nation.
        The magnitude of today's fiscal uncertainty will have grave
    consequences for our soldiers, our civilians, and our families who have
    sacrificed so much over the past decade. We cannot put the weight of
    these cuts on their shoulders. If nothing is done to mitigate the
    effects of operations under a continuing resolution, shortfalls in our
    funding of overseas operations, and the enactment of sequestration, the
    Army will be forced to make dramatic cuts to its personnel, its
    readiness, and its modernization programs, hence putting our national
    security at risk.
        Before I describe the challenges we face this fiscal year, let me
    remind the committee of the actions we are taking to comply with the
    Budget Control Act of 2011. This act required $487 billion in cuts over
    10 years across the Department of Defense (DOD), of which the Army's
    share is estimated to be $170 billion. As a result of these cuts, the
    Army is reducing the active duty end strength from a wartime high of
    about 570,000 to 490,000, the Army National Guard from 358,000 to
    350,000, the U.S. Army Reserve from 206,000 to 205,000, and the
    civilian workforce from 272,000 to 255,000 by the end of fiscal year
    2017. This is a net loss of 106,000 soldier and civilian positions. By
    fiscal year 2017, we will downsize our Active component force structure
    from 45 Brigade Combat Teams to potentially as low as 32. On January
    18th, we released a Programmatic Environmental Assessment describing
    the impact of potential force structure reductions across the Army. We
    began these force reductions in fiscal year 2012 focused initially on
    our overseas formations. In 2014, however, we will begin significant
    force reductions in the United States.
        In addition to personnel and force structure reductions, we have
    had to extend the timelines of our modernization programs and reduce
    the frequency of our training exercises putting us on the outer edge of
    acceptable risk for our future force and our ability to meet our
    National Security Strategy.
        The actions we have taken to adapt to the new defense strategic
    guidance are independent of the continuing resolution and
    sequestration. However, the domestic impacts of these actions are only
    now beginning to be felt and will be magnified over next several years.
        The fiscal crisis we now face is due in part to the fundamental
    lack of predictability in the budget cycle. Since fiscal year 2011, DOD
    has operated under a continuing resolution for 14 of the last 28
    months. Each continuing resolution prevents new starts for needed
    programs, limits reprogramming actions, creates inefficiency, and often
    results in wasteful funding for accounts that we no longer want or
    need. This uncertainty creates challenges in projecting future funding
    requirements that inform our annual budgets over time. The lack of
    predictability has been exacerbated by the threat of sequestration for
    the past year and a half. In fiscal year 2013, we now find ourselves in
    the midst of a perfect storm created by a continuing resolution, a
    shortfall in funds for overseas contingency operations, and the threat
    of sequestration. If not addressed, the current fiscal uncertainty will
    significantly and rapidly degrade Army readiness for the next 5 to 10
    years.
        The fiscal year 2013 continuing resolution has funded the Army's
    base budget at fiscal year 2012 levels, resulting in a shortfall of
    more than $6 billion in the Operation and Maintenance, Army (OMA)
    accounts relative to the President's budget. Unless DOD is given
    sufficient authorities that will allow the Army to reprogram the
    necessary funds across appropriations, this shortfall will impact
    readiness.
        Under the continuing resolution, we also face an approximate $5 to
    $6 billion shortfall in OMA Overseas Contingency Operations (OCO)
    funding for fiscal year 2013 because of costs related to the war in
    Afghanistan. This impacts the preparation of units about to deploy,
    current operations in support of Operation Enduring Freedom (OEF), and
    our ability to reset equipment and personnel. In order to ensure our
    soldiers are prepared, we have committed and will continue to commit
    100 percent of our operation and maintenance requirements for OEF.
    However, this exacerbates the funding shortfalls for the rest of the
    Army that is not deploying to Afghanistan, creating unacceptable
    readiness for the future.
        In addition to the impacts that the continuing resolution and OCO
    shortfalls are having on the force, a sequestration order is scheduled
    to be issued on March 1, and a second sequestration order due to the
    breach in the fiscal year 2013 discretionary caps is scheduled to be
    implemented on March 27. Using DOD planning assumptions for sequester,
    we estimate that sequestration will impose an additional $12 billion
    cut on the Army's budget in the remaining months of fiscal year 2013,
    to include a $5 billion cut in OMA, and approximately $1 billion in the
    Reserve component operation and maintenance accounts. The remaining $6
    billion will be taken across the board from our procurement; research,
    development, test, and evaluation; and military construction accounts.
        While budgetary uncertainty negatively affects each of the Army's
    operating and investment accounts, our OMA account is the most heavily
    burdened. Together, the continuing resolution, OCO shortfall, and
    sequestration will equate to $18 billion in shortfalls to the OMA
    account in the final 7 months of fiscal year 2013.
        As always, our priority will be to ensure that all soldiers in
    Afghanistan and those next to deploy are prepared and ready. We will
    ensure that the Forces in Korea are properly equipped and ready. We
    will continue to fund all programs related to Wounded Warrior care.
    Then we will determine if we have sufficient funds to continue training
    the Division-Ready Brigade at Fort Bragg--the Army's Global Response
    Force. These priority efforts will consume 43 percent of our OMA but
    are applied to only 22 percent of the force. Therefore, the remaining
    78 percent of the force will have to absorb the $18 billion in
    shortfalls out of the remaining 57 percent of the OMA budget. What that
    means is that the 78 percent of the force--more than three-quarters of
    the Army not in Afghanistan or Korea or deploying this year--will
    significantly curtail training today. Even with training and
    sustainment spending curtailed, we expect our accounts to be exhausted
    by July. The impact will translate into significant readiness issues
    through fiscal year 2014 and beyond, and put at risk our ability to
    deploy forces to meet all contingency operations.
        Given these challenges, the Secretary of the Army and I have taken
    the following steps to reduce our expenditure rate and mitigate, to the
    extent possible, the risk to current and future fiscal year budget
    execution:

             We are terminating an estimated 3,100 temporary and
            term employees and have directed an immediate Army-wide hiring
            freeze. These employees typically fill gaps in our installation
            services such as Army substance abuse programs, law
            enforcement, physical security, public works, and installation
            education programs.
             We have initiated planning to furlough up to 251,000
            civilians for 1 day a week for 22 weeks, in full recognition of
            the risks of decreased productivity, morale, and the loss of 20
            percent of their pay while furloughed. In addition to the
            hardship this poses to our dedicated workforce, this furlough
            will have an immediate trickle-down effect as the majority of
            these civilians are located throughout the United States on our
            posts and stations, and their spending directly impacts local
            economies and contributes towards State and local taxes. Any
            furlough would have an immediate impact on fire and emergency
            services, law enforcement, airfield operations, and all of our
            Army family programs.
             We are making plans to cancel third and fourth quarter
            depot maintenance. As a result, we are terminating employment
            of an estimated 5,000 temporary, term, contractor, and
            permanent employees due to the reduced Depot Maintenance
            workload. We will reduce Army purchase orders with 3,000
            companies, of which 37 percent, or approximately 1,100, may
            consequently face moderate to high risk for bankruptcy. The
            reduction in maintenance will delay equipment readiness for six
            Divisions (3rd Infantry Division [Georgia], 4th Infantry
            Division [Colorado], 10th Mountain Division [Louisiana and New
            York], 25th Infantry Division [Alaska and Hawaii], 101st
            Airborne Division (Air Assault) [Kentucky] and 82d Airborne
            Division [North Carolina]). These delays will halt the reset of
            1,000 Tactical Wheeled vehicles, 14,000 communication devices
            and 17,000 weapons in Active and Reserve units for 3 to 4 years
            following redeployment.
             We will cancel all but one of the Brigade Maneuver
            Combat Training Center (CTC) rotations for nondeploying units.
            Our inability to train nondeploying units will degrade our
            units' readiness posture and inhibit the progressive build of
            unit capability to meet early fiscal year 2014 missions,
            emergent requirements, and timelines associated with combatant
            commanders' war plans.
             We are reducing institutional training across the
            Army. This will result in a backlog across our education and
            individual training courses well into fiscal year 2014 and
            shortfalls in critical specialties.
             For example, we will curtail seven courses that support our
            Homeland Defense/Civil Support Mission resulting in a shortfall
            of over 1,600 trained operators and severely degrading
            Chemical, Biological, Radiological and Nuclear Response
            Enterprise. These teams require all unit members to be trained
            and certified with specific individual certifications tied to
            both National Fire Protection Agency standards and public law
            for operations in the Homeland. There are no other courses
            within the Army or the Joint Forces that provide this level of
            certification.
             We will cut 37,000 flying hours from our aviation training at
            Fort Rucker, which will create a shortfall of over 500 aviators
            by the end of fiscal year 2013 and will create a backlog at
            flight school that will take over 2 years to reduce. We are
            curtailing 16 military intelligence training courses, resulting
            in over 4,000 fewer soldiers with the intelligence skills the
            Army requires. At Fort Sill, we will have to cancel 15 Field
            Artillery Advanced Individual Training courses. Soldier
            training for recruiting duties will be curtailed in March
            resulting in over 900 untrained recruiters.
             The Army Corps of Engineers will reduce training slots at the
            Prime Power School for the Army's 249th Engineer Battalion,
            which provides power for the Department of Defense Disaster
            Response. Over time, reductions in training to critical
            specialties will decrease the Active Army, the Army National
            Guard, and the U.S. Army Reserves' responsiveness to crises and
            natural disasters in our communities across the United States.
             We are cancelling attendance at some of our mid-career officer
            and noncommissioned officer training programs across the Total
            Army including the Captains Career Common Core Course,
            Intermediate Level Education, and Noncommissioned Officer
            Education System (NCOES) common core. This will add to the
            already tremendous backlog of midgrade officer and NCO
            education that has built up during the almost 12 years of war.
             We have curtailed our civilian professional development
            training and education. This will cause an interruption in our
            intern training programs, reducing the pipeline and the
            functional and technical competency of the next generation of
            our Army civilians. It will also delay or eliminate civilian
            education and training opportunities--from entry level to
            senior management courses--impacting the growth and development
            of the Army's future civilian leaders at all levels of
            government service.
             We are in the process of reducing our base sustainment
            funds by $2 billion in fiscal year 2013, a 70 percent drop from
            what has been historically required to run our installations.
            This means even bare minimum maintenance cannot be sustained.
            In the event of water main breaks, clogged sewage, water
            damage, or power failure, there will not be adequate funding to
            repair these facilities, which would likely result in closure
            and personnel relocation. This also translates into an
            estimated 100,000 facility work orders per month that will not
            be executed, which places the Army on an accelerated slippery
            slope where our buildings will fail faster than we can fix
            them.
             All restoration and modernization projects, including
            renovations to the U.S. Military Academy Cadet Barracks, the
            Training Barracks Upgrade Program that consists of 12 projects
            at 8 locations in the United States, and our ability to
            complete relocation plans and projected closures in Europe will
            be eliminated. All projects under the Army Energy Program, to
            include upgraded energy efficiencies, utility system
            modernizations, and small renewable projects will also be
            cancelled. We have postponed all new construction projects,
            such as the Landstuhl Hospital in Germany and the Arlington
            National Cemetery expansion.
             We have initiated an Army-wide service contract review
            to identify savings and we are taking action to potentially
            terminate all non-essential contracts in coordination with our
            commands. These contracts support a myriad of programs,
            including facility maintenance, education and training, medical
            support, and equipment and provide thousands of jobs across our
            Army installations. Many of these contracts provide direct
            support to our soldiers, civilians, and their families, and
            their cancellation will cause backlogs in services rendered at
            our hospitals, our education centers, our schools, and our
            child development centers. Once a contract is terminated, it
            takes at least 150 days to restart a cancelled program,
            increasing the workload on an already taxed acquisition
            workforce, and increasing costs of the program in the short
            term.
             Our National Guard and Reserve will experience cuts of
            22 percent and 50 percent respectively in their medical
            readiness accounts. For example, we have cancelled pre-
            mobilization medical support for nearly 200,000 Army National
            Guard and U.S. Army Reserve soldiers, which will degrade
            Reserve unit readiness and increase post-mobilization training
            costs.
             We will curtail Operational Test and Evaluation
            operations affecting program of record development and fielding
            schedules which will add costly delays to critical acquisition
            programs and the fielding of equipment to soldiers.
            Particularly in the areas of networking capability and
            precision munitions, we will experience delays in key network
            programs such as the Warfighter Information Network-Tactical
            (WIN-T) and the Joint Battle Command-Platform (JBC-P).
             We are reducing our Science and Technology (S&T)
            programs by approximately $300 million. We anticipate making
            reductions to our Federal civilian employees and support
            contractors, and reducing programs with our academic and
            industry partners across all 50 States and the District of
            Columbia. The Assistant Secretary of the Army (Acquisition,
            Logistics, and Technology) (ASA(ALT)) provided an assessment to
            the Assistant Secretary of Defense (Research and Engineering)
            on 1 February 2013 detailing the impact to DOD research
            priorities.

        In addition to impact of sequestration for fiscal year 2013, the
    lowering of discretionary caps for fiscal year 2014-fiscal year 2021
    will have long-term impacts that extend beyond the current fiscal year.
    In order to maintain a balance between end strength, readiness and
    modernization, the Army will have to reduce additional 100,000
    personnel across the Active Army, Army National Guard and U.S. Army
    Reserve. This will generate a total reduction of approximately 189,000
    personnel in the coming years.
        We succeeded in recent years to bring personnel readiness in the
    Army National Guard and U.S. Army Reserve from 40 percent up to 70
    percent; that readiness will rapidly drop, and indeed the degradation
    has already begun. Let me emphasize that these readiness issues are not
    limited to the Active component. They will hit the Total Army. In fact,
    the reduction in overseas deployments which has sustained our Reserve
    readiness over the past 12 years may result in us being unable to
    maintain our operational reserve.
        Sequestration will continue to affect our valued civilian
    workforce, which would likely absorb cuts that would be sized
    proportionally to the cuts in our uniformed military end strength.
    Sequestration threatens the civilian workforce with enormous
    uncertainty, and may to some extent encourage the most capable to seek
    more predictability through employment outside the Department,
    resulting in the loss of critical continuity and stability that our
    civilian employees provide to the uniformed force that rotates on a
    routine basis.
        The losses in training and readiness we accrue in fiscal year 2013
    mean that we start fiscal year 2014 already at a marked disadvantage.
    One of the primary challenges we face over the next 5 years is to re-
    orient our force to the broader array of missions we may face in the
    years ahead, whether it be weapons of mass destruction recovery, cyber
    operations, support to civilian authorities, or high-intensity combat.
    To get our leaders and their formations to the state of preparedness we
    need, we must train hard on a wide number of tasks at our home station
    and at our combat training centers. Many of our leaders and their units
    will be conducting these tasks for the first time, meaning that we
    actually need to invest in longer periods of training to achieve
    proficiency. Sequestration will place in jeopardy our ability to
    achieve this readiness, so we will have to fundamentally reconsider
    whether the Army has the ability to meet combatant commander
    requirements.
        The long-term nature of sequestration puts every one of the Army's
    10 major investment priorities in jeopardy including vital network,
    combat vehicle and aviation modernization programs. The industrial base
    assorted with supporting the Army is also likely to make cost-benefit
    decisions about where best to be competitive, with the attendant
    decline in developing and producing the equipment our soldiers need. We
    will also be finalizing the withdrawal of the bulk of our equipment
    from Afghanistan, which, along with equipment still being reset from
    Iraq, will require additional investment to return to full use.
        Additionally, leader development will continue to be shortchanged.
    While we can recruit and train soldiers in relatively short order, we
    cannot build their leaders in a similar time span. The professional
    noncommissioned and commissioned officers who carry the Army across the
    years need the benefit of not only serving in units that train for and
    conduct wide ranging missions but also the professional education that
    deepens their knowledge of and commitment to the profession.
        While all of these trends are ultimately reversible, the critical
    variable is time. Maintaining a capable and ready Army is not like
    flipping a light switch; it takes years of dedicated effort by a large
    number of dedicated professionals. Sequestration will take that time
    from us.
        Ladies and gentlemen, sequestration is not in the best interest of
    our country, our soldiers, or our national security. Our current fiscal
    uncertainty is resulting in the cancellation of training today, the
    reduction of services to Army families today, and the firing of 3,100
    valuable civilian employees today. The cumulative effect of the Army's
    budget shortfalls and the enactment of sequestration put at risk the
    Army's ability to execute Department of Defense strategic guidance.
        We have a talented, committed, experienced, well-led, and
    professional force. Our Army has performed its missions in Iraq and
    Afghanistan with great proficiency, professionalism, and courage. We
    cannot take the readiness of our force for granted. We cannot send our
    soldiers into combat unprepared. If we don't have the resources to
    ensure their readiness, our soldiers will be the ones who pay the
    price. It is incomprehensible to me that we will put this burden on the
    shoulders of those who have sacrificed so much during nearly 12 years
    at war.
        Mr. Chairman, members of the committee: Thank you again for the
    opportunity to speak here today. The Army leadership understands the
    seriousness of our country's fiscal situation, but we need a
    legislative solution that averts sequestration and gives our leaders
    the flexibility to work with the resources you provide to shape our
    Forces for the future. We will be good stewards of the resources you
    give us. It is an honor to serve this great Nation and stand beside the
    dedicated professionals of our Army.

             The strength of our Nation is our Army
             The strength of our Army is our soldiers
             The strength of our soldiers is our families.
             This is what makes us Army Strong!

        I look forward to your questions.

        Chairman Levin. Thank you so much, General Odierno.
        Now Admiral Ferguson.

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

        Admiral Ferguson. Chairman Levin, Senator Inhofe, and
    distinguished members of the committee, thank you for the
    opportunity to testify on this important issue.
        Simply stated, the combined effect of a year-long CR and
    sequestration will reduce our Navy's overseas presence and
    adversely impact the material readiness and proficiency of our
    force, thus limiting the President's options in time of crisis.
        Of equal concern, we will irreversibly damage the
    industrial base that we depend upon to build and maintain our
    ships and aircraft.
        Under these circumstances, we assess your Navy will be
    limited in its ability to provide the capability and capacity
    called for in the current defense strategy. The Navy will be
    unable to execute all the naval force requirements of the
    combatant commanders.
        The impact of the CR is already being felt across the
    force. We will reduce our operations and maintenance spending
    by $4.6 billion over the remainder of the fiscal year as we
    defer maintenance, execute a hiring freeze, and reduce
    operations and base support. Because we are operating under a
    CR, we also do not have congressional authority to initiate new
    programs or adjust funding for ongoing programs. Over $5
    billion in planned fiscal year 2013 investments are affected.
        For example, we will be compelled to delay the start of
    construction of USS John F. Kennedy (CVN 79); the completion of
    USS America (LHA 6); as well as cancel procurement of an
    Arleigh Burke-class destroyer and hundreds of weapons. Without
    congressional authority, the carrier USS Abraham Lincoln must
    remain moored at Naval Station Norfolk rather than start her
    overhaul, and we will not be able to complete the current
    overhaul of the USS Theodore Roosevelt.
        These debilitating effects will be compounded by the
    devastation of sequestration, should it execute in its present
    form on March 1st. On that date, the Navy will face an
    additional reduction in this fiscal year of $4 billion to our
    O&M account, and a reduction of over $7 billion to our
    investment accounts. The immediate impact will be to our fleet
    operations and depot maintenance. We anticipate reducing flight
    operations and underway days for our deployed forces,
    cancelling deployments, deferring more maintenance on ships and
    aircraft, suspending most nondeployed operations, such as
    training and certifications, along with other cost-cutting
    measures. We will immediately begin to erode the readiness of
    the force.
        Over the long term, the discretionary budget caps under
    sequestration will fundamentally change our Navy. We will be
    compelled to reduce our force structure, end strength, and
    investments as we lower funding levels and the altered
    landscape of our industrial base.
        Like many Americans, our sailors, civilians, and their
    families are experiencing increased anxiety as a result of this
    fiscal uncertainty such as the Truman strike group that you
    alluded to, Senator. We must be mindful of the corrosive effect
    of this uncertainty on the morale of our people and be vigilant
    regarding the potential effects of sequestration on the
    propensity of our force to stay with us, and of new recruits to
    join. Accordingly, we will make every effort to sustain family
    and sailor support programs.
        We ask that Congress act quickly to reduce the magnitude of
    these reductions and replace the mechanism of sequestration
    with a coherent approach that addresses our national security
    interests.
        Additionally, we request that Congress enact a fiscal year
    2013 appropriations bill or other legislation that provides
    appropriate authorities for new starts and transfer authority
    between our accounts to address our immediate shortfalls.
        We look forward to working with Congress to resolve this
    fiscal uncertainty, and we must ensure that our Navy remains
    ready and capable to protect our Nation's security and
    prosperity.
        I appreciate the opportunity to testify today and look
    forward to your questions. Thank you.
        [ADM Jonathan W. Greenert, USN, Chief of Naval Operations,
    was scheduled to appear at this hearing. Due to a scheduling
    conflict, he was unable to attend. In his place, ADM Mark E.
    Ferguson III, USN, Vice Chief of Naval Operations, testified;
    however, Admiral Greenert's prepared statement is included in
    the record. Admiral Ferguson did not submit a prepared
    statement.]
        [The prepared statement of Admiral Greenert follows:]

                Prepared Statement by ADM Jonathan Greenert, USN

        Chairman Levin, Ranking Member Inhofe, and distinguished members of
    the committee, thank you for holding this hearing and for the
    opportunity to testify on the impact on our Navy of sequestration and a
    full-year Continuing Resolution (CR).
        Important qualities of our naval forces are their readiness to
    respond to crisis and persistent forward presence. Because they
    continuously operate overseas at the maritime crossroads, our Navy and
    Marine Corps are the first responders to crises such as terrorist
    attack, military aggression or natural disaster. Operating forward at
    strategic maritime crossroads such as the Straits of Malacca, Hormuz,
    or Gibraltar, naval forces contain conflict, deter aggression without
    escalation, and assure allies and build partnerships.
        When I last appeared before you I assessed that our fiscal year
    2013 budget proposal, developed under the limitations of the Budget
    Control Act of 2011 (BCA), was not without risk. As I said last year,
    senior DOD leaders conducted an assessment of the ability of our force
    to implement the new Defense Strategic Guidance (DSG). In the Navy we
    also assessed the capabilities, training, and the number and type of
    ships and aircraft required to execute the strategy. We determined the
    force supported by the fiscal year 2013 budget proposal was able to
    execute the strategy, but with some risk due to limitations in overall
    capacity.
        There is no question we must get our Nation's fiscal house in
    order, but we should do so in a coherent and thoughtful manner to
    ensure appropriate readiness, warfighting capability and forward
    presence--the attributes we depend upon from our Navy. Unless we change
    course we will, without proper deliberation, dramatically reduce: our
    overseas presence; our ability to respond to crises; our efforts to
    counter terrorism and illicit trafficking; and our material readiness
    across the Navy (afloat and ashore). Perhaps more disconcerting, we may
    irreversibly damage the military industrial base we depend on to build
    and maintain our ships and aircraft. Over the next decade, the
    combination of sequestration and the reduced discretionary caps would
    compel us to dramatically reduce our fleet size. Under these
    circumstances, I assess your Navy will be limited in its ability to
    provide the capability and capacity called for in the current defense
    strategy; and unable to fully support the Global Force Management
    Allocation Plan for our Combatant Commanders.

                                 OUR SITUATION

        We face three separate, but linked, budget mechanisms that converge
    next month and place at risk our ability to carry out our defense
    strategy. As a result of the failure of the Joint Committee established
    under the BCA to achieve $1.2 trillion in deficit reduction, a
    sequestration order will be issued on March 1; in addition, a second
    sequestration due to a breach in the fiscal year 2013 discretionary
    caps is scheduled to be ordered on March 27. Sequestration will add to
    a budget shortfall in operating accounts already created by the
    Continuing Resolution (CR). Sequestration and the CR render us unable
    to continue our current and anticipated level of operations, compel us
    to cancel some maintenance and training, and constrain our ability to
    invest in future capability and capacity.
        We will approach this challenge using our enduring tenets,
    established upon my assuming the office of CNO, to guide us:

             Warfighting first
             Operate forward
             Be ready

        The Navy's primary mission is to be ready to fight and win today,
    while building the ability to win tomorrow; all our efforts will remain
    grounded in this fundamental responsibility. We will continue to
    operate forward, where the Navy is most effective; but at significantly
    lower levels. We will endeavor to remain ready, providing our fleet and
    sailors the best possible training, maintenance, and logistics to
    assure their confidence and proficiency.

               FISCAL YEAR 2013: A READINESS CRISIS IN THE MAKING

        Our immediate concern from the sequestration and the CR is their
    impact on readiness and training during this fiscal year. The CR is
    based on fiscal year 2012 funding levels and therefore includes fewer
    operating dollars than we proposed, and Congress authorized, for fiscal
    year 2013. Extended for the whole fiscal year, the CR would provide the
    Navy $3.2 billion less in operations and maintenance funds than
    requested in the fiscal year 2013 budget. In addition, we have incurred
    $1.4 billion in unplanned costs in fiscal year 2013 from emergent ship
    repairs and increased (and unbudgeted) presence in the Arabian Gulf.
    The CR also precludes the start of new projects. If the CR is extended
    for the whole fiscal year, we will stop work on two aircraft carrier
    refueling overhauls (USS Abraham Lincoln and USS Theodore Roosevelt),
    one of which is within 4 months of completion. The prohibition on ``new
    starts'' under the CR also compels us to defer construction of USS John
    F. Kennedy (CVN-79), USS Somerset (LPD-25) and USS America (LHA-6) and
    cancel the planned procurement of an Arleigh Burke-class guided missile
    destroyer, multiple P-8A Poseidon aircraft and hundreds of weapons.
    Similarly, we will not begin about $675 million in ``new start''
    military construction projects while under the CR.
        In addition to the CR funding shortfall in operating accounts, the
    March 1 sequestration order would impose significant additional cuts in
    fiscal year 2013, which would reduce all of our accounts by about 8
    percent. As mentioned above, second sequestration due to a breach in
    the fiscal year 2013 discretionary caps is scheduled to be implemented
    on March 27. The Department estimates the combined effects of
    sequestration will be a 9 percent reduction, which would result in a $4
    billion cut in operations and maintenance funding from current levels
    and $11.2 billion in the fiscal year 2013 budget overall. Taken
    together, the CR, sequestration and emergent costs would create an $8.6
    billion shortfall in the operations and maintenance account for fiscal
    year 2013. $12.3 billion has already been spent from this account in
    fiscal year 2013, and another $16.4 billion is fixed in existing
    contracts and safety requirements. Therefore, we must find $8.6 billion
    in savings from the remaining $20.2 billion in operations and
    maintenance funding--more than a third of the money available in the
    account.
        Therefore, we are compelled to take the following steps:

             Cancel 70 percent of ship maintenance in private
            shipyards and all aircraft maintenance scheduled in the third
            and fourth quarters of fiscal year 2013; this affects up to 25
            ships and 327 aircraft and eliminates critical ship and
            aircraft repair and adds to an existing maintenance backlog
            generated by a decade of high-tempo operations--resulting in an
            overall Navy maintenance backlog of about $3 billion;
             Reduce by about one-third the number of days at sea
            and hours of flight operations for ships and aircraft
            permanently stationed in the Asia-Pacific; cancel all aircraft
            deployments and four of six ship deployments to the region;
             Reduce by half the number of days at sea and by one
            quarter the hours of flight operations for ships and aircraft
            in the Middle East and Arabian Gulf; reduce carrier presence in
            the Arabian Gulf to one (the requirement is two carriers);
             Stop Amphibious Ready Group (ARG) deployments to the
            Middle East/Arabian Gulf in fiscal year 2014 after USS Boxer;
            this loses the Nation's primary response force for crises such
            as noncombatant evacuations in Liberia and Lebanon, floods in
            Pakistan and Thailand and terrorism threats in Africa--all of
            which were addressed by ARGs in the past decade.
             Cancel five of six fiscal year 2013 ship deployments
            (including USNS Comfort) and stop all aircraft deployments to
            South America, stopping efforts that interdicted hundreds of
            tons of illegal drugs into the United States in 2012;
             Cancel all ship and aircraft deployments to Africa,
            halting support to counter-terrorism operations on the
            continent during a time when terrorist affiliates are active
            there;
             Stop training and certification of ballistic missile
            defense ships, resulting in no new deployments of these ships
            to Europe after October 2013;
             Cancel most non-deployed operations including
            exercises, pre-deployment certification, and all port visits in
            the continental U.S.; as a result, the number of ships
            available for homeland defense will be reduced and it will take
            9 to 12 months for ships that were not preparing to deploy to
            regain certification for Major Combat Operations;
             Stop training and certification for Carrier Strike
            Groups (CSG) except for the one next to deploy to the Middle
            East/Arabian Gulf; We will have only one additional or
            ``surge'' CSG certified for Major Combat Operations in fiscal
            year 2013 and throughout fiscal year 2014 (down from almost
            three on average);
             Stop training and certification for Amphibious Ready
            Groups (ARG), resulting in no additional or ``surge'' ARG
            certified for Major Combat Operations in fiscal year 2013 and
            fiscal year 2014;
             Freeze hiring of civilian workers and release current
            temporary workers, resulting in a reduction of about 3,000
            people from our shipyard workforce of Navy civilians;
             Plan to furlough up to about 186,000 civilians for 22
            days, resulting in a 20-percent pay reduction.

        On top of reductions in operations and maintenance funding,
    sequestration will reduce fiscal year 2013 funding for each investment
    program (about $7.2 billion overall). In some programs, such F-35C
    Lightning II, P-8A Poseidon and E-2D Hawkeye, this reduction will
    compel us to reduce the number of platforms procured in fiscal year
    2013.
        In addition to these immediate impacts, our actions in fiscal year
    2013 to address reductions from the CR and sequestration will begin to
    erode our readiness in four major ways:

              Degraded material condition and expected service life of our
            ships and aircraft. The cancellation of maintenance for ships
            and aircraft will reduce their service lives, increase the
            likelihood of break downs and force us to pay a higher cost
            (premium) to make up the critical maintenance later. Should
            operations funding eventually become available, some ships and
            aircraft will be unavailable to deploy or surge because they
            need repairs; further, we will need to realign ship maintenance
            periods and repairs within an already tight operational
            schedule.
              Sailors lacking proficiency and confidence. Cancelled
            training and exercises could result in some units in the fleet
            that, by the end of fiscal year 2013, are not proficient in the
            basic skills necessary for effective warfighting operations. To
            be effective, we need all combatants able to deploy or surge to
            a contingency.
              A damaged industrial base. Delayed or cancelled ship and
            aircraft construction, cancelled maintenance and repair, and
            reduction of the civilian workforce will immediately impact
            private shipyards, aircraft and weapons manufacturers and our
            military industrial base. The loss of work in fiscal year 2013
            alone may cause some smaller suppliers and service providers to
            shut down.
              Increased strain and operational tempo on our sailors and
            civilians. The reduction of ready forces will put greater
            stress on the sailors assigned to ships and squadrons that are
            currently deployed or soon to deploy. They will operate at a
            higher tempo; and we are already at an extraordinary
            operational tempo. While military compensation is exempt from
            sequestration, there is a cost to the force in having to do
            more. However, I remain committed to making sure we provide for
            our sailors, civilians, and their families by funding our most
            important missions and deployments, and Family Readiness
            Programs.

        If Congress authorizes the Navy to transfer funds within the fiscal
    year 2013 budget, we intend to restore our most critical operations and
    maintenance requirements. This will be done by taking funding from
    investments such as perhaps the P-8A Poseidon, F-35C Lightning II and
    Littoral Combat Ship--resulting in fewer of these platforms being
    procured in fiscal year 2013.

        LONGER-TERM EFFECTS: A DIFFERENT FLEET AND A DIFFERENT STRATEGY

        In addition to sequestration for fiscal year 2013, the BCA also
    required the lowering of the discretionary caps for fiscal year 2014
    through fiscal year 2021. Beyond fiscal year 2013, if the discretionary
    cap reductions are sustained for the full 9 years, we would
    fundamentally change the Navy as currently organized, trained and
    equipped. As time allows, we will take a deliberate and comprehensive
    approach to this reduction, based on a reevaluation of the Defense
    Strategic Guidance. In doing so, I will endeavor to: (1) ensure our
    people are properly resourced; (2) protect sufficient current readiness
    and warfighting capability; (3) sustain some ability to operate forward
    by continuing to forward base forces in Japan, Spain, Singapore and
    Bahrain, and by using rotational crews; and (4) maintain appropriate
    research and development.
        As I indicated last year to the Senate Armed Services Committee
    (SASC), under a set of fiscal circumstances in sequestration, our Navy
    may be a fleet of around 230 ships. That would be a loss of more than
    50 ships, including the loss of at least two carrier strike groups. We
    would be compelled to retire ships early and reduce procurement of new
    ships and aircraft. This would result in a requisite reduction in our
    end strength. Every program will be affected and as Secretary Panetta
    noted in his 2011 letter to Senators McCain and Graham, programs such
    as the F-35 Lightning II, next generation ballistic missile submarine
    and Littoral Combat Ship might be reduced or terminated.
        Inevitably, these changes will severely damage our industrial base.
    Some shipyards will not be able to sustain steady construction or
    maintenance operations and may close or be inactivated. Aviation depots
    will reduce their operations or become idle. Aircraft and weapons
    manufacturers will slow or stop their work entirely. In particular, the
    small firms that are often the sole source for particular ship and
    aircraft components will quickly be forced to shut down. Once these
    companies and their engineers and craftspeople move on to other work,
    they are hard to reconstitute, sometimes impossible, at a later date
    when our national security demands it.

       REDUCING THE IMPACT OF SEQUESTRATION AND THE CONTINUING RESOLUTION

        We ask that this Congress act quickly to replace sequestration with
    a coherent approach to deficit reduction that addresses our national
    security interests. Additionally, the Department needs Congress to pass
    fiscal year 2013 appropriations legislation that allows the department
    to allocate reductions in this fiscal year in a deliberate and coherent
    manner to sustain current operations while meeting current obligations.
        I am honored to represent about 600,000 sailors and civilians
    serving their country in the U.S. Navy. We understand the importance of
    resolving our fiscal challenges to ensure our Nation's future
    prosperity. I look forward to working with Congress to ensure our Navy
    will remain the world's preeminent maritime force while continuing to
    protect our Nation's security and prosperity.

        Chairman Levin. Thank you very much, Admiral.
        General Amos.

    STATEMENT OF GEN. JAMES F. AMOS, USMC, COMMANDANT OF THE MARINE
                                 CORPS

        General Amos. Chairman Levin, Ranking Member Inhofe, and
    committee members, thank you for the opportunity to testify
    before this committee on the potential impacts of
    sequestration. This topic is one of high importance with
    implications not only to our fiscal health but also our
    Nation's necessary leadership in the global community.
        Speaking as a member of the Joint Chiefs of Staff, a
    critical measure of the effectiveness of our Armed Forces is
    its readiness. Sequestration by its magnitude, its timing, and
    its methodology will have a devastating impact on readiness
    both short-term and long. Combined with the effects of the
    existing CR, sequestration creates unacceptable risk; risk to
    our strategy, risk to our forces, risk to our people, and
    lastly risk to our Nation.
        Regarding strategy, maintaining a free international
    economic system and a just international order are linchpins to
    our Defense Strategic Guidance. The effects of disruption to
    this global order are readily observed in rollercoaster energy
    prices, fluctuating global markets, sovereign behavior, and
    economic uncertainty. Failing to provide leadership in the
    collective security of this global order would have significant
    economic consequences for the American people. Worse, the lapse
    in American leadership would create a void in which old threats
    would be unaddressed and new security challenges would find
    room to grow. There should be no misunderstanding. The combined
    effect of the CR and sequestration will have a deleterious
    effect on the stability of global order, the perceptions of our
    enemies, and the confidence of our allies.
        Sequestration should not be viewed solely as a budget
    issue. Our collective actions in the next months will be
    scrutinized on a global stage and even the perception of a
    disruption of our Nation's ability to protect its global
    interests could well have strategic consequences.
        Regarding risk to our forces, the linkage between resources
    and readiness is immediate and visible. The scale and abrupt
    implementation of sequestration will have devastating impacts
    on readiness. Sequestration will leave ships in ports, aircraft
    grounded for want of necessary maintenance and flying hours,
    units only partially trained and reset after 12 years of
    continuous combat, and modernization programs cancelled.
        Because of our special role as America's crisis response
    force, marines place a high premium on readiness. I have done
    everything in my authorities to date to preserve the tenets of
    a ready Marine Corps. I will continue to do so. Under a CR, I
    have kept deploying units ready but only by stripping away the
    foundations of the long-term readiness of the total force.
    While these short-term adaptations are possible, the enduring
    effects of some of these decisions put us at an unsustainable
    tipping point. By the end of this year, more than 50 percent of
    my combat units will be below minimal acceptable levels of
    readiness for deployment to combat.
        In a sense, we are eating our seed corn to feed current
    demands, leaving less to plant for the long-term capabilities
    of the force. This pattern inevitably leads to a hollow force
    and its impacts are already being felt under the CR.
        The most troubling and immediate risks are those that
    sequestration imposes on our people. Sequestration does not
    hurt things. It hurts people. The qualitative edge that the
    American servicemember takes to the battlefield is the
    fundamental advantage that differentiates our forces from our
    enemies. This qualitative combat edge will be severely eroded
    by the impacts of sequestration, leaving marines and other
    servicemembers with inadequate training, degraded equipment,
    and reduced survivability.
        While military pay and allowances have been exempted in
    this round of sequester, the quality of life for the All-
    Volunteer Force and their families will inevitably suffer as we
    reduce family programs and installation maintenance. Our
    civilian marines will likewise be impacted. The 95 percent of
    our civilian workforce that is employed well outside the
    confines of the National Capital Region are the Guards at our
    gates, our budget experts who pay our bills, our acquisition
    professionals, the therapists who treat our wounded, and the
    experts who repair our equipment, and finally the teachers who
    instruct our children. The economic impacts to these families
    and their local communities are put at risk by either short-
    term furlough or long-term termination. Protecting our ability
    to keep faith with our wounded warriors is a top priority in my
    Marine Corps, but even this, this most sacred of
    responsibilities, will increasingly be placed at risk.
        In closing, allow me to articulate one more set of risks,
    the risk to our Nation. In the final analysis, sequestration
    asks the most from those who have borne the greatest sacrifice.
    It invalidates the careful planning of the services to manage a
    predictable resource decline, replacing it instead with a
    dramatic resourcing cliff that guarantees inefficiency, waste,
    and its accommodation. The effects of sequestration over the
    long term will threaten the foundations of the All-Volunteer
    Force, putting the Nation's security on a vector that is
    potentially ruinous. It dramatically shapes perceptions of our
    Government as both an employer and as a customer, reducing
    confidence throughout institutions.
        These are all risks that demand our immediate attention and
    action. By its scale, timing, and inflexibility in
    implementation, sequestration greatly aggravates our national
    risk profile, all at a time of strategic rebalancing and
    change. I urge the committee to consider the full range of
    risks created by this legislation and ask for your assistance
    in mitigating them to the extent possible.
        Thank you and I look forward to answering your questions.
        [The prepared statement of General Amos follows:]

                 Prepared Statement by Gen. James F. Amos, USMC

                                  INTRODUCTION

        As a Nation and as a department, we are entering difficult times.
    My fellow service chiefs and I are here to talk about the potential
    impacts of both the current continuing resolution (CR) and
    sequestration and the resulting fiscal impacts. We are here to talk
    about the challenges that have already presented themselves as a result
    of the CR, and the further disruptive impacts of pending sequestration.
    I think it is important, however, to start with some things that will
    not change. All marines, including their Commandant, believe in the
    criticality of our role in the defense of our Nation. Our marines in
    the valleys of Afghanistan, afloat on amphibious ships, standing their
    posts at our embassies, and training for war at home . . . all remain
    at their posts. We are highly cognizant of the global stage upon which
    our collective actions will be scrutinized, and we share the concern of
    all that even the perception of a disruption of our Nation's ability to
    protect its global interests will have strategic consequences.
        As Commandant, I assure you that we will do everything in our power
    to ensure the continued security of the American people, to protect the
    global interests that underpin our prosperity; we will meet our
    responsibilities for rapid response to crisis wherever it may occur.
    Marines will be always faithful to the trust which the American people
    have vested in them. You have my pledge that I will do everything
    within my authorities to maintain that forward deployed and ready
    force, period. Already a lean organization, your marines will continue
    to give you the best capability that can be squeezed from the resources
    you allocate for our Nation's defense.

                            RESOURCES AND READINESS

        Struggling under the CR funding levels for operating and investment
    accounts, which are much lower than the request, the prospect for even
    deeper reductions from sequestration in this fiscal year is alarming.
    There should be no misunderstanding; the combined effect of the
    continuing resolution and sequestration will have a significant effect
    on the global security climate, the perceptions of our enemies, and the
    confidence of our allies. In a new normal of brushfire instabilities,
    violent extremism, non-state threats and struggling sovereign entities,
    the role of the United States as a leader in the protection of the
    international order is central. The effects that our Armed Forces
    create in this global environment are measured in ready crisis response
    forces, ships at sea, planes in the air, partnerships on the ground and
    trust among our allies. In a word, our propensity to remain a global
    leader in a challenging world is measured in Readiness. Readiness is
    the aggregate of the investment in personnel, training, and equipment
    to ensure that units are prepared to perform missions at any given
    time. Our ability to project a ready force is measured by friend and
    foe alike. Their reactions, and the impacts on the international order
    upon which our prosperity and security depend, are a direct reflection
    of the readiness of our forces.
        The linkage between resources and readiness is immediate and
    visible. While I think all can agree that defense resources must be
    highly scrutinized as our Nation finds its fiscal footing, the scale
    and abrupt implementation of prospective resource changes have the
    potential for devastating impacts on readiness. This is not a temporary
    condition. Impacts on readiness have primary, secondary and tertiary
    effects. While the primary effects on short-term readiness will be
    observable immediately, the longer-term effects may be even more
    devastating. Under the continuing resolution at fiscal year 2012
    resource levels, I have already been forced to realign funds from
    longer term activities within the operation and maintenance account to
    protect the short-term readiness of our combat deployed marines, and
    those on the forward edge of our Nation's ability to respond swiftly
    when crisis erupts. While these short-term adaptations are possible,
    the short-term readiness of our current forces comes at the expense of
    those who will follow in their footsteps. In a sense, we are eating our
    `seed corn' to feed current demands, leaving ever less to plant for the
    enduring security demands of the Nation.
        Without action from Congress to address the magnitude of defense
    resource changes, the abrupt nature of the imposition of reductions,
    and the severe inflexibility in their implementation, the Nation will
    experience significantly degraded defense readiness. The strategic
    impacts will be immediate and global.

                       MARINE CORPS READINESS DEGRADATION

        The Defense Strategic Guidance remains a clear articulation of
    future threats, challenges, and opportunities--I continue to support
    its full implementation. In the event of an annualized CR, the Marine
    Corps faces a $406 million reduction in its Operation and Maintenance
    budget relative to the President's fiscal year 2013 budget. This will
    create immediate challenges in maintenance, training, and base
    operations accounts. Given the looming specter of sequestration in
    addition to the CR, we face an extended period of severely constrained
    spending driven by rules that provide little flexibility to efficiently
    apply the mandated reductions. Analyzing and applying constrained
    resources requires decisions now; decisions that will have strategic
    impact.
        By the will of the 82nd Congress, the Marine Corps is mandated to
    be the Nation's expeditionary force in readiness. Having been dubbed
    ``America's 911 Force,'' we are our Nation's hedge against uncertainty
    . . . a national insurance policy of sorts. As such, deployed forces,
    and units in training alike, are poised to swiftly respond to crisis
    and disaster, giving immediate options for strategic decision-makers .
    . . all while buying time for the generation of the larger joint force.
    We mitigate the risk inherent in an uncertain world by being ready to
    respond to today's crisis--with today's force--today. Even when not
    deployed, Marine units are required to maintain higher levels of
    readiness, so they can deploy on short notice. ``Tiered readiness,''
    where resources from non-deployed units are paid-forward to ensure that
    deployed and next-to-deploy units have sufficient personnel, equipment,
    and training to accomplish their mission, is a recipe for a hollow
    force. Over time, tiered readiness leads to an unacceptable degradation
    in unit readiness. This is not compatible with the ethos, role, or
    missions of our Nation's expeditionary force in readiness.
        Our marines on the forward edge of our Nation's security remain my
    number one priority. The forces that currently support the Afghanistan
    mission, those engaged in countering terrorism globally, and those
    preparing to go, will receive the full support they need. This has my
    full attention. Protection of support services for our wounded warriors
    and their families also remains a high priority. Our focus on deployed
    forces, families, and our wounded warriors, comes at a cost. Under the
    continuing resolution, I have been forced to degrade activities
    necessary to the long-term readiness of the force, such as
    organizational and intermediate maintenance of equipment returning to
    theater, to ensure the full support to our most engaged units. For
    forces not deploying to Afghanistan, the fuel, ammunition, and other
    support necessary for training will be reduced precluding our ability
    to provide fully trained individuals and ready units to meet emerging
    crises--ultimately impacting even the Amphibious Ready Group and our
    Marine Expeditionary Units. The looming specter of sequestration, if
    not addressed, amplifies this impact. To keep our marines in the field,
    we are already being forced to reduce depot maintenance of our
    equipment, reduce our participation in training exercises, reduce
    equipment buys and curtail modernization programs. Despite the
    constrained funding resulting from the CR and sequestration, in the
    next 6 months we will be able to continue meeting Marine Corps deployed
    warfighting needs and the training of next-to-deploy forces. Between 6
    and 12 months, however, we'll continue to decrement readiness accounts
    with ever increasing erosion of home station unit readiness and force
    modernization, and begin to show small impacts in next-to-deploy
    forces. Beyond 12 months we will see a real impact to all home station
    units (e.g. fixed wing squadrons will have on average only 4 of 12
    assigned aircraft on the ramp due to aviation depot shutdowns) and the
    beginning of impacts to our next-to-deploy and some deployed forces--in
    all a slide to a hollow force we have fought so hard to avoid.
        It is important to note that sequestration has significant impacts
    well beyond this current year. Viewing sequestration and its impact
    solely in fiscal year 2013 abrogates our responsibility to ensure long-
    term readiness of the force. The Marine Corps manages the long-term
    health and readiness of the force by balancing resources across five
    broad pillars: high quality people, near-term unit readiness,
    capability and capacity to meet combatant commander requirements,
    infrastructure sustainment, and equipment modernization. Maintaining
    balance across all five of these pillars is critical to achieving and
    sustaining Marine Corps readiness. Actions we are being forced to take
    to ensure our short-term readiness (e.g. transferring facilities
    sustainment funding to support operations and equipment maintenance)
    are creating an imbalance across these pillars and will result in both
    near and far-term readiness shortfalls. The entirety of your Marine
    Corps' ground material modernization investment accounts for this
    fiscal year contains only $2.47 billion, comprising a mere 12 percent
    of our baseline budget. Due to our small numbers, further reductions in
    the ground investment accounts, although perhaps proportional to the
    other Services, will have disproportional impact on Marine Corps
    readiness, especially as it pertains to limited essential
    modernization.
        Marine Corps readiness is at a tipping point in the sense that our
    ability to rebalance funding from long-term investments to short-term
    readiness is becoming unsustainable. By the end of calendar year 2013,
    less than half of our ground units will be trained to the minimum
    readiness level required for deployment. The impact on our aviation
    units is not any better. Only two thirds of our aviation combat units
    will be at readiness levels required for overseas deployment; decreased
    readiness will compound in 2014 and beyond. In order to maintain our
    forward deployed ``fight tonight'' units at acceptable readiness
    levels, we will fall well below the minimum number of flight hours at
    home necessary to retain minimum safe flight standards and warfighting
    capabilities. We will have to reduce our Theater Security Cooperation
    and exercise support by 30 percent in the Asia-Pacific region, opening
    the door to those who would gladly take our place in global leadership.
    In doing so, we will markedly limit bilateral and multi-lateral
    engagement opportunities, thus putting our credibility at risk with our
    allies and partners. The void left by our ``actual absence,'' where we
    may be needed most, will be filled by somebody . . . some other nation
    or entity.

                             CONTAINING THE DAMAGE

        We have worked diligently to mitigate the effects of the CR,
    slowing the rate of expenditures across our accounts to ensure
    sufficient funding for the entire fiscal year and to better prepare for
    the potential effects of sequestration. Our task has been made more
    challenging by the ever increasing demand for marines. A resumption of
    the Marine Unit Deployment Program in the Pacific has reestablished a
    key component of the Nation's stabilizing presence in the Asia Pacific
    region. The establishment of a rotational presence of marines in
    Darwin, Australia has already had a positive impact on the confidence
    of our allies and our ability to respond to crises in the South and
    Southeast Asian littoral. The planned ramp-up of Marine security forces
    for our embassies and consulates is a necessary artifact of the ``new
    normal.'' Marines are in high demand to support the growth of special
    operations and cyber forces as well. Together, the increased
    requirement for marines around the globe, combined with the reduced
    funding associated with an annualized CR, has created a Marine Corps
    funding shortfall of $945 million in fiscal year 2013.
        To preserve the ability to operate throughout the entire fiscal
    year and prevent immediate reductions in depot workforce, cyber
    activities, base security, and ongoing training and exercises we
    reallocated second quarter fiscal resources from lesser priority
    funding. We have curtailed all but mission-essential travel and
    conferences. We have slowed expenditure rates below those required to
    maintain our current readiness levels, and have reduced depot funding
    and facilities sustainment, restoration and modernization spending. We
    have delayed major contracting actions until later in the fiscal year,
    where feasible, to give us a hedge against our worst-case fiscal
    scenario--CR and sequestration. Had we not taken these actions, we
    would have exhausted our operations and maintenance resources in early
    to mid-August with no way to pay for even our deploying and next-to-
    deploy forces' readiness.
        As an example of our funding slow down, we are delaying obligation
    of MRAP support funding as we validate essential operational
    requirements. We reduced civilian personnel budget caps and allowed
    commanders to determine priority hiring within these reduced spending
    levels, even though they are still recovering from a previously
    instituted 14-month long Marine Corps wide hiring freeze in 2011 and
    2012. This funding reduction reduced planned civilian personnel
    expenditures by $38 million and will result in the Marine Corps being
    approximately 400 civilians short of our intended fiscal year 2013
    civilian workforce end strength. Some essential programs at our bases
    and stations, such as our Wounded Warrior programs, will continue while
    other, less critical programs such as Tuition Assistance and Off Duty
    Education are reduced or eliminated as the resources necessary to
    maintain faith with our marines and their families are used to fund
    readiness. While no decisions on furloughs have been made, we have
    published guidance across the Marine Corps to plan for reduction in
    temporary and term employees, and for potential furloughs of civilian
    personnel. The potential extensive and deleterious human and family
    effects associated with furloughing our civilian marines are
    unthinkable, but in the event they are unavoidable, we must do prudent
    planning. Beyond the individual impact of furloughs to our civilian
    marines, the impact on everything from readiness at Marine Special
    Operations Command, the readiness impacts at our Depots and our bases
    and stations, to the readiness impacts on our Wounded Warrior and
    family programs is significant. Our civilian marines are not simply
    headquarters staff personnel in the Pentagon. Rather, 95 percent of our
    civilian workforce comes to work every day outside the National Capitol
    Region and performs invaluable functions that keep our Marine Corps
    ready and contribute directly to our warfighting effectiveness.
        Although barely sufficient to mitigate the immediate impacts of an
    annualized CR, these actions are in no way sufficient to cover the
    additional fiscal impact of sequestration in fiscal year 2013.
    Sequestration is expected to impose nearly an additional billion
    dollars in resource reduction to the Marine Corps this year. This will
    drive irreversible readiness impacts, especially when viewed through a
    long-term lens. The inflexibility of sequestration and discretionary
    cap reductions in the Budget Control Act of 2011, if allowed to occur,
    would trigger cascading cuts in our operating budgets through 2021.
    Many initiatives will be unfunded or underfunded given our potential
    resourcing levels. Here are some specific examples of actions I will be
    forced to take due to the combined effects of the CR and sequestration:

             Reduce depot funding to 27 percent of the identified
            requirement, thus decreasing throughput of depot level
            maintenance for organizational equipment, and delaying our
            ability to reset war-torn equipment by 18 months or more
             Park over 80 aircraft as depot maintenance schedules
            are stretched out
             Reduce support to theater geographic combatant
            commander requirements for shaping their theaters, responding
            to crisis and preventing conflict
             Reduce participation in multi-national training
            exercises, degrading one of the most effective investments in
            building partner nation capacity
             Degrade training for deploying units due to lack of
            fuel, equipment and spare parts
             Cut ammunition allocations for gunner certification
            and training
             Cut flight hours available for pilot proficiency,
            safety, and certification
             Reduce facility maintenance to 71 percent of the
            requirement
             Delay Marine Corps contributions to Joint special
            operations and cyber forces
             Further reduce an already thinned civilian workforce
             Severely curtail or extend acquisition programs
             Reduce organizational activities including recruiting,
            range-maintenance, family-housing maintenance and quality of
            life enhancements for military families
             Curtail safety and base security investments
             Cut educational investments in the human capital of
            our uniformed and civilian workforce
             Reprioritize an entire year of Military Construction
            projects into fiscal year 2014 and beyond. Given the current
            fiscal limitations, some could be delayed or deferred or may be
            cancelled. When reductions in facilities sustainment are
            compounded with the inability to execute our planned Military
            Construction program for fiscal year 2013, we are faced with a
            situation where we have severely impacted planned aviation unit
            lay-downs associated with the MV-22 and F-35B, as well as other
            critical projects at home and in the Pacific.
             Delay major procurement programs such as Ground/Air
            Task Oriented Radar, Joint Light Tactical Vehicle, and
            Amphibious Combat Vehicle resulting in the possibility of Nunn-
            McCurdy breaches, Initial Operational Capability delays, and
            increased unit and total program cost.
             Cancel major multi-year procurements such as the MV-22
            and incur greater cost and program delay in future program buys

                              CONGRESSIONAL ACTION

        I have identified the very real impacts of the CR and the potential
    further impacts of sequestration. Congress can take actions in three
    areas that can lessen the impact and hopefully make less draconian
    implementation of reductions to the defense program:

             Review the magnitude of the total Defense reductions
            over the 10 years of sequestration and ensure the impacts to
            readiness and a sustainable national defense are well-
            understood and strategically acceptable;
             Pass a fiscal year 2013 appropriation bill that
            ameliorates to the greatest extent possible the adverse impacts
            of the continuing resolution; and
             If a fiscal year 2013 appropriation bill is
            unachievable, enhance the ability of the Services to optimize
            continued readiness under the current resource caps by allowing
            for reallocation or rebaselining of funds providing increased
            transfer and reprogramming authorities in the annualized CR,
            and include the ability to execute critical multi-year
            procurements such as the MV-22 and provide for fiscal year 2013
            military construction projects

        As part of either a fiscal year 2013 appropriation or an annualized
    CR, it will be necessary to arrest extra inflationary personnel cost
    growth in order to maintain a balanced portfolio and a capable force.
    Recently, the Joint Chiefs of Staff offered a number of well-developed
    and thoughtful proposals to slow or reduce the growing cost of our
    personnel accounts. I urge you to review these proposed adjustments to
    pay raises, housing entitlements, tuition assistance and TRICARE
    premiums. We must consider these critical cost reducing actions in
    order to continue to meet the Nation's defense requirements, take care
    of our people, and do so in a manner that retains the most ready,
    sustainable and capable All-Volunteer Force we have had across the
    proud history of this Nation.

                                   CONCLUSION

        Our actions to resource the defense of our national and global
    interests will have strategic consequences. Our foes, cunning and
    adaptive, watch carefully for any decline in American ability or
    willingness to lead in a partnered global order that supports the
    common good. The continued prosperity and security interests of our
    Nation are dependent on resourcing long-term success.
        While Congress and this committee carefully executes their
    responsibility to validate every taxpayer dollar they appropriate to
    our Nation's defense, I can assure you that the Marine Corps will
    continue to uphold our share of this responsibility as a sacred trust.
    Our reputation as the ``frugal force'' comes from an ethos that values
    both high combat readiness, and careful stewardship. The Marine Corps
    will ask only for what it needs, not for what it wants. I am committed
    to building the most ready Marine Corps that the Nation can afford. The
    current fiscal uncertainty and the implementation restriction of
    sequestration prevent realizing this commitment and threaten to force
    our retrenchment from those global issues and areas that are still of
    critical importance to America. Working together, we can map out a
    resource strategy that protects our global interests as a nation, keeps
    faith with our servicemembers, and provides the greatest value to the
    American people. I thank you for the opportunity to engage in this
    dialogue, for your service to our Nation, and for your continued
    support to your marines. Semper Fidelis.

        Chairman Levin. Thank you, General Amos.
        General Welsh.

     STATEMENT OF GEN. MARK A. WELSH III, USAF, CHIEF OF STAFF OF
                             THE AIR FORCE

        General Welsh. Thank you, Mr. Chairman, Ranking Member
    Inhofe, and members of the committee. It is always an honor to
    appear before you.
        In line with what you have already heard, sequestration
    threatens to carve crucial capability from America's Air Force
    with alarming and immediate effects on people, readiness, and
    infrastructure and eventually on modernization. Sequestration
    represents a potential $12.4 billion top line reduction for the
    Air Force in fiscal year 2013, affecting every account and
    program. If it occurs, it will significantly undermine your Air
    Force's readiness and responsiveness today. It will
    significantly impact the Air Force civilian workforce in the
    coming months, and its impact on modernization will clearly
    affect the Air Force's future capability.
        I know your staffs have the specific examples from all the
    Services, but just to highlight a few.
        Sequestration will result in an involuntary 22-day
    furlough, as the Deputy Secretary mentioned, that will affect
    180,000 civilian airmen. That deprives our Air Force of over
    31.5 million man-hours of productivity and specialized
    expertise this year. It will result in a loss of over 200,000
    flying hours. While we will protect flying operations in
    Afghanistan and other contingency areas, nuclear deterrence,
    and initial flight training, roughly two-thirds of our active
    duty combat Air Force units will curtail home station training
    beginning in March and will drop below acceptable readiness
    levels by mid-May. Most will be completely non-mission capable
    by July.
        Sequestration will cut 30 percent of our remaining weapon
    system sustainment funds, which means we will need to postpone
    approximately 150 aircraft and 85 engines from depot induction,
    creating a backlog that could take years for us to recover.
        The Air Force's global vigilance, reach, and power make it
    one of America's premier asymmetric advantages. That strategic
    agility and responsiveness requires a high state of readiness.
    Sacrificing that readiness jeopardizes the many strategic
    advantages of air power. From a parochial Air Force
    perspective, sequestration will have an immediate effect on our
    ability to respond to multiple concurrent operations around the
    globe, something we have been asked to do many times in the
    past, along with our sister Services.
        Longer term, 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 breaches and time delay in efficiencies, raise
    unit costs, and delay delivery of validated capabilities to
    warfighters in the field. The Air Force is long overdue for
    reconstitution following 2 decades of war. Our inventory still
    includes aircraft that are as old as I am, and our force is as
    small as it has ever been since becoming a separate service.
    Now we find ourselves stuck in the unenviable trade space
    between readiness and modernization and we need your help to
    get out.
        I urge Congress to do all that is necessary to avert the
    arbitrary cuts of sequestration and to pass an appropriations
    measure for the current fiscal year. I look forward to your
    questions.
        [The prepared statement of General Welsh follows:]

               Prepared Statement by Gen. Mark A. Welsh III, USAF

        America's Air Force strives daily to be The World's Greatest Air
    Force--Powered by Airmen, Fueled by Innovation. However, the threat of
    sequestration continues to overshadow that vision, as well as the
    Department of Defense's efforts to organize, train, equip, and employ
    America's armed forces in the defense of our Nation, her allies, and
    her ideals. Designed as a forcing function to spur meaningful fiscal
    solutions for our country, sequestration has instead exerted incredible
    short- and long-term planning disruptions upon the Military Services.
    It now threatens to carve crucial capability from America's military
    without thoughtful consideration of changes in the strategic
    environment, our Nation's defense strategy, or the conscious assumption
    of risk in the military instrument of national power.
        If sequestration occurs, it will significantly undermine the Air
    Force's readiness and responsiveness today, wreak havoc on the Air
    Force civilian workforce in the coming months, and--by hobbling
    modernization efforts--mortgage the Air Force's future health for years
    to come. For the U.S. Air Force, the effects of sequestration equate to
    a potential $12.4 billion topline budget reduction, affecting every
    non-exempt account and program. Coupled with a $1.8 billion shortfall
    in overseas contingency operations funding resulting from a potential
    year-long continuing resolution, reductions of this magnitude have
    already driven disruptive actions in the near-term, and promise
    devastating impacts over the longer-term.

                               NEAR-TERM ACTIONS

        As the current fiscal year approaches the halfway mark and the
    issue of fiscal year 2013 funding remains unresolved, the Air Force and
    the other military Services have instituted many near-term cost-saving
    actions to provide as much fiscal flexibility as possible in the coming
    months. As directed by Deputy Secretary of Defense Carter's January 10,
    2013, guidance memorandum ``Handling Budgetary Uncertainty in fiscal
    year 2013,'' these actions attempt to minimize adverse effects on
    Airmen and their families, protect unit readiness, and are to some
    degree ``reversible'' if the budgetary environment stabilizes.
    Nonetheless, the significant near-term actions the Air Force has
    already taken have induced turbulence into daily operations and future
    planning, and disrupted the lives of Airmen and their families.
        As of January 16, 2013, the Air Force implemented a civilian hiring
    freeze. This practice will drive capability gaps across the force and
    slow the Air Force's ability to provide trained civilian Airmen to
    manage the nuclear enterprise, sustain investments in the intelligence
    community, and maintain and operate our joint and Air Force bases. The
    Air Force is also releasing temporary employees and not renewing the
    appointments of term employees unless their positions are deemed
    mission critical. This will impact up to 990 temporary employees, 2,160
    term employees, and 260 re-employed annuitants who were specifically
    re-hired from retirement status for their expertise to perform
    specialized tasks. These releases will generate mission gaps, and will
    require the use of military personnel to cover the workload of the
    civilian positions vacated.
        Major commands have also been directed to anticipate and plan for
    an operations and maintenance (O&M) topline budget reduction of
    approximately 10 percent for fiscal year 2013, or approximately 22
    percent of their remaining funds, in order to lead-turn the possibility
    of sequestration. All flying not directly related to readiness is being
    reviewed for necessity, while also weighing the international
    partnership impacts of withdrawing from high-profile events. Supply
    purchases are limited to essential fiscal year 2013 consumption only,
    which will drive a bow-wave of all maintenance supply requirements
    beyond the fiscal year as long-term needs remain unordered. This
    practice will most affect operations at remote locales, where supply
    chain delays exert the greatest impact in the absence of an on-station
    critical component. The commands are also descoping or incrementally
    funding contracts for fiscal year 2013 only, particularly in the areas
    with the most flexibility, such as construction, facility support,
    information technology, and knowledge-based services. Unfortunately,
    these are also the areas where small business contracts typically
    thrive, and we anticipate a significant hit to our small business prime
    contractor base, an area where we have devoted time and energy to
    strengthen.
        The Air Force has also deferred all non-emergency facility
    sustainment, restoration, and modernization projects across its
    installations, which amounts to a 50-percent reduction in annual
    spending in this area, and a 90-percent reduction in planned spending
    for the remainder of the fiscal year. These delays affect dozens of
    restoration, modernization, sustainment, and demolition projects at
    dozens of installations nation-wide and overseas. Dormitory upgrade and
    repair projects are also delayed, as are many energy-saving initiatives
    at multiple installations.\1\ Although these near-term facility actions
    are technically ``reversible,'' they also magnify already-verified
    infrastructure risks, invite more costly repairs once conducted in the
    future, and bring economic hardship upon the civilian workforce in the
    affected communities. Some of these deferments elevate operational risk
    by interrupting runway or taxiway sustainment, while others require us
    to maintain unneeded and energy-inefficient infrastructure.
    ---------------------------------------------------------------------------
        \1\ 93 restoration and modernization projects at 52 installations
    nation-wide and overseas, 14 sustainment projects at 12 installations,
    and 82 demolition efforts across 39 locations have been delayed. Twelve
    dormitory upgrade and repair projects affecting 1,195 dorm rooms for
    airmen at 9 installations are also delayed, as are 220 energy focus
    fund projects at 70 installations, as well as some installation moves
    toward utility privatization and automated metering.
    ---------------------------------------------------------------------------
        Commanders across the Air Force major commands have already
    cancelled staff assistance visits, inspections, conferences, symposia,
    and training seminars not deemed mission critical. Some of these
    cancellations translate into increased operational risk that will
    compound over time as units delay much-needed compliance inspections,
    while others delay required certifications for specialized career
    fields like firefighters and explosive ordinance disposal specialists.
    A $53 million reduction in specialized training of this type postpones
    the promotions of over 8,000 Airmen, and reduces the certification
    levels of those career fields to critical deficiencies.
        If the Air Force executes all of these near-term actions for the
    remainder of the fiscal year, they will generate spending reductions of
    about $2.9 billion of the $12.4 billion total anticipated reductions
    required by sequester. Should sequestration occur, the remaining $9.5
    billion in reductions must come from three critical areas where
    reductions will inflict near- and long-term damage to our force--the
    civilian element of our Total Force, today's readiness (O&M accounts),
    and modernization accounts designed to ensure future institutional
    health--all during the latter half of the fiscal year. These longer-
    term actions will be substantial and will produce enduring consequences
    on our force for many years.

                              LONGER-TERM ACTIONS

        Should sequestration occur, the Air Force expects the requirement
    to involuntary furlough up to 180,000 civilian airmen. Although the
    exact figures are still in work, we anticipate the loss of 22 working
    days for each civilian airman between mid-April and September 30, 2013.
    This loss goes far beyond the 31.5 million man-hours of productivity we
    will lose--it also hits each individual with a 20 percent loss in pay
    over a 6-month period, and it breaks faith with an integral and vital
    element of the Air Force family. The operational impacts will be
    particularly severe in parts of the Air Force that rely most heavily on
    civilians, like our depots and some of our flying training bases. For
    example, at Laughlin Air Force Base, TX, the Air Force's largest pilot
    producer in fiscal year 2012 \2\, civilian Airmen comprise the entire
    maintenance and simulator instructor workforce. A 20 percent reduction
    in that base's ability to maintain jets and train student pilots will
    slow vital pilot production, an issue that always requires careful
    management.
    ---------------------------------------------------------------------------
        \2\ 358 Laughlin Air Force Base undergraduate pilot training
    graduates in fiscal year 2012.
    ---------------------------------------------------------------------------
        Decreasing force structure and high operations tempo since 2001
    have combined to increase stress on all the Services, and Air Force
    readiness levels have declined steadily since 2003. We have already
    been forced to put full-spectrum training on the back-burner to support
    the current fight, and now the arbitrary nature of sequestration
    threatens to put us even further into a readiness deficit. The Air
    Force's global range, speed, flexibility, and precise striking power
    are what make it one of America's premier asymmetric advantages. That
    strategic agility and responsiveness requires a high state of readiness
    across the Total Force to meet the requirements of the Defense
    Strategic Guidance--the Air Force cannot execute the defense strategy
    from a tiered-readiness posture. Continuing to sacrifice Air Force
    readiness jeopardizes the many strategic advantages of airpower, and as
    the Service chief charged with strengthening and advising on America's
    Air Force, I cannot stress strongly enough the devastating effects
    sequestration will have on Air Force readiness.
        Operationally, flying hours remaining in the current fiscal year
    will drop by 203,000 hours across the Air Force, the consequence of an
    18 percent reduction of the fiscal year's total budget, or about 30
    percent of remaining funds. Because the Air Force must prioritize and
    continue to fly operational flights in support of ongoing named
    operations, nuclear preparedness, presidential support, and initial
    qualification training pipelines, many of the flight hours that must be
    eliminated will come from other combatant commander requirements such
    as theater security cooperation packages and continuous bomber presence
    missions in the Pacific, joint and coalition exercises,\3\ and the
    cancellation of important advanced tactical training such as the
    Weapons Instructor Course. Test and training ranges in Nevada and Utah
    would also close in the July 2013 timeframe, removing valuable airspace
    for both combat training and test-and-evaluation activities. Beyond the
    readiness impacts of the flying hour reduction, relationships and
    continued interoperability training with many key partners and allies
    around the world, particularly in the Pacific, are also adversely
    affected.
    ---------------------------------------------------------------------------
        \3\ Joint and international exercises like Cope Tiger, Red Flag,
    Green Flag, Talisman Saber, Commando Sling, Cope West, and Northern
    Edge would likely be cancelled.
    ---------------------------------------------------------------------------
        The remainder of the lost flight hours, which are so vital to
    aircrew proficiency and currency, will come from the training side of
    the equation. Those combat air force units not expected to deploy--the
    majority of fighter and bomber units--will only continue to fly until
    unit-level depletion of their flying hour funds, which could occur as
    early as mid-May 2013. Mobility air forces will experience training
    degradations in airdrop and air refueling, affecting both joint and
    international partners, with unit O&M funds potentially running out in
    July 2013. Lost training currencies from unit stand downs would require
    6 months to a year to return to current sub-optimal levels, with
    desired flying proficiency for crewmembers requiring even longer. This
    restoration would require additional funding beyond expected fiscal
    year 2014 levels, necessitating further cuts in other areas.
        The Air Force pilot training pipeline is particularly sensitive to
    these types of disruptions. On April 1, 2013, Air Education and
    Training Command will curtail advanced flight training courses, freeing
    up resources necessary to protect initial qualification flight
    training. Despite those actions, initial qualification flight training
    may also stand down in early September 2013, or perhaps earlier
    depending upon the impact of civilian airmen furloughs. The cascading
    effects of stoppages like these could result in future pilot shortages
    that could take over a decade to remedy.
        Sequestration will also affect weapons system sustainment by
    deferring 30 percent of the remaining depot maintenance in the current
    fiscal year, representing about 18 percent of the fiscal year's total
    effort. These depot delays affect over 30 aircraft types and weapons
    systems across the Total Force and will require the grounding of some
    of the affected aircraft.\4\ The deferments equate to a 33 percent
    depot workload reduction, resulting in idled production shops, a
    degradation of workforce proficiency and productivity, and
    corresponding future volatility and operational costs. Most
    importantly, all of this deferred maintenance simply slides all future
    work to the right, further delaying functional, safe equipment to the
    warfighter. Full recovery from this kind of depot pipeline disruption
    could take as long as 6 to 10 years.
    ---------------------------------------------------------------------------
        \4\ Sequestration will induce 146 depot delays affecting over 30
    aircraft types and weapons systems, including the C-17, C-130, F-15, F-
    16, KC-135, B-52, A-10, and E-8 JSTARS. 85 engines will also be pulled
    from service.
    ---------------------------------------------------------------------------
        All of these longer-term impacts from sequestration negatively
    affect Air Force full spectrum readiness at a time when we've been
    striving to reverse a 10-year declining trend in this critical area.
    The unique characteristics of airpower include range, speed,
    flexibility, precision, lethality and persistence. These
    characteristics depend deeply on having a force ready to operate at a
    moment's notice. It is unconscionable that we would throw away the
    required readiness that is at the heart and soul of airpower's enduring
    value to the Nation and the joint force rather than come together to
    provide a more precise, thoughtful, and effective budgetary solution.
        These longer-term actions would only achieve an additional $3.4
    billion of the projected reductions required by sequester, driving the
    remaining $6.1 billion into Air Force modernization and investment
    accounts, effectively mortgaging our future health to pay today's
    avoidable bills.
        Sequestration cuts to Air Force modernization investments, if
    applied at the program, project, and activity level as planned, impact
    every one of the Air Force's investment programs. For example, the F-
    35A low rate initial production would see reductions of at least two
    aircraft from the requested 19 in fiscal year 2013. Such potential
    reductions not only drive up unit costs--resulting in fiscal year 2014
    production funding shortfalls--they also delay follow-on software and
    flight testing. Test and evaluation delays could increase total test
    costs three-fold across all programs, and delay delivery of critical
    capability to U.S. service men and women in the field. Sequestration
    also puts our innovative acquisition strategy on complex space
    systems--efficient space procurement--at risk by jeopardizing cost
    efficiencies. For example, an estimated $1 billion in savings within
    this strategy for the Space Based Infrared Radar System (SBIRS) would
    be lost under sequestration.
        Each of these long-term investment account disruptions negate
    thousands of man-hours spent on planning, implementing, and managing
    complex programs intended to best balance the efficiency of taxpayer
    dollar expenditure with the effectiveness of capability creation to
    fulfill the Defense Strategic Guidance. Inflicting a sledgehammer blow
    to the planned execution of these programs through sequestration harms
    both aspects of that precious balance. Over time, more taxpayer dollars
    would be spent to address the contract re-structures and time-delay
    inefficiencies that sequestration will induce, while delivery delays of
    validated capabilities infused with perishable technologies will only
    reduce our already-shrinking advantage over potential adversaries.

                         CONSIDERATIONS FOR THE FUTURE

        Many of the adverse impacts of sequestration to Air Force
    operations are aggravated by the fact that we are still operating under
    a continuing resolution, now 5 months into the fiscal year. The absence
    of a final fiscal year 2013 appropriations bill thrusts each military
    Service into a planning purgatory of sorts, clouding near- and long-
    term fiscal programming with a fog of ambiguity, and placing dozens of
    acquisition programs at risk.\5\ These implications are above and
    beyond those of sequestration, and further complicate an already
    overly-complex budgetary environment.
    ---------------------------------------------------------------------------
        \5\ Unapproved ``new starts'' and ``quantity increases'' will
    affect acquisition programs like the F-35A, MQ-9, and SBIRS, as well as
    negating the ability to award a CV-22 multi-year program. An additional
    22 scheduled Air Force construction and family housing projects will
    also not be awarded.
    ---------------------------------------------------------------------------
        None of the actions the Air Force has taken in anticipation of
    sequestration have been easy, but the actions that will be necessary
    should sequestration occur would be devastating. Although we will make
    every effort to minimize the impact of sequestration to airmen and
    their families, operational readiness, and force modernization, each of
    those areas will experience painful, palpable, and ultimately pricey
    disruptions. Additionally, to better position the Air Force to meet the
    many challenges of providing the effective airpower America expects
    within shrinking funding levels, further base realignment and closure
    authority would generate significant infrastructure savings that might
    alleviate assumed risk in other areas. At a time when Air Force
    readiness is long-overdue for vital reconstitution, our fleet is aged
    beyond the bounds of comfort, and our force is at its smallest since
    its inception, we find ourselves in the untenable trade space of
    forcing further risk to our Nation's defense by sacrificing elements of
    three keys to the effective provision of airpower--airmen, readiness,
    and modernization.
        I am reminded of times like March 2011 when America's Air Force
    conducted simultaneous combat operations in Iraq and Afghanistan,
    homeland defense missions in America's skies, airlift missions in
    support of presidential diplomatic efforts in South America, short-
    notice and significant humanitarian aid to tsunami-ravaged Japan, all
    while providing 99 percent of operational airlift, 79 percent of in-
    flight refueling, 50 percent of airborne reconnaissance, and 40 percent
    of strike missions in support of a United Nations-sanctioned no-fly
    zone over Libya. The readiness effects we expect should sequestration
    occur will make executing multiple concurrent operations like these
    much more difficult, and in some cases impossible. History shows these
    kinds of demands for America's military will continue--it is my job to
    make sure the Air Force is ready.
        I urge Congress to do all that is necessary to avert the arbitrary
    cuts of sequestration. We owe it to America's sons and daughters, who
    put their lives on the line whenever and wherever their Nation asks, to
    care for their families, provide them sufficient training, and equip
    them to a position of advantage over all potential adversaries.

        Chairman Levin. Thank you, General Welsh.
        General Grass.

      STATEMENT OF GEN FRANK J. GRASS, USA, CHIEF, NATIONAL GUARD
                                 BUREAU

        General Grass. Chairman Levin, Ranking Member Inhofe, and
    members of the committee, it is an honor and privilege to be
    here today.
        The greatest threat to the National Guard today is the
    continued uncertainty over the budget. I provided all 54
    adjutants general with a summary of near-term measures to
    assist them in mitigating budget risk and threats to our
    readiness. However, without near-term relief, our ability to
    respond to domestic and other contingencies will decline.
        In personnel, we are implementing a civilian hiring freeze
    and not renewing temporary civilian employees. We are planning
    to defer sustainment and maintenance requirements for our
    aircraft, vehicles, and facilities. The National Guard is
    reviewing every bit of overhead across our force. We are
    curtailing conference attendance and all travel and training
    that is not mission-essential or produces readiness.
        Full sequestration and a year-long CR will directly impact
    the readiness of our units and will have an impact on the full
    range of National Guard activities.
        In the area of personnel, a Government-civilian, and
    military technician hiring freeze, compounded by a possible 22-
    day furlough, will limit our ability to train and maintain our
    National Guard forces.
        In the area of maintenance, current depot backlogs, coupled
    with the loss of reset dollars, will reduce National Guard
    equipment availability and readiness.
        In the area of facilities, sustainment, restoration, and
    modernization cuts will degrade an already aging armory
    infrastructure. The CR prohibits any new starts on our military
    construction, further threatening armory and facility
    modernization master plans.
        Finally, in the area of training, a near-term lack of
    operations and maintenance funds will cut our flying hour
    program and reduce our vehicle miles in operations and
    maintenance causing reduced readiness. If not addressed, we
    will be forced to park vehicles and aircraft.
        In a matter of months, our readiness as an operational
    force for our Nation's defense and as an immediate homeland
    response capability available to the Governors will erode.
        Thank you for the opportunity to appear before you today,
    and I look forward to your questions.
        [The prepared statement of General Grass follows:]

                 Prepared Statement by GEN Frank J. Grass, USA

                                OPENING REMARKS

        Chairman Levin, Ranking Member Inhofe, distinguished members of the
    committee; I am honored to appear before you today, representing more
    than 460,000 citizen-soldiers and airmen in the Army and Air National
    Guard. The National Guard stands poised to fully implement its
    authorities, to execute its responsibilities, and to build upon its
    376-year legacy as an operational force deeply engrained within the
    foundation of American strength and values. The citizen-soldiers and
    airmen serving from throughout the Nation, its communities, the States,
    territories, and the District of Columbia contribute daily to our
    Nation's overseas and domestic security objectives.

                            SEQUESTRATION GENERALLY

        As I stated in my remarks to this committee last year, I believe
    sequestration will be devastating to the Department of Defense and the
    National Guard. Today's dynamic and difficult fiscal conditions require
    the Department of Defense to deliberately make tough choices and live
    within our means. The convergence of the potential March 1 and March 27
    sequestrations and a Continuing Resolution reduces the Department's
    ability to make those choices and institutes debilitating across the
    board cuts. This, will no doubt have devastating impacts on our force
    as an operational reserve.

                               THE NATIONAL GUARD

        Today's fiscal environment requires that the Reserve components be
    maintained as an operational force. This means the National Guard has
    to be trained, ready, and equipped to face the full spectrum of threats
    facing our Nation. The investment made in today's National Guard,
    particularly since September 11, has produced a proven operational
    force equally adept on the battlefield and in performing our domestic
    response mission, often within hours of an emergency. It has also
    produced an agile and skilled force postured to embrace new missions
    outlined in the President's strategic defense vision.
        The National Guard remains ready--every day, to expand the capacity
    of the President and our Governors to meet the needs of our people
    whether it is shaping the security environment, engaging across the
    world and within our communities, or bringing full-spectrum military
    power during times of critical need. National Guard Forces today are
    deployed to Sinai, Kosovo, Afghanistan, and many hot spots around the
    world. Additionally, over the weekend National Guardsmen responded to
    the winter storm in the northeast and are winding down Hurricane Sandy
    response activities.
        The National Guard is committed to remaining an operational force
    for use both at home and abroad, but this unique budgetary environment
    threatens the investment made to build and preserve this capability.
        While National Guardsmen provide a unique dual capability to State
    and Federal leaders at a lower cost than the Active component,
    sequestration will erode the improvements in the National Guard's
    operational capability made since September 11. The National Guard will
    be unable to properly address the training and equipping needed to
    sustain an operational force. Sequestration will harm the National
    Guard's ability to rapidly, robustly, and competently expand the
    Nation's full-spectrum military capability to defend vital national
    interests in the most affordable, lowest risk manner possible. This
    will result in a readiness crisis for our Armed Forces.

            SPECIFIC SEQUESTRATION AND CONTINUING RESOLUTION IMPACTS

        Within the National Guard the readiness crisis caused by
    sequestrations on March 1 and March 27 and a full-year Continuing
    Resolution will have an immediate and lasting impact. Although National
    Guard warfighters will continue to receive support, the ability to
    provide ready forces to respond to disasters in support of our Nation's
    governors and to meet our Federal obligations will be negatively
    impacted; simply our ability to protect and defend the Homeland will be
    significantly hindered. In addition to the statements made by the
    Chiefs of Staff of the Army and Air Force regarding the impact to the
    Total Force, four priority areas directly related to readiness of the
    National Guard will be severely impacted: Personnel; Equipment
    Maintenance; Facility Maintenance; and Training.

    Personnel
        Under sequestration, approximately 115,000 traditional National
    Guard Forces will not receive their annual medical or dental
    examinations. This reduction in examinations will bring total force
    medical readiness down by 39 percent. Much of the investment made in
    medical readiness and the operational force as a whole since September
    11 will be lost. Within 1 year, readiness will be degraded to pre-war
    levels.
        The National Guard has a unique civilian workforce, distinctly
    different from the Active component. Under sequestration, the civilian
    workforce faces potential furlough. These civilians, most of whom are
    also traditional members of the National Guard, support the maintenance
    and training of soldiers and airmen. On a day-to-day basis, military
    technicians and civilian employees support activities essential to the
    readiness and functioning of the largely part-time citizen-soldier
    force of the National Guard. This unique service provides the level of
    support and continuity necessary for the National Guard to support
    mobilizations, deployments, domestic operations, and maintain
    continuity of services for the National Guard members remaining in
    States during mobilizations and deployments. Furloughs of these
    essential personnel will further reduce the readiness of our people,
    equipment, facilities, and training.

    Equipment
        The Army will cancel or reduce depot level maintenance which
    includes the reset of equipment returning from deployment. The reset
    process ensures returning National Guard equipment is repaired and
    provides the maintenance needed to bring equipment back to Fully
    Mission Capable Status. Additionally, reductions in maintenance
    accounts will limit the availability of parts and labor to mitigate
    this issue. National Guard units will return to their States with
    equipment in a low state of readiness and it may not be available to
    the unit to support State authorities in response to tornados, floods,
    or wildfires, or a complex catastrophe.
        Similarly, the Air National Guard may not have the equipment
    available to respond to a new contingency. The Air National Guard will
    have to ``park'' aircraft due to reduced funding for flying hours.
    Additional cuts in weapon systems sustainment will result in an Air
    National Guard fleet may be less able to respond on a short notice to
    domestic and overseas contingencies.

    Facilities
        The National Guard is located in over 3,000 communities across the
    country, and our readiness is dependent upon maintaining modern
    facilities. The numerous National Guard facilities are crucial for
    training a geographically disperse force. The Army National Guard will
    face a reduction in each fiscal year 2013 military construction
    project. Project reductions will require a reduction in physical scope
    and cost additional dollars in planning and design in order to redesign
    to the reduced scope (lost scope impacts organizational parking, unit
    storage, and common space such as drill halls). Redesign will result in
    execution delays which, in turn, impact availability of facilities for
    training. Further, reductions in funding to maintain and repair
    existing facilities will result in inadequate resources to support
    soldiers. Routine and preventative maintenance will suffer causing
    greater damage to the quality of National Guard facilities.
        Sequestration will also directly impact contracts that are imbedded
    in our cooperative agreements with the States. The National Guard may
    be unable to maintain all contracts that support facilities and provide
    members of the community with jobs in security, fire fighting, grounds
    keeping, custodial work, snow and ice removal, and building maintenance
    and repair. Cancelling or reducing these contracts will also cost the
    National Guard additional funds above those lost to sequestration as a
    result of penalties.

    Training
        Training will be impacted by the reduction of ready equipment and
    the personnel who support those training events. The lack of equipment
    and personnel will limit ground level training; battalion and brigade
    level training will only occur for deploying units, while all other
    units will only train at the platoon level. As the Active Army reduces
    or cancels full spectrum training rotations, there will be fewer
    opportunities for total force training for members of the Army National
    Guard. The Army will cancel all Combat Training Center rotations and
    Division Warfighter Exercises except for training for deploying units.
    Fifteen Field Artillery classes will also be cancelled by the Army.
    Further reductions in Basic Combat Training will result in drastic
    reductions in the number of deployable soldiers. Within the Air
    National Guard, the number of flight training missions will also be
    reduced as training flights are cancelled and as flying hours are
    allocated for priority missions. Under sequestration most flying units
    will be below acceptable readiness standards by the end of this fiscal
    year.

                                CLOSING REMARKS

        As the Chief of the National Guard Bureau, I want to thank you for
    your continued support of our citizen-soldiers and airmen. We currently
    have the best trained, best equipped, best led, and most combat tested
    National Guard in our 376-year history. We see this force as essential
    not only to the Army and Air Force, but as the dual-use asset for our
    communities here at home.
        Your support is needed more than ever today, to mitigate the
    impacts of sequestration. Without congressional action, these across
    the board cuts will impact the National Guard's ability to meet steady
    state demands and act as a strategic hedge for unforeseen world events.
    I look forward to your questions.

        Chairman Levin. Thank you, General Grass.
        We are going to start with a 3-minute first round for
    questions, and see whether or not that may actually get us to
    where we need to go. I am going to yield to Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman, Mr. Ranking Member,
    my colleagues, and to the military leadership assembled, I
    appreciate your courtesy.
        Yesterday, unrelated to this hearing, I visited one of the
    premier medical facilities in the United States, the Fort
    Belvoir community hospital, to visit with wounded warriors,
    their families, and also the medical professionals who treat
    them. I had a roundtable session with wounded warriors, and I
    said I am a new Senator. What would you like to either tell me
    or ask me? I expected I would do a lot of talking about medical
    care for active duty and veterans. They wanted to talk to me
    about budget uncertainty. They asked how budget uncertainty
    would affect the medical care they are receiving right now and
    the care their comrades in arms are receiving. They wanted to
    talk about budget uncertainty in TRICARE benefits. Secretary
    Carter, your testimony goes into TRICARE deficits by year end.
        A guardsman, whose full-time civilian job, a DOD civilian
    job, wanted to talk to me about what furloughs meant, and
    others who were facing imminent medical retirement wanted to
    talk a little bit about the workforce they might be going back
    into and the potential effect on the economy of drastic cuts
    that would make it harder for them to get traction back into
    civilian life.
        This was a hearing where I expected to be talking about
    medicine, but what I heard and what I ended up talking about
    was the effect of budgetary uncertainty. This follows the
    testimony of Secretary Panetta and General Dempsey last week.
        I wanted to just ask a couple of questions focusing,
    Admiral Ferguson, on some Navy issues. The announcements last
    week dealing with the Truman and the Lincoln--I know one of the
    priorities that you are focusing on is trying to make decisions
    that are in fact reversible should Congress do our business and
    get this right. Some of the decisions that you have already
    announced--how long can we persist down that path before these
    decisions start to have an irreversible effect on our readiness
    and shipbuilding capacity?
        Admiral Ferguson. Senator, beginning on February 15, we
    will begin notification to private shipyards about deferrals of
    maintenance availabilities up to the point and under the CR. If
    we sustain under a CR, those maintenance actions will be
    deferred. If we do not get the authorities in the bill to say
    start work on the new construction carrier and to complete the
    overhaul--or start the overhaul--on the other carriers--then
    three carriers now are tied up and delayed because we do not
    have authorities. So those are reversible with congressional
    action.
        On the sequestration issue and with Truman, we had to look
    at what happens to the Navy under sequestration. Like the other
    Services, we effectively stopped training and certifications of
    our air-wings. We shut down four air-wings on March 1st. After
    90 days, those pilots lose their certification, and now it
    takes 6 to 9 months to retrain them at a much higher cost. In
    our assessment, it was more prudent for us to delay Truman to
    be able to deploy later this summer and for George H.W. Bush to
    deploy later this year or early next year to provide continuous
    coverage in the Middle East rather than have two carriers now
    and then fall off completely in fiscal year 2014.
        The impacts are under sequestration--the longer we go, the
    greater the impact on readiness for our forces and the longer
    the recovery time, and at greater expense.
        Senator Kaine. Thank you very much.
        Chairman Levin. Thank you very much, Senator Kaine.
        Senator Inhofe.
        Senator Inhofe. I enjoyed visiting with you yesterday, and
    of all of the States, I think you are hit just about as hard as
    anyone. There is a document here that I know has not been
    circulated to everyone. The Air Force alone shows what you lose
    in your State. Then you throw the Navy in there. I mean, you
    are out of business. I would like to ask all the other Services
    that did not provide us with this information in this format--
    what it does is show every State, how each is affected by
    sequester. Would you try to get that for me? Thank you.
        [The information referred to follows:]

        See response to question for the record #66.

        Senator Inhofe. Next, you heard what I said about Admiral
    Winnefeld talking about we would have to say that we cannot--do
    you agree with his statement that he made? Does anyone disagree
    with that statement? [No response.]
        Okay. Secretary Carter, I understand that the
    administration is planning towards an end-of-March release of
    the fiscal year 2014 budget. Will your submittal to the Office
    of Management and Budget (OMB), which I understand takes place
    today, include cuts from sequestration? Just yes or no is fine.
        Dr. Carter. No.
        Senator Inhofe. When you do this budget, would you be
    willing--you have heard Senator McCain and me complain about
    all this stuff that is thrown into the defense budget such as
    paying nine times as much per gallon for the Navy to buy
    450,000 gallons and all of that. Would you, for the record,
    send me something as to what your intentions are on putting
    things in the budget that do not really provide for our
    defense? We know we do have a Department of Energy. Would you
    do that just for the record?
        Dr. Carter. Absolutely, Senator.
        [The information referred to follows:]

        The Department of Defense's annual budget request includes
    requirements needed to meet mission needs. The majority of items that
    are non-core defense related are supplemental to the budget request.

                             DEFENSE HEALTH PROGRAM

        Most of the breast and other cancer research, as well as diseases
    such as ALS and Alzheimer's, are done via congressional adds ($300
    million/year), so they're not in the budget request.

                   MILITARY PERSONNEL (MILPERS) AND O&M COSTS

    ``Hurricane Hunters''
        The 53rd Weather Reconnaissance Squadron of the Air Force Reserve
    primarily supports the National Oceanic and Atmospheric Administration.
    The fiscal year 2013 budget request includes $34 million in O&M
    funding and $500,000-$1 million in MilPers.

    Guam Buildup
        To assist the civilian population of Guam in response to the
    military buildup in Guam. The fiscal year 2013 PB includes $139
    million. Included in the $139 million is $33 million for construction
    of a mental health and substance abuse facility and a regional public
    health laboratory.

    Counter Illicit/Threat Financing
        Funding for counter threat financing is embedded in the counter
    narcotics budget. Fiscal year 2013 request: $20 million.

    Drug Interdiction and Counter Drug Activities
        For fiscal year 2013, this includes $110 million for the ``Drug
    Demand Reduction Program''. Excludes $20 million Counter Threat Finance
    funding noted above. Total fiscal year 2013 request $999 million.

    Export Control/Licensing
        Funded in the Defense Technology Security Administration's account.
    Fiscal year 2013 request: $6 million.

    Defense Support to Civil Authorities
        The Air Force provides the civil air patrol corporation $24 million
    and also supports the Civil Air Patrol function (liaison officers and
    52 liaison office wings) with $9 million. Fiscal year 2013 request: $33
    million.

    National Security Education Program
        The National Security Education Program's mission is to equip
    Americans with proficiencies in less commonly taught languages and
    cultures that are critical to national security and to provide a cadre
    of highly qualified candidates for employment in the national security
    community. Fiscal year 2013 request $16 million.

    Integrated Acquisition Environment
        This funding pays the Department's share of mandatory GSA e-
    Government initiative costs. Fiscal year 2013 request: $29 million.

    Regional Security Affairs
        Provides analysis of management of cultural situations in nation
    states and oversight to military joint ventures and cooperative DOD-
    Foreign government programs including educational, training, and
    developmental opportunities. Fiscal year 2013 request: $5 million.
    e-Gov Initiatives and Government-Wide Councils
        This program implements OMB IT Management requirements supporting
    the President's agenda for transparency, information sharing, and OMB's
    guidance on alignment of architectures, advancement of new
    technologies, Federal-wide management initiatives, and implementation
    of Federal-wide services. Fiscal year 2013 request: $18 million.

    Readiness and Environmental Protection Initiative
        The military departments' identify expanding development and urban
    growth as an increasing challenge to range and installation viability
    and a growing impediment to mission readiness. Fiscal year 2013
    request: $51 million.

    Homeless Blankets
        The DOD budget includes an annual request to procure blankets that
    can be provided to the homeless each winter: $4 million.

    Cooperative Threat Reduction
        The Cooperative Threat Reduction (CTR) program provides for the
    destruction and nonproliferation of nuclear, chemical, and other
    weapons of mass destruction of the Former Soviet Union. The breakout is
    $483 million for CTR and $443 million for the Defense Threat Reduction
    Agency. Fiscal year 2013 request: $926 million.

    Vietnam War Commemoration
        In accordance with Public Law 110-181 SEC.598, the 2008 National
    Defense Authorization Act authorized the Secretary of Defense to
    conduct a program to commemorate the 50th anniversary of the Vietnam
    War. Fiscal year 2013 request: $11 million.

    Overseas Humanitarian Assistance/Foreign Disaster Relief
        The fiscal year 2013 funding is comprised of: (1) Humanitarian
    Assistance ($74 million); (2) Humanitarian Mine Assistance Program ($5
    million); and Foreign Disaster Relief ($30 million). The Overseas
    Humanitarian, Disaster, and Civic Aid appropriation is available for 2
    years.

    National Guard Youth Challenge Program
        The Challenge program (32 U.S.C. 509) is a youth development
    program for drug free 16 to 18 year old high school dropouts who are
    unemployed and not currently involved with the legal system. Fiscal
    year 2013 request: $120 million.

    Innovative Readiness Training Program
        CMP-The Innovative Readiness Training Program (10 U.S.C. 2012)
    provides improvements to local communities by means of selected
    infrastructure, health care, and environmental projects. Fiscal year
    2013 request: $20 million.

    School Grants
        Funds the ongoing effort to construct, renovate, repair, and expand
    elementary and secondary public schools located on military
    installation to address capacity and facility conditions in those
    schools. Fiscal year 2013 request: $51 million.

    Environmental Programs' Transfer Accounts
        Breakout of accounts: Army - $336 million, Navy - $311 million, Air
    Force - $529 million, Defense-Wide - $11 million, and Formerly Used
    Defense Sites - $238 million. Fiscal year 2013 request: $1.425 billion.

    Chemical, Biological, Radiological, Nuclear, High Yield Explosive
        Funds Operations and Maintenance ($115 million) and the Personnel
    cost ($188 million) for the Civil Support teams training and mission to
    support civil authorities at a domestic chemical, biological
    radiological, nuclear and high yield explosive. Fiscal year 2013
    request: $303 million.

    Non-Core Medical Research:
        Breast cancer - $11 million
        Gynecological cancer - $9 million
        Integrated Cardiac Health Care - $4 million
        Neuroscience - $2 million
        Pain management - $3 million
        Prostate cancer - $8 million
        Pacific Based Joint Information Technology Center - $8 million
    Other Activities:
        Defense research sciences: $8 million
        University research initiatives: $81 million
        University and Industry Research Centers: $109 million
        Combat vehicle and automotive technology: $16 million
        Environmental quality technology: $20 million
        Medical technology: $9 million
        Medical advanced technology: $20 million
        Military HIV research: $7 million
        Environmental quality technology demonstrations: $18 million
        Medical systems: $12 million
        Technology maturation initiatives: $25 million
        Medical biological defense equipment: $17 million
        Army integrated air and missile defense: $15 million
        Program wide activities: $7 million
        Security and intelligence activities: $8 million
        Medical development: $13 million
        Rapid technology transition: $13 million
        Provision of industrial facilities: $205 million
        Arms initiative: $3 million
        Education and outreach: $21 million
        University research initiatives: $141 million
        Technology insertion plan and analysis: $6 million
        Basic research initiatives-Minerva: $19 million
        National Defense Education Act: $88 million
        Language translation: $64 million
        Human, social, and culture behavior: $7 million
        Strategic environment research and development: $65 million
        Integration microsystems technology: $36 million
        Mixed technology integration: $75 million
        Environmental security tech certification program: $76 million
        Humanitarian demining: $13 million
        Joint operations security initiative: $3 million

        Senator Inhofe. Okay.
        General Welsh, you and I have talked about this in Fort
    Smith when we were over there about the problems that we are
    facing with the hollowing of the readiness in terms of just
    pilot training, number of hours. Does this dramatically
    increase your problem? What I am trying to get to here--and we
    may have to get it for the record. Readiness equals risk equals
    lives. Have you put into any kind of a quantitative amount of
    what this could cause in terms of lives or of risk? Just yes or
    no is fine.
        General Welsh. Yes, sir.
        Senator Inhofe. All right. Would you make sure that we get
    that for the record?
        General Welsh. Yes, sir, I will.
        [The information referred to follows:]

        Historically, we know that reduced readiness relates directly to
    increased risk. Our calculus to determine warfighting risk includes
    aircraft attrition and lost lives. In the training environment, a
    decrease in flying hours that would result from sequestration will
    result in lower aircrew readiness levels. Cutbacks in funding for
    weapons system sustainment negatively affect depot maintenance
    proficiency and drive lower aircraft and mission capable and
    availability rates. We know from experience that this reduced readiness
    and proficiency has an impact on safety in the air and on the ground.
        The consequences of reduced readiness in a combat environment are
    more significant. These same decreased proficiency and aircraft
    availability rates negatively affect safety statistics outside the
    battlespace and directly impact survivability and success in the air
    war. Lower aircraft availability directly affects our available
    capacity to prosecute the fight, while limited aircrew proficiency is
    directly connected to decreased survival for aircrew and aircraft in
    contact with enemy forces. We learned during the Vietnam conflict that
    if our Airmen had the opportunity to train in high-intensity, realistic
    threat environments, their survivability in combat was significantly
    enhanced--this was the genesis of our Red Flag exercise program. A lack
    of ready aircrews in a combat environment also results in greater
    losses for our sister Services, in addition to greater civilian
    casualties and collateral damage. Sequestration will severely degrade
    Air Force capability, lethality, and responsiveness, resulting in
    increased warfighting risk and limited national strategic options.

        Senator Inhofe. General Odierno, both you and General Amos
    talked about readiness, readiness, readiness, and I appreciate
    that. Again, readiness, risk, and lives. Would you do the same
    thing in your Services, or have you done this already?
        General Odierno. Yes, sir.
        [The information referred to follows:]

        See response to question for the record #66.

        Senator Inhofe. All right. I appreciate that.
        Then lastly General Dempsey and Admiral Ferguson, as I
    mentioned in my opening statement, Secretary Panetta announced
    the indefinite delay in deployment of the Truman Carrier Strike
    Group. Will you be as specific as you can as to what the
    consequences will be in a lack of a two-carrier presence, what
    it means for ongoing U.S. Central Command operations? Would you
    do that for us?
        General Dempsey. Yes, Senator, we will.
        [The information referred to follows:]

        General Dempsey. [Deleted.]
        Admiral Ferguson. On 6 February, the Secretary of Defense approved
    a delay in the deployment of the USS Harry S. Truman Carrier Strike
    Group (CSG) to U.S. Central Command (CENTCOM) by up to 6 months.
    Additional resequencing of follow-on CSG deployments planned for
    CENTCOM is in progress which will reduce the CSG presence in that
    region to the level funded in our adjudicated Global Force Management
    Allocation Plan, namely one aircraft carrier sustained presence. The
    reduction still maintains carrier presence in U.S. Pacific Command,
    with a surge capability if required. This decision was made in
    consultation with the CENTCOM commander.
        Through the Navy's Force Generation Process, we are committed to
    keeping one carrier operating forward and the ability to surge forward
    in the event of a crisis.
        Surge capacity enables the U.S. Navy to maintain ships to deploy on
    short notice in the event they are needed to respond to national
    security contingencies.
        The United States will continue to maintain a robust military
    presence in the CENTCOM region, including the current carrier presence
    and a mix of other assets, to fulfill enduring commitments to our
    partners. The U.S. military remains ready to respond to any contingency
    and to confront any threat in the region.

        Senator Inhofe. Thank you very much.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        Secretary Carter, I just want to clarify part of your
    testimony that if we are able to avoid sequestration, there are
    still significant issues with the BCA going forward. Is that
    correct?
        Dr. Carter. Right. Sequestration per se, the item-by-item
    cut, only applies to fiscal year 2013, but the BCA does a lot
    more than cut the fiscal year 2013 budget. It cuts the defense
    budget by a large amount, roughly $50 billion, in every year
    for the next 10 years. That is the part that turns a readiness
    crisis into a change of strategy. That is a lot of cut on top
    of what we have already done.
        Senator Reed. So the immediate challenge is sequestration
    and also obviously the either omnibus or a CR until the rest of
    this year, but longer term in strategic concepts that we also
    have to re-evaluate and perhaps redo the whole BCA strategy.
        Dr. Carter. We would have to go back and redo our national
    defense strategy if we had those cuts.
        Senator Reed. Let me ask another question. You have
    contractual obligations particularly when it comes to
    procurement, acquisition, et cetera. Are you in a position
    where you have to void those contracts and pay penalties, or is
    that something, ironically perhaps, that you are going to
    continue to build equipment, aircraft, ships, et cetera, while
    at the same time eroding the readiness of the force?
        Dr. Carter. Sequestration and the cuts only apply to
    unobligated funds. So if we already have entered into a
    contract, that contract is still good unless we choose to break
    it because of everything else that is going on.
        What will very much be affected is contracts that we intend
    to enter. For example, multi-year contracts, which we have
    intentions to enter because they are more efficient and they
    cause the manufacturer to produce things in a more economically
    efficient way that is good for the taxpayer, good for us. Those
    kinds of things we are not going to be able to do.
        As Admiral Ferguson pointed out, a lot of our ship actions
    are constrained account by account in the CR. He cannot do
    anything to start a new ship. He is only allowed to build the
    same ship he built last year. That does not make any sense.
        Senator Reed. Let me ask a related question too. Assuming a
    resolution somewhere down the road, you are going to have to
    probably spend more money restarting activities, recalling
    personnel, making up for training by doubling up not only the
    air, land, and sea forces. Is that another consequence? The
    irony here could be is that these savings disappear quite
    rapidly when we go back to business.
        Dr. Carter. Yes. This costs money because it wastes money.
    Starting, stopping, going up, going down, stretching out
    programs is inherently inefficient. So all of our managers who
    try so hard to use the taxpayers' dollar the best way, get
    things just so, work with their industry partners to get a good
    deal for the Government--all that stuff goes in the waste
    basket in these circumstances. It is really a shame.
        Senator Reed. Thank you for your testimony.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Reed.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        I thank all the witnesses for being here and their service
    to the country.
        This is, would you say, Ash, kind of an Orwellian
    experience? Here we are looking at these draconian cuts.
    Already some of the manifestations of the requirements have
    taken place. Meanwhile, it is the day after North Korea tests
    another nuclear weapon. Iraq is unraveling. The Iranians just
    rejected the Vice President's proposal last weekend for one-on-
    one talks concerning nuclear weapons. Libya is obvious. Mali.
    Egypt in a state of unrest. Now Tunisia. We are probably in a
    more unsettled period since the end of the Cold War than
    certainly I have ever seen. Would you agree with that
    assessment?
        Dr. Carter. I absolutely agree.
        Senator McCain. Meanwhile, the signal we are sending
    frankly to the Iranians is do not worry. This aircraft carrier
    is not coming. This is really a disconnect, the likes of which
    I have never seen before.
        I want to talk about the sequestration because Senator
    Graham, Senator Ayotte, and I traveled around the country
    warning about the effects of sequestration. We went to a whole
    lot of places where the men and women in the military say how
    can we possibly do this, cause this uncertainty in the lives of
    the men and women who are serving, the latest being the
    cancellation of the deployment of the aircraft carrier.
    Meanwhile, the President of the United States, when asked, said
    it will not happen. It will not happen. During the campaign, it
    will not happen. We were worried for a long time that it was
    going to happen, and it is disgraceful to treat the men and
    women in the military, who we all speak with such advocacy and
    passion on their behalf, to be subjected to this kind of day-
    to-day kind of uncertainty that they volunteered to serve this
    country. But we owe them a certain amount of certainty as to
    how they are going to be treated, what their assignments will
    be, and frankly what their future will be. Would you agree?
        Dr. Carter. I absolutely do.
        Senator McCain. Then would you not say--and by the way, the
    Worker Adjustment and Retraining Notification (WARN) Act. OMB
    put out the word do not worry. Sequestration is not going to
    take place. You do not have notification to comply with the
    WARN Act. The WARN Act requires 60 days, in some cases 90 days,
    notification to employees that they are going to be laid off. I
    think that we have just placed the Federal Government in a
    state of a very significant possibility of owing a lot of money
    to a lot of the military.
        But most importantly--and I do not expect you to respond to
    this. But we elect Presidents for a reason and that is to lead.
    It seems to me that it is now time for the President of the
    United States to call the leaders of Congress over to the White
    House and say, look, if you accept the word of every one of our
    military leaders as the effect of sequestration, if you accept
    the fact that the world is becoming more and more dangerous,
    that this is the worst time. We should sit down and come to an
    agreement to prevent the sequestration not only for our
    national security but for the benefit of the men and women who
    are serving this Nation. I would be glad to hear any response
    you might have, and I know that it would be difficult for you
    to respond to one of my assertions.
        Dr. Carter. Well, thank you. But I, first of all, thank you
    and Senator Ayotte and Senator Graham. I remember when you took
    that trip, and I was very grateful to you because we have, I
    think, felt--at least I felt like we have been voices crying in
    the wilderness now for 16 months. As I said, this committee is
    an exception because each and every one of you knows the DOD,
    knows national security, and can really be aware of what we
    face.
        There was a time when I thought that sequestration was not
    likely either. I used to say that I was hopeful and optimistic.
    Then I said I was just hopeful, and now I am not even hopeful
    because we are only 2 weeks away from it.
        We have for some time not only been planning for it, but
    taking action and that is what you hear described. Even though
    it has not kicked in, in order to soften, to the extent that is
    possible, in the last few months of the year the effects of
    this, we are starting to take actions now. That is what you see
    in the aircraft carrier. That is what you see in other things.
    If sequester goes away on March 1st or shortly thereafter, all
    these actions will have been unnecessary and inefficient, as
    was pointed out early, but we feel like we have to take them
    now because we cannot rule out the possibility that we are
    really going to do this.
        Senator McCain. I believe our witnesses would agree that
    this can have a long-term effect on retention.
        I thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator McCaskill.
        Senator McCaskill. Thank you, Mr. Chairman.
        One of the things this place is good about is, when the
    moment comes that we have to compromise, yelling about how we
    got to this place in the first place. I want to gently point
    out for the record that both the ranking Republican on the
    Senate Armed Services Committee and the chairman of the House
    Armed Services Committee voted for the BCA. So when we voted
    for this--and there were 28 Republican Senators that voted for
    it--we all knew that there would come a day of reckoning, that
    we would have to sit down and compromise. I certainly hope that
    the testimony, the dramatic testimony, that you have given this
    morning will help us get to that place. We will not avoid the
    sequester if we are all going to draw lines in the sand and say
    we are not cutting anything or we are not going to do any
    revenue. If we are willing to acknowledge that the price our
    country is going to pay is one that we are not willing to pay,
    then it seems to me this is the moment of compromise. The
    reason we were so optimistic it would not happen is because
    most of us thought when the time comes, we will compromise.
        So sign me up for the compromise, for painful cuts and for
    some revenue. I think we have money right now we are paying out
    to farmers that we all acknowledge is a huge waste of money,
    billions of dollars. It is not really going to farmers, and
    they are getting paid for whether they are making a lot of
    money or not making a lot of money. It is a great example of a
    place we can all agree we need to cut that. We need to do it in
    the next 2 weeks. We need to make sure that money goes towards
    defense where we know we cannot afford what you all are looking
    at over the next 10 years.
        Having said that, I would like someone to tell me if we
    gave you the ability--because there are a lot of folks that say
    just this year's cut, $46 billion out of a $600 billion budget,
    ought to be manageable. If you had the authority to cut it
    where you want to cut it instead of the way that we are
    handcuffing you under the sequester, where would that $46
    billion come from if you had the ability, which I think Senator
    Inhofe is advocating? I certainly agree with him in that regard
    that we at a minimum ought to give you the discretion to cut
    where you would do the least amount of harm.
        Dr. Carter. If I may, you are right, obviously, that the
    mechanism of sequester which makes us cut everything in
    proportion is dumb from any kind of managerial point of view.
        I have to say, though, at this point in the fiscal year, it
    does not matter that much. We have to go everywhere to get that
    $46 billion at this point. Anywhere you can get the money we
    have to go and get the money because, remember, in many places
    we cannot access it. We cannot lay people off. We can furlough
    them. We cannot furlough them for more than 22 days. We can
    furlough them up to 22 days. The President has, I think,
    rightly exempted military personnel. By this time in the fiscal
    year, a large amount of the O&M funding has been obligated or
    is constrained. So all we have left is the room where the
    unobligated reserve which, as General Odierno explained for the
    Army, is tiny now. So you are out of Schlitz. He has no room to
    go. So he is less constrained by the mechanism of sequester.
    Right now, we got to go everywhere there are dollars to take.
    So it does not help that much, although I appreciate any
    unfettering we could get, but it does not help all that much at
    this point in the year.
        Senator McCaskill. Well, if there are any specifics you can
    give us about whether or not it would help to at least give you
    that discretion, if there are any specifics you can provide us,
    that would be great.
        [The information referred to follows:]

        A cut of this size, almost halfway through the fiscal year, would
    still be a huge problem. Seven months into the fiscal year, achieving a
    $46 billion cut would require that we reduce all categories of
    unobligated balances even with flexibility. It would probably still
    require furloughs. We'd still have to curtail training and weapons
    maintenance, which would seriously harm readiness, and we would impact
    numerous investment programs. More flexibility is always better than
    none, but having that kind flexibility at this late date is not a
    substitute for solving the problem by detriggering sequestration and
    passing appropriations bills.

        Senator McCaskill. My time is up. Very rarely do we have
    all of you here at one time, and while you are all here--I have
    mentioned to a couple of you. If you have not yet seen the
    documentary, ``The Invisible War,'' I certainly hope that every
    single one of you see it before the next chance I have to visit
    with you. If you have specific recommendations after seeing
    that movie on how we can all look ourselves in the mirror and
    feel much better about the victims of sexual assault within the
    military, I would love to hear your specific ideas. I am
    determined to make a difference in that regard over the next
    year. If you have not seen the movie--it is nominated for an
    Oscar for one of the best documentaries this year, I certainly
    hope you all see it. Thank you.
        Senator Inhofe. Mr. Chairman, let me respectfully correct
    the Senator from Missouri. I did not vote for the BCA.
        Senator McCaskill. I should have said at the time the BCA
    was voted upon, the ranking Republican, Senator McCain, and
    Representative McKeon both voted for the BCA. They were the
    leading Republicans on Armed Services in the two houses at the
    time. I should have made it clear it was not you, Senator
    Inhofe. It was the ranking Republican at the time we took the
    vote.
        Chairman Levin. Thank you.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to thank all of our military leaders for being here
    today and for your service and everything that you do for us.
        Let me just start with this just to put it in a bigger
    picture here. Sequestration on a scale from 1 to 10, 1 being
    the least dangerous to our country, 10 being the most
    dangerous--how dangerous is sequestration in terms of the
    safety of this country?
        General Dempsey. Well, I will take a shot at that, Senator.
    From where I sit today, it sure feels like a 10. I mean, some
    think tank around town might want to negotiate me down to an 8,
    but it is really serious.
        Senator Ayotte. I am asking you for your professional
    judgment.
        General Dempsey. 10.
        Senator Ayotte. Is there any disagreement on this panel on
    that? [No response.]
        So we are at a place right now where we are facing very
    dangerous times around the world. Would you all agree with
    that? Not a time to take a peace dividend.
        General Dempsey. Yes, absolutely. If I could, because I did
    not get a chance to respond. The issue of the mechanism is one
    thing. The magnitude of this thing--even if we got all of the
    authority in the universe to deal with it, this would be the
    steepest, biggest reduction in total obligating authority for
    the Defense Department in history at a time when I will
    personally attest to the fact that it is more dangerous than it
    has ever been.
        Senator Ayotte. I thank you.
        I think that it was mentioned by Senator Inhofe. I am a
    cosponsor, along with others on this panel, of a bill that
    would come up with some alternative savings to provide at least
    a resolution of sequestration for the end of this fiscal year.
    So there are many of us that are trying to work toward
    solutions. As Senator McCain mentioned, we did travel around
    the country over the last 16 months, having heard from all of
    you about the concerns about what this would do to our men and
    women in uniform.
        I want to ask Admiral Ferguson about a particular impact
    and that is on the Virginia-class submarines and our attack
    submarine fleet. What do you believe will be the impact on
    that, number one, on the attack submarine fleet, the Virginia-
    class submarine, and also on our four public shipyards?
        Admiral Ferguson. Well, Senator, I believe that under a CR
    and sequestration, you will see us take action to defer the
    repairs of Miami in Portsmouth Naval Shipyard. You will see us
    make every effort to preserve our undersea dominance. We have
    issued contracts in fiscal year 2013 for the submarines. Those
    will be unaffected in the procurement. However, there are
    longer-term consequences. For example, there is a Moore
    training ship that is affected by CR and sequestration that has
    an impact in training our future nuclear operators. In a few
    years, if we do not get authority to build that training ship,
    we will lose the production of 1,100 nuclear operators a year,
    for example. You will see us--by the end of this year with the
    hiring freeze, we lose about 350 workers a week, 1,400 a month
    out of our civilian industrial base, and we will be down 3,000
    in our shipyards. If we furlough, we will furlough the workers
    in our shipyards which will cascade through on the work
    completion rates of the submarines and the ships going through
    overhaul in those public yards and really impact in a cascading
    way the readiness going forward.
        Senator Ayotte. I thank you, Admiral. I am sure my
    colleagues, certainly Senator Shaheen, Senator King, share my
    concerns about the impact and the importance of our shipyards
    and, of course, the important work done at the Portsmouth Naval
    Shipyard in maintaining our Virginia-class submarines. So I
    appreciate the insight that you provided us there, again
    another impact showing us why this is important that our men
    and women in uniform and our national security are not impacted
    by sequestration.
        I have some additional follow-up questions. So I am hopeful
    that we will either have a second round or I will submit to all
    of you additional questions for the record, including,
    Secretary Carter, I would like to understand whether we are
    going to have to pay damages because of the OMB guidance that
    was issued on the WARN Act. So I will follow up with you on
    that.
        [The information referred to follows:]

        The Office of Management and Budget (OMB) guidance does not make
    the Department of Defense responsible for any additional liabilities;
    instead, the guidance applies existing Federal Acquisition Regulation
    (FAR) provisions to a specific question regarding Worker Adjustment and
    Retraining Notification (WARN) Act-related costs raised by the Federal
    contracting community, and it explains how governing cost principles
    would apply in those circumstances. Specifically, the guidance states
    that if sequestration occurs, an agency terminates or modifies a
    contract as a result of sequestration that necessitates that the
    contractor order a plant closure or mass layoff subject to WARN Act
    requirements, and the contractor has followed a course of action
    consistent with the Department of Labor's Training and Employment
    Guidance Letter No. 3-12 (the TEGL), then certain liability and
    litigation costs would be allowable and be covered by the contracting
    agency, if otherwise reasonable and allocable. This is an appropriate
    application of existing FAR provisions and reflects a fair and
    reasonable approach. As circumstances evolve, each contractor must make
    its own decisions with regard to sequestration's impact on its business
    and whether the requirement to issue WARN Act notices has been
    triggered. As made clear in the TEGL, if and when ``specific closings
    or mass layoffs are reasonably foreseeable,'' notice would be required,
    and if a contractor failed to provide appropriate notice in that
    circumstance the relevant FAR principles may provide a different answer
    regarding the allowability of related costs.
        I do not anticipate that application of the OMB guidance will
    result in any significant costs to the Department.

        Chairman Levin. Thank you very much, Senator Ayotte.
        Senator Udall.
        Senator Udall. Good morning, gentlemen. Thank you for being
    here.
        It is clear from your testimony that sequestration will
    have very real threats to our national security. It would harm
    our military communities, and it would damage our military
    readiness. As always is the case, our soldiers, sailors,
    airmen, marines, and coastguardsmen will be the billpayers if
    we fail to meet our obligations.
        I want to associate myself with the remarks of the Senator
    from Missouri. She is spot on. Many of us in both parties voted
    for the BCA in the summer of 2011 to avoid defaulting on our
    good credit rating. It is on our shoulders to put the national
    interest ahead of the petty partisan sniping that has been
    occurring in this town as regards to the sequester. I really
    want to say that, frankly, if we allow this kind of harm to be
    done to our country, it will not make a damn bit of difference
    who wins the majority in 2014. So let us solve this problem. If
    we cannot reach a compromise, then let us work with you all to
    mitigate the effects.
        General Odierno, if I could, I would like to turn to the
    Army's training budget. I understand that if sequestration
    takes hold, that training above the battalion level will
    essentially stop except for units preparing for Afghanistan. My
    concern is, if you begin to see that take hold, there is a
    ripple effect that then might result in increased tour lengths
    for deployed troops. We have been really working on operational
    tempo. We have really been trying to increase the amount of
    dwell time. My concern is that we then break faith with our
    troops and the men and women in uniform if this takes hold.
    Could you speak to that?
        General Odierno. Yes, Senator. Currently we have funded the
    next group of units that would go into Afghanistan. We cannot
    fund the group that comes after them, and that would be done in
    the later part of 2013. What that means is the initial
    replacements that go in in the beginning of 2014 are funded.
    Those who would come in later in the year are not. So it would
    take them much longer to be prepared. So we will have to make a
    decision somewhere along the line to either extend those
    already there or send people there that are not ready. I choose
    not to send people that will not be ready. That is the
    cascading impact we have, a real problem we have in the 2013
    budget in terms of our operations and maintenance funds.
        Senator Udall. Thank you for that clarification. Another
    reason we have to get this right here in Congress.
        General Welsh, if I could turn to you. Of course, we
    proudly host Space Command in Colorado Springs. Last week, you
    issued a press release that warned that sequestration could
    lead to major cuts to essential programs, and I want to quote
    here. ``Reduce some missile warning and space surveillance 24/7
    hour operations to 8 hours per day operations, impacting
    national missile warning, missile defense, space situational
    awareness, and the intelligence community.'' That would
    indicate that Space Command would not be able to fulfill their
    basic mission requirements if sequestration goes into effect.
    Is that an accurate assessment? How would ballistic missile
    warning, for example, be affected by reductions in space
    surveillance operations?
        I would add I just walked through the anteroom, and of
    course, our friends in North Korea are at it again. They have
    just had another test. You might speak specifically about that
    situation as well.
        General Welsh. Thank you, Senator. Space Command actually
    in their space operating budget has the advantage of having a
    fairly wide latitude of where to take the money from under the
    cuts of sequestration. Compared to some of our other accounts,
    it actually gives them a little bit more freedom. So what they
    have done is they have removed--when you talk about going down
    to 8 hours a day at some of these sites, as opposed to 24 hours
    a day, what they have been able to do is do that in the sites
    that provide redundancy and provide extra capacity in their
    respective system.
        So missile warning is not impacted. We still have the
    capacity to do that. That threat to the Nation can be detected,
    but the redundancy in that capability is what is now impacted
    in the background. It is the operating funds to power radar for
    24 hours a day. When they are cut, we have to take that money
    from somewhere. We have taken it from the backup redundant part
    of the systems, the secondary capabilities of those major
    radars. That is what has actually happened, Senator.
        Senator Udall. Thank you for that clarification.
        I see my time is up. I just again want to urge the Senate
    Armed Services Committee, which is known for bipartisanship, to
    lead the way on finding a compromise that could involve
    revenue, strengthening our entitlement programs, and some
    targeted spending cuts. We could do that on this committee and
    show the Senate the way forward.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Udall.
        Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman, and thank you,
    Ranking Member Inhofe.
        First of all, I would like to begin by thanking all of you
    for your service, and I thank you on behalf of the people of
    this country. I would also like to recognize the men and women
    that you represent by being here today. Thank you.
        I would like to visit with you some about our nuclear
    modernization and readiness. Dr. Carter, the President has
    committed to modernizing our nuclear deterrent and the cost
    estimates that were provided--I believe it was last year--by
    the Department were about $56 million in order to sustain and
    modernize that over 5 years and $126 million over 10 years. Is
    that still a good estimate? Do you believe that it is an
    affordable investment that Americans should be making in our
    deterrent capabilities?
        Dr. Carter. Well, we do need to have a safe, secure, and
    reliable nuclear deterrent, in my view, as far into the future
    as I can see. That does require that we have the scientists and
    engineering base, the facilities, and the life extension
    programs and other things we do to keep the nuclear arsenal
    going.
        If the budget cuts that begin with sequestration and extend
    over 10 years are actually visited upon us over those 10 years,
    I cannot imagine that we will not have to also look at the
    nuclear part of our force structure in order to accommodate
    some of those savings. That is true also at the Department of
    Energy, which we do not have responsibility for but does have
    responsibility for the nuclear arsenal. So they are going to
    get hit with budget cuts too.
        The only thing I would say is that nuclear deterrence is
    pretty important. So it is the last thing that you want to do
    serious damage to. So I would imagine that the Department of
    Energy and the leadership there and certainly we in DOD will
    try to protect our nuclear capabilities to the maximum extent
    possible. But there may be some effects on some parts of it.
    General Welsh was just describing that. It is not critical. He
    is still able to do the mission but he is doing a little bit
    less than he used to do. I think you are going to see that even
    in the nuclear programs.
        Senator Fischer. We are looking at severe cuts to
    conventional forces, but if I am hearing you correctly, you
    would say that our nuclear deterrent then would be a national
    priority?
        Dr. Carter. I think it is a national priority. That does
    not mean that it will escape entirely the cuts of this
    magnitude. I would not say that. But it is something that we
    would value pretty highly because look at what the North
    Koreans are doing today and so forth.
        Senator Fischer. Exactly.
        Dr. Carter. We really have to have a safe, secure, and
    reliable nuclear deterrent.
        Senator Fischer. Thank you. I will have a follow-up
    question then in round two. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Fischer.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        Chairman Levin. I am sorry. I misspoke. Senator Hagan.
        Senator Shaheen. I thought you were going to let me get in
    there.
        Chairman Levin. She slipped in in time. I apologize,
    Jeanne. Senator Hagan.
        Senator Hagan. Thank you, Mr. Chairman.
        Gentlemen, I certainly do appreciate all of your service to
    our country, and thank you for your time today.
        If the devastating impact of sequestration, which we have
    all heard and talked about, and the effects of a year-long CR
    are to be avoided in this late hour, I really do appreciate the
    candor that you have shared with us, and that certainly does
    play an important role.
        I chair one of the subcommittees on this committee, the
    Emerging Threats and Capabilities Subcommittee, and I am very
    concerned about the possible impact of the sequestration and a
    full-year CR on our Special Operations Forces (SOF). North
    Carolina is the home to the headquarters of the U.S. Army's
    Special Operations Command, Joint Special Operations Command,
    and the Marine Corps Special Operations Command at Camp
    Lejeune, as well as thousands of special operators and their
    families.
        Admiral McCraven has noted repeatedly that there is a
    greater demand for SOF today than at any point in our history,
    and as we prepare to draw down in Afghanistan, SOF will likely
    remain. Additionally, as long as al Qaeda and its affiliates
    remain a threat to our Nation, our special operators will
    remain engaged abroad.
        I understand the combined impact of these issues could cut
    approximately 23 percent in the SOF operations and maintenance
    accounts and 9 percent in their investment accounts,
    essentially returning the command to fiscal year 2007 spending
    levels, or $2.4 billion below the budget request for fiscal
    year 2013.
        Dr. Carter and General Dempsey, if these cuts go forward,
    how will they impact the readiness of our SOF?
        Dr. Carter. Well, it is devastating. I will let the
    chairman speak to it more.
        But the reason that U.S. Special Operations Command gets
    hit especially hard is the same reason that General Odierno and
    the Army get hit especially hard, namely that they have a lot
    of funding in the overseas contingency operations account. That
    gets hit too by sequester. We have to protect the wars. So you
    protect the part of it that is working in Afghanistan right now
    or deployed right now. The rest of it has to pay a larger
    price.
        Our strategy is not to shrink our SOF. Our strategy is to
    grow them. We said last year we were going to take $487 billion
    in cuts and that we could do that if we had a new strategy.
    Actually our plan is, still is, to grow our SOF. Now, all that
    is obviously in question because of sequestration, but if
    sequestration is averted and we get back on course, SOF will
    actually grow slightly, I think from 65,000 to 72,000 if I
    remember the numbers. I was just down at Fort Bragg a few weeks
    ago and discussing that with them. So it is a priority in our
    strategy.
        Senator Hagan. Well, it is a priority and we are counting
    on these individuals and we are really looking to the SOF. It
    just seems incongruous to me that we think we can count that at
    the same time we are looking at a 23 percent cut.
        Dr. Carter. I am with you.
        General Dempsey. There is plenty of incongruity to go
    around on the topic of sequestration.
        I would only add to what the Deputy Secretary said that in
    the first round of these cuts, the $487 billion BCA, we did
    advantage the special operations. But if sequestration occurs
    in the magnitude we are discussing, everybody will be affected
    because we have to maintain a joint force of conventional and
    unconventional capability.
        Senator Hagan. Well, obviously, the SOF do rely heavily, as
    you were saying, on the general purposes counterparts for the
    significant enabling support, including the intelligence,
    surveillance, reconnaissance (ISR), medical evacuation, and
    logistics.
        General Odierno and Admiral Ferguson and General Amos, I am
    running out of time. As representative of our Military
    Services, how is sequestration and then the full-year CR--how
    would that impact your ability for your Services to provide
    these critical enabling capabilities to our SOF?
        General Odierno. Senator Hagan, if I can go first. Again,
    as I said, it is a reduction in intelligence capability,
    training, reduction of our aviation training. So all of these
    will have an impact on providing much of the enabling support
    that we provide to SOF. We are going to lose 37,000 flying
    hours in fiscal year 2013. That will take a while to recover
    from as we have to go through and then revalidate and meet our
    gates for our pilots in order to support all our forces, to
    include SOF. So they will be affected by the reductions that we
    face in the Army.
        General Amos. Senator Hagan, we stood up Marine Special
    Operations Command 6\1/2\ years at Camp Lejeune. The number of
    marines was planned to about 2,500. When I became the
    Commandant, we did a force structure review, as you remember, 2
    years ago, and due to the requirements and the need in the real
    world, I agreed to grow that force another 1,000. We are not
    there. We are sitting at about 2,600 today. If sequestration
    and CR continue and persist especially over the next 10 years,
    it is unlikely that I will grow the force up to the extra 1,000
    that I said. Certainly the equipment and the people will not be
    available.
        Admiral Ferguson. Senator, for us it is really two areas:
    people and platforms. So in the people area, we will continue
    to support the Navy Special Warfare Command and provide the
    enablers to them. But on the platform piece for the ISR, for
    the ships that they may operate from, the other units, you will
    see a decreased presence and a more difficult time doing the
    training and preparation for deployment because of
    sequestration and the CR.
        Senator Hagan. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Hagan.
        Here is where we are. The votes that were originally
    scheduled for 11 a.m. are now scheduled for 11:30 a.m., which
    means we can safely go to about 11:40 a.m., which means in turn
    that we ought to be able to completely finish our first round
    and hopefully have a couple, perhaps, second rounds if
    necessary, the goal now being to complete this hearing by 11:40
    a.m.. It is now five after 11 a.m.
        Senator Inhofe. Mr. Chairman, I think it would be good for
    our staff to make sure that their member knows that so they can
    come down here.
        Chairman Levin. I would ask our staff, at that suggestion,
    to notify our members that there may be a few minutes for a few
    second rounds. So if they are interested, they should let us
    know.
        The meeting of our committee on the Hagel nomination that
    was scheduled at 2:30 p.m. will begin now at 2:45 p.m. because
    we have two votes at 2:15 p.m. Two votes at 2:15 p.m. this
    afternoon. So after consulting with Senator Inhofe, we are
    going to begin our meeting this afternoon at 2:45 p.m. instead
    of 2:30 p.m. I would ask everybody to vote early in that second
    vote so we can begin promptly at 2:45 p.m. this afternoon.
        Now I am going to call on Senator Graham and then I am
    going to go to Senator Shaheen. Senator Graham?
        Senator Graham. Thank you all, gentlemen, for coming.
        Mr. Chairman, thank you for having this hearing. I cannot
    think of a better topic to be talking about.
        Have you run out of adjectives to tell us how bad this is?
        General Dempsey. Senator, I have a degree in English from
    Duke University, and the answer is yes. [Laughter.]
        Senator Graham. I do not know what it is going to take,
    guys, but just keep trying.
        Maybe bases closing seems to get everybody's attention in
    Congress. From a Navy perspective, if sequestration is fully
    implemented, will we have less naval bases?
        Admiral Ferguson. Well, Senator, that falls under the base
    closure and realignment process.
        Senator Graham. How many ships will we have?
        Admiral Ferguson. If sequestration is enacted with the
    discretionary budget caps over the 9-year period, we anticipate
    the fleet shrinking by approximately 50 ships and at least two
    carrier strike groups and a proportional number of amphibious
    ready groups.
        Senator Graham. In English, how many is that?
        Admiral Ferguson. 220 to 230.
        Senator Graham. All right.
        The Air Force. Are we going to have less airplanes?
        General Welsh. We will have to have less airplanes,
    Senator.
        Senator Graham. What happens to the F-35?
        General Welsh. It depends on what the top line is going
    forward. Short-term, it is one to two airplanes this year----
        Senator Graham. Well, let us say sequestration fully goes
    into effect.
        General Welsh. We are going to have to look completely at
    the program.
        Senator Graham. I mean, it is going to be hard to
    modernize. Right?
        General Welsh. It is going to be impossible to modernize
    the way we currently would like to.
        Senator Graham. Would that make it more difficult to go
    into a situation like an attack on Iran to prevent their
    nuclear program in the future?
        General Welsh. Yes, sir. Our ``kick in the door''
    capability would be impacted.
        Senator Graham. From the Army point of view, General
    Odierno, will we eventually have less Army bases?
        General Odierno. We will definitely have less brigade
    combat teams, about a 40 percent reduction with sequestration.
        Senator Graham. Okay, a 40 percent reduction in combat
    power.
        General Odierno. We will have to look at closing bases if
    we do this.
        Senator Graham. Okay.
        Has anybody thought about resigning in protest?
        General Dempsey. You ask me that a lot, Senator. I do not
    know if you are trying to send me a message.
        Senator Graham. No. I do not want you to resign.
    [Laughter.]
        I just want to make this real to people up here. I mean, we
    are putting you in an almost untenable position.
        General Dempsey. Well, your point is a good one. Look, none
    of us walk away or run away from a crisis or a fight. That is
    not our nature. But I will tell you personally if ever the
    force is so degraded and so unready and then we are asked to
    use it, it would be immoral to use the force unless it is well-
    trained, well-led, and well-equipped.
        Senator Graham. Are we on the path to creating that
    dilemma?
        General Dempsey. We are on that path.
        Senator Graham. So please understand that, colleagues. We
    are on the path of requiring our military in the future to
    protect us in a circumstance where they know they do not have
    the ability, given what we are doing to the training and the
    readiness of the force. General Dempsey, I cannot say it any
    better. Do all of you agree with that general statement? Would
    you please say yes or no into the mike?
        General Odierno. Yes.
        General Amos. Yes.
        General Grass. Yes.
        General Welsh. Yes.
        Admiral Ferguson. Yes.
        Senator Graham. Thank you all for your service.
        Chairman Levin. Thank you very much, Senator Graham.
        Senator Graham, before you leave, your question, as I
    understand it, an extremely good one, you referred to the
    current 9-year sequestration.
        Senator Graham. Yes. We are on the path.
        Chairman Levin. Right.
        Senator Graham. Yes, sir. That is a good point, Mr.
    Chairman. Sequestration is putting us onto a path of putting
    our military leaders in a great moral dilemma knowing they
    cannot send people into battle who are not ready, knowing that
    people are going to die unnecessarily. That is sort of the
    issue.
        Chairman Levin. I understood that and I very much agree
    with that, but I just wanted to make sure that that was the 9-
    year sequestration.
        Senator Graham. Yes, sir, the 9-year path. Yes, sir.
        Chairman Levin. It is bad enough. The first year part of it
    is plenty bad enough.
        Senator Graham. Right, I agree.
        Chairman Levin. Okay.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        Again, thank you all very much for being here and for your
    candor in terms of your response to what has clearly been
    irresponsible on the part of Congress.
        I voted for the BCA, as did the majority of my colleagues
    in the Senate and the majority in the House, because I thought
    we were going to be responsible about how we then responded to
    coming up with a long-term solution to address this country's
    debt and deficits. The fact that we have not I think means that
    each and every one of us in Congress should take a second look
    at what our jobs are in this body.
        The fact is we can come up with a long-term solution that
    avoids the impact of sequestration, that avoids the devastating
    toll that all of you are talking about this morning on our
    military and on our defense. But in order to do that, we have
    all got to put aside some of our sacred cows and be flexible.
    We have to look at the entire budget. We have to look at
    spending. We have to look at revenues, and we have to look at
    our mandatory programs. I can pledge to you that I will do
    everything I can to be flexible about that and to be willing to
    look at all of the options that we have to get a solution
    because this is not just, as you point out, about our military
    readiness and about this country's national security. It is
    also about the future of the economy of this country. Anybody
    who looked at those economic numbers from the fourth quarter
    has to understand that if we continue on the path we are on, we
    are going to put the economic growth of this country and
    everything that means in terms of unemployment and impact to
    defense and all the other sectors of our economy--we are going
    to put that back at risk.
        So I can understand your frustration. I share it. I do not
    blame you one bit.
        Now, I have a question. You have talked--and I think very
    eloquently--about the impact on our men and women who are
    serving and on our security. But I want you, if you would, to
    talk a little bit more about the impact on this country's
    industrial base because I know that we have heard from some of
    the small businesses in New Hampshire. There has been one firm
    quoted as saying that 20,000 small businesses in its pipeline
    would be affected if these cuts are not addressed. I wonder if
    you could elaborate on the potential reversibility of
    sequestration with respect to our defense industrial base and
    its small businesses. Secretary Carter?
        Dr. Carter. Thank you for the question because this has a
    very serious impact. I talked about the larger companies are
    telling me that they are, as I said, maintaining more
    liquidity, not making internal investments in defense. But they
    have a capital structure that allows them to survive. Remember
    that 60 to 70 cents of every dollar that we contract ends up in
    a subcontractor, and many of these are small businesses that do
    not have the capital structure to be able to withstand blows
    and be turned on and off and so forth. So I am concerned and
    our industry partners are concerned that some of them just are
    not going to make it, and then you do not have a supplier for a
    critical component. So both the magnitude and the abruptness of
    these impacts and also just the uncertainty that looms over
    these little companies--and small businesses are important to
    us because they are at the source of a lot of innovation, and
    they bring new ideas, new people into the defense field, which
    we need. So many of our most dynamic, new ideas, new systems
    and so forth originate in small businesses. So we are concerned
    about the health of the so-called lower tiers of the industrial
    base as we make this adjustment.
        Admiral Ferguson. Senator, if I might add, another concern
    for the Navy is the people involved in repairing the ships, the
    very highly skilled craftsmen and tradesmen. It takes years to
    develop a nuclear welder, for example--that we could lose those
    skills when the works go away and they have to find employment
    or they are furloughed. They may make a choice to retire or
    leave Federal service, and so there is that aspect.
        But then the secondary one is we have many sole-source
    suppliers, that if we cut off the development and the
    construction of these systems, they do not have any work for
    them since they are single source for some critical components.
        Senator Shaheen. So that could have a significant impact on
    jobs and the economy that is dependent on----
        Admiral Ferguson. Right. Jobs but also the ability to
    reconstitute the industrial base and the ability, in response
    to a crisis, to ramp up in the future.
        Senator Shaheen. Well, obviously, I share Senator Ayotte
    and Senator King's concern. We are seeing that already at
    Portsmouth Naval Shipyard, the potential impact that this could
    have.
        So thank you all very much.
        Chairman Levin. Thank you, Senator Shaheen.
        Senator Blunt.
        Senator Blunt. Thank you, Mr. Chairman.
        On that, let us talk about jobs and the workforce for a
    little bit. Admiral Ferguson, just to be sure I understand what
    you are saying, that if the shipyard people get furloughed,
    your view is that some of them eventually decide this is not my
    long-term career path?
        Admiral Ferguson. I think that is the potential outcome,
    Senator.
        Senator Blunt. General Welsh, I asked the other day about
    the F-18 line in St. Louis because that is the big line I am
    the most familiar with. We have lots of little defense
    contractors in Missouri. I did a tour of some of these
    businesses last year. As I recall, one of them was out in the
    country, and the office had at one time been a dairy barn.
    Everything is run by computer, very sophisticated, very
    purposeful, but of course, if they do not have that contract, I
    am sure they are not conditioned in a way that allows them to
    just wait. That business would go away.
        But what about the big lines, General Welsh? I have always
    been told that if that ever goes away--that is why some of our
    foreign military sales were so important, to keep the lines
    open. What are your concerns if you all have to say we are not
    going to be able to follow through with our plan for the number
    of planes that we have ordered?
        General Welsh. Sir, some of the major defense contractors
    have the ability to absorb some of that workforce into their
    public side of the house. Boeing is an example with a very
    large public aircraft production capacity.
        Where we are facing a more immediate problem with
    sequestration, especially just for the remainder of this year
    is in our depot maintenance workforce. If we stop, for example,
    the 150 airplanes and 85 engines I mentioned not going into
    depot if sequestration occurs for the remainder of this fiscal
    year, we will not just furlough the workforce that is there
    working in the depot maintenance facilities, but the workload
    will also stop. Many of the small business contracts that
    provide parts and people to come in and do specialized work as
    part of that depot maintenance will really start to go----
        Senator Blunt. So this would be a furlough not because you
    are furloughing people because of sequestration, because you
    are furloughing people that sequestration meant they did not
    have any work to do.
        General Welsh. Yes, sir. It will be both.
        Senator Blunt. Let us talk about the other part of that
    furlough. General Grass, you and I visited the other day. Some
    of your uniformed personnel, because of the way you function
    uniquely where you have civilians wearing a uniform at things
    like the Aviation Classification Repair Activity Depot, but on
    your civilian personnel, what are you thinking you would have
    to do in terms of just telling them not to show up for work a
    certain number of days for the next 6 months?
        General Grass. Senator, if full sequestration were to kick
    in--and some of the information we have passed on to the
    adjutant generals right now to plan on is 1 day a week maximum
    for the rest of the fiscal year, starting probably in April.
    Again, we have not implemented that. We are taking a look at
    that. What it really means especially for the National Guard is
    the bulk of our maintenance is completed each day by our
    civilian technicians, the ones that wear a uniform to work each
    day. As we begin to draw those down for that time period, we
    begin to see a decrement in our readiness of our armories
    across the Nation. I just did a study the other day and looked
    at a 10 percent reduction of our rolling stock and our aviation
    here within the next 6 months. That is on top of already a
    depot shutdown that is going to cause us problems.
        Senator Blunt. I may have some more questions just in
    writing on furloughs generally.
        Secretary Carter, I have one last question. I am out of
    time. But I appreciated your sense that even if you are given
    some flexibility, now the time is so short and what money is
    left, that might not do what you need to have done. Were you
    asked, when you submitted your budget, to submit an alternative
    for the sequestration number for next year?
        Dr. Carter. No, we were not. We were asked to prepare the
    2014 budget according to the fiscal guidance that we were given
    late last year.
        Senator Blunt. All right. Thank you.
        Chairman Levin. Thank you, Senator Blunt.
        Now Senator Blumenthal is kindly willing to yield to
    Senator Nelson for a question.
        Senator Nelson. Mr. Secretary, how do you think the U.S.
    should respond to this dangerous and unprecedented action by
    North Korea?
        Dr. Carter. Well, there is nothing more provocative than
    what the North Koreans did. I do not know if they did it to
    coincide with the State of the Union. They had several other
    holidays this week they could have taken advantage of. They
    tend to like to do this on holidays.
        But in all seriousness, it is very dangerous. We will take
    action to condemn and get the rest of the international
    community to condemn this test by North Korea. I am
    particularly looking to China, of course, to join in that
    condemnation. They have a pivotal role in influencing the
    future here for North Korea. That is an extremely dangerous
    situation for us. The Chinese have significant influence over
    it, and we need them to use it.
        Chairman Levin. Thank you.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        Thank each and all of you for your service to the country
    and your extraordinary performance under very, very difficult
    conditions, not only fiscal conditions but obviously the Nation
    remains at war, and your caring for the men and women in
    uniform has impressed me beyond words. Your dedication to them,
    whether it is health care or family. We often say here that our
    people are our most important asset, and you have lived that
    concept in the way you have led by example. I am very, very
    grateful to you.
        On that score, I want to ask you, Secretary Carter, in
    terms of people, you outline in your testimony the effects on
    TRICARE of the sequester, that it may mean cuts of $2 billion
    to $3 billion and that our health system for our military men
    and women may not be able to pay its bills. Can you tell us
    just very briefly what you see the effects of our potential
    sequester on health care for our men and women in uniform?
        Dr. Carter. Yes, I will say something and perhaps I can ask
    Secretary Hale to add to that.
        But you are exactly right. Under this scenario that we all
    fear so much, by the time we get to the end of the year, we are
    out of money. It is very hard to cut back health care the way
    you can cut back depot maintenance or training because you
    cannot just tell people they cannot be sick or they cannot see
    a doctor. You can do a little of that with elective procedures
    and so forth. But the reality is that by the end of the year we
    are, by our estimates, a few billion dollars short, and that
    will mean either trying to kick bills into the next year or we
    are going to have to simply cut back on the care we can
    provide.
        Let me ask Secretary Hale.
        Mr. Hale. Just briefly. We are actively looking for a way
    around what I view as a crisis, and it may be that the best way
    by far would be to detrigger this. You heard it repeatedly but
    let me just add my voice to that. We need to not do this.
        Senator Blumenthal. My understanding is that the Navy is
    continuing with its program of two submarines per year,
    including 2014, Admiral Ferguson. Is that correct?
        Admiral Ferguson. Only in 2013. The 2014--we do not have an
    appropriations bill and that issue is unresolved for the multi-
    year for that submarine. So the two boats in 2013 are under
    contract and proceeding. It is questionable, based on the
    outcome of congressional action on both our budget request and
    the appropriate authorities.
        Senator Blumenthal. I am very concerned, as my colleagues
    have said, about the effect on our defense industrial base, our
    workforce, our skilled working men and women who build the
    Joint Strike Fighter or submarines or helicopters that they do
    in Connecticut or all around the United States and retaining
    that workforce if we are faced with sequester.
        So again, I thank all of you for your service, and I hope
    we will be able to surmount that problem. Thank you.
        Dr. Carter. Mr. Chairman, just on that point, we have
    talked a lot about furloughs, and it is just worth noting that
    we need to find $46 billion under sequestration between now and
    the end of the year. Furloughing everybody, all of our 800,000
    employees, for the maximum allowable under the law gets $5
    billion. Even if we do that, we still have $41 billion to go.
    That $41 billion shows up in contracted services. That is where
    the money will come from. It will affect all those people who
    work for us, that is, work for national defense, but they are
    not employees of DOD. There are millions of such people and we
    do depend on them. They build our systems. They provide some of
    the expertise that we cannot keep in-house. That $41 billion--
    much of that will go to cutting their work for us.
        General Odierno. If I could just add to that.
        Senator Blumenthal. Yes, General.
        General Odierno. In the Army, we are going to have to
    reduce purchase order to over 3,000 small companies. Our
    assessment tells us 1,100 of those are then at moderate to high
    risk of bankruptcy if we have to execute this this year. Then
    you are not even talking about the impacts of the small
    companies that exist around all of our large installations that
    are dependent upon the support of the installations as we
    continue to reduce the dollars that are being spent at every
    one of our installations.
        Then in our own industrial base, the depots--we said we are
    going to cut 5,000, but we actually believe if sequestration
    goes into effect, it will be well over 10,000, if we end up
    having to move out of depots in the out-years. So the impact on
    our civilian team that we have built between our depots and our
    civilian assistance that we get from contractors will be quite
    significant, and it will really, from an Army perspective, hit
    the small companies, which I think is devastating for us as we
    move forward.
        Senator Blumenthal. That is very important and I thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Blumenthal.
        Now, before I call on Senator Donnelly, there have been a
    number of questions for the record that have been referred to
    and there will be additional ones I am sure. We would ask our
    witnesses, because of the shortness of time before that
    sequestration threat is executed, that you respond to those
    questions within 5 days. Thank you.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        I want to thank all of you for your service to our country.
        General Grass, obviously in Indiana we have a large
    National Guard presence. You touched upon it briefly, but I was
    wondering if you could detail, in terms of our National Guard,
    the impact that sequestration will have as we move forward.
        General Grass. Senator Donnelly, the major impact in the
    near term of sequestration will be the reduction in our
    maintenance, and our maintenance readiness will decline
    drastically which will require us to park vehicles. As General
    Odierno has mentioned, we are so closely tied in the Army side
    with the contracts that they have in their depot maintenance,
    and a lot of our equipment returning from overseas--there is
    already a backlog.
        In addition to that, then if we furlough or if we have a
    hiring freeze, we will go ahead and we will reduce the amount
    of maintainers at the armory level in hometown America, which
    further degrades our ability just through annual services,
    nothing else.
        With that, that time to respond to the disaster in your
    home States begins to increase. We had 2,500 guardsmen from 4
    States this past weekend that responded. We will be able to
    continue to do the smaller ones. I am very concerned about the
    most regional long disasters, the catastrophic and complex
    catastrophes.
        Senator Donnelly. Thank you very much.
        Mr. Secretary, this is for you or General Dempsey. Do you
    have a number you can live with in terms of reductions? $487
    billion is too high. What is a number that you can live with?
        Dr. Carter. We have said we can live with $487 billion, and
    we worked very hard last year to accommodate an adjustment that
    large. As I said, that cut was on top of the cuts that
    Secretary Gates imposed, which were another several hundred
    billion dollars. So we understand that we need to play a role
    in deficit reduction. We understand that the country cannot
    afford to give us the amount of money they have been over the
    last 10 to 11 years. What we are saying here today is that we
    were able to do that, but we are now on the edge in many of our
    capability areas, and the suddenness, the scale, and the
    arbitrariness of sequester is what causes all these effects
    that you have heard about today.
        General Dempsey. I would just add and the magnitude. The
    magnitude of another half trillion dollars over 10 years on top
    of the $487 billion and on top of the Gates era efficiencies
    will put the current strategy at risk--not at risk. It will
    make it infeasible. So the question back to you will be what
    strategy will you as a member of the committee and the Congress
    of the United States be willing to live with, which will be a
    degraded capability from what we provide today. We will owe you
    that discussion. But any additional cuts will change the
    strategy.
        Senator Donnelly. I just want to ask real quick. In terms
    of suicide prevention programs, we lost, as I mentioned last
    week, more young men and women to suicide in the past year than
    we lost in Afghanistan. I was wondering the effect of
    sequestration on those programs, the mental health programs.
        General Odierno. Sequestration has an impact on everything.
    We have invested a lot of money and effort and time in trying
    to build resiliency and trying to get after the issues we have
    with suicide and many other issues. We have counselors that we
    have increased significantly in every one of our installations
    that help our families and our soldiers to work through coping
    mechanisms and problems that they have. But that will all be
    affected. We will not be able to afford the numbers of
    counselors that we have today. That is just simple. We cannot
    do it. That is one of our high priorities. We will try to
    sustain it at the highest level possible as we go forward, but
    it will have to take a reduction. This is serious business.
    Although the effort we have put into it, we have not yet put a
    dent into our suicide problem, and so this is of deep concern
    to all of us as we move forward.
        It also impacts our other critical family programs that
    have helped us over the many years as our families have
    sacrificed so much over the last 10 to 12 years. Those will
    have to be reduced as well.
        So we are looking at this very carefully to find where the
    critical ones are and where the ones that are still important
    and not as critical. But in every case, we will have to reduce
    the size of all these programs.
        Senator Donnelly. Thank you all for your service.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        Thank you, gentlemen.
        This hearing must feel bizarre to you guys. It is one of
    the most strange hearings I have ever been in where a portion
    of the U.S. Government is talking about essentially going out
    of business because of decisions made somewhere else in the
    Government. Senator McCain talked about it being Orwellian. I
    would say it is more Alice in Wonderland. It is a very strange
    situation.
        Mr. Carter, I am so glad you used the word ``dumb'' because
    that was the word that was in my notes. So you have given me
    license to use it. This whole thing is dumb. It is an arbitrary
    date. It means nothing. March 1st has nothing to do with what
    is going on in the economy or the credit of the United States
    or anything else. It is a totally self-imposed deadline.
        The impacts will be drastic. In my small State of Maine,
    7,000 jobs is the calculation. George Mason University has just
    done a study of what the impacts of this will be State by
    State, and I commend it to my colleagues. They estimate 7,000
    jobs in Maine, 4,000 in the defense sector at places like Bath
    Iron Works, Portsmouth Naval Shipyard. It is a disaster, and it
    is a self-imposed disaster that we do not have to do.
        It is also hitting the wrong targets. Your budget as a
    percentage of gross domestic product (GDP) is relatively stable
    and in fact has been declining. Nondefense discretionary
    spending as a percentage of GDP is at the lowest level it has
    ever been in 50 years. The growth in our budget over time and
    the deficit problem relates mostly to health care. The
    sequester has nothing to do with that whatsoever, and we have
    to be having that discussion.
        It is also terrible timing because it is hitting at a time
    of a fragile economy. I do not know if it can push us back into
    recession, but it certainly will not help with these thousands
    of layoffs and furloughs around the country. It is certainly
    going to kill the confidence of the economy in this institution
    of the U.S. Government that we can make decisions on a timely
    basis and respond to these problems intelligently and not with
    a blunt instrument.
        I believe, as some of you have testified today, it will
    increase long-term costs. In the Navy, for example, by getting
    rid of multi-year procurements, the ships which we ultimately
    need are going to cost more. Deferred maintenance is not
    savings. It has to be done eventually. That is exactly what is
    going to happen here.
        So I would again associate my comments with those of
    Senator McCain.
        I think there is one person that can help us resolve this
    and that is the President of the United States. I think he has
    to precipitate a solution. If I were him--and believe me, there
    is no chance that is ever going to happen--but if I were him, I
    would have the helicopter running on the lawn of the Capitol
    this evening, take the leadership of Congress and the
    leadership of this committee to Camp David and say you have 3
    or 4 days, guys. Nobody leaves--men and women--until we get
    this thing solved. I hope he takes the initiative because right
    now we are slouching toward a catastrophe for this country both
    in terms of its economy, in terms of its military readiness.
        I thank you for what you have done today, and hopefully
    what you have given us will have some impact throughout
    Congress and at the other end of Pennsylvania Avenue because we
    can solve this. It is ridiculous to be at this stage at this
    time given the seriousness of the danger.
        Thank you very much.
        Chairman Levin. Thank you very much, Senator King.
        Now, here is the order of battle. We have Senator Hirono,
    Senator Gillibrand, Senator Manchin on our side that we know
    about. I suggested to Senator Manchin that he go vote on the
    first vote and try to come back so that he can have his turn.
    It is now Senator Hirono and then Senator Gillibrand. If you
    could stick to 3 minutes, everybody, we may be able to pull
    this off.
        Senator Hirono. Of course, I join all my colleagues in
    thanking our distinguished panel.
        I think it is abundantly clear that we need to avoid
    sequestration because the harm to our military, as well as on
    the civilian side, and the non-military spending will be quite
    devastating.
        Secretary Carter, I was very struck by your saying very
    clearly that this is a self-inflicted situation and brought
    about by political gridlock. So it is going to take us sitting
    here, along with the President, to get out of this gridlock.
        I know that there are many potential threats that we face
    in the world today, including many in the Asia-Pacific theater,
    and only this morning we learned of actions taken by North
    Korea that are very troubling. I believe that the
    administration is correct in talking about rebalancing with an
    emphasis to the Asia-Pacific theater. Secretary Panetta last
    week said that a sequester would cut naval operations in the
    Pacific by a third.
        General Odierno, I would like to ask you about the impacts
    on the Army's ability to carry out missions in the U.S. Pacific
    Command (PACOM) area of responsibility if sequester cuts are
    put in place.
        General Odierno. Thank you, ma'am.
        First, as I talked about 80 percent of our force having to
    stop training this year, that includes our forces in Hawaii.
    That includes our forces at Fort Lewis who are in PACOM. So
    there will be significantly degraded capabilities that they
    would have to respond to anything that goes on within PACOM.
        Additionally, the Army is responsible for providing a
    significant amount of communications support, intelligence
    support, and logistical support to the PACOM theater. Their
    ability to do that will also be affected by sequestration,
    specifically in fiscal year 2013 but beyond.
        We have tried to fence our capability in Korea to make sure
    they are at the highest readiness level. We will continue to do
    that. But the cuts in family programs, cuts in soldier
    programs, cuts in our civilians will also impact Korea as well.
        So for us, it has a significant impact on our ability to
    operate in the Pacific for the next several years.
        Senator Hirono. For General Dempsey, I am glad that we are
    going to protect wounded warrior programs because that is one
    of the more, I would say, important programs to enable our
    people coming back from Iraq and Afghanistan to be able to
    transition back into civilian life.
        But I think there was mention about other programs such as
    counseling, family-related programs. How would those kinds of
    programs that support our servicemembers and their families be
    negatively impacted by sequestration?
        General Dempsey. Thanks, Senator.
        I should mention, by the way, in addition to the effect in
    the Pacific of the Army, we are in the process of moving
    significant U.S. Marine Corps forces into the Pacific. General
    Amos can speak to that.
        Think of it this way. Base operations, that is to say the
    support services, whether it is any of the things you mentioned
    or teachers in the clinics or teachers in the schools, medical
    professionals in clinics--about 30 percent of base operations
    will be degraded.
        Senator Hirono. Thank you. My time is up.
        Chairman Levin. Okay. Now, we alternate here. So it goes to
    Senator Lee next. I would suggest--these are 3-minute
    questions. So please, if you would, Senator Lee, stick right to
    that so Senator Gillibrand will be next.
        Senator Lee. Great. Thank you very much, Mr. Chairman, and
    I will be as brief as I can possibly be here.
        In December 2012, Senator Chuck Hagel, the nominee to
    become the Secretary of Defense, sat for an interview with the
    Financial Times. When he was asked about outgoing Secretary
    Panetta's comments that budget sequestration would be
    disastrous to national defense, Senator Hagel replied as
    follows. ``DOD, I think in many ways, has been bloated. The
    Defense Department has gotten everything it has wanted the last
    10 years and more. We have taken priorities. We have taken
    dollars. We have taken programs. We have taken policies out of
    the State Department, out of a number of other departments and
    put them over in Defense. The abuse and waste and the fraud is
    astounding. I think the Pentagon needs to be pared down. I
    think we need the Pentagon to look at their own priorities.''
        We are pressed for time. So I would, if I could, like to
    have each of the Joint Chiefs go down the line and just
    briefly, if you can answer with a yes or no, answer whether you
    agree with this general characterization that Senator Hagel
    made. That would be great.
        Dr. Carter. I am not a member of the Joint Chiefs, but let
    me try. It is a good question. It is a fair question. I cannot
    speak for Senator Hagel, but my interpretation of that is along
    the lines of something that Secretary Gates used to say which
    was that we had accumulated over the decade post-September 11,
    2001, when our budget kept going up every year--and I said
    this, by the way, when I was Under Secretary for Acquisition,
    Technology, and Logistics. When your budget goes up year in and
    year out, I think it is fair to say that when you had a
    management problem--all of our managers--it was easy to reach
    for more money to solve your management problem, whether it is
    a technical problem in a program or something like that. So it
    was noticeable to me when I was Under Secretary for
    Acquisition, Technology, and Logistics that in some places that
    habit had accumulated over the decade.
        That is why Secretary Gates started his efficiency
    initiative, which I was part of, and our efforts to reform the
    acquisition system and to improve our performance. In parallel,
    we have absorbed $487 billion in budget cut in a way where I
    think we all said we could still accomplish the mission of the
    Nation. That speaks to the fact that we could do what the
    country needed with less. So we have made that accommodation.
        What we are saying today is we cannot do that strategy if
    there are further cuts. So we have accommodated a substantial
    budget adjustment relative to a few years ago. We have tried to
    do it in a strategic way. But what we are saying today is we
    cannot take another major cut and sustain that strategy.
        Senator Lee. Thank you. I see my time has expired. In
    deference to my friend from New York, I will defer. I will say
    it does appear to be somewhat inconsistent with Senator Hagel's
    statement since it was made just recently, just in December.
    Thank you.
        Senator Gillibrand [presiding]. Thank you, Mr. Ranking
    Member.
        Thank you for your testimony. It is incredibly distressing
    to hear the statements that you have made today. As the Senator
    from New York, I am very troubled about emerging threats as New
    York City is one of the top terror targets. We have two
    missions for weapons of mass destruction under the National
    Guard. Cutting those programs obviously puts us at great risk.
    We have a lot of National Guard contingencies and operations
    throughout the State, which is essential for recovery efforts.
    We saw what an amazing job they did during Hurricane Sandy. So
    I am very concerned that with these kind of cuts, we are
    exposing ourselves to very grave vulnerabilities.
        I also have concerns about cyber, and the cyber threat is
    obviously one of our gravest emerging threats. We do a lot of
    work for them in Rome Labs.
        I am worried about our training. Obviously, Fort Drum is
    one of the premier training operations we have for the Army,
    and we need to keep those resources available.
        I would like you to briefly talk about, if you can
    quantify, how are our risks now elevated because of these cuts.
        General Dempsey. Well, Senator, let me answer briefly and
    see if one of the chiefs, in the terms of their service, want
    to respond.
        You asked exactly the right question. How is risk elevated?
    So what we provide is a deterrent against our enemies and
    assurance of our allies, and then where we cannot do as much
    deterrence or assurance as we think we need, we talk about
    risk. We are going to be less forward. We will have less forces
    to provide that assurance, meaning risk goes up and we could
    find ourselves, as I describe it, vulnerable to coercion.
        But let me see if any of the chiefs want to comment.
        General Grass. Senator, I do applaud the great work of New
    York throughout Sandy as well as this past weekend.
        My real concern for the National Guard is, as we continue
    to draw down in our ability to go train at regional hubs or
    also in the training centers, we will reduce the proficiency of
    our leaders and also of our operators. Many times when we
    respond to a situation like Hurricane Sandy, those pilots
    flying those helicopters are really in extreme conditions, and
    we will degrade their ability to fly.
        Senator Inhofe. Senator Gillibrand, Senator Lee has asked
    that you answer the question that he asked the service chiefs,
    answer the question for the record so I have that.
        I am sorry for the interruption, Senator Gillibrand.
        Senator Gillibrand. Then my second question is obviously as
    we are looking at emerging threats worldwide, al Qaeda has
    truly metastasized. It obviously needed Afghanistan as its base
    of operations to train and plan September 11. Since al Qaeda is
    now remotely operated worldwide, we have a presence in Somalia,
    Yemen, Mali, all over the world. I know the President is
    intending to announce his decisions with drawing down troops.
    It has been rumored to be released shortly, pulling troops,
    about 34,000, out of Afghanistan.
        Do you imagine that having a lighter footprint long-term to
    be able to deal with these threats worldwide will be something
    that you will recommend and as a way also to shift how we spend
    money and in what way?
        Dr. Carter. I will comment on that and ask the Chairman or
    anyone else.
        It is part of our strategy--this is pre-sequester--to
    maintain what we call, exactly as you said, light footprint
    presence in many parts of the world where terrorist groups
    could seek a safe haven. That is exactly part of our strategy.
    You do see that going on. It is part of the special operations
    force structure decisions that we were discussing earlier with
    Senator Hagan, namely our decision, if sequester does not go
    through of course, to maintain and even slightly increase the
    number of SOF so that they can maintain that wider global
    footprint as things in Afghanistan wind down.
        Let me ask the chairman.
        General Dempsey. Yes. The only thing I would add, Senator,
    is the question you asked is exactly what this group at the
    table does. The Joint Chiefs are responsible for balancing
    global responsibilities, for looking at ways to do things,
    sometimes directly ourselves, sometimes through partners in a
    region. I think what you are hearing today is that our ability
    to do that is going to be called into doubt given the effects
    of sequestration.
        Senator Gillibrand. Thank you, gentlemen.
        We are going to call a short recess, this hearing will
    recess until the chairman returns. Thank you. [Recess.]
        Chairman Levin [presiding]. We will come back to order.
        Senator Manchin, who has been here all morning, will put
    his questions in the record. He has kindly consented to do
    that.
        I want to thank our panel for their very powerful testimony
    this morning. It is incumbent upon those of us that are elected
    to do the country's business that we avoid sequestration, that
    we avoid the year-long CR as well. These are mindless,
    irrational activities. They are not intended to become
    operative. They are intended to force us, kind of an action-
    forcing mechanism to do what needs to be done, and hopefully
    they can still perform that role. But as of right now, that
    threat remains.
        It is incumbent upon Congress and the President to remove
    that threat. I will say both threats because they are both real
    threats to the well-being of this country both in terms of our
    security but also in terms of so many other important programs
    that the Federal Government helps to fund.
        So, again, we will appreciate answers within 5 days of
    these questions because of the time constraints that we have.
    We are grateful to you for your service and for those with whom
    you serve, for their service and their families.
        We will stand adjourned.
        [Questions for the record with answers supplied follow:]

                   Questions Submitted by Senator Bill Nelson
                   U.S. SOUTHERN COMMAND COUNTERDRUG MISSION

        1. Senator Nelson. Secretary Carter, Admiral Ferguson, 2 weeks ago,
    I met with General Kelly to discuss the impacts of sequestration and
    the continuing resolution (CR) on U.S. Southern Command (SOUTHCOM).
    Drug interdiction on the high seas accounts for the removal of 200 tons
    of cocaine from the U.S. supply, which is 10 times that which is
    removed by U.S. law enforcement. Can you confirm that SOUTHCOM will not
    have the Navy assets available for interdiction in the Caribbean as a
    result of sequestration and the CR?
        Secretary Carter. Under sequestration, the Navy will reduce the
    numbers of ships and aircraft deployed. The Navy has reported this
    includes stopping all deployments to the Caribbean and South America.
        Admiral Ferguson. In the event that sequestration is triggered, the
    Navy's Fleet Response Plan (FRP) will lose its inherent flexibility to
    generate trained and ready forces due to a lack of funding. Non-Major
    Combat Operations will be the first to be cut which includes the
    SOUTHCOM counternarcotics mission set.
        Sequestration deployment cancelations were prioritized using the
    Force Allocation Decision Matrix. Deployments to SOUTHCOM for drug
    interdiction missions were a lower priority than other operational
    requirements.
        Sequestration and the CR render us unable to continue our current
    or anticipated level of operations; therefore we are compelled to
    cancel five of six fiscal year 2013 ship deployments (including USNS
    Comfort) and stop all aircraft deployments in South America, stopping
    efforts that interdicted hundreds of tons of illegal drugs in the
    United States in 2012.

                        SHIP MAINTENANCE AVAILABILITIES

        2. Senator Nelson. Admiral Ferguson, the Chief of Naval Operations
    (CNO) has called for cancelations of third and fourth quarter ship
    availabilities at the Nation's private shipyards. 23 canceled
    availabilities worth $604 million. Has the Navy analyzed the ability of
    industry to absorb this loss?
        Admiral Ferguson. Analysis of the impacts of cancelled
    availabilities is in progress. On February 15, 2013, Navy notified
    private-sector ship repair contractors of potential cancellations of
    third and fourth quarter ship maintenance availabilities and requested
    feedback concerning the likely impacts of the cancellations.
        While the Navy is committed to conducting the required maintenance
    on each of our ships, the simple fact is that under the current CR and
    sequestration law, the Navy does not have the funds necessary to get
    through the remainder of the year. Therefore, we are faced with a
    choice between potentially canceling these maintenance availabilities,
    regardless of the second order impacts of those cancellations, or
    mortgaging the readiness of our forward deployed forces who are
    actively engaged in combat operations. That said, we have not cancelled
    any availabilities yet--if Congress passes an Appropriations bill
    before 1 March, we will avoid having to make these difficult choices.

                          AMPHIBIOUS READY GROUP MOVE

        3. Senator Nelson. Admiral Ferguson, current plans call for the
    Navy to move an Amphibious Ready Group (LPD 21, LHD 7, LSD 43) from
    Virginia to Mayport, FL, starting with the USS New York (LPD 21) in the
    fourth quarter of calendar year 2013. LHD 7 and LSD 43 are scheduled to
    arrive in calendar year 2014. Under sequestration, would this move go
    forward?
        Admiral Ferguson. The Iwo Jima amphibious readiness group (ARG),
    comprised of three ships, USS Iwo Jima (LHD 7), USS New York (LPD 21),
    and USS Fort McHenry (LSD 43), is currently planned to change homeports
    from Norfolk, VA to Mayport, FL. While homeport adjustments programmed
    for fiscal year 2013 or fiscal year 2014 could incur delays due to
    maintenance, personnel moves, and operational schedule changes
    resulting from sequestration, the Navy remains committed to our plan to
    transfer an ARG to Mayport in fiscal year 2014.

        4. Senator Nelson. Admiral Ferguson, if yes, will the timeline
    change?
        Admiral Ferguson. Homeport adjustments programmed for fiscal year
    2013 or fiscal year 2014 could incur delays due to personnel moves,
    maintenance and operational schedule changes resulting from
    sequestration. The Navy's current Iwo Jima ARG transfer timeline is the
    USS New York (LPD 21) in the first quarter of fiscal year 2014, and the
    USS Iwo Jima (LHD 7) and USS Fort McHenry (LSD 43) in the fourth
    quarter fiscal year 2014.

        5. Senator Nelson. Admiral Ferguson, under a full year CR, would
    this move go forward?
        Admiral Ferguson. While homeport adjustments programmed for fiscal
    year 2013 or fiscal year 2014 could incur delays due to personnel
    moves, maintenance, and operations schedule changes resulting from a
    continuing resolution, the Navy remains committed to our plan to
    transfer an ARG to Mayport fiscal year 2014. Currently, the Iwo Jima
    ARG is planned to change homeports from Norfolk, VA to Mayport, FL
    under a full-year CR. However, the Navy continues to evaluate all
    options to maximize its strategic objectives should Congress approve a
    full-year CR.

        6. Senator Nelson. Admiral Ferguson, if yes, would the timeline
    change?
        Admiral Ferguson. Currently, the Iwo Jima ARG is planned to change
    homeports from Norfolk, VA to Mayport, FL as scheduled under a full-
    year CR. However, homeport adjustments programmed for fiscal year 2013
    or fiscal year 2014 could incur delays due to personnel moves,
    maintenance and operational schedule changes resulting from a year-long
    CR. The Navy's current ARG transfer timeline is the USS New York (LPD
    21) in the first quarter of fiscal year 2014, and the USS Iwo Jima (LHD
    7) and USS Fort McHenry (LSD 43) in the fourth quarter of fiscal year
    2014. The Navy continues to evaluate all options to maximize its
    strategic objectives should Congress approve a full-year CR.
                                     ______

                  Questions Submitted by Senator Kay R. Hagan

                        U.S. SPECIAL OPERATIONS COMMAND

        7. Senator Hagan. Secretary Carter and General Dempsey, as I noted
    before, the impact of sequestration and a full-year CR would return
    U.S. Special Operations Command (SOCOM) to fiscal year 2007 spending
    levels. In the last 6 years, SOCOM has grown by approximately 9,000
    military and civilian personnel to respond to unprecedented operational
    tempo. In the coming years, I understand SOCOM is set to add
    approximately 5,000 more people under growth directed by the last two
    Quadrennial Defense Reviews. Do you believe this growth is achievable
    if sequestration and/or a full-year CR become a reality?
        Secretary Carter. Since 2001, Special Operations have become an
    integral part of our national defense strategy--across the full range
    of contingencies from major combat operations to counterterrorism to
    building security capacity of partner nations. As you indicated, we
    have recognized the importance of Special Operations and for the past
    several years aligned the forces and resources needed to right-size
    SOCOM to meet our current and future security needs. A full-year CR
    and/or sequestration would significantly disrupt these plans, limit
    programmed growth, cut investment in future capabilities, and most
    critically degrade the training and readiness of Special Operators,
    many of whom are among our Nation's most rapidly deployable crisis
    response assets. After nearly 10 years of responsibly expanding the
    force, we're on track to level off growth in 2015, and posture SOCOM
    for persistent engagement with security partners around the globe.
    Cutting resources back to the sequester level and implementing across-
    the-board budget cuts would significantly reduce the capabilities and
    capacity of our Special Operations Force.
        General Dempsey. Currently, I understand SOCOM is on track to meet
    their growth plans. However, if sequestration and/or a full-year CR
    become reality we will need to re-examine all of our budget plans.

                 EFFECTS OF REDUCING AND CANCELING MAINTENANCE

        8. Senator Hagan. General Odierno, Admiral Ferguson, General Amos,
    and General Welsh, reducing maintenance during the remainder of the
    year is a central part of the Department of Defense's (DOD) response to
    sequestration. All of the Services have plans to defer or cancel
    maintenance. For example, in North Carolina, the Navy and Marine Corps
    propose canceling $81 million in aircraft maintenance at Cherry Point
    during the third and fourth quarters of this fiscal year. While the
    Services are attempting to protect deployed units and those preparing
    to deploy, I am deeply concerned about how sacrificing maintenance will
    affect our military's readiness. What is your assessment of the longer-
    term effects of deferred and canceled maintenance?
        General Odierno. My assessment is that sequestration will impact
    both short term and long-term readiness of Army equipment. The planned
    $2 billion reduction in the third and fourth quarter workload along
    with depot workforce reduction of 5,000 permanent/temp/term and
    contractors will delay equipment on-hand readiness for six Divisions
    (3rd Infantry Division [Georgia], 4th Infantry Division [Colorado],
    10th Mountain Division [Louisiana and New York], 25th Infantry Division
    [Alaska and Hawaii], 101st Airborne Division (Air Assault) [Kentucky]
    and 82nd Airborne Division [North Carolina]) and stops Reset of 1,000
    Tactical Wheeled vehicles directly impacting Red River Army Depot
    [Texas and Arkansas]; 14,000 communication devices, directly impacting
    Tobyhanna Army Depot [Pennsylvania] and 17,000 weapons, defers post-
    combat equipment repair in Active and Reserve units 3-4 years following
    redeployment. If full sequestration is implemented we believe over
    10,000 employees in Army Material Command will be affected, further
    reducing our life cycle maintenance capability, deferring and reducing
    readiness throughout the active Duty, National Guard and U.S. Army
    Reserve.
        Admiral Ferguson. The negative effect of deferred and cancelled
    maintenance to ships will eventually force us to pay a higher cost and
    take longer than originally planned to make up the critical maintenance
    later and at a loss of operational availability. If maintenance is not
    eventually done, there will be a reduction in service life and
    increased material casualties can be expected.
        The negative effect of deferred and cancelled maintenance to
    aviation squadrons will be felt for a minimum of 3 years and it has the
    potential to affect our readiness over the next decade. Beginning in
    fiscal year 2014, we will have a backlog of 327 aircraft and 1,208
    engines that should have been placed into the depot for overhaul,
    repair, and inspection. This increasing backlog will compete with
    scheduled fiscal year 2014 inductions. Additionally, the loss of
    skilled labor due to the release of contractors and temporary hires
    will reduce our capacity to recover from the projected backlog in
    fiscal year 2014.
        Readiness levels across the force will be negatively impacted as
    ship maintenance availabilities are delayed and insufficient aircraft
    are available to execute training plans in preparation for deployment.
        General Amos. While short-term adaptations are possible, the short-
    term readiness of our current forces comes at the expense of those who
    will follow in their footsteps. Deferring or cancelling planned
    maintenance will cause long-term effects that will directly and
    negatively impact readiness and operational capability.
        For ground equipment, depot maintenance requirements include both
    repair of weapon systems being retrograded from Afghanistan and
    scheduled maintenance on home station assets both required to maintain
    readiness of the force.
        In the near-term, reduced funding results in reduced capability to
    respond to contingencies. A high percentage of our overall inventory of
    critical weapon systems, such as Mine Resistant Ambush Protected
    vehicles, were used heavily in Afghanistan. Delays in repairing them
    causes immediate shortfalls throughout the Marine Corps that reduce our
    ability to deploy fully capable forces.
        In the long-term, reduced funding results in declining readiness
    that compounds over time as we are forced to compromise sustainment
    plans required to maintain critical weapon systems. Most of our depot
    funding supports key weapon systems, such as M1A1 tanks, Amphibious
    Assault Vehicles and Light Armored Vehicles, that comprise our core
    capability, and are aging platforms that are our most expensive to
    maintain. Reduced funding requires us to defer maintenance of key
    systems such as these. For example, an M1A1 tank should be rebuilt
    every 10 years of its lifecycle. This requires the Marine Corps to fund
    rebuild of 40 tanks per year. Deferring rebuild of 20 tanks this year
    would degrade readiness and require funding the rebuild of 60 tanks
    next year to recover. Over time, this key system repair pattern will
    create a hollow force. Without additional funding in future years,
    maintenance intervals will continue to extend. This results in
    equipment failures becoming more frequent.
        For Aviation, the Marine Corps will have 107 scheduled depot
    inductions that will not occur as a result of CR/sequestration. This
    will result in less aircraft available for tasking to each squadron and
    reduce the assets available for training and operational support. As an
    example, in the F/A-18 community; squadrons are equipped with 12
    airplanes. Reductions to depot throughput will cause squadrons to each
    have 5 aircraft available for each nondeployed squadron. The long term
    effect to nondeployed F/A-18 squadrons operating with a diminishing
    number of aircraft is the inability of the unit to achieve and maintain
    minimum combat readiness required for follow-on deployments.
    Impacts
             Today 110 of 254 USMC F/A-18s are ``out of reporting''
            status.
             Each year an additional eight F/A-18s go ``out of
            reporting'' because the depots currently lack the capacity to
            induct all aircraft requiring depot level maintenance.

        General Welsh. Reductions in funding for weapons system sustainment
    negatively impact depot maintenance proficiency and drive aircraft
    mission capable and availability rates further below standards for more
    than 30 weapon systems. Significant reductions in fiscal year 2013
    workload will ripple through industry, causing many small businesses
    producing critical components to struggle, leading to a lengthier and
    less effective/efficient recovery. The bow wave of aircraft awaiting
    induction will further burden our depot capacity and lengthen the
    recovery time. The mounting depot workload backlog will also drive
    additional maintenance activities, like inspections, to the field.
    Ultimately, both field and depot maintenance activities will be less
    efficient, causing readiness to decline.

        9. Senator Hagan. General Odierno, Admiral Ferguson, General Amos,
    and General Welsh, what effect will this reduced maintenance have on
    the ability of our military to respond to unforeseen contingencies that
    might arise?
        General Odierno. Bottom line, decreased maintenance capabilities
    directly impact the readiness of all our equipment from night vision
    devices to tanks. It significantly increases the risk to our soldiers
    based on the degraded readiness of our systems. These impacts will
    ultimately translate into longer response times, longer mission
    accomplishment times, and increased risk to our soldiers.
        Admiral Ferguson. The Navy currently operates under a Fleet
    Response Plan that trains ship crews and air wings immediately after
    completing maintenance availabilities to ensure we have sufficient
    numbers of Carrier Strike Groups (CSGs) and Amphibious Ready Groups
    (ARGs) ready to deploy in support of emergent requests from combatant
    commanders. However, the enduring impact of maintenance availabilities
    and training we must cancel in event of sequester will significantly
    reduce Navy's future capability to respond to emergent requests for
    maritime forces. If sequestration endures, it would make maintaining
    our present force structure essentially impossible; therefore, the Navy
    would have fewer assets available to meet the growing number of Global
    demands.
        General Amos. Today, with the majority of our standard equipment
    forward in combat and overseas contingency operations (OCO) dollars
    spent on theater specific requirements, our home station units are hard
    pressed to achieve levels of readiness necessary for crises and
    contingencies. They continue to train with the small pool of equipment
    they have on hand. With this equipment, marines are able to maintain a
    basic level of proficiency that enables them to respond quickly to
    crisis when the Nation calls. However, without sustained funding, lower
    maintenance levels will begin to degrade quickly these small pools of
    equipment, leading to degradation in training readiness. Eventually,
    the equipment needed at home station will wear out; when it does, our
    marines will lose associated training and therefore the proficiency
    necessary to keep these units ready to respond.
        Our amphibious core capabilities rely on operationally available
    amphibious warships to conduct training, exercises, and deployments.
    Any reduction in amphibious ship maintenance will directly limit
    operationally available amphibious warships and erode readiness. Our
    ability to deploy to meet Combatant commander timelines will be
    impacted adversely.
        As America's Force in Readiness, our Marine Aviation Units maintain
    a high state of readiness at all times to respond to contingencies and
    commitments throughout the globe. At any given time, one-third of
    Marine Aviation Units are deployed, one-third of Marine Aviation Units
    are preparing to deploy, and one-third of Marine Aviation Units have
    just returned from deployment. Deployed units will maintain the highest
    states of readiness, but units preparing for deployment will need
    additional resources and/or time to undertake their wartime mission. A
    cancellation of depot level maintenance for the third and fourth
    quarters of this fiscal year will result in a substantial decrease in
    our readiness to respond to unforeseen contingencies and future
    deployments. The Marine Corps will have 107 scheduled depot inductions
    that will not occur as a result of CR/sequestration. This will result
    in less aircraft available for tasking to each squadron and reduce the
    assets available for training and operational support. The best example
    is our F/A-18 community; squadrons normally equipped with 12 airplanes.
    Reductions to depot throughput will cause FA-18 squadrons to each have
    5 aircraft available for each nondeployed squadron. The effect of
    reduced aircraft in these nondeployed squadrons is less aircraft to
    train with, resulting in the inability of the unit to achieve and
    maintain minimum combat readiness required for deployment.
        General Welsh. Cuts to weapon system sustainment degrade aircraft
    availability, effectively reducing available force structure for
    operational employment and delaying achievement of Operations Plan
    (OPLAN) objectives. Combined with flying hour cuts, overall operational
    readiness degradation will be immediate, devastating, and long term,
    putting our ability to support the current defense strategy at critical
    risk.

                          EFFECTS OF REDUCING TRAINING

        10. Senator Hagan. General Dempsey, with a couple of exceptions,
    DOD plans on prioritizing training to units preparing to deploy. If the
    sequester were to occur and the CR continues, this is the right thing
    to do. However, this is going to leave the vast majority of units
    underprepared for future operations. For example, the Army estimates
    that 78 percent of all Brigade Combat Teams (BCT) will face severe
    cutbacks to training because they fall into the category of units not
    deployed or preparing to deploy. As chair of the Emerging Threats and
    Capabilities Subcommittee, I am concerned about the effect these cuts
    will have on our military readiness. How will reductions of training to
    the majority of our forces affect DOD's ability to respond to future
    threats and unforeseen contingencies operations?
        General Dempsey. The Secretary maintains a Global Response Force to
    respond to future threats and unforeseen contingency operations. The
    Global Response Force (GRF) possesses a broad set of capabilities
    across Land, Air, and Maritime domains with sufficient strategic
    agility to hedge against a range of contingencies in the opening stages
    of an unforeseen crisis. Maintaining a ready GRF will remain a high
    priority for the Department. However, over the long-term sequestration
    will put pressure on all forces and we can expect to see reduced
    capacity, capability and longer delays in crisis response.

            SCIENCE, TECHNOLOGY, AND TEST AND EVALUATION ACTIVITIES

        11. Senator Hagan. Secretary Carter, on January 15, Mr. Frank
    Kendall, the Under Secretary of Defense for Acquisition, Technology and
    Logistics requested the Services to provide further information on the
    potential impact on reducing science and technology (S&T) programs by
    10 percent. What is your assessment of the impact of these potential
    cuts to those technical areas that support the development and
    deployment of new technologies, especially in critical areas like cyber
    security and electronic warfare?
        Secretary Carter. The specific impact of sequestration to S&T
    programs will vary among technical areas, but, in general, a 10 percent
    reduction will both slow progress on existing research and reduce the
    number of new grants and awards. The impact will be larger in newer
    research efforts because existing multi-year commitments leave a
    smaller pool of available funds to which to apply the cuts required by
    sequestration. This will impact important areas like electronic warfare
    (EW) and cyber.
        With regard to electronic warfare, sequestration will, for
    instance, delay the efforts of the Advanced Components for EW program,
    which develops EW components in areas like highly integrated photonics,
    millimeter-wave sources, and receivers. Sequestration will slow the
    development of advanced mid-wave infra-red focal planes in the Army's
    Vital Infrared Sensor Technology Integration (VISTA) program, which
    helps keep the United States competitive in fielding advanced
    surveillance systems. Sequestration will also delay the development of
    electronic protection upgrades for existing F-15 and F-18 aircraft and
    cause the cancellation of the demonstration of advanced EW capabilities
    in key exercises.
        With regard to cyber security, sequestration will, among other
    things, slow efforts for new integrated, cross-Service research efforts
    in system ``trust'' and resiliency. It will also slow the hiring of new
    personnel and support contractors needed to develop these advanced
    capabilities; experience has shown that it takes significant time to
    recover a workforce's capabilities following a hiring interruption.
        There will be other significant impacts in research-funded
    infrastructure. For example, DOD has five High Performance Computing
    Modernization Office supercomputer centers; the combined impact of the
    continuing resolution and sequestration will force the DOD to close at
    least one of the five. The Department could also be forced to close the
    Maui Space Surveillance System. There will be other challenges to
    infrastructure, but these two examples are most stark.
        We are still assessing the impact of sequestration on new grants
    and awards, but it will likely result in a decrease of grant funding of
    approximately $300 million. This funding reduction will significantly
    affect university investment and will impact several thousand graduate
    scientists and engineers supported by DOD research.

        12. Senator Hagan. Secretary Carter, how will these potential cuts
    be allocated between DOD in-house activities and outside performers
    such as at universities and small businesses?
        Secretary Carter. Individual program managers will execute their
    programs to best meet their objectives and be consistent with the
    description of the fiscal year 2013 program already provided to
    Congress. Each program manager will determine how to allocate their
    resources between DOD in-house activities and outside performers. Some
    programs, such as Small Business Innovative Research, will continue to
    exclusively invest in small business, although at the reduced levels.

        13. Senator Hagan. Secretary Carter, what will be the impact on
    facilities and maintenance of the DOD's test and evaluation ranges that
    are crucial to ensuring that DOD systems that are fielded are effective
    and suitable?
        Secretary Carter. As a result of budget cuts mandated by
    sequestration, the Department's test and evaluation (T&E) facilities
    and ranges run the risk of becoming not mission capable.
        Funding cuts will force reductions in both test capability and test
    capacity driven by the loss of test facility and range personnel with
    unique technical skills. There will be direct cuts in funding to the
    test infrastructure, and furloughs of test personnel. There will also
    be indirect funding cuts--cuts to program dollars that would otherwise
    be used to pay for the use of test facilities and maintenance
    operations. The net result of these cuts will be reductions in both
    test capability and test capacity, which in turn will cause either
    delayed acquisitions or reduced efficacy of systems acquired. If the
    cuts and furloughs are sustained, there could be permanent loss of
    critical test capabilities.
        Future acquisition programs could be impacted as well. The
    Department may be unable to invest in emerging test technologies, such
    as improved electronic warfare test capabilities or consolidated cyber
    ranges, or to properly recapitalize its existing test infrastructure.
    The DOD recapitalization rate may already lag that of the industrial
    sector. Failing to maintain the Department's T&E infrastructure
    investments and to keep pace with emerging technology will reduce total
    testing capacity now and in the future.
        Lastly, civilian and contract employees make up 53 percent of the
    Major Range and Test Facility Base workforce. Reductions to the range
    support workforce will reduce testing capacity due to the inability to
    commit to long-term test event schedules, and the loss of critical
    contracted test range expertise that will result from employees losing
    their jobs or voluntarily moving on to more stable employment
    opportunities. This will further adversely impact the Department's test
    infrastructure by inhibiting its ability to return to original testing
    capacity--let alone make up lost ground and bring program testing
    timelines back onto schedule. Over time, these cuts will increase total
    program cost significantly.

                       SCIENTIFIC AND TECHNICAL WORKFORCE

        14. Senator Hagan. Secretary Carter, technological superiority on
    the battlefield is supposed to be one of the primary components of our
    current and future military. Continual hiring to renew scientific and
    technical staff and broaden expertise is critical to future creativity.
    How are the DOD's laboratories supposed to conduct the research
    necessary to maintain our technological military superiority if they
    cannot hire the scientists and engineers needed due to blanket hiring
    freezes?
        Secretary Carter. If sequester occurs, there will be reduced
    funding to support the current workforce, and this will impact our
    ability to maintain technological superiority. Loss of funds over a
    lengthy period may not permit the sustainment of some programs at
    sufficient levels to retain a viable lab workforce in certain areas.

        15. Senator Hagan. Secretary Carter, considerable investments in
    effort and money have been made in the laboratories' Science,
    Technology, Engineering, and Mathematics (STEM) programs to encourage
    students to enter the STEM fields and to come to work for the DOD
    government labs and to hire the best and the brightest of current
    graduates. Sequestration and hiring freezes will curtail many of these
    programs, prevent the hiring of successful STEM graduates, send many of
    the recently hired best and brightest home, and severely damage the
    desirability of a STEM career within the government labs. What
    consideration has been given to the possibility of reducing the
    strictness of the constraints on this group of personnel?
        Secretary Carter. Selected exceptions to the hiring freeze are
    allowed, but this needs to be balanced with the overall civilian
    workforce needs. Sequestration will likely result in talent gaps within
    our lab system, which will be difficult to fill.

        16. Senator Hagan. Secretary Carter, what is the plan to recover
    from the extremely detrimental effects of the hiring freeze and impacts
    of sequestration?
        Secretary Carter. There will be degradation in the DOD mission
    associated with a year-long Continuing Resolution and sequestration. To
    mitigate this degradation, we will need to rely extensively on the
    University Affiliated Research Centers and federally Funded Research
    and Development Centers. During this difficult period, we will maintain
    an inventory of skills lost. As budgets allow, we will use the
    authorities granted to the labs via existing Science & Technology
    Reinvention Lab legislation to aggressively recruit new talent.
    However, we do not believe existing personnel authorities will be
    sufficient to overcome the negative environment created by
    sequestration and the mandated hiring freeze. Lab directors are
    reporting the loss of several of their most talented scientists and
    engineers to non-government jobs; we expect this trend to continue.

                            RESEARCH AND DEVELOPMENT

        17. Senator Hagan. Secretary Carter, earlier this week, an article
    on sequestration in Defense News stated that Mr. Frank Kendall ``said
    that he is starting to think about whether research and development
    money needs to be protected to provide alternatives to some big,
    expensive programs. The idea is that if large, complex items are cut
    because of continuing declines in defense spending, then DOD would have
    new, less expensive systems as backups.'' What are some specific
    examples that Mr. Kendall is considering?
        Secretary Carter. As I understand Under Secretary Kendall's
    remarks, he was suggesting the possibility of investing in research and
    development of programs that would not be affordable in production at
    current budget levels. While I don't have specific examples to offer,
    the idea underlying this approach would be to provide a hedge against
    future uncertainty by sustaining our technological superiority in the
    research and development base. This approach has been used before when
    budgets have been below the levels needed for long term sustainment of
    the force structure. If future budgets are reduced as much as
    sequestration would require, this is one approach the Department would
    consider to manage the risk to our long term national security posture.

        IMPACT ON COUNTER ILLICIT TRAFFICKING OPERATION IN THE WESTERN
                                   HEMISPHERE

        18. Senator Hagan. General Dempsey and Admiral Ferguson, in a
    February 6, 2013, Associated Press article titled: ``Panetta: Defense
    Budget Cuts Will Damage Economy,'' it is reported that, if
    sequestration takes effect, the Navy will cease deployments to South
    America and the Caribbean and limit those deployments to Europe. While
    the impact of this potential change by the Navy is difficult to
    measure, it is estimated that the absence of Navy vessels patrolling
    and intercepting illicit trafficking fast boats could result in more
    than 200 additional tons per year of cocaine ending up on the streets
    of the United States. Has DOD done any contingency planning internally
    or with Federal, State, and local law enforcement officials to prepare
    for the likely increase in the availability of cocaine and other
    illicit drugs?
        General Dempsey. If sequestration should go into effect, the Navy
    is planning to stop deployments in the Caribbean and South America in
    support of SOUTHCOM. The department's statutory responsibility is to
    serve as the lead agency for aerial and maritime detection and
    monitoring of illicit trafficking. The department accomplishes this
    mission principally with a variety of radar and intelligence assets,
    but compliments this with Navy ships, and a variety of airborne assets.
    The lack of Navy ships will degrade our detection and monitoring
    capabilities but not totally eliminate our detection and monitoring
    capabilities. Other U.S. Government and foreign law enforcement
    agencies are responsible for the interdiction of the illicit
    trafficking based on queuing from DOD's detection and monitoring
    capabilities. While conducting the detection and monitoring mission,
    Navy ships typically have a U.S. Coast Guard law enforcement detachment
    on board which enables these same ships to support/compliment the U.S.
    Coast Guard's assets and interdiction mission. I am unaware of how
    sequestration would affect the USCG interdiction mission. We do not
    plan for operations within the United States. Rather, we respond to
    requests for support as we receive them.
        Admiral Ferguson. Navy assets are responsible for interdicting, or
    facilitating the interdiction of, about 30.5 metric tons of illicit
    narcotics annually. Without Navy participation, it is supposed that
    Joint Interagency Task Force-South will fail to disrupt or interdict at
    least 30.5 metric tons of illicit narcotics during this period. It is
    unclear what the impact on asset tracking and identification performed
    by Navy vessels will be on our ability to assist partner nation law
    enforcement interception of drugs.
        Navy is a force provider and deploys units based on operational
    priorities determined by the Joint Staff utilizing the Secretary of
    Defense's Guidance for Employment of the Force. The Joint Interagency
    Task Force-South is the appropriate agency to comment on interagency
    law enforcement contingency planning.

        19. Senator Hagan. General Dempsey and Admiral Ferguson, what is
    the view of the Commander of SOUTHCOM on this matter?
        General Dempsey. SOUTHCOM is keenly aware that decreasing DOD
    assets to the Detection and Monitoring and support to Law enforcement
    mission will result in more illicit product trafficked and more illicit
    products arriving into the United States.
        Admiral Ferguson. Navy is a force provider. We deploy units based
    on operational priorities determined by the Joint Staff using the
    Secretary of Defense's Guidance for the Employment of the Force. The
    geographic combatant commander employs the forces deployed to his
    region and is the appropriate agency to comment on the views of
    SOUTHCOM.

        20. Senator Hagan. General Dempsey and Admiral Ferguson, has the
    Commander of SOUTHCOM directed any planning guidance to his component
    commanders on this matter?
        General Dempsey. General Kelly has directed his Component
    commanders to ensure remaining funding is prioritized to missions that
    protect and promote our National Security Interests, specifically,
    prioritizing building partnerships capacity activities with Central
    American and Andean Ridge nations.
        Admiral Ferguson. Navy is a force provider. We deploy units based
    on operational priorities determined by the Joint Staff using the
    Secretary of Defense's Guidance for the Employment of the Force and the
    fiscal year 2013 Global Force Management Allocation Plan (GFMAP), which
    is the authoritative, Secretary of Defense-approved process for
    supporting combatant commander presence requirements. There has been no
    change to the approved fiscal year 2013 GFMAP that the Navy is aware
    of. The geographic combatant commander, and by proxy, his component
    commanders, are the appropriate agency to comment on any SOUTHCOM
    planning guidance.
                                     ______

                 Questions Submitted by Senator Joe Manchin III

                                     AUDIT

        21. Senator Manchin. Secretary Carter, DOD and each of the Services
    laid out--in impressive detail--detailed cuts that would occur if the
    sequester occurs on March 1. These details were provided in a
    relatively short timeframe. However, DOD remains unable to conduct a
    complete audit and has stated it will be several more years before it
    is ``audit ready.'' Why is it so easy for DOD to quickly lay out
    detailed spending cuts, but so difficult for DOD to conduct a full,
    complete, and transparent audit?
        Secretary Carter. The projected cuts that would result from a
    sequester are based on our budget amounts. Like budgets in any
    organization, DOD budget amounts are based on assumptions about the
    resources needed to meet future requirements and mission objectives and
    not on actual historical transactions. We know these budget amounts
    well and can estimate changes quickly. We also have reliable
    information about how we spend appropriated funds. However, an audit of
    financial statements does not look at assumptions and judgments but
    rather at documentation of controls and financial events that have
    already been executed. We do not always have auditable controls and
    documentation is not always available quickly. The DOD is investing in
    the capability to control and store the documentation for all material
    financial events so that it can meet audit standards. This is a long-
    term project that the Department is committed to complete by 2014 for
    our budgetary statement and by 2017 for all statements.

                          POST WAR SPENDING REDUCTION

        22. Senator Manchin. Secretary Carter, after Korea we reduced
    spending 43 percent, after Vietnam we reduced spending 33 percent, and
    after the Cold War we reduced spending 36 percent. History proves that
    we have drawn down spending after every war. We will draw down spending
    after this war. If we implement the Budget Control Act (BCA) caps and
    the sequester, we will reduce total defense spending by 31 percent (the
    CSIS chart referenced is listed as an attachment). That's less than any
    of the previous reductions. How do we maintain a strong and ready force
    in light of this reality?
        Secretary Carter. We should make defense policy based on a strategy
    that leads to strong national security, not based on budget
    projections. Maintaining a ready force is a priority of the Department.
    I am deeply impressed by the caliber and capabilities of our military
    forces. It is vitally important that they be ready to respond to the
    Nation's needs. However, further budget cuts brought about through
    sequestration and a year-long Continuing Resolution will create a
    hollow force that is rendered incapable of performing the mission that
    we expect it to conduct. With a hollow force, units do not have the
    resources, personnel, equipment, and training necessary to make them
    capable or ready to execute the defense strategies that secure our
    country.

                                  FLEXIBILITY

        23. Senator Manchin. Secretary Carter, last week I asked Secretary
    Panetta if the timing of the sequester ``is hitting you harder than
    anything.'' He replied by saying ``that's right.'' So, it's that you
    are having to take these cuts across the board, with no flexibility. If
    you had the flexibility, would the cuts be less painful?
        Secretary Carter. A cut of this size, almost halfway through the
    fiscal year, would still be a huge problem. Seven months into the
    fiscal year, achieving a $46B cut would require that we reduce all
    categories of unobligated balances even with flexibility. It would
    probably still require furloughs. We'd still have to curtail training
    and weapons maintenance, which would seriously harm readiness, and we
    would impact numerous investment programs. More flexibility is always
    better than none, but having that kind flexibility at this late date is
    not a substitute for solving the problem by detriggering sequestration
    and passing appropriations bills.

        24. Senator Manchin. Secretary Carter, what kind of flexibility can
    Congress provide?
        Secretary Carter. The President believes that the solution is for
    Congress to work to enact balanced deficit reduction that can avoid
    sequestration entirely. If Congress is unable to get all the way there
    before sequestration would occur on March 1, the President believes
    that Congress should enact a short-term package of additional spending
    cuts and tax reform that can delay sequestration for a few months.

                          BASE REALIGNMENT AND CLOSURE

        25. Senator Manchin. Secretary Carter and General Dempsey, Simpson/
    Bowles outlined several cost-saving measures for defense that have not
    been acted upon. For instance, they recommended that Congress should
    also consider a Base Realignment and Closure (BRAC) commission for
    terminating major weapons systems, appointed and headed by the
    Secretary of Defense, for trimming redundant or ineffective weapons
    from DOD's inventory. Would a BRAC commission aimed at eliminating
    unnecessary and unneeded programs be helpful in generating cost-savings
    for DOD?
        Secretary Carter. I don't think a BRAC-like commission for
    acquisition programs would be particularly helpful to DOD. The
    Department already strives to eliminate redundant or ineffective
    weapons systems through its current acquisition and Planning,
    Programming, Budgeting, and Execution processes and has eliminated many
    lower-priority systems in recent years. A commission would most likely
    be duplicative of these existing processes. A BRAC, however, is
    critical for reductions in the Department's overall infrastructure.
        General Dempsey. With full sequestration we must have at least one
    round of BRAC to eliminate excess infrastructure. We will also have to
    rewrite our defense strategy and will work with the administration and
    Congress to determine the right mix of force structure to best meet
    that strategy.

                       FAMILY READINESS SUPPORT PROGRAMS

        26. Senator Manchin. General Odierno, as I understand it, both DOD
    and Service Chief guidance is to ensure that a potential sequester does
    not impact the warfighter. But, that's not what is happening on the
    ground, in the deployed units. I'm directing this question to you,
    because I want to make sure that the Army is protecting servicemembers
    and their families. I have been asking the Army, in written
    correspondence, since early September about the Family Readiness
    Support Program, and have been assured, in writing, that all deployed
    battalion sized units and above will receive a Family Readiness Support
    Assistant (FRSA) 90 days before, during, and 90 days after a combat
    rotation. Yet, you have battalions that have deployed without a FRSA.
    Just last week, a West Virginian who is the battalion commander of an
    Active Duty unit deployed without the family support (a battalion FRSA)
    that Secretary McHugh assured me, in writing, that a battalion would
    have. Why did this happen, and why do you continue to let this unit go
    without the appropriate family support even after your staff has been
    notified?
        General Odierno. It is Army policy and my intent that FRSAs be
    assigned to every battalion that is deploying and brigade for non-
    deploying units. It is my understanding that the battalion in question
    now has a FRSA. There appeared to be some bureaucratic issues regarding
    the hiring freeze, which we have corrected. FRSAs are full-time unit
    assets, and units should not be deploying without FRSA support.
        FRSAs provide support throughout the full deployment cycle. Active
    component FRSAs are permanent GS employees on unit Augmentation Table
    of Distribution and Allowances. The Army National Guard is authorized
    two FRSAs per brigade element, or a minimum of one FRSA per State where
    there is no brigade. The Army Reserve is authorized one FRSA per 1,500
    to 2,000 soldiers per functional and operational command.

        27. Senator Manchin. General Odierno, how many deployed units do
    not have an FRSA? I know of at least two deployed battalion-sized units
    that do not have FRSAs. Why has this not yet happened?
        General Odierno. At the present time, the Army Reserve has
    identified three units deployed that have vacant FRSA positions; this
    is not due to funding but the inability to find an individual to fill
    the position. However, appropriate deployment support is being provided
    by higher-level Family Program Coordinators. The Army Reserve has
    funding to hire the FRSAs and intends to fill the vacancies as
    expeditiously as possible.

        28. Senator Manchin. General Odierno, in December, I asked
    Secretary McHugh for a staff delegation to visit the Fort Myer Child
    Development Center to review the policies after the horrendous abuses
    that have occurred. This staff delegation has not been arranged. Since
    the Army is allocating over $1 billion for family programs this year, I
    feel that a site visit is not an unreasonable request.
        General Odierno. We are currently conducting a thorough
    investigation specifically into the activities and procedures at the
    Joint Base Myer-Henderson Hall Child Development Center. Once
    completed, the Office of the Chief of Legislative Liaison will contact
    the Senate Armed Services Committee staff to discuss the
    appropriateness of a committee staff visit to the Joint Base Myer-
    Henderson Hall Child Development Center.

                                    FURLOUGH

        29. Senator Manchin. General Grass, the proposed involuntary, 22-
    day furlough of Federal employees will hurt West Virginians. Even in a
    small State like West Virginia, we have over 1,000 technicians that
    would be impacted. In fact, there are approximately 350 dual status
    civilians that also serve in the National Guard or Reserve. These
    workers make up almost 50 percent of the full-time support for the West
    Virginia National Guard. With so much of your full-time support being
    comprised of civilian workers, are you concerned that the National
    Guard might be disproportionally impacted by the civilian furlough?
        General Grass. As citizen soldiers and airmen, our military
    technicians provide the day-to-day continuity in the operations and
    training of 464,635 Army and Air National Guardsmen. These same
    technicians provide millions of maintenance manhours annually to repair
    all equipment and aircraft assigned to our 8 Brigades, 450 separate
    ARNG units and 89 ANG Wings.
        Our National Guard military technicians serve concurrently in three
    different ways. Our military technicians:

        (a)  Perform full-time ``civilian'' work in their units (or
    supported unit);
        (b)  Perform military training and duty in their units; and
        (c)  Are available to enter active Federal service at any time
    their units are called.

        If these civilian hiring controls are applied to the National Guard
    technician workforce, the impact to our full-time force and ensuing
    effect to the readiness of the National Guard would be devastating. The
    anticipated effects of sequestration will reduce the National Guard
    full-time technician program by more than 20 percent. Release of our
    7,600 temporary technicians, who for the most part are backfilling
    deployed military technicians, coupled with a hiring freeze (est 2,550
    based upon 5 percent turnover) will result in the loss of over 10,000
    full-time employees. When taking into consideration the effects of
    temporary technician terminations, a hiring freeze, and a 22 week
    furlough, the National Guard could realize a loss of almost 16 million
    operational, training and maintenance manhours by the end of this
    fiscal year.

                                  CONTRACTORS

        30. Senator Manchin. Secretary Hale, DOD must find ways to increase
    its purchasing power. DOD's internal cost growth exacerbates any budget
    cut because our defense dollars continue to buy less and less. For
    instance, in 2001, the average operation and maintenance (O&M) cost per
    Active Duty servicemember was $105,000 (in constant 2012 dollars).
    Since September 11 that cost has risen nearly 50 percent to
    approximately $147,000 per servicemember. Meanwhile, defense
    contractors, such as Boeing and Raytheon, continue to see their profits
    soar. What actions are you taking to limit contractor costs and profit
    to help make the best military in the world more affordable?
        Secretary Hale. We recognize that we need to continue to strive to
    get a better business deal for the taxpayers and the warfighters we
    support. That is what our Better Buying Power initiatives are all
    about--increasing the buying power of the Department. Our interest is
    primarily focused on paying less for the goods and services that we
    buy. We are instructing our contracting officers to use profit as a
    motivator to reduce cost and to reward those contractors who perform
    well. We want to align profit with cost reduction and performance. If
    we find instances of excess profit, we take the action to understand
    why and to eliminate them.
        Through the Defense Acquisition Workforce Development Fund
    authorized by Congress we have been able to make significant strides in
    the number and quality of Government personnel (contracting officers,
    contract auditors and contract pricing experts) who are focused on
    getting a better deal for the taxpayers.
        In addition to the BBP initiatives that we are pursuing, section
    804 of the National Defense Authorization Act for Fiscal Year 2013
    directed the Secretary of Defense conduct a review and modify the
    Department's profit guidelines. We are in the process of doing that.
    Our focus will be to consider modifications to the existing policy that
    are necessary to ensure an appropriate link between contractor profit
    and performance and will align itself with the areas of emphasis
    included in that legislation.

        31. Senator Manchin. Secretary Hale, at almost any military base
    you visit, contractors are providing security at the front gates and
    entrance points. This was presumably done because so many
    servicemembers were deployed from their bases. As fewer soldiers are
    deployed from their bases, we would expect the number of contractors to
    decline. However, I remain concerned about the number of contractors
    still being used for tasks that our servicemembers could do. What
    specific tasks will soldiers begin to reassume from contractors as they
    return from deployments?
        Secretary Hale. As existing contracts expire and if money is
    unavailable, soldiers will have to perform base operation tasks because
    they are the only available pool of manpower. However, it is incorrect
    to characterize them as ``soldier jobs.'' The fact that civilians
    (government or contractor) are doing them now generally means that they
    are not part of their key training or mission tasks and with a
    volunteer sized force, their day is more properly spent on soldier
    skills, education, training, exercises and operations. When military
    manpower is detailed to other functions, it directly detracts from
    impacts, hour for hour, on their skills.

                          TEMPORARY ACTIVE-DUTY ORDERS

        32. Senator Manchin. General Grass, a significant number of
    National Guard soldiers and airmen are currently serving on temporary
    Active-Duty for Operational Support orders (ADOS) to assist with
    training, recruiting, medical readiness, and many other critical
    support functions to augment the technician and AGR full-time support.
    If the sequester occurs on March 1, approximately how many National
    Guard members serving on temporary ADOS orders would be impacted?
        General Grass. Military personnel appropriations are exempt from
    sequestration. As such, there will be no impact to any soldiers/airmen
    serving on ADOS in fiscal year 2013. However, if military personnel
    appropriations are not exempt from out-year budget reductions, the
    number of members we can afford to employ on ADOS will be affected.
    Determination of the exact number cannot be made until future budgets
    are finalized.
        We currently have 859 Army and 527 Air National Guard members
    serving on temporary ADOS orders to support training, medical readiness
    and other critical support functions.

                                   COMBAT PAY

        33. Senator Manchin. Secretary Hale, are you watching to make sure
    that pay and benefits are equitable across the Services? For example, a
    servicemember living in a country away from the fighting in Kyrgyzstan
    makes the same combat pay as a soldier living in a tent on the
    Afghanistan/Pakistan border.
        Secretary Hale. ``Combat Pay'' is a term of art referring to a
    group of special pays, allowances and entitlements received while
    deployed to a Combat Zone, Qualified Hazardous Duty Area, or Direct
    Support Area. The pay and entitlements most closely associated with
    this term are Imminent Danger Pay (IDP) and combat zone tax exclusion
    (CZTE).
        Combat zones are declared by Executive order and designate those
    locations where our military is engaged in combat. The tax exclusion
    benefits provided to members serving in a combat zone may also be
    extended to members serving in locations outside the combat zone, where
    the member is serving in direct support of operations in the combat
    zone.
        At this time, Kyrgyzstan, Afghanistan, and Pakistan are all
    designated as IDP areas, and members serving in these countries receive
    the pay. Additionally, Executive Order 13239 designated Afghanistan as
    a combat zone. Kyrgyzstan and Pakistan have both been designated by DOD
    as areas in which members serve in direct support of the Afghanistan
    combat zone. Thus, members currently serving in Afghanistan,
    Kyrgyzstan, or Pakistan are eligible for the CZTE.
        The Department routinely monitors the compensation of our members
    to ensure that pay and benefits are effective, efficient, and equitable
    across the force.

        34. Senator Manchin. Secretary Hale, after a decade of war, is it
    time to reevaluate how we compensate those that are in the most
    dangerous locations?
        Secretary Hale. ``Combat Pay'' is a term of art referring to a
    group of special pays, allowances and entitlements received while
    deployed to a Combat Zone, Qualified Hazardous Duty Area, or Direct
    Support Area. The pay and entitlements most closely associated with
    this term are Hostile Fire or Imminent Danger Pay (HFP/IDP), and CZTE.
    The Department routinely monitors these entitlements, along with other
    forms of compensation for our members to ensure that pay and benefits
    are effective, efficient, and equitable across the force.
        All members currently assigned to a Combat Zone, Qualified
    Hazardous Duty Area, or Direct Support location receive the following:

          Combat Zone Tax Exclusion. Members performing active service in a
    location designated in an Executive order as an area in which military
    members are engaged in combat are eligible for the CZTE. Additionally,
    members serving outside these designated areas may also be eligible for
    CZTE benefits if they are serving in ``direct support'' or operations
    in the combat zone. DOD designates these ``direct support: areas. For
    members serving in a combat zone or in a direct support area, all
    military pay for enlisted members and military pay for officers up to
    the amount earned by the Sergeant Major of the Army, Master Chief Petty
    Officer of the Navy, Chief Master Sergeant of the Air Force, or the
    Sergeant Major of the Marine Corps will be excluded from income for
    Federal income tax purposes.
          Hostile Fire or Imminent Danger Pay. Members performing duty in a
    location designated by DOD as an Imminent Danger Area receive IDP at a
    rate of $225 per month, prorated at $7.50 per day. If the member is
    subjected to a hostile fire event, the full monthly amount is paid.

        DOD is currently examining a more tiered pay structure for HFP/IDP
    that differentiates pay based upon proximity to danger. Using the more
    flexible authorities provided by Congress in the National Defense
    Authorization Act for Fiscal Year 2008, we are on schedule to make
    adjustments to HFP/IDP later this year.
                                     ______

                 Questions Submitted by Senator Jeanne Shaheen

                               BREACH OF CONTRACT

        35. Senator Shaheen. Secretary Carter, could you describe the
    anticipated affects sequestration would have on the contract management
    within DOD particularly regarding contract fees and penalties?
        Secretary Carter. Generally speaking, most contracts are fully
    funded at the time of award. Since we intend to avoid contract
    terminations if we can, in the case of a fully funded contract,
    sequestration should have little impact, and modifications would likely
    not be required. On the other hand, incrementally funded contracts
    might require modifications to address future funding limitations
    resulting from sequestration. Depending upon the contract's
    requirements, a modification may be required to address a change in
    scope or in the period of performance (e.g., stretching out the period
    of performance). At this time, we do not know if we will need to
    terminate contracts, but, if we do, they will be handled in accordance
    with the procedures in the Federal Acquisition Regulation (FAR) and the
    Defense Federal Acquisition Regulation Supplement (DFARS). We do not
    have an estimate of costs associated with contract terminations or
    modifications at this time.

                               COSTS OF PLANNING

        36. Senator Shaheen. Secretary Carter, not only are we set to face
    significant defense and non-defense cuts, but the costs across the
    government associated with actually planning for sequestration are also
    significant. The Office of Management and Budget (OMB) acting budget
    director warned lawmakers last summer that any planning for
    sequestration would ``necessarily divert scarce resources'' from other
    important missions and priorities. What are the costs already
    associated with planning for sequestration?
        Secretary Carter. The process of planning for sequestrations has
    been disruptive in many ways. It forces us to be uneconomical, and our
    industry partners to be uneconomical, in the conduct of our affairs. It
    makes the orderly disposition of the public's business impossible
    including all the things we do for servicemembers and their families.
    The potential for government shutdowns and the prospect of the
    government operating on a series of continuing resolutions in place of
    a budget also affect defense industry partners trying to do their jobs.
    We're working on contingencies at the same time we're trying to do the
    bedrock business that we're supposed to do, which is to support the
    warfighter and deliver value for the taxpayer. It's annoying, it's
    frustrating and it's counterproductive.

        37. Senator Shaheen. Secretary Carter, isn't it the case that the
    longer we wait to get a long-term debt deal done, the more expensive
    and disruptive this process will be?
        Secretary Carter. Yes. Further delays will continue the
    uncertainty, extra work, and inefficiencies associated with
    sequestration and Continuing Resolutions.

                                   USS MIAMI

        38. Senator Shaheen. Admiral Ferguson, repairs to the USS Miami are
    scheduled to begin in fiscal year 2013; but might be deferred due to a
    full-year CR and sequester. What will be the overall impact to Navy
    operations if the USS Miami repair is deferred?
        Admiral Ferguson. If repairs to the USS Miami are delayed, the Navy
    would have one less submarine in support of the Global Force Management
    Allocation Plan (GFMAP)--the Secretary of Defense-approved plan and
    process for supporting combatant commander presence requirement. The
    Navy will reassess maintenance availabilities and operational
    deployments of remaining submarines in order to meet overall Navy
    operations through the Global Force Management Allocation process,
    which JS/J3 conducts and adjudicates on behalf of CJCS and the
    Secretary of Defense.

                 DIFFICULTY OF FISCAL YEAR 2014 BUDGET REQUEST

        39. Senator Shaheen. Secretary Carter, according to a DOD
    spokeswoman, ``If sequestration is triggered . . . much of the work
    going into the fiscal year 2014 budget will have been an exercise in
    futility. We will have to redo the budget.'' Can you discuss the
    difficulties you have had in pulling together the fiscal year 2014
    budget request given the current uncertainty with respect to
    sequestration and the unfinished fiscal year 2013 budget business?
        Secretary Carter. The Department uses a Planning, Programming,
    Budgeting and Execution process to develop not just an annual budget
    but a Future Years Defense Plan. Execution of the current budget and
    congressional action on the next budget are critical factors to inform
    our programming and budgeting phases. Long-term continuing resolutions
    which constrain funding to previous levels and accounts, combined with
    the potential for sequestration, create an uncertain financial
    environment which disrupts this process. When Congress fails to provide
    timely funding guidance, every individual program is faced with
    uncertainty about what they will be able to fund in fiscal year 2013,
    which in turn undermines our ability to develop long range plans.

                               MILITARY FAMILIES

        40. Senator Shaheen. General Dempsey, please describe the negative
    impact to military families should Congress fail to reach an agreement?
        General Dempsey. It is the Department's responsibility to help
    prepare military families to cope with the challenges inherent with
    military service. In order to build and sustain resilient military
    families, the Department must continue to focus on programs that
    enhance their social, financial, educational and psychological well-
    being. Sustaining these family programs in the current fiscally
    constrained environment or potential environment under sequestration
    and/or a full year of CR will be very challenging, but is of vital
    importance. We will take the necessary measures to protect funding for
    family readiness programs to the greatest extent possible and examine
    all such programs to ensure they are operating efficiently. In
    addition, we must identify and pursue opportunities to improve
    efficiency and accessibility of the resources and programs that DOD,
    other Federal agencies, State and local governments, and community
    organizations provide to support servicemembers and their families.
    That said, with base operating funds reduced by approximately 30
    percent, military families will be affected.

                                AUDIT READINESS

        41. Senator Shaheen. Secretary Carter, one of the areas of
    particular interest to this committee with respect to DOD's business
    practices is the ongoing effort to produce fully-auditable financial
    statements. DOD is scheduled to meet that target in 2017. What level of
    risk would sequester add to DOD's effort to meet the 2017 deadline for
    audit readiness?
        Secretary Carter. The enormous budgetary uncertainty and actions
    needed to address it have already delayed our audit efforts through
    actions such as hiring freezes and robbing senior leaders of time
    needed for productive work. If sequestration occurs, it will add
    significant risk to the DOD efforts to achieve audit readiness. DOD
    civilians will likely be furloughed should sequestration occur, leaving
    less time to accomplish the business process and control changes needed
    to meet our audit goals. In addition, there also would likely be a
    reduction in the amount of money available to procure contract audit
    and accounting expertise that is critical to our effort. Finally, this
    unprecedented level of budget uncertainty is draining valuable
    leadership time and attention from this important effort. As GAO has
    repeatedly observed, sustained leadership is critical to the success of
    this enterprise change management effort.

        42. Senator Shaheen. Secretary Carter, how much has DOD invested in
    this effort thus far?
        Secretary Carter. As we report in our bi-annual report to Congress,
    the Department has made a major investment in audit readiness. With
    Secretary Panetta's direction to focus on audit readiness and
    acceleration of the goal for audit ready budgetary statements the
    amount increased significantly to just over $400 million in fiscal year
    2012. In recent prior years, the Department invested roughly $200
    million in audit readiness per year. These amounts are in addition to
    major investments in modern enterprise resource planning systems that
    also deliver capability that supports accurate financial reporting.
    More information can be found in our bi-annual reports to Congress at
    http://comptroller.defense.gov/FIAR/plan.html
                                     ______

                     Questions Submitted Senator Tim Kaine

                             CONTINUING RESOLUTION

        43. Senator Kaine. Secretary Carter, previously you were DOD's
    chief acquisition official, so you well know the impact of
    indiscriminate cuts on our contracts and our defense industrial base.
    Can you speak to the effect that sequestration and a full-year CR will
    have on the defense industrial base?
        Secretary Carter. Sequestration and a full-year CR will negatively
    impact companies in the industrial base. It will impact their financial
    standing, stock market positions, and, of course, their employees. Many
    defense industry employees have highly specialized skills and if laid
    off or if they depart for companies in other sectors, they may not
    return to the defense sector. Budget uncertainty and the specter of
    sequestration have already caused companies to take undesirable
    actions, including postponing normal activities such as hiring,
    investments, and research. Cuts from sequestration and a full-year CR
    will impact not only our prime contractors, but also our
    subcontractors, and particularly our small businesses, who are less
    able to absorb the loss in revenues and have limited access to capital
    during a downturn. This could result in the permanent loss of
    subcontractors at the lower tiers of the supply chain-companies that
    contribute essential ideas, key component designs, and unique, highly
    specialized, and difficult-to-replace production equipment and skilled
    labor.

        44. Senator Kaine. Secretary Hale, DOD is known for its rigorous
    planning process, and yet, it must be very difficult for you and the
    financial managers of DOD to plan for the future, without knowing the
    baseline budget from which to plan. It must be difficult to make any
    assumptions going forward, with a fiscal year 2012 CR, no fiscal year
    2013 appropriations bill, and a delayed budget process for fiscal year
    2014. Does congressional funding, from CR to CR, affect your ability to
    plan for the future?
        Secretary Hale. The Department uses a Planning, Programming,
    Budgeting and Execution process to develop not just an annual budget
    but a Future Years Defense Plan. Execution of the current budget and
    congressional action on the next budget are critical factors to inform
    our programming and budgeting phases. Long term continuing resolutions
    which constrain funding to previous levels and accounts combined with
    the potential for sequestration create an uncertain financial
    environment which disrupts this process. When Congress fails to provide
    timely funding guidance, every individual program is faced with
    uncertainty about what they will be able to fund in fiscal year 2013
    based on their unique situations such as labor mix, contract
    provisions, and execution rate. Integrating these assessments into the
    whole Department's long range program and detailed budget is
    necessarily a measured process.

        45. Senator Kaine. Secretary Hale, if Congress were to pass a
    fiscal year 2013 omnibus appropriations bill, what positive impacts
    would we see to DOD's and overall readiness?
        Secretary Hale. An appropriation bill would put funds in the
    correct appropriations and allow us to execute fiscal year 2013 in
    accordance with our original plan. Especially if the bill fixes our O&M
    problems, it would enable us to minimize readiness problems, even
    though no funding fix can make up for the time lost under the first 6
    months of the continuing resolution. It would also enable us to fund
    ``new starts'' in military construction and acquisition programs,
    providing a positive economic impact on communities throughout the
    country.

                              COMBATANT COMMANDERS

        46. Senator Kaine. General Dempsey, what effect would decisions
    such as delaying the deployment of the USS Truman and deferring the
    refueling and overhaul of the USS Lincoln have on the combatant
    commanders' ability to perform their missions?
        General Dempsey. Although delaying Truman helps mitigate potential
    gaps in future U.S. Central Command (CENTCOM) CSG presence, CENTCOM
    feels immediate impacts to its capacity to handle the wide range of
    threats within their AOR. The specter of severe spending cuts requires
    Services to stretch readiness in order to ensure there are no gaps in
    combat capability. This stretching of resources limits the capacity
    and, in some cases, the capability of the combatant commanders.
    Carrier-based aviation is in increasingly high demand due to its non-
    reliance on host-nation coordination for conduct of operations. This
    demand for carrier-based aviation will only increase as we redeploy
    land-based strike aircraft from Operation Enduring Freedom. Deferring
    refueling and overhaul to later-scheduled CVNs will not only exacerbate
    the capacity issue in the CENTCOM AOR, but will add the additional
    shortfall in capability for some combatant commands especially when
    asked to provide assets to surge to CENTCOM during crises.

                                  NAVY'S SHIPS

        47. Senator Kaine. Admiral Ferguson, our Nation's shipbuilding
    plans cannot be carried out as planned with a fiscal year 2013 CR. What
    are the long-term impacts to our shipbuilding plans if we do not
    conduct these refueling and overhauls, as scheduled?
        Admiral Ferguson. USS Abraham Lincoln (CVN 72) Refueling and
    Complex Overhaul (RCOH) was scheduled to proceed with contract award
    and commence RCOH on February 14, 2013. Delaying CVN 72 RCOH execution
    will leave CVN 72 moored at Naval Station Norfolk in a nondeployable
    condition with increased and unscheduled costs. As a consequence, CVN
    72 will be delayed returning to the fleet, which will impact future CVN
    presence during a period in which the Navy is operating with just ten
    carriers. Since CVN 72 RCOH, USS George Washington (CVN 73) RCOH and
    USS Enterprise (CVN 65) defueling and inactivation have been closely
    coordinated to maximize use of common facilities (e.g., heel-to-toe in
    the drydock), delays in CVN 72 RCOH will also impact CVN 65 defueling/
    inactivation and CVN 73 RCOH.

        48. Senator Kaine. Admiral Ferguson, what will be the impact of
    aircraft carrier availability in the future?
        Admiral Ferguson. Navy remains committed to an 11-aircraft carrier
    force structure over the next 30 years as shown in the department's 30-
    year fiscal year 2013 shipbuilding plan, which optimizes overall
    shipbuilding funds between the aircraft carrier programs and other
    ship, submarine, support, and amphibious recapitalization plans.
        Navy is required by title 10, section 5062(b), to maintain 11
    operational carriers, except as modified by section 1023 of NDAA 2010
    which authorized a short-term reduction to 10 carriers between the
    inactivation of USS Enterprise (CVN 65) and commissioning of Gerald R.
    Ford (CVN 78). The combined impacts of sequestration and a full-year
    Continuing Resolution will result in delayed completion of CVN 78, a
    late construction start for John F. Kennedy (CVN 79), delayed
    completion of the USS Theodore Roosevelt (CVN 71) RCOH, and postponed
    starts for RCOHs for USS Abraham Lincoln (CVN 72) and USS George
    Washington (CVN 73), which will reduce the Navy's ability to meet COCOM
    presence requirements for the foreseeable future.

        49. Senator Kaine. Admiral Ferguson, the Navy's planned
    cancellation of third and fourth quarter ship maintenance will impact
    surface ship repair workers in the Hampton Roads area. This decision
    may cost the Navy more in the long run. What are the savings you
    project from this decision, and the long-term cost of this decision, in
    the future?
        Admiral Ferguson.
    Private Shipyards
            - Cancelling scheduled maintenance will result in a workforce
            reduction of an estimated 7,000 personnel by the end of fiscal
            year 2013 (3,861 Norfolk personnel).
            - Deferrals and cancellations will result in fiscal year 2014
            workloads beyond port capacities.
            - Replacing lost skilled workers will take years.
            - Based on CR and sequestration, total savings estimate for
            Hampton Roads is $287 million.
    Public Shipyards
            - Hiring freeze results in workforce being 2,200 below hiring
            plan by end of fiscal year 2013.
            - One day per week furloughs starting in April and minimizing
            overtime will reduce capacity to accomplish fiscal year 2013
            workload by approximately 533,000 man days. Workloads pushed
            into fiscal year 2014 will result in additional rescheduling
            and cancellations.
            - Approximately $35 million of advanced material purchases
            required to support the workload will not occur. Purchase of
            material is still required which creates an unplanned bill for
            fiscal year 2014.
            - Approximately $14 million of required equipment maintenance
            on industrial plant equipment will not occur. Adds risk to
            equipment reliability and productivity.
            - These actions will result in inefficiencies that will impact
            complex critical aircraft carrier and submarine availabilities
            and reduce the number of deployable aircraft carriers and
            submarines. These inefficiencies will also make it more
            expensive to accomplish this work in the future.
            - The total savings from these actions is still to be assessed.

        Long term, the cost of recovery may exceed the warfighting value of
    the ships and could result in early decommissioning if deferred
    maintenance backlogs are not completed. The net result could be
    reductions to Navy surface ship force structure.

            - Contractors will increase rates to recover sunk costs.
            - Work will be more expensive than inflation rates used in
            current budget models.
            - Ultimately, important modernization work will not occur which
            will stagnate military capability, and create an even larger
            backlog of modernization work.

        50. Senator Kaine. Admiral Ferguson, what does a decision for
    deferred maintenance mean for operational deployments?
        Admiral Ferguson. Deferring maintenance will not have an immediate
    effect on the ability to deploy but could negatively impact the
    completion of a given deployment creating the need for emergent costly
    repairs. Cancellation of 70 percent of ship maintenance in private
    shipyards and all aircraft maintenance in the third and fourth quarter
    of fiscal year 2013 will affect up to 25 ships and 327 aircraft and
    create an overall maintenance backlog of about $3 billion.
        In the mid-term without proper and timely maintenance and repairs,
    failure rates will accelerate over time increasing the length and cost
    of maintenance availabilities, further impacting tight operational
    schedules.
        In the long-term, deferred maintenance will shorten the service
    lives of our ships and aircraft, impacting force structure and
    deployment schedules.

        51. Senator Kaine. Admiral Ferguson, are we limiting the number of
    strike groups available to deploy?
        Admiral Ferguson. Navy is not limiting the number of strike groups
    available to deploy but we are prudently managing the readiness
    resources while meeting all Secretary of Defense approved CSG presence
    levels. The Global Force Management Allocation Plan calls for 2.0 CSG
    presence in CENTCOM, and Navy received relief to go to 1.0 CSG
    presence. We are managing remaining CSG schedules to sustain 1.0 CSG
    presence for as long as we can with current and available deployers,
    rather than have 2.0 CSG presence through fiscal year 2013, with less
    than 1.0 CSG presence in fiscal year 2014.

        52. Senator Kaine. Admiral Ferguson, how are we mitigating this
    degraded readiness capability?
        Admiral Ferguson. Navy will continue to conduct the maintenance and
    training necessary to provide trained and ready forces to the combatant
    commanders at a level ordered by the Secretary of Defense within budget
    limits authorized by the fiscal year 2013 Continuing Resolution.
                                     ______

                 Questions Submitted by Senator James M. Inhofe

                            NATIONAL SECURITY IMPACT

        53. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, as I
    mentioned in my opening remarks, Admiral Winnefeld recently stated that
    he was aware of ``no other time in history when we have come
    potentially down this far, this fast, in the defense budget.'' He
    continued that ``there could be, for the first time in [his] career,
    instances where we may be asked to respond to a crisis and we will have
    to say that we cannot.'' Do each of you share Admiral Winnefeld's
    concerns?
        General Dempsey. Yes.
        General Odierno. Yes, I agree with Admiral Winnefeld's concerns.
    After ensuring that soldiers deploying to or already in Afghanistan and
    those supporting Korea are prepared and ready, the remaining 80 percent
    of the Army must significantly curtail training today. There may be
    instances where we will be called upon to respond to a national or
    global crisis and be forced to make a choice to deploy forces that are
    not ready, or not be able to respond based on the lack of resources. It
    could also impact our ability to provide properly trained soldiers to
    Afghanistan in 2014.
        Admiral Ferguson. We share Admiral Winnefeld's concerns. Simply
    put, the combined effect of a year-long continuing resolution and
    sequestration will reduce our Navy's overseas presence and adversely
    impact the material readiness and proficiency of our force, thus
    limiting the President's options in time of crisis. We anticipate
    reducing flight operations and steaming days for our deployed forces,
    canceling deployments, deferring more maintenance on ships and
    aircraft, and suspending most non-deployed operations such as training
    and certifications. This will immediately erode the ability of the
    force to respond in time of crisis.
        General Amos. As Commandant, I do share Admiral Winnefeld's
    concerns, but I assure you that we will do everything in our power to
    protect enduring U.S. global interests that underpin our prosperity. We
    will meet our responsibilities for rapid response to crises wherever
    they may occur. Still, the Marine Corps' ability to execute our
    expeditionary crisis response role is based upon one word--readiness.
    This requires trained marines, ships at sea, and aircraft in the air.
    These assets are the foundation of our forward deployed and rotational
    forces. Without them, not only will our forces become hollow and unable
    to respond as we are accustomed to, but we will make enduring national
    interests hollow as well. If insufficient maintenance and operating
    resources are available, our marines will not be located forward,
    poised to intervene when our citizens, diplomats, allies or interests
    are threatened. We will be able to respond to crisis as a nation, but
    our response options will be limited, and our response times
    dramatically slowed. When crisis erupts unexpectedly, especially if
    this occurs far from existing bases or stations, our threatened
    citizens may have to wait longer for help to arrive. The risk of small-
    scale crises escalating is increased without forces that can rapidly
    contain them at their lowest levels. Without ready amphibious ships and
    well-trained Marine units, there will be less engagement with allies
    and partners, leading to decreased deterrence for small scale conflict.
    American leadership in response to unforeseen natural and man-made
    disasters will be sporadic. Without ready marines, our Nation will
    forfeit a primary political-military tool that helps to protect U.S.
    interests, prevent conflict, and enable our joint forces in war.
        General Welsh. I am sure we all share Admiral Winnefeld's concern
    about the impact sequestration may have on the Services' ability to
    respond to a crisis. Without any changes to the implementation of
    sequestration, continued downward fiscal pressure could cause an Air
    Force response to a crisis to fall short of the Nation's expectations.
        General Grass. Yes, I share Admiral Winnefeld's concerns. The
    defense budget cuts approved under sequestration are too large, too
    steep, and do not allow enough programmatic flexibility between
    accounts. While the United States has historically made large cuts in
    both defense spending and force structure after each war (as is
    appropriate), previous drawdowns came about after the end of combat
    operations, which we often concluded victoriously. Cuts under
    sequestration come at a time when we are not only still fighting in
    Afghanistan but also continue to face a wide array of other challenges
    across the globe. Sequestration could preclude us from responding--
    rapidly and decisively--to all future global contingencies including
    those here at home.

        54. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, what short-
    term and long-term risks do you see to our national security interests
    around the world?
        General Dempsey. Over the short- and long-term there will be
    numerous, evolving threats to our national security interests. I am
    just completing my annual risk assessment, as required by law, and will
    soon provide it to the Secretary of Defense for forwarding to Congress.
    The risk assessment is a classified document that will fully articulate
    my risk assessment. Should sequestration occur it will force a
    reexamination of our current National Military Strategy and Defense
    Strategic Guidance in order to balance ends, ways and means against
    available resources. Over the long-term, if we have less capacity and
    fewer resources to shape an increasingly uncertain and chaotic security
    environment, risks to our forces and our ability to accomplish our
    national security objectives will be greater.
        General Odierno. The global security environment is the most
    dynamic and unpredictable I have seen in my 36-year career. We don't
    know when we will be asked to send soldiers to do our Nation's bidding,
    but history shows us that we will. When we do, they must be trained and
    ready. Sequestration will increase the risk that they will not be
    prepared to defend the global commons; to respond to natural and
    manmade catastrophes here and abroad; to fight and win our Nation's
    Wars; respond to regional crisis, whether in the very unsettled Middle
    East or the Asia Pacific region; or to fulfill the myriad other
    requirements in support of combatant commander's plans and
    contingencies. Our defense strategy contains 11 critical tasks and the
    Army plays a vital role in 10 of the 11. If sequestration is
    implemented in full, we will not be able to fully execute these tasks.
        Admiral Ferguson. For more than 60 years, our Navy posture in
    support of national security has rested upon a foundation of forward-
    deployed forces that assure allies, deter aggression, and, if
    necessary, defeat adversaries in conflict. In the near term, we believe
    sequestration mistakenly signals a lack of U.S. resolve to our allies
    and partners as well as our potential adversaries, heightening the
    possibility of opportunistic aggression. Longer term, the absence of
    sufficient forward-deployed forces creates a power vacuum that
    threatens the international, rules-based system that has underwritten
    stability in many parts of the world for decades.
        General Amos. As a steward of the Nation's resources, I will
    continue to do everything in my authority to maintain a forward
    deployed and ready force. First and foremost, this means that the units
    we deploy or rotate forward will be trained and ready for a wide range
    of military operations. Unfortunately, if sequestration is allowed to
    proceed, short- and long-term impacts on our national security are
    unavoidable.
        In the short term, risks in our ability to respond to crisis are
    the most troubling. Our allies and partners understand the tremendous,
    sustained investment in training and maintenance that empowers our
    world-leading capabilities, and they understand the damage we will do
    to those capabilities with what must appear to them as capricious
    reductions. Because of the magnitude and inflexibility of proposed cuts
    to defense resourcing, there is a disproportionate impact on O&M
    funding. The ability to project forces forward, where they provide
    visible reminders of American strength and commitment, will be reduced.
    Without forward deployed Marine and Navy forces, our diplomats,
    citizens, allies, and national interests will be held at-risk for
    longer periods as response times are slowed. When innocent populations
    are threatened by armed violence, we will be able to intercede with
    words alone. When our allies are directly threatened, they may be asked
    to do the best they can while we gather the elements of our response.
    When our embassies or diplomats are threatened, they may be asked to
    wait. These are the short term risks created when ships are not
    maintained, aircraft are unavailable, and marines are not trained and
    ready. In non-priority theaters, our ability to respond to unexpected
    crises will be reduced by lack of strategically mobile forces. In
    natural disaster, devastated populations may have to wait weeks before
    assistance arrives. As we scramble to preserve short-term readiness,
    they will begin to doubt our willingness to sustain that readiness in
    the places that matter most: forward, in the contested areas of the
    world.
        Over the longer term, these short-term risks erode the credibility
    of American security assurances and the security of the global order
    upon which our prosperity and security rests. Allies and partners,
    without the reassuring physical presence of U.S. forces, even on a
    rotational or transitory basis, will consider their options for dealing
    with regional threats. In regions where our influence is contested, our
    partners may believe their own national interests are best protected by
    reaching accommodations with our competitors. Others may feel it
    necessary to develop weapons that can be wielded independently of the
    United States or take more severe measures such as militarizing
    disputed areas. U.S. ability to encourage and develop partners to
    invest in collective security efforts will be dramatically reduced,
    shifting much of that burden onto our own shoulders. U.S. weakness and
    unresponsiveness in natural disaster or man-made catastrophe will
    further undermine our credibility. Confidence in the survival of a
    collective world order based on shared interests will be shaken.
    Unchecked, the forces of extremism, nationalism, and selfish
    exploitation are likely to fill this void.
        General Welsh. In the short term, deep and indiscriminate budget
    cuts required to comply with sequestration will result in a force
    unable to maintain required readiness levels. In the long term, three
    continuing challenges within the strategic environment, amplified by
    decreased force readiness, will be the primary drivers of risk: (1) an
    increase in the number of nuclear-armed hostile regimes combined with
    an expanding capability to reach far beyond their borders will threaten
    regional stability and increase risk of homeland attack; (2) the growth
    and proliferation of anti-access/area denial capabilities that will
    reduce our freedom of action; and (3) an increased access to WMD and
    advanced weapons by violent extremist organizations that will remain an
    enduring threat to the United States and its interests worldwide.
        General Grass. The National Guard rapidly expands the capacity of
    the Army and the Air Force. The National Guard does the same for civil
    authorities by providing organized, disciplined, and properly equipped
    military units on very short notice. The Guard can do this because of
    the institutional procurement, training, educational, and depot-level
    maintenance programs the Army and the Air Force provide. In the short-
    term, I see immediate and significant risk to readiness. Curtailing
    training or slowing the recapitalization will quickly impact the
    Guard's ability to respond rapidly to contingencies both at home and
    abroad. I foresee significant risk to National Guard personnel,
    readiness, and force structure in the longer-term. We must retain our
    best personnel. To do this, we have to offer them continuing and
    challenging worldwide training opportunities and operational
    deployments. The National Guard must also maintain sufficient dual-use
    force structure to respond to domestic emergencies and to augment and
    reinforce Active component forces during international contingencies.

        55. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, how would
    sequestration redefine the United States' national security role in the
    world?
        General Dempsey. Sequestration will redefine our national security
    role in the world. It will reduce our influence and our ability to
    secure our national interests. Sequester would posture our military to
    become a less flexible, proactive, shaping force, able to seize
    fleeting opportunities, and more of a reactive force, focused on
    combating only immediate threats. The erosion in military capacity will
    be manifested in our ability to deter adversaries, assure allies and
    partners, sustain global presence, and surge for contingencies.
        General Odierno. Sequestration creates significant risk to national
    security and will cause us to redefine the Defense Strategic Guidance
    that was published last year. I understand the seriousness of our
    country's fiscal situation and we will continue to do our part to be
    good stewards of taxpayer money, but the magnitude of cuts associated
    with sequestration will directly impact our ability to sustain
    readiness today and into the future and to meet the requirements to
    sustain our national security through the implementation of the Defense
    Strategic Guidance.
        Admiral Ferguson. The security, prosperity, and vital interests of
    the United States are tightly coupled to those of other nations in a
    global system comprised of interdependent networks of trade, finance,
    and governance; this system has been underwritten and secured by U.S.
    military power for more than 60 years. Sequestration not only would
    send ripples of uncertainty throughout this global system; it would
    also place in doubt our ability to meet current and future warfighting
    commitments overseas. In short, by undermining the U.S. role as
    guarantor of a stable, rules-based order, sequestration would threaten
    U.S. interests and heighten the possibility of instability and
    conflict.
        General Amos. The United States remains the recognized leader in
    the collective security arrangements that underpin the stability of the
    global order. The United States relies on its military to provide a
    visible and credible deterrent to individuals, groups or States who
    would otherwise attempt to undermine the peace and security that the
    current global system provides. Erosion of the credibility of American
    leadership fundamentally threatens the security of the global order
    upon which the continuance of a just order and global prosperity rests.
    Global economic growth, the rising of billions from poverty, and
    decline in major world conflict are all derivatives of U.S. security
    leadership. The pillar of U.S. leadership in the advocacy and
    protection of this benign global order is irreplaceable. Our security
    absence from the world's most critical regions begins a process of a
    thousand cuts to our Nation's credibility, and the gradual decline of
    this order.
        The role of the United States in this world would, of necessity,
    change. Rather than shaping the conditions that preserve order, the
    United States would find itself increasingly reacting to the potential
    disorder that would ensue. Without a stabilizing U.S. presence forward,
    our ability to prevent and contain crisis would be greatly reduced. The
    United States would increasingly be forced to react to higher levels of
    violence and instability as regional competitors, extremists, and even
    criminal networks seek to exploit a perceived security vacuum. Without
    a stabilizing presence forward, the United States may find itself
    without security options in crisis, leading to larger, more expensive
    security interventions when the Nation's interests demand a response.
    The United States may find the expense of a reactive role to exceed
    that of a preventative one. It may find that the cumulative economic
    impact of global instability vastly exceeds that of preserving its
    stability.
        The role of the United States in this national order will be
    fundamentally redefined, devolving from ``leader'' to ``participant.''
        In this reduced role, the moral authority of our ideals and values
    would suffer a corresponding decline. No longer the ideals of a global
    leader and powerful advocate, there is significant risk that these
    would become perceived as only the selfish interests of just another
    participant in a series of regional challenges.
        General Welsh. As the world's security environment becomes ever
    more complex and dangerous, the effects of sequestration on the Air
    Force and our Sister Services would make it impossible to perform, in a
    timely manner and with acceptable risk, the missions the Nation
    requires. While the Air Force has taken great care to protect the
    critical capabilities on which our joint, interagency, and coalition
    partners rely, sequestration will directly impact our full spectrum
    readiness. National strategic options will be limited and less
    sustainable, resulting in partners, allies and adversaries who will
    question our resolve. The Nation will be at greater risk.
        General Grass. The United States today has a military second to
    none. Sequestration jeopardizes this preeminence. We must maintain the
    capability to intervene, rapidly and decisively, in furtherance of our
    national security interests in any worldwide contingency. More broadly,
    and setting aside potential contingencies, cuts to the defense budget
    of the size and speed of sequestration may undermine the United States'
    ability to play the preeminent role in promoting global security and
    stability. To shape the world in a way that is favorable to the vital
    national security interests of the United States, we must remain
    engaged with our friends, partners, and allies--and sometimes potential
    adversaries--across the globe. Sequestration may preclude the United
    States from doing this, limiting our strategic choices, and ceding
    initiative to potential adversaries.

        56. Senator Inhofe. General Dempsey, how will sequestration affect
    our ability to respond to more than one major conflict simultaneously?
        General Dempsey. Sequestration will cause a significant reduction
    in both force structure and readiness, severely limiting our ability to
    implement our military strategy. As stated, it will require us to
    redefine our strategy, including how we would respond to more than one
    major conflict simultaneously.

                       LONG-TERM IMPACT OF SEQUESTRATION

        57. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, we in
    Congress need to know what's at stake if the budgets proposed under
    sequestration are allowed to proceed. Can you provide your view of the
    impact of 10 years of budget caps from sequestration?
        General Dempsey. If multi-year reductions in funding take place
    such as those required by sequestration, we will need to do a complete
    review and revision of our defense strategy and make hard choices about
    which of our current national defense capabilities we could afford to
    retain.
        General Odierno. Ten years of budget caps from sequestration will
    produce a fundamentally different Joint Force. Reductions of this
    magnitude would first prompt a review of the national security
    strategy, military strategy, and the roles and mission of all of the
    Services. Following this comprehensive review, the Army would then
    plan, program and implement the forces, capabilities and capacities
    that the new strategy requires. What the Army may look like after this
    is based on too many factors to allow a more detailed description. This
    future Army would likely be significantly smaller, with a reduced
    capability to respond decisively to the range and scope of threats the
    Nation is likely to face over the next decade. This smaller Army would
    be concentrated on fewer installations across the country with few
    forces, if any, stationed overseas. It will impact our ability to shape
    the geographic combatant commanders' areas of operation in order to
    prevent conflict. It could put at risk our ability to deter conflict
    and increase the likelihood of miscalculation from our adversaries or
    other opportunists who believe we no longer have sufficient capacity or
    capability to respond.
        Admiral Ferguson. If the discretionary cap reductions are sustained
    for the full 10 years, we would need to fundamentally change how the
    Navy is currently organized, trained and equipped. As time allows, we
    will take a deliberate and comprehensive approach to this reduction,
    based on a reevaluation of the Defense Strategic Guidance. In doing so,
    we will endeavor to: (1) ensure our people are properly resourced; (2)
    protect sufficient current readiness and warfighting capability; (3)
    sustain some ability to operate forward by continuing to forward base
    forces in Japan, Spain, Singapore and Bahrain, and by using rotational
    crews; and (4) maintain appropriate research and development.

             Under a set of fiscal circumstances given in
            sequestration, our Navy may be reduced to a fleet of about 30-
            40 fewer ships by 2030, including the loss of at least 2 CSGs.
             We would be compelled to retire ships early and reduce
            procurement of new ships and aircraft. This would result in a
            concomitant reduction in our end strength.
             Inevitably, these changes will severely damage our
            industrial base. Some shipyards will not be able to sustain
            steady construction or maintenance operations and may close or
            be inactivated. Aviation depots will reduce their operations or
            become idle. Aircraft and weapons manufacturers will slow or
            stop their work entirely. In particular, the small firms that
            are often the sole source for particular ship and aircraft
            components will be forced to shut down.
             The contraction of the sub-tier industrial base will
            ultimately place our major procurement programs at risk since
            there will be more limited supplies of critical parts and costs
            will likely increase as a result of these effects.
             In the end, increasing costs for our ships and
            aircraft, while in a declining budget, will result in reduced
            procurement quantities and likely contraction of the prime-
            vendor industrial base as well.

        General Amos. The impacts of the full weight of the Budget Control
    Act (Sequester Provision) over 10 years have the potential to force a
    fundamental change in today's Marine Corps. While most discussions to
    date have focused primarily upon fiscal year 2013 and the readiness
    implications therein, the size of the annual reduction (in excess of $2
    billion/year) to the service top line will demand a complete redress of
    the Marine Corps size, organization, readiness levels, and
    infrastructure. The one thing that will remain intact will be a Marine
    Corps that is the Nation's crisis response force--ready to meet today's
    crisis, with today's force, today.
        In the early years of this 9 year period (less fiscal year 2013),
    there will be significant reductions to all acquisition programs and
    O&M accounts in order to fund immediate combat requirements and support
    our forward deployed forces. These reductions will negatively impact
    service plans to modernize equipment hard worn during 11 years of
    combat operations. Further, it will slow reset of equipment returning
    from Afghanistan. This will, in turn, disrupt the plan to source this
    equipment to support units and marines as they perform their mission
    around the globe in uncertain, dangerous times, and will adversely
    impact the rebalance to the Pacific. Additionally, there will be an
    erosion of home station/crisis response force readiness that will grow
    worse over time, and will certainly begin to affect our ``next-to-
    deploy'' units. Despite the constrained funding resulting from the CR
    and sequestration, in the next 6 months we will be able to continue
    meeting Marine Corps deployed warfighting needs and the training of
    next-to-deploy forces. Between 6 and 12 months, however, we'll continue
    to decrement readiness accounts with ever increasing degradation of
    home station unit readiness and force modernization, and begin to show
    small impacts in next-to-deploy forces. Beyond 12 months, we will see a
    real impact to all home station units (e.g. fixed wing squadrons will
    have on average only five of twelve assigned aircraft on the ramp due
    to aviation depot shutdowns) and the beginning of impacts to our next-
    to-deploy and some deployed forces to include our Marine Expeditionary
    Units aboard amphibious ships--in all a slide to a hollow force we have
    fought so hard to avoid.
        Sequestration cuts will also create an immediate reassessment of
    programs that are underway as a result of the lessons learned during
    the hard fights in Iraq and Afghanistan. Further, due to the suddenness
    and size of the reductions, the first years of the sequestration will
    generate requirements to fund the additional costs of what could be a
    significant and difficult reduction in both the civilian workforce and
    military end strength on top of our ongoing current reduction of 20,000
    personnel. Certainly we will have to make hard decisions about
    eliminating entire procurement programs due to reduced resources over a
    9 year period.
        Such reductions would not be the result of a change in national
    strategy or policy, but simply because of these traumatic cuts to
    funding; such measures are sure to break faith with thousands of
    marines and civilian marines whose heroic service over the past decade
    deserves better. The perhaps unintended consequence will be a budget
    driven change to our strategy and our place in the global community.
        General Welsh. Ten years of budget caps from sequestration will
    result in decreased readiness, reduced force structure capacity and
    capability, and delayed recapitalization and modernization of aging
    fleets. Consequently, the appetite for employing Air Force capabilities
    will have to be suppressed as we simply will not be able to meet
    currently expected levels of support to national security objectives.
        General Grass. Ten years of budget caps due to sequestration will
    degrade military readiness, both in the National Guard and in the U.S.
    military as a whole, over those 10 years and well beyond then.
    Specifically, we will not be able to maintain the current numbers of
    trained personnel with concomitant reductions in acquisition,
    equipment, and facilities. This will no doubt spur much discussion as
    we go forward as to the value of maintaining force structure within the
    National Guard so that capabilities are retained and available with the
    best balance between cost-effectiveness and responsiveness.

        58. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, in your
    opinion, what will be your end strength?
        General Dempsey. Ultimately, the Service Secretaries and Chiefs
    must structure, equip and train forces to meet strategic requirements.
    The Joint Force requires the right balance of capabilities, force size
    and structure, and it must be trained and equipped for a range of
    contingencies. With sequestration we will have to make difficult
    choices about our force size and capability modernization, which will
    impact our ability to respond to crises and undertake the Nation's
    security requirements.
        General Odierno. Based on the President's decision, which I fully
    support, military end strength was exempted in fiscal year 2013.
    However, Secretary McHugh and I are determined to ensure we have the
    right balance between end strength, readiness, and modernization.
    Therefore we will have to further reduce the Army by at least 100,000
    soldiers with a combination of Active Duty, National Guard, and U.S.
    Army Reserve reductions. When you add that to the already programmed
    89,000 reduction in the Army drawdown you would remove, as a minimum,
    189,000 soldiers, but the figure will probably be closer to 200,000.
    Full enactment of sequestration will draw the Army below the level
    required to support the current military strategy and could drive
    personnel actions that could break faith with our soldiers.
        Admiral Ferguson. Sequestration will result in a Navy with a fleet
    of about 30-40 fewer ships by 2030, including the loss of at least 2
    CSGs. End strength reductions are still being assessed, and would be
    commensurate with the decrease in force structure and the supporting
    (i.e. training, equipping, and sustainment) infrastructure required to
    sustain that reduced force.
        General Amos. It is difficult to assess, without detailed analysis
    against our strategic guidance, what end strength reduction will result
    from sequestration. There is little doubt that the over $2 billion
    annual reduction to the Marine Corps' top line authority will cause
    fundamental change across the service. As we analyze sequestration's
    impact across our five pillars of readiness; High Quality People, Unit
    Readiness, Capacity to meet Combatant Commander Requirements,
    Infrastructure, and Modernization, we face an immediate imbalance when
    focusing on near-term readiness--our congressionally-mandated
    responsibility. Fully three-fifths of the Marine Corps' Total
    Obligation Authority is dedicated to funding personnel. While the
    President chose to exclude military manpower from sequestration related
    cuts in fiscal year 2013, this is not the case over the following 9
    years. As we begin to apply the reductions in a way that balances
    readiness, end strength, and modernization, there are significant, hard
    choices required, one of which may well be a reduction to our final end
    strength. Such a step may well result in reductions to both the number
    and seniority of our military personnel as well as cuts to our civilian
    marine workforce.
        This condition is further exacerbated by the fact that the Marine
    Corps is already in the first year of a 4-year effort to reduce its end
    strength by 20,000 military members from our wartime footing of
    202,100. That drawdown, while challenging, benefitted from both prior
    planning and the resources required to ensure that we kept faith with
    those affected marines and their families. In the case of
    sequestration, these conditions of planning time and resources do not
    exist. The cost savings associated with manpower reductions will not
    immediately achieve sufficient savings to offset the magnitude of
    reductions required by sequestration, and if immediately implemented,
    the size of these reductions will break faith with marines that have
    been at war for 11 years. Ultimately the Marine Corps is committed to
    producing a Marine Corps that balances manpower, readiness, and
    modernization to provide the most capable Marine Corps that the Nation
    can afford.
        General Welsh. The fiscal year 2013 Air Force military authorized
    end strength is as follows: Active Duty is 329,460; Air National Guard
    is 105,700, and Air Force Reserve is 70,880. We have an Air Force
    corporate process to evaluate and prioritize resources to maintain a
    balance between people, equipment and funds available. Should our
    funding and force structure decrease, we would evaluate end strength to
    ensure it remains in balance.
        General Grass. Our best estimates as to National Guard end strength
    going forward are based on the levels enacted when the President signed
    the National Defense Authorization Act for Fiscal Year 2013 last month.
    That Act provides for 358,200 Army National Guard personnel and 105,700
    Air National Guard personnel. Included within these Military Personnel
    numbers, per title IV of the act, are the 49,390 military (dual-status)
    technicians who are fundamental to the equipment and personnel
    readiness of the National Guard Force.

        59. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, what
    capabilities, missions, and responsibilities that your Service conducts
    today will be sacrificed in the next 10 years?
        General Dempsey. As these major budgetary decisions are
    implemented, the Department will need to evaluate and redefine areas of
    risk and develop mitigation options. My aim is to have the associated
    risk be manageable, although the magnitude and speed of sequestration
    will make this a difficult task.
        General Odierno. Ten years of budget caps from sequestration will
    produce a fundamentally different Joint Force. Reductions of this
    magnitude would first prompt a review of the national security
    strategy, military strategy and the roles and mission of all of the
    Services. Following this comprehensive review, the Army would then
    plan, program and implement the forces, capabilities and capacities
    that the new strategy requires. What the Army may look like after this
    is based on too many factors to allow a more detailed description. This
    future Army would likely be significantly smaller, with a reduced
    capability to respond decisively to the range and scope of threats the
    Nation is likely to face over the next decade. This smaller Army would
    be concentrated on fewer installations across the country with few
    forces, if any, stationed overseas. It will impact our ability to shape
    the geographic combatant commanders' areas of operation in order to
    prevent conflict. It could put at risk our ability to deter conflict
    and increase the likelihood of miscalculation from our adversaries or
    other opportunists who believe we no longer have sufficient capacity or
    capability to respond.
        Admiral Ferguson. If the full magnitude of sequestration is applied
    against DOD and the Navy's share of that reduction remains constant,
    the Navy will have to reduce our overall fleet by about 30-40 ships,
    including at least 2 CSGs. To achieve this reduction we will retire
    ships early and significantly reduce the procurement of new ships and
    aircraft such as the P-8A Poseidon, F-35 Lightning II, next generation
    ballistic missile submarine, and the Littoral Combat Ship.
        In addition to being smaller, the fleet will be challenged to field
    the capability needed to pace emerging threats. New platforms such as
    the F-35 Lightning II will struggle to arrive in time or in relevant
    numbers and new payloads such as weapons, sensors, unmanned vehicles
    and electronic warfare systems will be delayed or cancelled.
        A smaller fleet will be challenged to be where we are needed, when
    we are needed. Slowed capability improvement will make us less relevant
    to the threat or challenges we will face. We will dramatically reduce
    our overseas presence; our ability to respond to crises; our efforts to
    counter terrorism and illicit trafficking; and our material readiness
    across the Navy (afloat and ashore). In the end, the Navy will be
    limited in its ability to provide the capability and capacity called
    for in the current defense strategy and unable to fully support the
    Global Force Management Allocation Plan for our combatant commanders.
        General Amos. The size, focus, and capabilities of the Marine Corps
    will directly reflect adjustments to the national military strategy and
    the commensurate roles and missions assigned to the service as the
    Nation adjusts to the realities of the funding reductions mandated by
    the sequester. As in the past, the Marine Corps will adjust and evolve
    to balance its five pillars of readiness: High Quality People, Unit
    Readiness, Capability and Capacity to meet Combatant Commander
    Requirements, Infrastructure, and Modernization to provide the most
    capable and ready Marine Corps that the Nation can afford.
        Based on the extent of the sequestration reductions (over $2
    billion/year), the restrictions in applying these reductions in fiscal
    year 2013, and the extended period in which they are implemented, this
    adjustment will not be smooth nor efficient. While the discussions
    surrounding current year impacts provide substantial examples of
    readiness shortfalls that will lead to future degradations in crisis
    response capacity, the longer term issues center on the substantial
    effort that will be required of the Marine Corps to adjust structure,
    balance tradeoffs, and right size enduring programs to conform to an
    annual reduction of over $2 billion/year over the next 9 years. The
    entire procurement account for weapons and ammunition, to include
    research, development, test and evaluation (RDT&E), is only $2.47
    billion in fiscal year 2013 after sequestration. This will require a
    comprehensive assessment of national priorities and goals and a
    subsequent review of the Defense Strategic Guidance; there is no
    question that we will collectively not be able to do all the things we
    are doing today, and this requires a thorough review of ways, means,
    and ends to arrive at an optimal solution that meets our national
    security goals in this uncertain and unstable world.
        General Welsh. Current fiscal uncertainties make it extremely
    difficult to specify which Air Force capabilities, missions and
    responsibilities will be sacrificed over the next decade. However, we
    can be certain that significant changes to Air Force capabilities will
    be required. As General Dempsey said, under sequestration the current
    strategy is ``infeasible.'' As more specific fiscal and strategic
    guidance become available, the Air Force will need to conduct a
    complete review of current and future capabilities in order to ensure
    support for our national strategy.
        General Grass. The National Guard rapidly expands the capacity of
    the Army and the Air Force. The National Guard does the same for civil
    authorities by providing organized, disciplined, and properly equipped
    military units on very short notice. The Guard can do this because of
    the institutional procurement, training, educational, and depot-level
    maintenance programs the Army and the Air Force provide. The reduction
    in these critical areas would have an immediate impact on National
    Guard readiness. In a matter of months, our readiness as an operational
    force for our Nation's defense, and as an immediate Homeland response
    capability, will erode. Although there is much uncertainty associated
    with projecting the future security environment, our efforts to build
    partnership capacity with our interagency counterparts such as the
    Department of Homeland Security may allow the National Guard to reduce
    or eliminate some of our support to law enforcement efforts along
    international borders. Additionally, our reliance on piloted aircraft
    may be reduced as advances in remotely piloted aircraft technology
    improve. Some important functions such as finance and personnel
    management may be outsourced to systems and processes that are more
    cost effective and efficient than our current construct. Any mission
    currently conducted by the National Guard that is not aligned with a
    military core competency, may be sacrificed over the next 10 years.

        60. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, what will the
    risk be over 10 years to the readiness of your forces?
        General Dempsey. Military Readiness is the Armed Forces ability to
    fight and achieve the Nation's security interests. It requires adequate
    resourcing with people, equipment, training time and funding. If these
    get out of balance, our ability to support our national security
    objectives deteriorates. This will result in a much smaller, less
    capable and less responsive military force in the future, which will
    require the development of a new National Military Strategy. This
    revised strategy will likely assume greater risk in the following ways:

             Reduced capability to provide a stabilizing presence,
            deter war, assure our allies and build their capacity;
             A slower response to conflict resulting in greater
            aggressor initiative, a more difficult fight, and potentially
            greater casualties to our force;
             Delayed reconstitution of the Global Response Force
            post conflict;
             Severely limited ability to address simultaneous
            cries, or more than one major conflict; and
             Less forces available to support civil authorities in
            the Homeland while engaged in overseas crises.

        General Odierno. Ten years of budget caps from sequestration will
    produce a fundamentally different Joint Force. Regardless of the size
    and composition of what the resulting Army may look like, we must
    ensure that it would be a balanced force. At all times, we strive to
    maintain balance across our manpower, investment, and readiness
    accounts so that we can produce the most capable force possible.
        Decreased maintenance capabilities will directly impact the
    readiness of all our equipment, from night vision devices to tanks.
    This significantly increases the risk to our soldiers based on the
    degraded readiness of our systems. These impacts will ultimately
    translate into longer response times, longer mission accomplishment
    times, and increased risk to our soldiers. This will impact our ability
    to shape the geographic combatant commanders' areas of operation in
    order to prevent conflict. It could put at risk our ability to deter
    conflict and increase the likelihood of miscalculation from our
    adversaries or other opportunists who believe we no longer have
    sufficient capacity or capability to respond.
        Admiral Ferguson. As described during my testimony, the risk of 10
    years of sequestration is a smaller, less ready, less capable force due
    to reduced investments in training, readiness, and personnel compounded
    with the added risk that we will not have invested in sufficient
    innovation and future capability to win against a next-generation
    threat.
        The sustained impact of approximately a 9 percent per year
    reduction across all Navy appropriations for the next 10 years will
    magnify the loss of readiness that the Navy is currently experiencing
    as we respond to shortfalls created by the fiscal year 2013 Continuing
    Resolution and from the lack of a fiscal year 2013 defense
    appropriations bill. Over the next 10 years, sequestration will
    continue to erode unit readiness and further stress the force by
    placing higher operational tempo demands on our ships, aircraft and
    personnel. This greater operational tempo will further exacerbate
    maintenance and readiness challenges on our equipment, and will place a
    higher burden on our sailors and their families.
        Under sequestration, the Navy will be required to reduce the size
    of our forces. We will be required to retire ships early and reduce
    procurement of new ships and aircraft. The reduction in force structure
    over 10 years caused by sequestration will reduce Navy's capacity to
    surge additional forces in response to crisis and impact our ability to
    provide persistent forward presence.
        General Amos. The Marine Corps, throughout its modern history, has
    been the Nation's force in readiness, forward deployed and ready to
    respond in the world's critical littoral regions to meet any crisis--
    helping friends and allies, responding to emergencies, and providing
    the Nation's leaders decision space. This role is central to our
    organization, ethos, and training and it will remain a focus as we deal
    directly with the impacts and challenges brought about by the Budget
    Control Act.
        Marine Corps readiness is measured primarily in terms of five
    pillars of readiness: High Quality People, Unit Readiness, Capacity to
    meet Combatant Commander Requirements, Infrastructure, and
    Modernization. Each of these pillars incorporates all the
    organizations, activities, and programs that make up the service and
    each, and when optimized, represents a sensitive balance between
    resources and requirements--the sequester threatens to create a
    significant imbalance across these pillars.
        These imbalances will not necessarily occur simultaneously nor can
    they be ameliorated concurrently due to the specific elements within
    each. Short-term readiness issues are impacted by the availability of
    resources in the O&M accounts that fund unit readiness and equipment
    maintenance. Over time, reductions in this funding generate significant
    backlogs and additional requirements for depot maintenance, further
    driving up depot requirements with reduced resources. Similarly,
    deferral of maintenance to our infrastructure reduces the overall life
    of barracks, hangers, motor pools, et cetera, which then generates the
    need for early replacement. The most significant long term impact to
    future readiness will be centered on our ability to modernize the force
    with significantly fewer resources and numerous competing demands.
    Modernization is the process by which our less capable systems or those
    exceeding their current programmed life are replaced--preserving
    resources in the amount necessary to affect the progressive
    accomplishment of our modernization plans is most at risk as these
    longer term resources are reduced to fund the most pressing short term
    readiness impacts.
        Underpinning all of this is our most valued asset, the individual
    marine--and his/her retention, training, and education. Any manpower
    reductions will necessitate the use of costly separations incentives
    that require additional resources that would normally resource the
    training and readiness accounts and which can require such funding over
    an extended period of years depending upon the authorities granted by
    Congress.
        The cuts imposed as part of an annualized continuing resolution and
    sequestration result in a $1.2 billion reduction to O&M in fiscal year
    2013 alone and don't account for evolving requirements above current
    resource levels. The Marine Corps prides itself on being a frugal
    service that asks only for what it needs and not what it wants. Any cut
    to our $10 billion O&M budget will entail risk in either the near or
    long term. A cut of $1.2 billion will immediately affect every aspect
    of Marine Corps operations and readiness. The long term cuts associated
    with sequestration will erode readiness, limit crisis response
    capacity, and adversely affect our Active and Reserve marines, our
    civilian marines, and their families.
        General Welsh. Twenty-two years of high OPTEMPO and combat
    operations have led to a steady decline in our readiness. Air Force
    readiness is long-overdue for vital reconstitution. Continuing to
    sacrifice Air Force readiness because of sequestration jeopardizes the
    Air Force's ability to fulfill its role in the Nation's current defense
    strategy. Operations, training, and modernization accounts are
    currently underfunded and 10 years of sequestration would produce un-
    manageable risk to meeting national strategic guidance.
        General Grass. The National Guard rapidly expands the capacity of
    the Army and the Air Force. The National Guard does the same for civil
    authorities by providing organized, disciplined, and properly equipped
    military units on very short notice. The Guard can do this because of
    the institutional procurement, training, educational, and depot-level
    maintenance programs the Army and the Air Force provide. The reduction
    in these critical areas would have an immediate impact on National
    Guard readiness. In a matter of months, our readiness as an operational
    force for our Nation's defense, and as an immediate Homeland response
    capability, will erode. If sequestration is fully implemented, the
    National Guard's ability to support global and domestic missions over
    the next 10 years will be severely impaired. Our ability to recruit and
    retain a quality All-Volunteer Force would be degraded to the point
    that we are left with a hollow force composed of unready and unhappy
    soldiers and airmen. A sharp decline in schools, training, and exercise
    budgets would lead to a degradation of required individual and
    collective skills creating an unqualified force with little or no
    opportunity for career progression.

                            FISCAL YEAR 2014 BUDGET

        61. Senator Inhofe. Secretary Carter: I understand that the
    administration is planning towards an end of March release date of the
    fiscal year 2014 budget. Will your submittal to OMB, which I understand
    takes place today, include the cuts from sequestration, and if not, why
    not?
        Secretary Carter. The Department's fiscal year 2014 budget follows
    the topline guidance provided by OMB. That guidance reflects the $487
    billion of cuts that were made in the President's budget proposal for
    fiscal year 2013, cuts that were consistent with the BCA. Currently
    that guidance does not reflect large out-year reductions that could
    occur under provisions of the Balanced Budget and Emergency Deficit
    Control Act, as amended.

                          STATUS OF ENERGY INVESTMENTS

        62. Senator Inhofe. Secretary Carter, on February 6, 2013, the same
    day the Secretary of Defense announced that the Truman Carrier Group
    would not be deploying to the Middle East due to budget cuts, I
    received a letter from Under Secretary for Acquisitions, Technology and
    Logistics Frank Kendall, announcing DOD's intent to spend $30 million
    on the advanced drop-in biofuels production project. This is part of
    DOD's commitment of $170 million to coax the private sector to build a
    commercial biofuels refinery. I find the irony a sad testament on the
    priorities of this administration. I have voiced serious concerns on
    siphoning away critical defense funds to pay for this administration's
    green agenda. DOD has budgeted approximately $1.6 billion for
    operational energy initiatives just for 2013 and another $9 billion
    over the next 5 years and another $4 billion for renewable energy
    projects is planned for solar panels, net-zero facilities, biofuel
    refineries, and other projects on military installations. The
    unprecedented diversion of over $14 billion in critical defense dollars
    could be used to support our military's warfighting capabilities,
    including purchasing more ships, more F-35s, and higher degrees of
    readiness for the warfighter. Given the dire funding situation facing
    the armed services, what guidance have you provided to curtail
    investments in alternate energy technologies?
        Secretary Carter. DOD's energy investments focus on enhancing our
    military capabilities, increasing our mission success, and lowering
    costs.
        Ninety-six percent of DOD operational energy investments over the
    next 5 years are to reduce fuel use. These investments are built into
    modernization plans for our planes, ships, and combat vehicles. These
    upgrades are primarily meant to increase the range, endurance, and
    lethality of DOD systems, but also have the effect of increasing energy
    efficiency. Only 4 percent of operational energy investments are
    related to alternative fuels, and these investments help ensure that
    our forces can operate on a broader range of fuels than petroleum,
    including not just biofuels, but also gas-to-liquid and other fuels.
    These investments will necessarily be reduced under sequestration.
        The Department is not planning to spend $4 billion on renewable
    energy facility projects. Most renewable energy projects (such as solar
    arrays) on DOD bases are privately financed and require no DOD
    investment. DOD is making significant investments in facility projects
    that will increase energy efficiency and pay for themselves by reducing
    our utility bills.
        If sequestration is implemented, my guidance to the Department will
    be to prioritize our energy investments to emphasize those that have
    relatively short payback periods.

        63. Senator Inhofe. Secretary Carter, is DOD still committed to the
    use of $170 million in defense funds to build a commercial biofuels
    refinery?
        Secretary Carter. I believe this question is in reference to one
    specific project, undertaken in partnership with the private sector and
    the Departments of Energy and Agriculture, which have the lead roles
    for the Federal Government in promoting biofuels. The Nation's long-
    term energy security would benefit from a competitive, domestic
    renewable fuels industry; as a major consumer of liquid fuels, the
    Department would benefit from that industry as well. This initiative is
    subject to a rigorous review process, as are all Defense Production Act
    projects, and no awards will be made unless the proposals have merit
    and the private sector can at least match Federal investment. If
    sequestration is implemented in fiscal year 2013 and beyond, and if the
    Continuing Resolution is extended for a full year, all Department
    investments will have to be reconsidered, including this one.

        64. Senator Inhofe. Admiral Ferguson, the Department of the Navy
    announced with great fanfare and press releases last August the use of
    alternate fuels in fleet ships--fuel that the Navy paid $12 million to
    purchase at over $27 per gallon. Now, many of those fleet ships will
    not be steaming at all because of defense budget cuts. If every $1 rise
    in gas prices costs $30 million, a $27 increase in fuels costs due to
    the forced use of biofuels would add up to about $660 million. A recent
    DOD report revealed that the biofuels program will amount to an extra
    $1.8 billion a year in fuel costs for the Navy alone. Faced with
    delaying critical deployments and maintenance actions, does the Navy
    intend to pursue goals for the use by the fleet of alternate fuels?
        Admiral Ferguson. In a time of declining budgets, investment in
    energy efficiency for ships and airplanes, and in developing viable
    alternative fuels, becomes even more important. Energy efficiency
    investments not only enable cost savings but also increase combat
    capability of Navy platforms. Investments in alternative fuels afford a
    degree of protection from rapid price increases in the cost of
    petroleum, as has occurred many times in U.S. history and with recent
    increasing frequency.
        Together, our energy efficiency initiatives and the potential for
    affordable alternative fuels improve our combat capability, enhance our
    mission effectiveness, and reduce vulnerability to an increasingly
    volatile petroleum market.
        Limited quantities of alternative fuels previously purchased were
    required for test and qualification. The Navy is committed to only
    purchasing fuel for operational use that is cost competitive with
    conventional fuels.

        65. Senator Inhofe. Admiral Ferguson, given the budget shortfalls,
    is the Navy committed to purchasing only the most economical fuel for
    operations that meet mission requirements over the next 5 years?
        Admiral Ferguson. Yes, the Navy is committed to only purchasing
    fuel for operational use that is cost competitive with conventional
    fuels.

                             STATE-BY-STATE IMPACTS

        66. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, please provide State-by-State information
    similar to what the Air Force provided to the committee on February 11,
    2013 (pasted below).
        General Odierno. See Attached G8 PDF (Budget Uncertainty Impacts -
    U.S. Army)

        Admiral Ferguson. The Navy State-by-State diagram is attached.

        General Amos. The USMC updated State-by-State diagram is attached.

        General Welsh. The Air Force updated State-by-State diagram is
    attached.

                       truman carrier strike group delay
        67. Senator Inhofe. General Dempsey, last year you told ``Face the
    Nation'' on CBS that Iran has ``invested in capabilities that could, in
    fact, for a period of time block the Strait of Hormuz,'' but ``we've
    invested in capabilities to ensure that if that happens, we can defeat
    that.'' What role do our CSGs play in deterring Iran from taking
    aggressive actions in the Arabian Gulf or other important areas in the
    CENTCOM area of responsibility (AOR)?
        General Dempsey. [Deleted.]

        68. Senator Inhofe. General Dempsey and Admiral Ferguson, as I
    mentioned in my opening statement, Secretary Panetta announced the
    indefinite delay of the deployment of the Truman CSG to the CENTCOM
    region. In addition to the impact on deterrence of Iran, what will the
    lack of a two-carrier presence mean for other ongoing CENTCOM
    operations and reassurance of partners in the Gulf region?
        General Dempsey. [Deleted.]
        Admiral Ferguson. On 6 February, the Navy delayed the deployment of
    the Harry S. Truman CSG to CENTCOM by up to 6 months to reduce
    spending. Additional resequencing and delays of three other CSGs
    planned for CENTCOM is in progress which will reduce the CSG presence
    in that region to the funded amount, one aircraft carrier presence. A
    similar reduction of Navy-Marine Corps ARG is planned if sequestration
    occurs, which will create multi-month gaps in ARG coverage in CENTCOM
    during 2014. These overall reductions still maintain a Carrier in
    CENTCOM and another in Pacific Command (PACOM), with a surge capability
    if required.
        Through the Navy's Force Generation Process, we are committed to
    keeping one carrier operating forward and the ability to surge forward
    in the event of a crisis.
        Surge capacity enables the U.S. Navy to maintain ships to deploy on
    short notice in the event they are needed to respond to national
    security contingencies.
        The United States will continue to maintain a robust military
    presence in the CENTCOM region, including the current carrier presence
    and a mix of other assets, to fulfill enduring commitments to our
    partners. The U.S. military remains ready to respond to any contingency
    and to confront any threat in the region.

        69. Senator Inhofe. General Dempsey and Admiral Ferguson, will you
    be able to mitigate the impact or will you have to accept more risk in
    the Middle East?
        General Dempsey. [Deleted.]
        Admiral Ferguson. The Navy will continue to meet its commitments as
    adjudicated by the Global Force Management Allocation Process (GFMAP).
    The GFMAP reflects a prioritization of combatant commander (COCOM)
    needs against the forces available to meet these needs. While we have
    been able to provide between two to three CSGs and two to three
    Amphibious Ready Groups (ARGs) to meet COCOM needs worldwide during the
    year, the resources we have today will only support one to two CSG/year
    and a like number of ARGs--this will mean more risk will have to be
    assumed somewhere. We will only be able to tell where this additional
    risk will manifest after the GFMAP has assigned available forces.

        70. Senator Inhofe. Admiral Ferguson, what were specifically the
    major reasons to hold the Truman in port?
        Admiral Ferguson. In our assessment, it was more prudent for us to
    delay Truman to be able to deploy later this summer and for George Bush
    to deploy later this year or early next year and conserve the O&M
    funding, to provide continuous coverage in the Middle East for as long
    as we can rather than have two carriers now with little to no CSG
    presence in fiscal year 2014.

                       WRITTEN TESTIMONY FOR THIS HEARING

        71. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, I've had the opportunity to read each of your
    written statements and I appreciate your candid assessments. This
    committee expects our Nation's military leaders to be able to provide
    us with honest and complete testimony without political interference.
    Each of you during your confirmation hearings assured us that you would
    give your personal views, even if those views differ from the
    administration in power. I'd like to know from each of you (yes or no)
    whether the substance of your written statements were edited or altered
    by the OMB and if so, can you summarize for me the qualitative parts of
    your statement that were edited?
        General Odierno. No.
        Admiral Ferguson. No, the review and edits made by OMB did not
    change my statement in a substantive way.
        General Amos. We prepare our responses with assistance from many
    sources. Yes, OMB reviewed my statement and provided input. I assure
    you that I would not, will not, and did not provide you anything that I
    believe was not my best military advice. Any OMB suggestions I received
    were evaluated by me and either accepted, modified, or rejected. My
    testimony is my best military advice.
        General Welsh. The Air Force did receive suggestions on minor edits
    of our statement from the OMB, but the substance of the Air Force
    statement was not altered.

                IMPACT OF SEQUESTRATION ON AIR FORCE AND DEPOTS

        72. Senator Inhofe. General Welsh, I am aware that after 22 years
    of sustained combat operations, the Air Force is already facing a range
    of challenges in pilot training production, aircraft availability
    rates, and lower readiness rates for certain limited mission sets that
    are in high demand. At the current plan for funding, is the Air Force
    already facing the prospect of hollowing out readiness through 2018
    even if sequestration does not occur?
        General Welsh. The Air Force has taken risk in full-spectrum
    readiness to support the current fight and to modernize for the Anti-
    Access/Area Denial (A2AD) environment. While special emphasis has been
    placed on regaining full-spectrum readiness, the AF requires time,
    reduced deployment rates, and additional resources to train for a near-
    peer adversary with advanced capabilities.

        73. Senator Inhofe. General Welsh, can you provide details on the
    impact of significant cuts to the Air Force flying hours programs?
    Specifically, how many squadrons of aircraft will be parked?
        General Welsh. Sequestration will result in a loss of over 200,000
    flying hours. We will protect flying operations in Afghanistan and
    other contingency areas, nuclear deterrence and initial flight
    training. Fencing these hours will result in a shortfall for remaining
    units; roughly two-thirds of our active duty combat Air Force units
    will curtail home station training beginning in March and will drop
    below acceptable readiness levels by mid-May. Most, if not all units,
    will be completely non-mission capable by July.

        74. Senator Inhofe. General Welsh, what will be the impact on pilot
    readiness this year and over the next 10 years?
        General Welsh. Sequestration will have immediate, devastating, and
    long-term impacts on pilot readiness, particularly in our combat air
    forces, where two-thirds of our active duty units will curtail home-
    station training beginning in March and will drop below acceptable
    readiness levels by mid-May. Further, advanced flight training will be
    curtailed on or near 1 Apr and initial flight training will be
    curtailed late August/early September, interrupting vital training
    pipelines. The average pilot career length according to rated
    management modeling is 10-15 years, meaning the devastating impacts on
    training activities now will create a pilot shortage over at least the
    next 10 years.

        75. Senator Inhofe. General Welsh, in the area of weapon system
    sustainment, a 30 percent reduction in funds will result in at least
    146 postponed depot inductions/grounded aircraft, and 85 engines pulled
    from service--meaning a one-third reduction in depot workload. Given
    these are maintenance actions that because of lost time cannot be
    recovered without forgoing other planned work, impacts to future
    readiness are almost inevitable. If sequestration results in lower
    defense budgets over the next 10 years, how will the Air Force recover,
    and at what cost?
        General Welsh. The recovery effort must focus on reversing all
    adverse effects of sequestration to weapon systems, supply chain, and
    workforce. The focus will be on regenerating and reprioritizing
    workload requirements, hiring/rehiring civilian personnel, and
    reinvigorating the supply chain. In some cases, we will need contractor
    sites to restart dormant lines impacted during sequestration to meet
    production demands. A balance of force structure, modernization
    programs, and weapon system sustainment funding will be required to
    recover Air Force readiness levels. Other programs would potentially
    need to be restructured, reduced and/or terminated. Absorbing these
    reductions would impact readiness, potentially ``hollowing out'' the
    force until a comprehensive recovery effort can take effect. The
    potential billions of dollars lost in funding for total force weapon
    system sustainment activities would result in significantly increased
    costs to recover due to rehiring efforts, training new personnel, re-
    establishing supply chain linkages, as well as normal expected cost
    growth.

                 SEQUESTER IMPLICATIONS FOR U.S. NUCLEAR FORCES

        76. Senator Inhofe. Secretary Carter, General Dempsey, Admiral
    Ferguson, and General Welsh, according to the President's 2010 Nuclear
    Posture Review (NPR), an important basis for reducing the role and
    numbers of nuclear weapons is that ``U.S. allied and partner
    conventional military capabilities now provide a wide range of
    effective conventional response options to deter and if necessary
    defeat, conventional threats from regional actors.'' (p.15). That ``as
    the role of nuclear weapons is reduced in U.S. national security
    strategy, these non-nuclear elements [including a forward U.S.
    conventional presence and effective theater ballistic missile defenses]
    will take on a greater share of the deterrence burden.'' (p.xiii).
    Would a reduction in our conventional capability require us to reassess
    our nuclear posture?
        Secretary Carter. As the Secretary and I have stated repeatedly,
    reductions of the scale that would be imposed by sequestration would
    have devastating effects on the ability of the U.S. military to
    accomplish its missions. If sequester occurs, the administration will
    seek to maintain a strong nuclear deterrent as part of the President's
    comprehensive approach to nuclear security. That said, sequester-level
    reductions would require some very hard choices and, in principle, all
    elements of the defense program--including conventional and nuclear
    forces--would be on the table.
        General Dempsey. As Secretary Panetta previously stated, reductions
    of the scale that would be imposed by sequestration would have
    devastating effects on the ability of the U.S. Armed Forces to
    accomplish their missions. Such reductions would require some very hard
    choices and, in principle, all elements of the defense program--
    including conventional and nuclear forces--would be on the table. It
    would be premature to speculate which parts of the force would bear the
    brunt of the reductions.
        Admiral Ferguson. Our nuclear posture has always been an iterative
    process to properly balance our conventional and nuclear capabilities,
    as well as the needs of our allies. Given this is a balance between
    nuclear and conventional, a dramatic change in our conventional
    capabilities would compel us to assure ourselves that the nuclear
    component remains adequate.
        General Welsh. As reflected in the current NPR, maintaining and
    modernizing the Air Force legs of the Triad and dual-capable aircraft
    are critical to our Nation's security and remain top Air Force
    priorities. Even though the Air Force is committed to providing the
    Nation a safe, secure, and effective nuclear deterrent, the impact of
    sequestration will force some difficult choices.

        77. Senator Inhofe. Secretary Carter, General Dempsey, Admiral
    Ferguson, and General Welsh, does this not make it even more important
    to follow-through with the nuclear modernization commitments that were
    made by the President to secure Senate support for the New START
    treaty?
        Secretary Carter. Please refer to my answer to question #76.
        General Dempsey. As Secretary Panetta previously stated, reductions
    of the scale that would be imposed by sequestration would have
    devastating effects on the ability of the U.S. Armed Forces to
    accomplish their missions. Such reductions would require some very hard
    choices and, in principle, all elements of the defense program--
    including conventional and nuclear forces--would be on the table. It
    would be premature to speculate which parts of the force would bear the
    brunt of the reductions.
        Admiral Ferguson. Nuclear deterrence remains a high priority.
    However, changes in the underlying fiscal assumptions would warrant a
    reassessment of the nuclear part of our force structure in order to
    accommodate some savings. Modernization of the nuclear weapons
    enterprise remains critical in ensuring that the nuclear weapons
    stockpile remains safe, secure, and effective, and continues to provide
    deterrent value to the Nation.
        General Welsh. Nuclear modernization is an important objective for
    the Air Force, and we remain committed to a safe, secure, and effective
    nuclear deterrent. As reflected in the current NPR, maintaining and
    modernizing the Air Force legs of the Triad and dual-capable aircraft
    are critical to our Nation's security and remain top Air Force
    priorities. The Air Force will continue to provide the leadership focus
    and institutional excellence on nuclear deterrence necessary to support
    the President's comprehensive approach to nuclear security. Even though
    the Air Force is committed to providing the Nation a safe, secure, and
    effective nuclear deterrent, the impact of sequestration will force
    some difficult choices.

        78. Senator Inhofe. Secretary Carter, General Dempsey, Admiral
    Ferguson, and General Welsh, if the United States must now depend more
    on its nuclear deterrent to compensate for weaknesses in our
    conventional capabilities (due to the decline in defense spending
    anticipated over the next 10 years), why then is the President
    exploring further nuclear reductions with Russia, as has been reported
    in the press?
        Secretary Carter. Please refer to my answer to question #76.
        General Dempsey. As Secretary Panetta previously stated, reductions
    of the scale that would be imposed by sequestration would have
    devastating effects on the ability of the U.S. Armed Forces to
    accomplish their missions. Such reductions would require some very hard
    choices and, in principle, all elements of the defense program--
    including conventional and nuclear forces--would be on the table. It
    would be premature to speculate which parts of the force would bear the
    brunt of the reductions.
        Admiral Ferguson. Strategic dialogue with our Russian counterparts
    is extremely important in maintaining strategic stability. Mutually
    verifiable reductions that contribute to strategic stability could be
    advantageous to both of our countries, and ultimately reduce the
    funding necessary to support an inventory of the size we have today.
        General Welsh. The Air Force has not been made aware of any policy
    determination that the United States will depend more on its nuclear
    deterrent to compensate for any potential weaknesses in our
    conventional capabilities caused by the decline in defense spending
    anticipated over the next 10 years.

        79. Senator Inhofe. Secretary Carter, General Dempsey, Admiral
    Ferguson, and General Welsh, what will be the impact of a sequester on
    the current readiness of our nuclear deterrent as well as plans to
    modernize all legs of the triad in the coming years: a ballistic
    missile submarine (which is already 2 years delayed); a strategic
    bomber (which won't be nuclear certified at the outset); a nuclear
    long-range standoff missile (delayed by 2 years); and a follow-on
    Intercontinental Ballistic Missile (ICBM) (still under analysis)?
        Secretary Carter. If the Department did not have sufficient funding
    to extend the life of the ICBMs, this leg of the Triad would atrophy,
    at a minimum. Stretching out the other strategic programs would
    increase costs in the long run, thus further reducing our overall
    buying power. I strongly oppose sequestration, which would be
    disastrous to the Department.
        General Dempsey. We have not made any decisions on how to reduce
    costs under sequestration. We have made clear; however, that nothing
    will be off the table in our review of how best to proceed. If the
    Department did not have sufficient funding to extend the life of the
    ICBMs, this leg of the Triad would atrophy, at a minimum. Stretching
    out the other strategic programs would increase costs in the long run,
    thus further reducing our overall buying power.
        Admiral Ferguson. In the short term, there would be no impact to
    Navy nuclear readiness. It is critical that we maintain a continuous
    at-sea nuclear deterrent, and SSBN O&M will continue to be fully
    funded, though this will come at the expense of funding SSN O&M. In the
    long term, reductions to Ohio Replacement (OR) R&D funding would lead
    to program delays and pose significant risk to the OR SSBN being ready
    to replace retiring Ohio SSBNs in the 2030s. Additionally,
    modernization of Trident missile could be significantly slowed and
    would impact strategic readiness.
        General Welsh. Under sequestration, Air Force Global Strike Command
    faces severe impacts to critical mission capabilities and readiness.
    Sequestration will reduce Air Force Global Strike Command's ability to
    meet mission requirements by approximately 20 percent.
        Even though the Air Force is committed to providing the Nation a
    safe, secure, and effective nuclear deterrent, the impact of
    sequestration will force some difficult choices. The effects of
    sequestration will negatively impact the modernization schedules for
    new systems which are currently synchronized with National Nuclear
    Security Agency programs. Reductions in funding would alter schedules
    and create a disruptive effect to our modernization programs, driving
    additional costs for unplanned life-extension programs.

        80. Senator Inhofe. Secretary Carter, General Dempsey, Admiral
    Ferguson, and General Welsh, Russia and China are deploying a new
    generation of ICBMs and Submarine Launched Ballistic Missiles (SLBM).
    If the United States does not go forward with the modernization of its
    triad, isn't this tantamount to unilateral disarmament?
        Secretary Carter. The administration is committed to a safe,
    secure, and effective nuclear deterrent as long as nuclear weapons
    exist. As reflected in the 2010 NPR, maintaining the Triad and
    modernizing our nuclear forces and the nuclear weapons infrastructure
    are--and will remain--national security priorities. If sequester
    occurs, the administration will seek to maintain a strong nuclear
    deterrent as part of the President's comprehensive approach to nuclear
    security. That said, sequester-level-reductions would require some very
    hard choices and, in principle, all elements of the defense program--
    including conventional and nuclear forces--would be on the table. If
    the Department did not have sufficient funding to extend the life of
    the ICBMs, this leg of the Triad would atrophy, at a minimum.
    Stretching out the other strategic programs would increase costs in the
    long run, thus further reducing our overall buying power.
        General Dempsey. The administration is committed to a safe, secure,
    and effective nuclear deterrent as long as nuclear weapons exist. As
    reflected in the 2010 NPR, maintaining the Triad and modernizing our
    nuclear forces and the nuclear weapons infrastructure are--and will
    remain--national security priorities. If sequester occurs, the
    administration will ensure continued focus on maintaining a strong
    nuclear deterrent as part of the President's comprehensive approach to
    nuclear security.
        Admiral Ferguson. As stated in the NPR, the United States is
    committed to a safe, secure, and effective nuclear deterrent. All
    platforms and systems degrade over time. Our TRIAD is no exception.
    Modernization of the TRIAD remains crucial in ensuring strategic
    stability between the United States and both China and Russia. We are
    committed to doing everything within our power to maintain the level of
    readiness of our existing force; however, sequestration will impact the
    transition timing for the SSBN(X) program. We are looking at ways to
    avoid a slowdown in this program. Nuclear deterrence is extremely
    important, so serious thought must be given before potentially taking
    irreversible actions given the current fiscal environment, and we will
    make this effort.
        General Welsh. The Air Force is committed to providing the Nation a
    safe, secure, and effective nuclear deterrent. As reflected in the
    current NPR, maintaining and modernizing the Air Force legs of the
    Triad and dual-capable aircraft are critical to our Nation's security
    and remain top Air Force priorities. If sequestration occurs, the Air
    Force will ensure continued focus on maintaining a strong nuclear
    deterrent as part of the Nation's comprehensive approach to nuclear
    security although some difficult choices will have to be made.

                         RISK WASTING MORE THAN WE SAVE

        81. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, I understand that because of the
    indiscriminant way that sequestration will be applied and the lingering
    impacts from the CR, DOD may be forced to take many actions--including
    canceling contracts, decertifying capabilities, and foregoing
    training--that will result in short-term cost-savings but will have
    adverse long-term budgetary consequences. The Navy has provided the
    example that it will be forced to shut down all flying for four of nine
    carrier air wings in March, which will take 9 to 12 months to restore
    normal readiness at two to three times the cost. Do you agree that the
    hidden costs of sequestration may actually nullify any savings
    anticipated to be gained through a sequester on DOD?
        Secretary Carter and Secretary Hale. The combined effects of a
    continuing resolution at the fiscal year 2012 base budget levels and
    sequestration will create inefficiencies throughout the Department
    which will drive up metrics such as unit cost and push requirements for
    funding into future years. The law requires certain net savings, which
    will have to be achieved. The inefficiencies will increase the size of
    the program changes needed to achieve these net savings.
        General Dempsey. If sequestration is allowed to occur--requiring us
    to reduce spending by a total of $1 trillion over the next 10 years for
    the Joint Force--it will cause a spike in program inefficiency and
    increase military risk by starting, stopping, and stretching out
    programs, which inherently drives up costs and delays warfighter
    capabilities. Training backlogs caused by sequestration will increase
    costs and add unnecessary risk. Most significantly, it will severely
    limit our ability to implement our defense strategy; it will put the
    Nation at greater risk of coercion; and it will break faith with the
    men and women who serve this nation in uniform.
        General Odierno. The Army agrees that the hidden costs of
    sequestration may actually nullify any savings anticipated to be gained
    through sequester. First, in order to protect the direct war effort and
    other critical programs like Wounded Warriors, the Army has
    significantly reduced funding for training, equipment and facilities
    readiness. The Army has been forced to reduce funding for both
    institutional and unit training. In reducing institutional training,
    the Army will increase the backlog of functional and professional
    military education courses. In addition to affecting unit readiness due
    to untrained leaders, the student backlog will take years to clear and
    drive higher costs for increased capacity/throughput in our
    institutional training base. The Army will face similar timelines and
    increased costs to regain unit training readiness. The lack of unit
    training resources forces equipment maintenance to be deferred and
    warfighting skills to atrophy. The longer the current budgetary
    conditions persist, the greater the cumulative effect the Army will
    face from deferred maintenance and the lack of realistic, high-level
    unit training. This again will take years to recover from and will
    drive significant costs, likely exceeding any realized savings
    generated through sequestration. Similar to equipment, facility
    sustainment will be deferred for all activities other than life, health
    and safety. The costs to the Army will increase the longer sustainment
    is deferred and conditions are allowed to degrade. In the extreme, it
    is possible that facility conditions could degrade to the point where
    more costly military construction would be required to replace a
    facility because restoration is no longer possible. This is a great
    concern with National Guard and Army Reserve facilities.
        The second area of hidden costs that will likely offset any
    realized savings through the continuing resolution and sequestration is
    Army service contracts and acquisition programs. The Army has hundreds
    of contracts in place providing services ranging from trash collection
    to headquarters support. Many of these contracts are no longer
    affordable given the revised budget caps and the Army has few options--
    terminate, modify, or replace with borrowed military manpower--all of
    which will likely drive higher costs. Any attempt to terminate existing
    contracts will likely incur penalties that will offset the expected
    savings. Contract modifications will require the renegotiation of each
    individual contract, which is likely infeasible given the possible
    civilian furlough, and may also incur increased costs. If the Army
    seeks to replace services with borrowed military manpower, it will
    incur not only the higher cost of the soldier, vice contractor, unit
    readiness will also suffer as soldiers are pulled from their units.
        The impact of the continuing resolution and sequestration will also
    greatly affect Army acquisition programs. We know the immediate impacts
    of sequestration in this fiscal year alone would result in the loss of
    over $3.2 billion and 9,200 jobs from over 200 programs impacting 39
    States and the District of Columbia. The impacts of sequestration on
    acquisition programs and science and technology (S&T) efforts will go
    beyond the identified costs and effects discerned in the current fiscal
    year. Each program affected by over $2.6 billion in cuts will encounter
    greater susceptibility to future delay and cost brought about by risks
    imposed by sequestration. To absorb these reductions, current year
    activities and procurement buys will be delayed or reduced to meet
    sequestration targets. These changes will extend program schedules,
    increase unit costs and add to our programs' overall risk in fiscal
    year 2014 and beyond. Lastly, we also risk losing critical expertise in
    the S&T base and the defense industrial base as a result of fiscal year
    2013 impacts. As it stands today, our analysis shows S&T programs would
    be reduced by $311 million; thereby potentially impacting academic
    institutions and the defense industry across all 50 States and the
    District of Columbia this year alone. The long term impacts of these
    cuts on our ongoing and future acquisition efforts are potentially
    significant.
        Admiral Ferguson. Significant funding cuts of the magnitude of
    sequestration require force structure reductions--reductions that
    require a new defense strategy and take time to implement. These cuts,
    when done in a planned fashion, first show up in reductions to
    acquisitions via reduced equipment modernization followed by down-
    stream savings in operations and manpower as legacy systems are
    retired.
        Sequestration cuts equally from all accounts (except MILPERS),
    driving immediate reductions to maintenance and training. Much like an
    automobile owner who chooses to skip a series of oil changes today to
    realize near-term savings, eventually his decision will result in the
    need for a costly engine overhaul later, the downstream costs of
    cancelled maintenance (facilities, ship, aircraft, equipment, et
    cetera) is both reduced operational availability and much higher depot-
    level type repairs in the future.
        General Amos. Yes, we foresee numerous costs that will result from
    the implementation of sequestration both now and in the future.
        Any interruptions during program acquisition will ultimately
    increase the total program cost, as schedule slips and delays result in
    longer contracts, loss of efficiencies, negative impacts on development
    and production schedules, program restructures and potentially cause
    Nunn-McCurdy breaches. In procurement, existing contracts will have to
    be renegotiated which will prevent the Marine Corps from receiving the
    Economic Order Quantity pricing, especially those that result from
    multi-year procurements such as MV-22. Loss of the MV-22 multi-year
    procurement will add $1 billion to total program cost and increase H-1
    unit costs as well.
        We will also have to sustain legacy systems longer than planned,
    which will ultimately drive up current operation and support costs. We
    will have to shift our attention to developing/replacing obsolescent
    parts for legacy systems that are no longer available in the market
    place, which will shift the workforce to a focus of reengineering old
    and inefficient technology. (e.g. sustaining 5 legacy radar systems
    will cost more than employing one new Ground/Air Task Oriented Radar).
    Finally, technologies designed to improve efficiencies (fuel,
    lightweight armor, et cetera) will have to be postponed, preventing the
    Marine Corps' from reaping planned savings while simultaneously driving
    up costs due to the use of older, more expensive technologies.
        We also expect to see significant equipment backlogs at our depots,
    which, unless additional funds are applied, will be impossible to
    overcome. Similar to the acquisition of new systems, delays at our
    depots will result in lost efficiencies, delays in conducting necessary
    maintenance on legacy equipment, and disrupt maintenance timelines
    throughout the Marine Corps. Further, we expect that reductions in
    force and furloughs of our civilian workforce will result in loss of
    unique skill sets as highly skilled, highly trained civilian marines
    leave the workforce. Should this occur, we will be required to rehire
    and retrain new personnel, resulting in additional cost and delays.
        In the area of O&M, the Marine Corps will have to mortgage the
    future to pay for readiness today--we will have to forgo necessary
    modernization and sustainment to support our forward deployed forces.
    We are tasked by Congress to be the most ready when the Nation is least
    ready. In order to accomplish this, we have been forced to make
    sacrifices in our modernization and infrastructure sustainment accounts
    to pay for the readiness of today's force. This will mean that we will
    be forced to delay the purchase of new equipment and maintain legacy
    equipment for longer periods of time, incurring greater maintenance
    cost. Further, our facilities will not be sustained at planned rates,
    meaning that maintenance will be delayed or omitted, hastening the
    deterioration of buildings and driving up long term costs and the
    ability to properly train our force.
        General Welsh. Sequestration has devastating impacts on current and
    future capability, and drives significant cost increases. In our weapon
    system sustainment account, deferred maintenance will drive
    inefficiencies to our working capital funded activities, which results
    in execution year losses and increased rates in the future. In our
    flying hour program, reduced training will result in increased
    shortfalls in our pilot pipeline, which will require years of surge
    training (which is not currently budgeted) to recover and a potential
    shortfall in instructor pilots. In our acquisition portfolio, across
    the board reductions will result in program stretches, restructures and
    possible terminations--all of which defer or reduce capability and
    drive weapon system unit costs higher. Sequestration is not a good way
    to achieve reductions, indiscriminate, across the board reductions
    wreak havoc on programs, drive inefficiencies, reduce readiness and
    hinder our modernization efforts.
        General Grass. I agree. If we cease all equipment reset and
    sustainment efforts and stop unit-level training just even for the
    remaining 7 months of the fiscal year, the backlogs would take 2 years
    or more to work through just to regain our current readiness levels. It
    could cost more in time and money to retrain and requalify military
    skills for our personnel than it would to sustain their skill and
    qualification levels now.

        82. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, please provide some other examples of the
    hidden costs of sequestration.
        Secretary Carter and Secretary Hale. If sequestration and a year-
    long continuing resolution both occur, they will be added to costs in
    many ways. They will lead to higher unit costs for weapons. We will be
    forced to sign uneconomically short contracts to minimize near-term
    costs. Time available to achieve more efficient operations will instead
    be wasted on replanning to meet legal requirements. But the biggest
    problem associated with sequestration and a year-long Continuing
    Resolution is the damage it will do to national security through sharp
    cuts in readiness and disruption and delay in investment programs.
        General Dempsey. I will defer to the Service Chiefs to provide
    specific service impacts.
        General Odierno. The Army believes the term `hidden costs' is
    actually a misnomer. The year-long continuing resolution and
    sequestration is effectively forcing the Army to delay must-fund costs
    to the future. These are not `hidden costs,' they are known costs.
    Three specific examples are provided below for equipment sustainment
    and procurement, and facility sustainment.
        A reduction of inductions and throughput into Army depots will
    result in equipment shortages in Active and Reserve component units.
    Reset of equipment that is not identified for a deploying unit will be
    delayed. This will create a bow wave and increased demand in fiscal
    year 2014 and beyond, and may take 3 to 4 years to recover. Equipment
    that will not be reset includes 1,000 Tactical Wheeled vehicles, 14,000
    communication devices and 17,000 weapons. Impacts to some units will be
    a 14 percent or more impact to unit Equipment on Hand readiness; units
    include: 3rd Infantry Division (Georgia), 4th Infantry Division
    (Colorado), 10th Mountain Division (Louisiana and New York), 25th
    Infantry Division (Alaska and Hawaii), 101st Airborne Division (Air
    Assault) (Kentucky) and 82d Airborne Division (North Carolina). All of
    this equipment must be reset eventually, so we are simply deferring
    costs to the future. As we lose buying power, individual costs per item
    will increase. The full extent of this inefficiency is not known until
    we renegotiate multiple contracts with industry.
        A prime example of the inefficiencies imposed by the continuing
    resolution and sequestration reductions is the procurement of new
    equipment. While the full impact is not yet known, we are anticipating
    all new equipment procurement programs to incur schedule delays,
    reduced quantities or increased unit costs. For example, the Army is
    unable to begin a multi-year procurement of CH-47 helicopters under the
    current continuing resolution and will likely incur at least a 20
    percent increase in unit cost if forced to forgo a multi-year
    procurement contract vehicle.
        The Army is also reducing the funding for Facilities Sustainment,
    Restoration, and Modernization (SRM). Facility Sustainment is being
    reduced by 70 percent to support only life, health and safety
    requirements, and the Army is cancelling all fiscal year 2013
    Restoration and Modernization projects on Army installations. The
    impacts are significant and affect all three components--Active, Guard,
    and Reserve. Eventually, these facility repairs will have to be
    addressed. As the infrastructure deteriorates, it will cost more to fix
    and we may be forced to buy new. There are no `hidden costs' in
    sequestration, just deferred costs and less efficient use of government
    resources.
        Admiral Ferguson. If faced with sequestration, Navy would be forced
    to consider the following potential costs and impacts:

             Cancel deployments (rolling sked): 10 Destroyers (DDG)
            (7 are Ballistic Missile Defense (BMD) in fiscal year 2014),
            FFGs
             Delay Harry S. Truman (CVN 75) CSG deployment; reduce
            Middle East CSG presence 50 percent
             Cease workups for two CSGs (Ronald Reagan (CVN 76),
            Carl Vinson (CVN 70))
             Cancel Bataan (LHD 5) ARG Deployment
             Shut down four of nine Carrier Air Wings (CVW) 9 to 12
            months to restore readiness at 2-3x cost
             Stop nondeployed ops that do not support predeployment
            training
             Reduce nondeployed operations for predeployment
            training
             Cut WESTPAC deployed ops by 35 percent; Nondeployed
            PAC ships steaming days cut 40 percent
             Cancel ops to South America (Continuing Promise - USNS
            Comfort)
             Cancel non-BMD deployments to Europe in fiscal year
            2013
             Reduce exercises (e.g., Malabar, Carats, Foal Eagle)
             Reduce CONUS and OCONUS port visits
             Lay-up four combat logistics force ships
             Cancel three ship depot avails (rolling schedule) in
            San Diego, CA ($72 million)
             Defer emergent repairs to USS Porter (DDG 78) ($125
            million) and USS Miami (SSN 755) ($339 million in Maine)
             Reduce System Commands (SYSCOM) fly-away emergent
            repair travel teams
             Delay/defer combat vehicle, weapon, trainer
            maintenance
             Delay up to 20 CVN/Submarine public shipyard
            availabilities
             Cancel F-35B testing w/USS Wasp (LHD 1); further
            program delay
             May have to execute a civilian furlough (186k
            eligible) for 22 work days ($448 million)
             Reduce throughput of new pilots/flight officers in
            flight training 44 percent
             Cancel midshipmen summer training programs
             Cancel third and fourth quarter Blue Angels shows ($28
            million), community outreach programs (e.g.-Fleet Week)

        Investment Actions:

             Reduce Investment in ships, aircraft, weapons, R&D (by
            $7.75 billion)
             DDG 51 advance procurement at risk ($46 million) in
            Maine, New Jersey, Mississippi
             Defer Lyndon B. Johnson (DDG 1002) contract awards in
            Mississippi, Massachusetts, and Maine ($90 million)
             Delay Moored Training Ship (MTS) award in Norfolk ($28
            million)
             Defer DDG 65 (San Diego, CA) DDG 58 (Norfolk) Mod ($44
            million)
             Reduce procurement quantities: JSF ((-4) 2 x F-35B, 2
            x F-35C), UH-1Y/AH-1Z (-3), P-8A (-1), E-2D (-1), JPATS (-3),
            MQ-8C (-2) [Increases current/future unit pricing]

        Impacts:

             Unable to meet approved fiscal year 2013/2014 GFMAP
            deployments
             Immediate coverage gaps in multiple COCOMs
             John C. Stennis, Dwight D. Eisenhower, Ronald Reagan,
            Theodore Roosevelt CSGs will shut down at various intervals,
            with 9 to 12 months required to restore normal readiness
             By October 13, CONUS forces will require 9+ months to
            deploy due to maintenance and training curtailments
             Less readiness for 9 surge sealift, 22 RRF ships
            (including T-AH ships)
             One CSG surge-capable in fiscal year 2013
             Zero surge-capable ARG in late fiscal year 2013 and
            into fiscal year 2014
             Multi-year recovery to private sector industrial base
             Furloughs likely to contribute to delayed maintenance
            for CVNs/Subs in public shipyards; reduced hours of operation
            at bases, medical facilities, business offices, port ops;
            reduced acquisition oversight, auditing and investment
            planning/execution analysis
             Navy civilians could lose up to 20 percent of salary
            through a furlough.

        General Amos. The hidden costs of sequestration are manifold and
    not merely limited to funding. They include the qualitative costs to
    operational readiness, forward presence, training, and building
    partnerships.
        For the Marine Corps, sequestration cuts will result in $2.4
    billion of reduced economic opportunity in fiscal year 2013 for local
    communities as we cut military construction contracts, facility
    restoration contracts, procurement of equipment, recruiting advertising
    contracts, tuition assistance, and implement furloughs. In these
    fiscally uncertain times, this will dramatically impact the bottom line
    of local small businesses, disrupt well-established community
    partnerships, and have an adverse impact on the economy of the
    communities that surround our bases and stations.
        Cuts to our O&M funding will delay necessary maintenance and reset
    of our aging equipment that is returning from 11 years of combat
    overseas. Commanders will be forced to forgo necessary maintenance as
    they selectively apply their limited resources. This will result in the
    elimination of some preventive maintenance, which will cause a higher
    failure rate to equipment and less equipment available for training.
    This will increase depot requirements where we have already sustained
    significant reductions. Supply, training, and maintenance are key
    aspects of readiness and it can readily be seen from this example that
    all will be affected by sequestration. We predict over 55 percent of
    USMC forces (ground combat, logistics, and combat support) will have
    unsatisfactory readiness ratings, which will have a dramatic impact to
    respond when called upon by the Nation.
        Numerous contracts have Foreign Military Sales partners, and a
    reduction in support for a particular weapon system will cause our FMS
    partners to look to other countries to acquire like type capabilities
    due to increases in cost or schedule slips. This will result in lost
    revenue for U.S. companies, a loss of trust with our partners and
    allies, and a lack of compatible equipment should we deploy to a
    conflict with these partner nations.
        Sequestration will also force prime contractors to pass the cuts
    directly to their supplier base, many of which are small businesses.
    Small businesses provide essential and unique skills such as military-
    grade precision tooling and advanced composites manufacturing that are
    critical to the procurement of our weapons systems. As a result, these
    small businesses will be forced to either increase unit costs or pull
    out of defense work and look to the commercial sector to remain viable.
        Under the cuts imposed by sequestration, we will have to reduce our
    civilian workforce which will further chip away at our readiness; our
    civilian marines make a significant contribution in all aspects of
    Marine Corps operations, from family readiness to maintenance to
    command and control. Over 95 percent of civilian marines work outside
    the National Capital Region. We expect we will potentially have to
    eliminate thousands of positions across the Marine Corps in order to
    meet the long term budget reductions mandated by sequestration, and as
    such, the services that our marines and their families rely upon will
    also be reduced or eliminated. This will have a detrimental effect on
    the local communities surrounding our bases and stations, many of which
    rely heavily on DOD for employment. We also expect that we will have to
    cut or curtail many family readiness programs to include eliminating
    paid family readiness officers in some units, cutting teen and youth
    programs, and closing morale, welfare, and recreation facilities. This
    will have an adverse impact on our families at home station and will
    negatively affect their personal well being and stability.
        Sequestration is driving the DOD to a level of funding that will
    affect all aspects of our operations. The cuts to O&M will have a
    widening ripple across all aspects of readiness hindering the Marine
    Corps' ability to respond to crises, take care of its families,
    preserve our relationship with our local communities, and support a
    strong economy.
        General Welsh. In our weapon system sustainment account, deferred
    maintenance will drive inefficiencies to our working capital funded
    activities, which results in execution year losses and increased rates
    in the future. In our flying hour program, reduced training will result
    in increased shortfalls in our pilot pipeline, which will require years
    of surge training (which is not currently budgeted) to recover and a
    potential shortfall in instructor pilots. In our acquisition portfolio,
    across the board reductions will result in program stretches,
    restructures and possible terminations--all of which defer or reduce
    capability and drive weapon system unit costs higher. Deferred/delayed
    facility sustainment will lead to more costly repairs as our units will
    only be able to accomplish emergency repairs. Cancelled or restructured
    contracts in all areas (operations and acquisition) will need to be
    renegotiated potentially at higher prices. In some instances, unit
    quantity costs will increase.
        General Grass. The longer-term costs of sequestration, in terms of
    our Nation's military readiness and in terms of the investment that
    would then be needed to restore that readiness, are substantial. If we
    cease all equipment reset and sustainment efforts and stop unit-level
    training just even for the remaining 7 months of the fiscal year, the
    backlogs would take 2 years or more to work through just to regain our
    current readiness levels. It could cost more in time and money to
    retrain and requalify military skills for our personnel than it would
    to sustain their skill and qualification levels now.

                            SHORT-TERM SEQUESTRATION

        83. Senator Inhofe. Secretary Carter, there has been speculation
    recently that sequestration may be allowed to occur for just a few
    weeks until political points can be scored in the course of a
    compromise. I find this an appalling risk to our national security. We
    are already seeing the deterioration of our readiness with the decision
    to hold back the Truman CSG. What damage will be caused to our national
    security by even a short-term sequestration?
        Secretary Carter. The combined effects of a Continuing Resolution
    and the scale and manner in which sequestration reductions would be
    imposed would force the Department to take cuts in accounts that
    support current operations, training, and maintenance in order to find
    immediate savings. As a result, even a short-term sequestration would
    lead to immediate, visible, and serious effects. The Military
    Departments and combatant commands would have to begin reducing their
    global activities and forward presence, assuming increased risk in our
    ability to assure partners and allies and prevent and deter conflict.
    Training for the missions identified in the Defense Strategic Guidance
    would also begin to be curtailed and maintenance would begin to be
    deferred, eventually creating backlogs that could take several months
    to a year or more to correct depending on the length of sequestration.
    As a result, readiness levels of the Joint Force to execute emergent
    missions that are critical to U.S. national security would be severely
    degraded and our ability to respond to potential crises or
    contingencies would be hampered.

        84. Senator Inhofe. Secretary Carter, once March 1st passes and
    sequestration kicks in, what do you believe will need to happen to our
    Armed Forces before the President and Congress decide that
    sequestration should not continue?
        Secretary Carter. As Secretary Panetta and I have said for over a
    year, sequestration will have devastating effects for national defense.
    These effects will include furloughs, degraded readiness, maintenance
    cutbacks, and disrupted investment programs. In the near term, these
    reductions would create a crisis in military readiness, especially if
    coupled with an extension of the Continuing Resolution (CR) under which
    we currently operate. In the long term, failure to replace these large
    and arbitrary budget cuts with sensible and balanced deficit reduction
    would require a revision of U.S. defense strategy. This is why I
    continue to urge Congress, in the strongest possible terms, to avoid
    sequestration by devising a comprehensive and balanced deficit
    reduction package that both the House and Senate can pass and that the
    President can sign. The goal should be to avoid sequestration
    altogether and not calculate how much further stress our Armed Forces
    can endure by allowing sequestration to take effect for some period of
    time.

                               CURRENT READINESS

        85. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, your letter
    to this committee dated January 14, 2013, a copy which is attached,
    stated the following: ``The readiness of our Armed Forces is at a
    tipping point . . . . Under current budgetary uncertainty, we are at
    grave risk of an imposed mismatch between the size of our Nation's
    military force and the funding required to maintain its readiness,
    which will inevitably lead to a hollow force.'' Can you describe for me
    the risk to the warfighter by underfunding readiness this year and over
    the next 10 years?
        General Dempsey. Military readiness is in jeopardy due to the
    convergence of unprecedented budget factors. If sequestration is
    enacted, we will be unable to implement our defense strategy; it will
    put the Nation at greater risk of coercion; and it will likely break
    faith with the women and men who serve this nation in uniform.
        Over the next decade approximately one third of these cuts would
    come from our force structure. The other two-thirds would occur in our
    modernization, compensation and readiness accounts. During the next few
    years we will be forced to disproportionately cut our modernization and
    readiness funds to pay for personnel and infrastructure, a recipe for a
    hollow force. In addition, the sequestration mechanism in fiscal year
    2013 restricts our flexibility to maintain a balanced force by cutting
    every account equally. Lastly, end strength caps in the 2013 National
    Defense Authorization Act restrict our ability to manage the force
    drawdown, and therefore inhibit our ability to reduce spending
    efficiently and responsibly. When legislation inhibits our flexibility
    to touch individual parts of the budget to include necessary force
    structure reductions, readiness accounts inevitably pay the price.
        Taken together and in context, these factors will make it much
    harder for us to preserve readiness after more than a decade of
    fighting in Iraq and Afghanistan. We must reset, refit and in many
    cases replace our equipment. We must retrain our personnel on a broader
    range of military skills that have atrophied, while also developing new
    skills and capabilities that are essential to our ability to address
    emerging threats.
        We need time to deliberately evaluate trade-offs in force
    structure, modernization, compensation and readiness; we need
    flexibility to allocate our resources to our highest priorities; and we
    need budget certainty. That is, we need the antithesis of
    sequestration--namely, a steady, predictable funding stream and the
    flexibility to ensure we retain the best military force in the world.
        General Odierno. While in the near-term the Army can continue to
    ensure the readiness of all soldiers in Afghanistan, those next to
    deploy, those stationed forward in Korea, and possibly the Army's
    Global Response Force, we are concerned that in doing so we are
    creating a hollow Army that may not be able to respond to the
    challenges of an uncertain world. The impact of the continuing
    resolution and sequestration has caused the Army to focus training
    resources on next-to-deploy units and to accept significant risk in the
    training of non-deploying units. The Army will no longer be able to
    train next-to-deploy units to the highest level of readiness prior to
    deployment, equipment readiness will continue to decline and the leader
    development backlog will expand. Additionally, the Army will not have
    trained forces available to respond to emerging contingencies in a
    timely manner. Restoring adequate readiness across the force will take
    years and significant resources.
        The Army will be unable to maintain the readiness of the current
    force at the levels we are accustomed given the budget caps associated
    with sequestration. Reductions of this magnitude would likely prompt a
    holistic strategic review and generate a fundamentally different Army.
    The Army would have to rebalance across its manpower, investment and
    readiness accounts, which would likely drive a reduction in the size of
    the Army in order to maintain a modern and trained force.
        Admiral Ferguson. Navy is prioritizing the readiness of our
    deployed and next-to-deploy forces to meet our commitment to provide
    ready forces to the combatant commanders and our obligation to our
    sailors deployed globally. If readiness is underfunded for the
    remainder of this year and into the future, our capacity to surge
    additional forces will be degraded and material condition of the force
    will suffer. With decreasing levels of funding, our ability to sustain
    the full level of training for future deploying forces will be impacted
    and we will be unable to sustain ready forces to meet our global
    commitments--hollowing the force. Unless this situation is resolved in
    the very near term, the time to recover readiness will be lengthy, and
    the damage to our industrial base may take years to recover.
        General Amos. Over the past 10 years, the Marine Corps has been
    able to maintain a high state of readiness in our forward deployed
    units supporting Operation Iraqi Freedom and Operation Enduring
    Freedom. We have been able to do this through our responsible use of
    the OCO dollars provided by the taxpayer. The Marine Corps is extremely
    grateful for this; the OCO money provided has allowed us to purchase
    equipment specific to the missions for those operations and to purchase
    equipment to protect our marines against the types of unique and
    emerging threats that exist in these environments. However, much of
    this equipment purchased to sustain the National Strategy in Iraq and
    Afghanistan does not meet the future strategic and operational
    requirements that we see for the Marine Corps. Furthermore, much of our
    standard equipment sets are deployed forward supporting the theater of
    operations, leaving home station units with an equipment deficit. At
    current funding levels, we expect it will take up to 18 to 24 months
    after forces have left Afghanistan to reset the equipment through our
    depots.
        Our Marine Aviation Units maintain a high state of readiness at all
    times to respond to contingencies and commitments throughout the globe.
    At any given time, two-thirds of Marine Aviation Units are committed:
    one-third are deployed and one-third are preparing to deploy. The
    effects of sequestration and the Continuing Resolution equates to an
    approximately 20 percent reduction in flight hours, curtailment of
    depot maintenance throughput, and fewer spares due to decreases in
    Aviation Depot Level Repairable funding. Limited flying hours and
    available mission ready aircraft creates a negative effect on
    readiness. In addition, lack of operational funds, i.e. training range
    support, ordnance, TAD for training directly impact readiness.
        In December 2012, 73 percent (38 of 54) of all our flying squadrons
    met the COCOM minimum deployable combat readiness level of C2. By
    December 2013 (if sequestration is enacted and we remain under a CR),
    only 66 percent (35 of 53) of our flying squadrons will met the COCOM
    minimum deployable combat readiness level of C2.
        In December 2015 (if sequestration is enacted and we remain under a
    CR), we anticipate seeing a reduction in aviation readiness to 47
    percent (25 of 53) of Marine Aviation flying squadrons meeting the
    COCOM minimum deployable combat readiness level of C2.
        Looking ahead to the next 10 years, underfunding readiness this
    year will challenge our plans to reset and reconstitute the force. The
    Marine Corp planned to focus fiscal resources on non-deployed unit
    training and equipment readiness. The effects of sequestration on the
    warfighter may not be felt immediately, but will delay the depot reset
    of equipment by at least 18 months.
        Sequestration will also affect our funding for critical training
    exercises such as our Integrated Training Exercise at the Marine Corps
    Air Ground Combat Center, Twentynine Palms, California, and pre-
    deployment training and deployment certification exercises for our
    Marine Expeditionary Units (MEUs) as well as other units deploying to
    meet geographic combatant commander requirements. Exercises such as
    these are critical to maintaining our unique Marine Air Ground Task
    Force forward presence and crisis response capability. Sequestration
    will also affect long-term readiness by forcing us to reduce equipment
    purchases and curtail modernization programs. Ultimately, shortfalls in
    funding will impede the Marine Corps from executing the aforementioned
    large exercises, degrade the ability of the Marine Corps to meet
    readiness standards, impede reset and modernization, and create a
    negative readiness trajectory that would require ever-increasing
    resources to reverse.
        Finally, limited O&M funds will impact our rotational forces'
    ability to conduct Theater Security Cooperation (TSC) exercises and
    build partner capacity, reducing our allies interoperability and
    eroding confidence in U.S. commitments abroad.
        General Welsh. The Air Force's capabilities and responsiveness will
    be severely degraded, thus creating unmanageable risk and limiting
    national strategic options. Ultimately, the risk due to reduced
    readiness during a conflict increases loss of American lives and over
    the next 10 years could limit our ability to project national power.
        General Grass. If sequestration is fully implemented, the National
    Guard's ability to support our warfighting missions over the next 10
    years will be severely impaired. Our ability to recruit and retain a
    quality All-Volunteer Force would be degraded to the point that we are
    left with a hollow force composed of unready and unhappy warriors. A
    sharp decline in schools, training, and exercise budgets would lead to
    a degradation of required individual and collective skills creating an
    unqualified hollow warfighting force with little or no opportunity for
    career progression.

        86. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, how would you
    assess the readiness of your combat forces right now?
        General Dempsey. As a matter of routine, we assess the readiness of
    the Armed Forces through the Joint Staff's input to the classified
    Quarterly Readiness Report to Congress. Today our forces are postured
    globally, conducting counterterrorism, stability, and deterrence
    operations, maintaining a stabilizing presence, conducting bilateral
    and multilateral training to enhance our security relationships, and
    providing the crisis response capabilities required to protect U.S.
    interests. In the event of an unexpected crisis, large-scale conflict,
    or a threat to the homeland, ready forces are available to provide the
    surge capacity to meet wide-ranging operational challenges.
        General Odierno. I believe our combat forces are the most
    experienced and capable in generations. We have been able to reset a
    few of our combat systems such as Tanks and Bradleys. However, the high
    operational demand on Army combat units of the previous 10 years has
    significantly impacted aviation, stressed our truck fleet and other
    soldier equipment that is yet to be reset. Our manning has been
    stressed even more. Non-available soldiers consistently represent 15
    percent of the Force, which impacts our ability to meet specific grade
    and skill requirements. Shortages of precision munitions affect our
    ability in support of combatant commands and OPLAN requirements.
    Furthermore, after nearly 12 years of a Counter Insurgency focus, we
    must re-establish our skills in Decisive Action in support of Unified
    Land Operations. The Army's current readiness is focused on counter
    insurgency. With the projected drawdown and our requested funding, the
    Army was projected to grow our capacity to respond to other
    contingencies. Under sequestration and other budget uncertainties, it
    will take the Army longer to prepare, and have significantly less
    capacity to respond to unknown contingencies, increasing risk
    significantly.
        Admiral Ferguson. Navy forces deployed globally today are fully
    trained and ready. We are already preparing our next-to-deploy forces
    to be fully ready as well, although we have requested and received
    relief on the total number we will deploy for the remainder of the
    year. The overall readiness of the force will degrade as we selectively
    extend some deployments, cancel maintenance availabilities, and reduce
    training for those units not deploying in the near term.
        General Amos. Readiness of our deployed forces remains at the
    highest levels and is my number one priority. However, high readiness
    levels for our deployed force come at the expense of our nondeployed
    forces. Equipment and personnel have been sourced globally from non-
    deployed forces to support deploying units and theater manning
    requirements, resulting in reduced readiness of the nondeployed units.
    Almost two thirds of non-deployed units report significantly degraded
    overall readiness in executing their core missions. Sixty-five percent
    of the nondeployed units report equipment shortfalls and 34 percent of
    nondeployed units report personnel shortfalls.
        General Welsh. Currently, about one half of our Air Force combat
    forces are below an acceptable readiness level.
        General Grass. Overall, the current readiness of our combat forces
    is sufficient to meet our global commitments in support of combatant
    commanders and the requirements of our national strategic priorities.
    We are focusing our efforts toward improved personnel readiness in
    occupational specialties and professional education which are essential
    in retaining a quality All-Volunteer Force. Our readiness has been on
    the rise as deployments have decreased. We have made gains in our
    institutional training, medical readiness. These gains are at risk if
    proposed sequestration actions are fully implemented, our ability to
    sustain combat ready forces (especially for fiscal year 2014 and
    beyond) would be severely degraded.

        87. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, how close are
    we now to a hollow force?
        General Dempsey. I have described my concerns about creating a
    hollow force only in the context of sequestration. If sequestration is
    detriggered, the Joint Force will remain capable of supporting the
    National Military Strategy and Defense Strategic Guidance. Should
    sequestration occur in combination with the continuing resolution, it
    will produce measurable declines in unit-level readiness within 1-3
    months. Within 3-6 months declines in unit level readiness will result
    in significant cancellations to major exercises and planned
    deployments. Sequestration will force a rapid drop in readiness levels,
    while recovery will take several times longer. Due to training cycles,
    deferred maintenance, and the pace of current operations, recovery from
    several months of sequestration will take years. These near-term
    impacts drive long-term uncertainty in our capability and capacity to
    effectively execute our current strategy.
        General Odierno. If we begin executing sequestration cuts in the
    last 7 months of fiscal year 2013, we are moving dangerously close. I
    view a hollow force as an Army that has prolonged and disproportionate
    investment across manpower, O&M, modernization, and procurement without
    corresponding adjustments to strategy. The Army, without both adequate
    funding and the flexibility to manage the funds we do have available,
    would be forced to make resourcing decisions that would only accelerate
    and compound inequalities and risk in the force to other OPLANS in the
    future. Some examples:

        1.  Available personnel would be shifted from non-deployed to
    deploying forces in order to meet operational demands. This would
    exacerbate personnel shortfalls geometrically each month and place at
    higher risk combatant commander operational plans.
        2.  Equipment would be migrated from non-deployed to deploying
    forces in order to fill shortages due to incomplete reset and
    redistribution, or shortages arising from the lack of equipment
    retrograded from theater. Again, this would jeopardize combatant
    commander operational plans in an ever increasing manner each
    succeeding month.
        3.  Shortage of repair parts would drive cannibalization and
    reduced training events will significantly impact our ability to build
    readiness. This would have a compounding effect on the capability of
    our equipment and the effectiveness of Army units.
        4.  Soldier training. Perhaps no other example is as important. We
    would not be able to fully train our soldiers, neither through
    individual professional military education nor collective unit
    training, that would meet the demands to successfully operate in a
    joint, interagency environment across the range of military operations
    (from stability operations to decisive action). After the current
    fiscal year, the deficit in forces trained in Decisive Action would
    further compound our inability to meet higher end OPLANS.

        The force would grow in ``hollowness'' each month that the Army was
    forced to re-distribute resources, funding, and training, most
    importantly soldiers from non-deployed forces to support current
    operations without the necessary resources to prepare for contingency
    operations.
        Admiral Ferguson. The term ``hollow'' force is a descriptive term
    that is not a function of time, so I cannot say how ``close'' we are to
    being hollow. ``Hollow'' describes a path that leads to a force not
    ready where it matters, when it matters. It involves training,
    maintenance and people, with people being the key symptom. While the
    immediate readiness impacts of actions we have taken to date are
    limited, there are many long term implications for the material
    readiness of the force, the expected service life of our platforms, the
    health of our industrial base and our people should we continue to
    operate without the resources we need. The longer we continue down the
    path we take now, the maintenance, training, and time required to
    return to full readiness with a stabilized funding level will become
    even more protracted.
        General Amos. The continuing resolution and sequestration will
    immediately begin hollowing the near- and long-term readiness of the
    Marine Corps. To keep marines in the field, we are already being forced
    to reduce depot maintenance of equipment, reduce participation in
    training exercises, reduce equipment buys and curtail modernization
    programs. Within 6 months of sequestration implementation, there will
    be increased degradation to home station unit readiness. These units
    are the ``bench'' that the Marine Corps pulls from for contingency
    response and execution of combatant commanders' operational plans.
    Beyond 12 months, there will be adverse readiness impacts to all home
    station units, to include next-to-deploy and some deployed units.
    Additional, detailed near-term impacts are cited in my written
    statement. The Marine Corps' readiness is already at a tipping point,
    because the ability to rebalance funding from long-term investments to
    short-term readiness is becoming unsustainable.
        While the primary effects on short-term readiness are already
    observable, the longer-term effects may be even more damaging and not
    readily reversible. The realignment of funds to adjust to the
    continuing resolution has already begun to degrade activities necessary
    for the long-term readiness of the force, such as the maintenance of
    equipment returning to theater. The Marine Corps manages its long-term
    health and readiness by balancing monies across its five readiness
    pillars of high quality people, unit readiness, capability and capacity
    to meet combatant commander requirements, infrastructure sustainment,
    and equipment modernization. Sequestration will unbalance the Corps'
    institutional readiness by forcing investments in manpower and near-
    term unit readiness at the expense of infrastructure, sustainment,
    reset, and modernization.
        General Welsh. In the context of what the Nation asks us to
    accomplish in support of the defense strategy, we are currently on the
    brink of becoming a hollow force. A hollow force is a condition that
    exists when a force is not able to perform its assigned missions with
    an acceptable level of risk due to readiness and sustainment
    deficiencies. A hollow force may look good on paper but has more units
    and equipment than it can support, lacks the resources to adequately
    man, train and maintain them.
        General Grass. If sequestration is fully implemented, our analysis
    shows signs of a hollow force toward the end of fiscal year 2014. Sharp
    declines in training and maintenance budgets result in a rapid
    degradation in personnel and equipment readiness, especially combat
    missions.

        88. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, even before
    sequestration, what percentage of your non-deployed major combat units
    are trained and ready today for their full spectrum of assigned
    missions?
        General Dempsey. I will defer to the Service Chiefs for their
    answers on percentages of nondeployed forces assignable to full
    spectrum missions.
        General Odierno. The exact amounts and percentages will be provided
    in classified correspondence. Currently, a low percentage of
    nondeployed major combat units are trained and ready. Our priority will
    be to ensure that all soldiers in Afghanistan and those next to deploy
    are prepared and ready. We will ensure that the Forces in Korea are
    properly equipped and ready. We will continue to fund all programs
    related to Wounded Warrior care. Then we will determine if we have
    sufficient funds to continue training the Division-Ready Brigade at
    Fort Bragg--the Army's Global Response Force. These priority efforts
    will consume 43 percent of our OMA but are applied to only 22 percent
    of the force. Therefore, the remaining 80 percent of the force will
    have to absorb the $18 billion in shortfalls out of the remaining 57
    percent of the OMA budget. What that means is that the 80 percent of
    the force--more than three-quarters of the Army not in Afghanistan or
    Korea or deploying this year--will significantly curtail training
    today. Even with training and sustainment spending curtailed, we expect
    our accounts to be exhausted by July.
        Admiral Ferguson. The readiness of nondeployed Navy units is a
    function of where they are in execution of our force generation
    process, the Fleet Response Plan (FRP). At present, our next to deploy
    units are progressing towards the required level of readiness--and
    provide the surge capacity the Navy is required to sustain. Units in
    the maintenance or basic training phase of the FRP are not expected to
    be ready. However, CR and sequestration will inevitably take a toll on
    our ability to have forces that are forward be ready and still prepare
    next-to-deploy forces to take their place. As we extend existing
    deployments and cancel maintenance and training time for our non-
    deployed force, their readiness will degrade even further. There is a
    limit to how quickly this fall can be arrested and the unit be made
    ready to deploy. Navy will provide specific percentages and readiness
    ratings in classified correspondence if requested.
        General Amos. The abilities of the Marine Corps to operate across
    the full spectrum of warfare, especially at the Marine Expeditionary
    Force (MEF) level and major subordinate command level, have degraded
    due to a necessary focus on counterinsurgency and irregular warfare
    mission requirements for Operation Enduring Freedom. Training
    limitations in core mission capabilities such as MEF-level combined
    arms, anti-air warfare, amphibious operations, and prepositioning
    operations have accordingly degraded the Marine Corps' ability to
    respond to other operational plans, contingencies, and activities.
    Moreover, high readiness of the deployed force comes at the expense of
    our nondeployed forces. Equipment and personnel have been sourced
    globally from non-deployed forces to support deploying units, which had
    the causal effect of reducing the readiness of nondeployed units. More
    than half of the Marine Corps' combat units report limitations in
    achieving readiness levels required for deployment.
        General Welsh. Due to the Air Force's speed, range, and
    flexibility, we include all units--deployed and garrison--when
    determining readiness levels. Further, the defense strategy and current
    force structure does not allow us to maintain a tiered readiness
    posture. Currently, just under 50 percent of our Air Force fighting
    level units are below an acceptable combat readiness level.
        General Grass. Today's National Guard is the most ready it has been
    in its 376-year history. Our readiness levels for both Army and Air
    National Guard units are very close to the active Duty components.
    Specific unit readiness information is classified at the Secret level.

        89. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, if
    sequestration were allowed to occur, how quickly would your force start
    to go hollow?
        General Dempsey. The combination of sequestration and the
    continuing resolution will produce measurable declines in unit-level
    readiness within 1-3 months. Within 3-6 months declines in unit level
    readiness will result in significant cancellations to major exercises
    and planned deployments. Sequestration will force a rapid drop in
    readiness levels, while recovery will take several times longer. Due to
    training cycles, deferred maintenance, and the pace of current
    operations, recovery from several months of sequestration will take
    years. These near-term impacts drive long-term uncertainty in our
    capability and capacity to effectively execute our current strategy.
        General Odierno. Immediately. The Army, without both adequate
    funding and the flexibility to manage the funds we do have available,
    would be forced to make resourcing decisions that would only accelerate
    and compound inequalities and risk in the force to other OPLANS in the
    future. Some examples:

        1.  Available personnel would be shifted from nondeployed to
    deploying forces in order to meet operational demands. This would
    exacerbate personnel shortfalls geometrically each month and place at
    higher risk combatant commander operational plans.
        2.  Equipment would be migrated from nondeployed to deploying
    forces in order to fill shortages due to incomplete reset and
    redistribution, or shortages arising from the lack of equipment
    retrograded from theater. Again, this would jeopardize combatant
    commander operational plans in an ever increasing manner each
    succeeding month.
        3.  Shortage of repair parts would drive cannibalization and
    reduced training events will significantly impact our ability to build
    readiness. This would have a compounding effect on the capability of
    our equipment and the effectiveness of Army units.
        4.  Soldier training. Perhaps no other example is as important. We
    would not be able to fully train our soldiers, neither through
    individual professional military education nor collective unit
    training, that would meet the demands to successfully operate in a
    joint, interagency environment across the range of military operations
    (from stability operations to decisive action). After the current
    fiscal year, the deficit in forces trained in Decisive Action would
    further compound our inability to meet higher end OPLANS.

        The force would grow in ``hollowness'' each month that the Army was
    forced to re-distribute resources, funding, and training, most
    importantly soldiers from nondeployed forces to support current
    operations without the necessary resources to prepare for contingency
    operations.
        Admiral Ferguson. The term ``hollow'' force is a descriptive term
    that is not a function of time, so I cannot say how quickly our force
    would start to go hollow. ``Hollow'' describes a path that leads to a
    force not ready where it matters, when it matters. It involves
    training, maintenance and people, with people being the key symptom.
    While the immediate readiness impacts of actions we have taken to date
    are limited, there are many long term implications for the material
    readiness of the force, the expected service life of our platforms, the
    health of our industrial base and our people should we continue to
    operate without the resources we need. The longer we continue down the
    path we take now, the maintenance, training, and time required to
    return to full readiness with a stabilized funding level will become
    even more protracted.
        General Amos. Sequestration would produce irreversible impacts to
    readiness. We already are seeing indicators of a hollowing of the
    force; over half of our Marine Corps units are at unacceptable
    readiness levels to meet core mission requirements. Although we are
    able to mitigate immediate challenges to readiness in the near term,
    there will be a steadily increasing degradation to readiness as
    sequestration unfolds. To keep our marines in the field, we are being
    forced already to reduce depot maintenance of our equipment, reduce our
    participation in training exercises, reduce necessary equipment buys,
    and curtail force modernization programs. Furthermore, over the next 6
    to 12 months, we will see a continued decrement to readiness accounts
    with an ever-increasing erosion of home station unit readiness and
    force modernization. This will manifest itself in small impacts in
    next-to-deploy forces readiness. Beyond 12 months, we will see a real
    impact to all home station units (e.g. fixed wing squadrons will have
    on average only four of twelve assigned aircraft on the ramp due to
    aviation depot shutdowns) and the beginning of impacts to our next-to-
    deploy and some deployed forces. Ultimately, this will result in a
    compounding and escalating slide to a hollow force, some of which will
    be irreversible.
        General Welsh. We will protect flying operations in Afghanistan and
    other contingency areas, nuclear deterrence and initial flight
    training; however, roughly two-thirds of our active duty combat Air
    Force units will curtail home station training beginning in March and
    will drop below acceptable readiness levels by mid-May. Most, if not
    all, will be completely non-mission capable by July.
        General Grass. If sequestration is fully implemented, our analysis
    shows signs of a hollow force toward the end of fiscal year 2014. Sharp
    declines in training and maintenance budgets result in a rapid
    degradation in personnel and equipment readiness, especially combat
    missions and our ability to respond to missions here in the Homeland.

        90. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, will you
    please provide your assessment promptly to this committee when you have
    determined an unacceptable risk to the readiness of your forces?
        General Dempsey. Yes.
        General Odierno. If sequestration reductions begin in fiscal year
    2013, I believe we are in the short term accepting unacceptable risk to
    our force based on the uncertainty of the current world environment. I
    will continue to provide my assessment of unacceptable risk to the
    readiness of the force whenever I believe it is necessary. The
    determination of risk requires collaboration with combatant commanders
    and other Services with whom the Army interoperates and supports.
    Additionally the full impacts of the current budget uncertainty on the
    Army is dependent on resource allocation decisions that are in the
    process of being made.
        Admiral Ferguson. Yes.
        General Amos. If ever I determine there is an unacceptable risk to
    the readiness of my marines or their ability to accomplish the mission,
    I will promptly take action to include providing that assessment to
    this committee. As I have testified this week, I am very concerned that
    an annualized Continuing Resolution (CR) and subsequent sequestration
    reductions could create unacceptable risk in the readiness of the
    Marine Corps.
        General Welsh. Yes, the Air Force will promptly notify the Senate
    Armed Services Committee if we determine we have reached unacceptable
    risk to the readiness of our forces.
        General Grass. Yes.

                            NATIONAL SECURITY IMPACT

        91. Senator Inhofe. General Dempsey, the January 2012 Defense
    Strategic Guidance (DSG) was written in response to the
    administration's decision to slash $487 billion from defense spending
    over the next 10 years. It calls for low-cost, small-footprint
    approaches to achieve our security objectives in Africa. As I said in
    my opening statement, the Benghazi tragedy is a vivid illustration of
    the increased risks we assume under a strategy that relies on reduced
    resources available only on a rotational basis in volatile parts of the
    world. Do we currently have adequate resources to carry out the 2012
    DSG? For example: do we currently have enough assets for sea and air
    lift in the Pacific theater to carry out a rebalancing?
        General Dempsey. The rebalance to the Asia-Pacific is a key tenet
    of the DSG and calls for a renewed emphasis on the Asia-Pacific region,
    outlining a deeper and more enduring role for the United States in
    advancing the security and prosperity of the region. Currently there
    are adequate assets for sea and airlift for the rebalance to the Asia-
    Pacific, assuming no further reductions. The rebalance obviously
    involves more than merely bringing more forces to the region--it will
    influence, over time, the DOD's investments in force structure,
    capabilities, posture, operational concepts operational concepts, and
    engagement in the region.
        The magnitude of proposed defense cuts over 10 years on top of the
    $487 billion in cuts over that period made under the 2011 Budget
    Control Act (along with efficiencies previously implemented) will make
    the current defense strategy unfeasible and will severely limit our
    ability to implement the January 2012 Defense Strategic Guidance (DSG).
    If the current budget trend is not corrected over the longer term, the
    military will have to revise its entire defense strategy within the
    decade. We would not be able to rapidly respond to major crises in the
    world or be globally positioned to deter our adversaries.
        One notable feature of the rebalance is that our emphasis on more
    engagement, more attention, and more quality relies substantially on
    rotational forces. Rotational presence is finite in time and purpose,
    enabling them to be attentive and impactful without a large footprint.
    This approach is sensitive to the needs and limitations of the region,
    and also enables us to avoid foregoing our commitments and leadership
    role in the rest of the world. Although implementing the rebalance with
    increasing budget pressures is not without challenges or difficult
    decisions, DOD is dedicating significant attention to increasing Joint
    integration, beyond that enabled by Goldwater-Nichols, as a means to
    deny others the ability to deny our access to the commons. These new
    operational concepts necessarily require strong partnerships in the
    region. Continually engaging with our regional allies and partners
    reassures them of U.S. commitment as well as our effectiveness as the
    security partner of choice.

        92. Senator Inhofe. General Dempsey, how would you characterize the
    potential risk of another Benghazi if we double defense spending cuts?
        General Dempsey. The security environment is increasingly complex
    and dangerous. If defense spending cuts were doubled, we could incur
    greater risk of a crisis of a similar nature. Preventing this type of
    crisis is not only about our ability to rapidly respond, it is about
    our capacity to shape the security environment through our allies and
    partners, presence and work with the interagency.

        93. Senator Inhofe. General Dempsey, in your opinion, what changes
    in the new DSG would DOD implement if the cuts under sequestration are
    sustained over 10 years?
        General Dempsey. Understanding that we would require a new defense
    strategy under sequestration, we would work closely with the Secretary
    of Defense to develop a strategy that best secures our national
    interests using the resources available.

        94. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, if sequestration is allowed to occur, what do
    you foresee as changes to our National Military Strategy (NMS)?
        General Odierno. We will have to conduct a thorough review of our
    Defense Strategy with the Joint Chiefs and the Office of the Secretary
    of Defense (OSD) leadership. It is my opinion that we will no longer be
    able to execute the current strategy as rolled out in early 2012.
        Admiral Ferguson. Our current NMS relies upon forward-stationed and
    rotationally-deployed forces to assure allies, deter aggression, and,
    if necessary, defeat adversaries in conflict. As we say in the Navy,
    ``Trust cannot be surged.'' While it is premature to speculate on the
    details of a new strategy built on the premises of sequestration, the
    accompanying Joint Force will be smaller, less capable, and less ready
    to address threats and sustain presence in an increasingly dangerous
    and volatile world.
        General Amos. Sequestration is a fiscal choice that will incur a
    strategic risk. The Deputy Secretary of Defense stated that if
    sequestration is allowed, DOD must then consider changes or adjustments
    to the current Defense Strategic Guidance. The NMS will also require
    review in light of this new fiscal reality. If sequestration is
    allowed, it will require the Marine Corps to adjust and reassess the
    way in which we employ our military capabilities and capacities to
    defend the Nation. Fiscal decisions will invariable create strategic
    consequences with implications for our national security interests.
        General Welsh. The February 8, 2011, NMS envisioned a Joint Force
    that provides military capability to defend our Nation and allies, and
    to advance broader peace, security, and prosperity by achieving the
    following National Military Objectives: Counter Violent Extremism,
    Deter and Defeat Aggression, Strengthen International and Regional
    Security, and Shape the Future Force. If sequestration occurs, we would
    need to prioritize within and among the National Military Objectives.
    In the end, as Secretary Panetta has repeatedly stated, sequestration,
    both the size and the arbitrary manner of these cuts, would be
    devastating to the Department. It would harm Air Force readiness and
    disrupt every investment program, limiting our ability to shape the
    force, deter and defeat aggression, and counter violent extremism.
    Sequestration would force constraints on our training activities, to
    include cuts to flying hours that would reduce readiness and increase
    risk. It would allow fewer day-to-day global activities, reducing our
    presence and partnerships and undermining longstanding efforts to
    strengthen international and regional security. After the stress of
    more than a decade of continuous combat, sequestration will harm the
    morale and welfare of the force, create recruiting and retention
    problems, and it will wreak havoc on the civilian workforce in the
    coming months, a particular concern given the priority placed on our
    people and their families in the NMS. Not limited to operations,
    sequestration will mortgage the Air Force's future health for years to
    come by hobbling force structure modernization efforts. Overall,
    sequestration disrupts the force in the near term and promises
    devastating impacts over the longer-term; it seriously jeopardizes our
    ability to field the Joint Force envisioned in the NMS and its ability
    to achieve the National Military Objectives.

                      IMPACT OF SEQUESTRATION ON THE ARMY

        95. Senator Inhofe. General Odierno, the Army is starting out
    fiscal year 2013 with a shortfall of $6.0 billion in its O&M account
    because of the CR. Assuming that we do nothing to address sequestration
    or the CR, in your military judgment, won't the Army become hollow by
    the end of fiscal year 2013 or as we enter into fiscal year 2014?
        General Odierno. The combined effects of sequestration, continuing
    resolution, and OCO shortfalls have created a perfect storm of
    pressures on the readiness of Army units. Due to their combined
    effects, the Army will be severely challenged to provide ready units
    beyond our next deployers to OEF, those stationed forward in Korea, and
    possibly the Division Ready Brigade. This will create a large part of
    the force that will have degraded readiness, which will continue in
    fiscal year 2014 and fiscal year 2015.

        96. Senator Inhofe. General Odierno, what will be the impact on the
    Army's ability to meet the demands of the NMS?
        General Odierno. Ten years of budget caps from sequestration will
    produce a fundamentally different Joint Force. Reductions of this
    magnitude would first prompt a review of the national security
    strategy, military strategy and the roles and mission of all of the
    Services. Following this comprehensive review, the Army would then
    plan, program and implement the forces, capabilities and capacities
    that the new strategy requires. What the Army may look like after this
    is based on too many factors to allow a more detailed description. This
    future Army would likely be significantly smaller, with a reduced
    capability to respond decisively to the range and scope of threats the
    Nation is likely to face over the next decade. This smaller Army would
    be concentrated on fewer installations across the country with few
    forces, if any, stationed overseas. It will impact our ability to shape
    the geographic combatant commanders' areas of operation in order to
    prevent conflict. It could put at risk our ability to deter conflict
    and increase the likelihood of miscalculation from our adversaries or
    other opportunists who believe we no longer have sufficient capacity or
    capability to respond.

        97. Senator Inhofe. General Odierno, please describe the impact of
    having potentially only $2.0 billion in the O&M account to fund the
    remainder of fiscal year 2013.
        General Odierno. The Army will likely have only $2 billion in our
    O&M account to fund the remainder of fiscal year 2013 because of a
    ``Perfect Storm'' of fiscal measures: a shortfall of $6 billion in the
    Continuing Resolution's O&M funding, which cannot be compensated by
    reprogramming from other accounts; $5-7 billion in emerging shortfalls
    in OCO funding due to unanticipated costs in Afghanistan; and $5.3
    billion in sequestration. We prioritize costs needed for Afghanistan
    and Korea, and will try to fund readiness for the Global Response
    Force. However, this will effectively exhaust our operations accounts
    and we will be forced to take severe actions. The actions we will be
    forced to take include, but are not limited to:

             We will curtail training for 80 percent of our force,
            and have already canceled all but one BCT Combat Training
            Center rotations for the remainder of fiscal year 2013.
             We are terminating an estimated 3,100 temporary and
            term employees and have directed an immediate Army-wide hiring
            freeze. These employees typically fill gaps in our installation
            services such as Army substance abuse programs, law
            enforcement, physical security, public works, and installation
            education programs.
             We have initiated planning to furlough up to 251,000
            civilians for 1 day a week for 22 weeks, in full recognition of
            the risks of decreased productivity, morale, and the loss of 20
            percent of their pay while furloughed. In addition to the
            hardship this poses to our dedicated workforce, this furlough
            will have an immediate trickle-down effect as the majority of
            these civilians are located throughout the United States on our
            posts and stations, and their spending directly impacts local
            economies and contributes towards State and local taxes. Any
            furlough would have an immediate impact on fire and emergency
            services, law enforcement, airfield operations, and all of our
            Army family programs.
             We are reducing institutional training across the
            Army. This will result in a backlog across our education and
            individual training courses well into fiscal year 2014 and
            shortfalls in critical specialties.
             For example, we will curtail seven courses that
            support our Homeland Defense/Civil Support Mission resulting in
            a shortfall of over 1,600 trained operators and severely
            degrading Chemical, Biological, Radiological and Nuclear
            Response Enterprise. These teams require all unit members to be
            trained and certified with specific individual certifications
            tied to both National Fire Protection Agency standards and
            public law for operations in the Homeland. There are no other
            courses within the Army or the Joint Forces that provide this
            level of certification.
             We will cut 37,000 flying hours from our aviation
            training at Fort Rucker, which will create a shortfall of over
            500 aviators by the end of fiscal year 2013 and will create a
            backlog at flight school that will take over 2 years to reduce.
            We are curtailing 16 military intelligence training courses,
            resulting in over 4,000 fewer soldiers with the intelligence
            skills the Army requires. At Fort Sill, we will have to cancel
            15 Field Artillery Advanced Individual Training courses.
            Soldier training for recruiting duties will be curtailed in
            March resulting in over 900 untrained recruiters.
             The Army Corps of Engineers will reduce training slots
            at the Prime Power School for the Army's 249th Engineer
            Battalion, which provides power for the Department of Defense
            Disaster Response. Over time, reductions in training to
            critical specialties will decrease the active Army, the Army
            National Guard, and the U.S. Army Reserves' responsiveness to
            crises and natural disasters in our communities across the
            United States.
             We are cancelling attendance at some of our mid-career
            officer and noncommissioned officer training programs across
            the Total Army including the Captains Career Common Core
            Course, Intermediate Level Education, and NCOES common core.
            This will add to the already tremendous backlog of midgrade
            officer and NCO education that has built up during the almost
            12 years of war.
             We have curtailed our civilian professional
            development training and education. This will cause an
            interruption in our intern training programs, reducing the
            pipeline and the functional and technical competency of the
            next generation of our Army civilians. It will also delay or
            eliminate civilian education and training opportunities--from
            entry level to senior management courses--impacting the growth
            and development of the Army's future civilian leaders at all
            levels of government service.
             We are in the process of reducing our base sustainment
            funds by $2 billion in fiscal year 2013, a 70-percent drop from
            what has been historically required to run our installations.
            This means even bare minimum maintenance cannot be sustained.
            In the event of water main breaks, clogged sewage, water
            damage, or power failure, there will not be adequate funding to
            repair these facilities, which would likely result in closure
            and personnel relocation. This also translates into an
            estimated 100,000 facility work orders per month that will not
            be executed, which places the Army on an accelerated slippery
            slope where our buildings will fail faster than we can fix
            them.
             All restoration and modernization projects, including
            renovations to the United States Military Academy Cadet
            Barracks, the Training Barracks Upgrade Program that consists
            of 12 projects at 8 locations in the United States, and our
            ability to complete relocation plans and projected closures in
            Europe will be eliminated. All projects under the Army Energy
            Program, to include upgraded energy efficiencies, utility
            system modernizations, and small renewable projects will also
            be cancelled. We have postponed all new construction projects,
            such as the Arlington National Cemetery expansion.
             We have initiated an Army-wide service contract review
            to identify savings and we are taking action to potentially
            terminate all non-essential contracts in coordination with our
            commands. These contracts support a myriad of programs,
            including facility maintenance, education and training, medical
            support, and equipment and provide thousands of jobs across our
            Army installations. Many of these contracts provide direct
            support to our soldiers, civilians, and their families, and
            their cancellation will cause backlogs in services rendered at
            our hospitals, our education centers, our schools, and our
            child development centers. Once a contract is terminated, it
            takes at least 150 days to restart a cancelled program,
            increasing the workload on an already taxed acquisition
            workforce, and increasing costs of the program in the short
            term.
             Our National Guard and Reserve will experience cuts of
            22 percent and 50 percent respectively in their medical
            readiness accounts. For example, we have cancelled pre-
            mobilization medical support for nearly 200,000 Army National
            Guard and U.S. Army Reserve soldiers, which will degrade
            Reserve unit readiness and increase post-mobilization training
            costs.
             We will curtail Operational Test and Evaluation
            operations affecting program of record development and fielding
            schedules which will add costly delays to critical acquisition
            programs and the fielding of equipment to soldiers.
            Particularly in the areas of networking capability and
            precision munitions, we will experience delays in key network
            programs such as the Warfighter Information Network-Tactical
            and the Joint Battle Command-Platform.
             We are reducing our Science and Technology (S&T)
            programs by approximately $300 million. We anticipate making
            reductions to our Federal civilian employees and support
            contractors, and reducing programs with our academic and
            industry partners across all 50 States and the District of
            Columbia. The Assistant Secretary of the Army (Acquisition,
            Logistics, and Technology) provided an assessment to the
            Assistant Secretary of Defense (Research and Engineering) on 1
            February 2013 detailing the impact to DOD research priorities.

        98. Senator Inhofe. General Odierno, how long will it take and how
    much more will it cost for the Army to recover from the impact of
    sequestration and the CR if the administration and Congress do nothing?
        General Odierno. If the continuing resolution and sequestration
    persist, the Army as it exists today will not recover--it will be
    forced to transform and adapt to a new normal. It is unavoidable that
    10 years of budget caps from sequestration will necessitate a
    fundamentally different Army. Reductions of this magnitude would first
    prompt a strategic review and likely result in an Army with revised
    roles, missions, capabilities and capacities. What the Army may look
    like after this is based on too many factors to allow a more detailed
    description. In a broad sense, this future Army would likely be
    significantly smaller, less capable to respond decisively to the range
    and scope of threats the Nation is likely to face over the next decade
    and concentrated on fewer installations across the country with almost
    no forward stationed forces. Only through a fundamental transformation
    would the Army be able to recover and regain balance across our
    manpower, investment and readiness accounts.

        99. Senator Inhofe. General Odierno, I understand that the Army
    will cancel several National Training Center (NTC) and Joint Readiness
    Training Center (JRTC) rotations this year regardless of whether we
    solve sequestration and the CR. Will the Army be able to reschedule
    these rotations in fiscal year 2014?
        General Odierno. Unfortunately, no. The Army will conduct rotations
    at the NTC and JRTC as funds are available, but we will have missed the
    window for improving readiness for those units as they flow through the
    Army Force Generation (ARFORGEN) cycle into the Available Phase. Our
    capacity is limited and even with additional funding in fiscal year
    2014, we cannot significantly increase capacity and will have lost this
    critical training opportunity for those units with canceled rotations
    until they again rotate through the ARFORGEN cycle in 2 years.

        100. Senator Inhofe. General Odierno, what will be the impact on
    readiness?
        General Odierno. There will be a significant impact on readiness.
    The readiness of Army units is tied to our force generation model which
    allows Army units to build readiness in order to meet mission
    requirements at predictable periods in time. Combat Training Center
    rotations ensure Army units receive specific training tailored to the
    operational requirements the unit will execute on deployment. Readiness
    of those units executing operations in support of combatant command
    requirements must remain at the highest level.

        101. Senator Inhofe. General Odierno, are there other areas of
    readiness from which we will not be able to recover because of the CR?
        General Odierno. It becomes very difficult to recover when you have
    a combination of lost time and resources. It will take us additional
    time to recover the level of readiness we believe is necessary. The
    amount of time to recover will be based on if full sequestration goes
    into effect. If it does, I believe it will take 5-10 years to fully
    recover our readiness to the level we and the American people expect it
    to be at.
        However, we don't know what will be the impact on our soldiers and
    families and their trust in our institution. It will be our challenge
    as leaders to ensure we keep our best and reassure them that the
    institution will be there for them in repayment for their incredible
    sacrifice over the past 12 years.

        102. Senator Inhofe. General Odierno, the President used his
    authority to exempt the military pay accounts from sequestration. While
    I fully understand why one would want to preserve personnel accounts,
    doing so certainly exacerbates the budget difficulties under
    sequestration and the CR. What can we do to avert creating a hollow
    force similar to the one we had after taking the 1990s peace dividend?
        General Odierno. First, in fiscal year 2013 it would have cost us
    more money than we would have saved if we had to take military
    reductions in fiscal year 2013, because of the amount of separation and
    other pays that would have to be used. Additionally it would not have
    been possible to reduce the number required by sequestration in a 7
    month period. As the Army draws down the operating force, we must be
    allowed to manage the slope and path towards the current goal of
    490,000 Active Duty soldiers in order to maintain balance between end
    strength, modernization and readiness within the budgetary guidelines
    given. Arbitrarily accelerating the reduction may have impacts that
    will not be recoverable should a future emergency occur. If we must
    further reduce the size of our force we must be allowed to manage it
    carefully in order to take care of our soldiers and families, meet our
    contingency requirements, and balance readiness and modernization. Any
    reduction below 490,000 Active Duty soldiers can only be made with the
    Nation and its leaders fully aware of the risks--to include tradeoffs
    in modernization and readiness--and how those risks may directly affect
    our ability to win our Nation's wars.

        103. Senator Inhofe. General Odierno, are the Army's end strength
    reductions being driven by the NMS or by budget constraints?
        General Odierno. As part of the DOD Strategic Guidance released
    last year, the Army developed a plan to downsize approximately 80,000
    soldiers to 490,000 soldiers in the Active component by the end of
    fiscal year 2017. Based on the drawdown of major commitments in Iraq,
    the ongoing drawdown in Afghanistan, and the anticipated range of
    potential future missions envisioned in the new defense strategy, the
    Army concluded after extensive analysis that the demands described in
    the new defense strategy could be met with an Active component end
    strength of 490,000 soldiers. If sequestration occurs, future end
    strength reductions will be driven by budget constraints.

        104. Senator Inhofe. General Odierno, would the Army be able to
    execute to the NMS if the current planned end strength reductions are
    accelerated?
        General Odierno. The Army's ability to support the NMS will be
    greatly hindered if we reduce force structure at a faster pace than
    currently planned. We will not be able to take care of our soldiers and
    families and meet current contingency operations, while simultaneously
    sustaining appropriate readiness levels.

        105. Senator Inhofe. General Odierno, according to a February 7
    Congressional Research Service memorandum on the potential effects of
    sequestration, the funding shortfall for Army aircraft, already almost
    $500 million below the fiscal year 2013 request because of the CR,
    would be exacerbated by the sequester, creating a combined shortfall
    from the fiscal year 2013 request of over $900 million. What would be
    the impact of extending the CR to a full year on Army aviation systems?
        General Odierno. The combined impacts of the sequester and a full-
    year Continuing Resolution (CR) would significantly weaken Army
    Aviation and would take years to overcome, especially if the CR is
    enacted without a substantial number of anomalies that would be
    necessary to sustain some critical Aviation programs. Some illustrative
    examples of the adverse impacts on critical aviation systems are the
    Chinook, Apache, Kiowa Warrior and Common Infrared Counter Measure
    (CIRCM) programs.
        In the event of sequester and a CR without an anomaly the Army
    could not award the second multi-year contract for the CH-47F Chinook.
    That would result in the loss of $810 million in negotiated multi-year
    savings over 5 years. It would require the program to revert to single
    years contracts and in the near term, it would necessitate employment
    of an inefficient contracting strategy to preclude a near term
    production break. In the end, it will cost the Army an additional $1.7
    billion through fiscal year 2020 to procure the planned acquisition
    objective and would delay fieldings to aviation units, including those
    in the National Guard and Reserves.
        The AH-64 Apache could be forced to reduce planned fiscal year 2013
    production from 48 aircraft to as few as 9 aircraft. This would result
    in a delay in system fielding, deferring a critical combat capability.
    This reduction would exacerbate the existing problem of an aging Apache
    fleet, which are averaging 20 years and nearing the expected life of
    the airframe. The production reduction would yield a substantial
    increase in unit cost, a production line break and workforce
    reductions.
        The Kiowa Warrior program would be unable to produce at least 10 of
    the planned 16 war replacement aircraft. The actual quantity could
    ultimately fall below six aircraft, as the funding available under
    sequester and a year-long CR is insufficient to execute the existing
    contract. This would require the Program Manager to renegotiate the
    contract resulting in higher unit costs, fewer aircraft and delays in
    the production. The Kiowa Warrior currently has the highest flying hour
    rate of all the Army aircraft deployed to the theater of operations.
        CIRCM is in the technical development phase to deliver a required
    light weight, laser-based countermeasure protection against modern
    Manportable Air Defense Systems. Without approval of the requested
    anomaly a work stoppage would result. Program restart is estimated to
    cost an additional $39.9 million and delay the fielding of this
    critical capability beyond the projected fiscal year 2019 fielding
    date.
        Most Army Aviation programs would be adversely impacted by the
    sequester and a full-year CR.

        106. Senator Inhofe. General Odierno, would this have an impact on
    deploying and next-to-deploy units?
        General Odierno. Yes, the combined effects of a nearly $900 million
    shortfall on Army aviation systems to include crew proficiency would be
    detrimental for deployed, deploying, and non-deployed forces. We would
    have a 500 pilot shortfall in 2013 alone due to lack of training
    dollars and this will increase over time, and impact long term Aviation
    readiness.

        107. Senator Inhofe. General Odierno, could the shortfall be
    mitigated if you are given more flexibility to move funding with an
    appropriation?
        General Odierno. Yes, the complexity of the cumulative effects of
    the sequester and the fiscal year 2013 budget request as compared to
    the full year CR requires a comprehensive solution. Army is requesting
    authority to move funding within and across Appropriations. This
    includes authority to move funding between Budget Activities,
    Subactivity Groups, Program Elements, Projects, Programs, Accounts,
    Standard Study Numbers (SSN) and Budget Line Item Numbers for all Army
    Defense and Military Construction Appropriations. The Army will conduct
    a thorough review to identify where the Army needs to take action to
    mitigate the effects. This synchronization and assessment will expose
    redline items that will form our prioritized candidates for
    reprogramming. Despite the mitigation that such measures would provide,
    the cumulative effect of the CR, a shortfall in overseas contingency
    funding, and the sequester will still have severe consequences.
    Moreover, I must stress that fiscal flexibility in particular,
    correcting the misallocation of funds under the CR, while essential, is
    not sufficient to avert the problems we face. Even if we get relief
    from fiscal year 2013 budget restrictions, sequestration in fiscal year
    2014 will pose a significant risk to readiness and will force us to
    reconsider the Army's ability to execute the Defense Strategic
    Guidance.

                      IMPACT OF SEQUESTRATION ON THE NAVY

        108. Senator Inhofe. Admiral Ferguson, Navy has been proactive on
    actions to address sequestration and the CR with the announcement to
    hold back the deployment of the Truman CSG and delay the refueling of
    the USS Lincoln Aircraft Carrier in Virginia. In addition, the CNO
    recently announced that beginning February 15, the Navy shall notify
    contractors and cancel all private-sector fiscal year 2013 third and
    fourth quarter surface ship maintenance availabilities as well as
    aircraft depot maintenance. How do you assess the current readiness of
    the nondeployed fleet to meet the requirements of full spectrum
    operations?
        Admiral Ferguson. Currently one third of nondeployed units are
    trained and ready to execute the full range of military operations,
    while the remaining units are in training or maintenance status. Under
    CR/sequestration, the Navy will stop training and certification except
    for the units next to deploy.

        109. Senator Inhofe. Admiral Ferguson, what will happen to the
    readiness of your combat aviation assets?
        Admiral Ferguson. If sequestration is executed, Navy and Marine
    Corps aviation readiness will begin to degrade for nondeployed
    squadrons as we curtail the flying hours of four carrier air wings.
    While Navy will focus its available resources to support deployed
    aviation readiness, if sequestration endures, it will increasingly
    impact deployed units as the Navy and Marine Corps reduces flying hours
    across the entire force. Aircraft and engine depot repairs will be
    curtailed, resulting in a steady decline in available aircraft and
    engines. Naval aviation will not have the resources to train our
    rotational forces for fiscal year 2014 deployments and may not be able
    to fully honor existing global commitments to deploy forces in several
    theaters.

        110. Senator Inhofe. Admiral Ferguson, can you describe how long-
    term delays in the refueling complex overhaul of the USS Lincoln will
    have bow wave effects on the timing of follow on carrier maintenance
    and may impact future carrier readiness?
        Admiral Ferguson. Delaying the start of the RCOH will delay
    Lincoln's return to the fleet in 2016 on a day-for-day basis. Due to
    limited shipyard maintenance capacity, long term delays in the RCOH
    will have second and third order effects upon other subsequent carrier
    work. Delays in the CVN 65 defueling and CVN 73 RCOH are thus likely,
    which negatively impact readiness of the entire carrier fleet. The cost
    of the delays of the RCOH are likely to increase as the cost of
    perturbations in the shipyard's workforce, cancelled contracts with
    subvendors, and disruptions in the materiel supply chain are passed to
    the Navy.
        The delays in CVN 73 RCOH and CVN 65 defueling will stress other
    CVNs for extended or additional deployments, while adding to the CVN
    maintenance backlog.

        111. Senator Inhofe. Admiral Ferguson, if sequestration occurs, the
    Navy will be compelled to reduce the number of ships and aircraft
    deployed, reduce days at sea and flying hours across the entire force,
    stop all deployments to the Caribbean and South America, limit European
    deployments to only those supporting ballistic missile defense
    missions, and cease State-side training, flying, steaming, and other
    operations for the majority of ships and aircraft preparing to deploy.
    How will all these actions impact the risk of meeting the requirements
    of the combatant commanders around the world?
        Admiral Ferguson. The Navy will be unable to execute all of the
    naval force requirements of the combatant commanders under
    sequestration and a year-long continuing resolution.

        112. Senator Inhofe. Admiral Ferguson, how will these actions
    affect the morale and training of the fleet?
        Admiral Ferguson. Our sailors, civilians, and their families are
    experiencing increased anxiety as a result of this fiscal uncertainty.
    This will have a corrosive effect on the morale of our people over time
    and could affect the decisions of our sailors and civilians to continue
    their service in the Navy.
        For most sailors and their families, the immediate effect of
    sequestration and a year-long continuing resolution is the uncertainty
    in the deployment schedules of our ships and aircraft. Delayed,
    extended, or canceled deployments disrupt the lives of Navy families.
        The reduction of ready forces will also put greater stress on
    deployed or soon-to-deploy sailors assigned to ships and squadrons as
    they operate at a higher tempo. While military compensation is exempt
    from sequestration, there is a cost to the force in having them
    maintain our ships and aircraft and train for future deployments with
    fewer resources, spare parts, and less depot maintenance.
        Additionally, a year-long CR and sequestration will compel us to
    cancel most non-deployed operations, such as training and
    certifications, which will erode the readiness of the force.
        Operating under a year-long CR and sequestration will impact
    training pipeline sources, from recruit training to basic and advanced
    skills training, as well as the U.S. Naval Academy, Naval War College
    and Naval Postgraduate School. This reduces opportunities for our
    sailors to achieve personal and professional development. The immediate
    impact will be a decrease in student throughput and a growing backlog
    of those awaiting training, delaying their arrival in the fleet and
    negatively impacting at-sea manning and operational readiness.

        113. Senator Inhofe. Admiral Ferguson, you mentioned in your
    written testimony that programs such as the F-35 Lightning II, the next
    generation ballistic missile submarine and Littoral Combat Ship might
    be reduced or terminated. Can you provide more details on what you
    anticipate as the impact of an annualized sequestration on your major
    acquisition priorities, specifically what general numbers of reductions
    and what program terminations?
        Admiral Ferguson. Each of these programs brings vastly different
    capabilities to the Fleet. Each is a piece of the overall Defense and
    Naval Strategies and provides different aspects to the capability of
    the Force. If annualized sequestration occurs, the overarching Defense
    and Naval strategies and force structure would need to be reviewed.
    Additionally, the impacts of fiscal year 2013 funding decisions, i.e.
    sequestration and/or an annualized CR, will play a large part in
    determining fiscal year 2014 and out-year acquisition decisions.
    Funding priorities would align to those updated strategies.
        The Department is studying the impacts that sequestration would
    have on the F-35 Lightning II, the next generation ballistic missile
    submarine, Littoral Combat Ship, and other programs. The DoN goal would
    be to preserve these programs to the greatest extent possible,
    emphasizing capabilities to maintain near-term initial operational
    capabilities; and to balance within these programs the necessary fleet
    capability. At this point in time identifying numbers of reductions and
    terminations would be premature until fiscal impacts and constraints
    are solidified. The Navy has identified potential sequestration and
    annualized CR impacts to the operational and investment accounts for
    fiscal year 2013. That being said, if further reductions in the
    investment accounts are required to fund operations, there could be
    significant impacts to F-35 Lightning II, next generation ballistic
    submarine, LCS, and other programs.

                  IMPACT OF SEQUESTRATION ON THE MARINE CORPS

        114. Senator Inhofe. General Amos, how would you express, in terms
    of risk, the effects of sequestration over 10 years on the capabilities
    of the Marine Corps?
        General Amos. The Marine Corps' ability to respond to and
    contribute to the achievement of our national security interests will
    be the greatest risk imposed by sequestration. The Marine Corps is
    currently capable of meeting ongoing operational commitments, but is
    challenged to man, equip, train, and sustain the force to meet
    strategic objectives. The effects of 10 years of sequestration, in
    addition to 11 years of combat operations in Iraq and Afghanistan,
    could jeopardize the institutional health of the Marine Corps. Over the
    long-term, without adequate funding, the readiness and institutional
    health of the Corps will suffer, eventually leading to a hollow force.
    Although the capabilities of the Marine Corps will remain relatively
    constant over these 10 years, it will be the capacity of the Marine
    Corps to provide capable and ready Marine forces to influence the
    accomplishment of our vital national security interests that will be
    challenged. Additionally, the Marine Corps' reliance on the U.S. Navy
    to support operationally available amphibious warships and aviation
    related maintenance and support, further degrades our ability to
    project, support, and sustain forces abroad.

        115. Senator Inhofe. General Amos, you have warned of a hollow
    force. What does that specifically mean for the Marine Corps?
        General Amos. Readiness is the aggregate result of balanced
    investment in the pillars of high quality people, well-trained units,
    functional facilities and modernized equipment. Together, these ensure
    that units are prepared to perform assigned missions at any given time.
    A `hollow force' is one that is not ready in one or more of these
    pillars.
        By the will of Congress, the Marine Corps is mandated to be the
    Nation's expeditionary force in readiness. Deployed forces and units in
    training alike are poised to swiftly respond to crisis and disaster,
    giving immediate options for strategic decision-makers, while buying
    time for the generation of the larger joint force. Even when not
    deployed, Marine units are required to maintain higher levels of
    readiness, so they can deploy on short notice. Tiered readiness, is a
    concept whereby resources from non-deployed units are paid-forward to
    ensure that deployed and next-to-deploy units have sufficient
    personnel, equipment, and training to accomplish their mission. Over
    time, tiered readiness leads to an unacceptable degradation in unit
    readiness. Tiered readiness for the joint force as a whole may be
    warranted, but it is not compatible with the ethos, role, or missions
    of nation's immediate crisis response force.
        Below are specific examples of current actions made necessary in
    response to the combined effects of the CR and sequester. These actions
    will degrade the pillars of force readiness, leading the force down a
    path that leads to a hollowing of the force:

             Reduce through-put of depot level maintenance for
            organizational equipment, delaying our ability to reset war-
            torn equipment by 18 months or more
             Park over 80 aircraft as depot maintenance schedules
            are stretched out
             Reduce support to theater geographic combatant
            commander requirements for shaping their theaters, responding
            to crisis, and preventing conflict
             Reduce participation in multi-national training
            exercises, degrading one of the most effective investments in
            building partner nation capacity
             Degrade training for units in training due to lack of
            fuel, equipment, and spare parts
             Cut ammunition allocations for gunner certification
            and training
             Cut flight hours available for pilot proficiency and
            certification
             Reduce facility maintenance to 71 percent of the level
            required
             Delay Marine Corps contributions to joint special
            operations and cyber forces
             Furlough or reduce an already thinned civilian
            workforce
             Severely curtail or extend acquisition programs
             Reduce organizational activities including recruiting,
            range-maintenance, family-housing maintenance and quality of
            life enhancements for military families
             Curtail energy-efficiency, safety, and base security
            investments
             Cut educational investments in the human capital of
            our uniformed and civilian workforce

        Early Marine Corps readiness is at a `tipping point' toward a
    hollow force in the sense that our ability to rebalance funding from
    long-term investments to short-term readiness is becoming
    unsustainable. Given the combined trajectory of the continuing
    resolution and sequestration, the symptoms of a hollow force will begin
    to emerge between 6 and 12 months from now. By the end of calendar year
    2013, less than half of our ground units will be trained to the minimum
    readiness level required for deployment. Only two-thirds of our
    aviation combat units will be at readiness levels required for overseas
    deployment. Beyond 12 months, our fixed-wing squadrons will have on
    average only 5 to 6 of 12 assigned aircraft on the ramp due to aviation
    depot shutdowns.
        These immediate readiness reductions are accompanied by facilities
    that have fallen into disrepair, training ranges that are no longer
    adequate for the demands of modern combat, and aging equipment for
    which modernization has been deferred or cancelled. Our ability to
    attract high quality volunteers to our ranks will be reduced. Together,
    these symptoms are the very definition of a force that has become
    `hollow'.

        116. Senator Inhofe. General Amos, it is my understanding that the
    United States no longer maintains an amphibious ready group in the
    Mediterranean Sea, and this is before sequestration. How will
    sequestration affect the Marine Corps' ability to respond to crises in
    North Africa, conduct non-combatant evacuations, deploy FAST units, and
    maintain a rapid response capability with forward deployed forces?
        General Amos. Prior to September 11, the Navy and Marine Corps team
    provided a sustained Amphibious Ready Group/Marine Expeditionary Unit
    (ARG/MEU) presence in the Mediterranean with forces from the east coast
    and another in the Pacific/Indian Ocean with forces from the west
    coast. Over the past decade, the number of amphibious ships has dropped
    below the 38 required ships to the current inventory of 30. Traditional
    amphibious ship availability rates of approximately 70-75 percent due
    to ship maintenance, leaves only 22-25 ships available at any time for
    operations and sustainment training. The Navy's 30-year shipbuilding
    plan grows the amphibious force to a maximum of 34 ships, but that
    level is only maintained 3 years in the mid 2020s.
        Over the past decade, ARG/MEUs from both coasts have deployed in an
    alternating rotation specifically to fill a continuous presence in the
    CENTCOM AOR, providing only transitory presence to U.S. European
    Command (EUCOM) or U.S. Africa Command (AFRICOM). Amphibious forces
    have responded to crises in these theaters, but at the expense of force
    presence in the CENTCOM AOR. Given the low numbers and operational
    availability of amphibious warships today, along with a potential
    reduction in force or curtailment in operations, the Navy-Marine Corps
    team will be challenged to provide a sustained presence, capable of
    responding to crisis in the Mediterranean without accepting risk
    elsewhere.
        If sequestration occurs, the Department of the Navy may be forced
    to gap the required CENTCOM AOR presence. Response to crises in the
    Mediterranean might have to rely on the global response force ARG/MEU,
    which would take 10 days for transit (following equipment/forces
    onload) if an east coast ARG/MEU responds, and 28 days for transit if a
    west coast ARG/MEU responds. Maritime Prepositioning Squadron-2
    (MPSRON-2), located in Diego Garcia and assigned to PACOM, would take
    10 days to sail to the Mediterranean Sea. The equipment prepositioned
    on the MPSRON is optimized for major combat operations, but is capable
    of supporting events across the range of military operations. However,
    unlike US Navy amphibious ships, MPSRON ships operate only in
    permissive environments and have no forcible entry capability.
        In response to the Secretary of Defense's direction to the
    geographic combatant commands and the Services to develop crisis
    response options to be deployed to EUCOM or AFRICOM, the Marine Corps
    developed a concept for a Marine Special Purpose Marine Air Ground Task
    Force-Crisis Response; a self-deployable unit capable of conducting
    limited crisis response missions to include embassy reinforcement,
    limited noncombatant evacuation operations (NEO), tactical recovery of
    aircraft and personnel, and fixed site security. However, fiscal
    constraints imposed upon the Marine Corps as a result of sequestration
    will have a direct impact on the Service's ability to initiate this
    capability while maintaining the support it provides to all other
    global demands.
        Finally, sequestration would reduce already limited crisis response
    capacity and capability in the Mediterranean while effecting a
    concomitant reduction in theater security cooperation (TSC). For
    instance, sequestration will affect naval independent, single-ship
    deployers that support Africa Partnership Station TSC, which in turn
    also reduces crisis response capability in AFRICOM. Sequestration would
    also affect Special-Purpose Marine Air-Ground Task Force Africa (SP-
    MAGTF)-Africa's support to the African Union Mission in Somalia and its
    support to African Contingency Operations and Training Assistance
    missions. In Europe, sequestration could affect Black Sea Rotational
    Force deployments to the Black Sea/Caucasus regions in Eurasia. Each of
    these deployments utilizes intra-theater lift to move forces to remote
    locations from a forward base. Sequestration will reduce the intra-
    theater lift provided by all the Services, thus affecting the Marine
    Corps' ability to respond to crises and to support combatant commander
    TSC priorities.

        117. Senator Inhofe. General Amos, the Marine Corps has been
    designated by Congress as the Nation's force-in-readiness. How will the
    anticipated cuts affect the Marine Corps in terms of its ability to
    respond not only to the previously mentioned rapid response incidents,
    but what about its ability to respond to larger contingency operations?
        General Amos. The Marine Corps takes its mandate to be the Nation's
    force-in-readiness seriously and fields ready forces to meet National
    Military Strategy demands. It fully resources Marine units in support
    of Operation Enduring Freedom and other forward deployed requirements.
    However, the cost of fielding ready forces comes at the expense of home
    station units. Accordingly, the combination of sequestration and an
    annualized continuing resolution will further degrade both near-term
    readiness and the Corps' long-term capability to meet the Defense
    Strategic Guidance. In fiscal year 2013, this resultant degradation
    will begin to set conditions for a ``hollow'' Marine Corps.
        The Marine Corps manages readiness across five broad elements or
    pillars: high quality people; unit readiness; capability and capacity
    to meet requirements; infrastructure sustainment; and equipment
    modernization. Maintaining balance across these pillars is critical to
    achieving and sustaining the Nation's expeditionary force-in-readiness
    for today and tomorrow. If the cuts associated with sequestration are
    implemented, the Corps would not be able to maintain balance across
    those pillars due to the nature and relative size of its budget. The
    Corps crisis response ability and readiness would suffer accordingly.
    Actions the Marine Corps is being forced to take today to ensure short-
    term readiness will create both near- and far-term readiness shortfalls
    within the next year. Any further reductions in fiscal year 2014
    funding, below fiscal year 2012 and 2013 budget levels, would cause the
    Corps to invest in manpower and near-term unit readiness at the expense
    of infrastructure and sustainment.
        For forces not deploying to Afghanistan, the fuel, ammunition, and
    other support necessary for training will be reduced, thereby affecting
    the Corps' ability to provide fully trained individuals and ready units
    to meet emerging crises. Sequestration will require tough solutions in
    terms of idling hundreds of aircraft as they await the funding
    necessary for depot-level work. Without aircraft, critical readiness
    training will degrade and require ever-increasing resources to reverse.
    Sequestration will also require discontinuing efforts to reset
    equipment returning from the combat theater, which would otherwise
    increase readiness in units critically short of essential equipment.
    Shortfalls in equipment will negatively affect pre-deployment and
    collective training, deployment timelines as unit readiness degrades,
    and essential forward deployed missions--including Marine expeditionary
    units, single ship amphibious deployments, and maritime prepositioning
    force exercises. Again, home station units would be the ``billpayers''
    as limited resources will be allocated to those identified for upcoming
    deployments. Many are already in a degraded status after a decade of
    war, and these cuts would further exacerbate deficiencies in home-
    station unit readiness. These same units impacted by resourcing
    shortfalls are the foundation for responding to large-scale
    contingencies.
        The Marine Corps is committed to building the most ready force that
    the Nation can afford. The current fiscal uncertainty puts the Corps at
    risk in realizing this commitment.

        118. Senator Inhofe. General Amos, how would sequestration affect
    Marine Corps end strength?
        General Amos. The Marine Corps is on its way down to 182,000--as
    planned and agreed to. The Marine Corps has no plans to decrease its
    end strength below that number, even with sequestration. As of now, the
    President has exempted the manpower accounts from sequestration. Thus,
    sequestration cuts will come from O&M, which impacts training and
    readiness, and procurement, which impacts modernization and reset.

        119. Senator Inhofe. General Amos, from your perspective, how would
    sequestration impact the rebalancing of Marine Corps forces in the
    Pacific theater?
        General Amos. We are concerned that sequestration, when applied in
    the midst of our planned redistribution of forces in the Pacific, will
    impose significant impacts to our operational readiness and
    responsiveness, and hinder our ability to maintain deterrence, project
    power, respond to crises, and contribute to stability in accordance
    with combatant commander requirements and timelines. Our rebalance to
    the Pacific faced a significant challenge with the planned downsizing
    of the Marine Corps to 182,100. We mitigated this by pacing the
    reconstitution of the III MEF Unit Deployment Program (UDP)
    commensurate with our force requirements in the CENTCOM AOR and by
    accepting the impacts of the downsizing in other commands in favor of
    sustaining, and in some cases increasing, our III MEF force levels
    under the distributed laydown. Sequestration will reduce the
    operational readiness of those Pacific-based forces while also
    incurring a proportional delay in executing the facilities and force
    posture restructuring necessary to achieve the distributed laydown
    plan. Extending the already protracted timeline for the distributed
    laydown increases risk for III MEF due to disruption of operational
    capabilities during the transition and relocation process.
        Sequestration may affect USMC participation in Theater Security
    Cooperation (TSC) events across the Pacific, to include Phase II of the
    Marine Rotational Force-Darwin (MRF-D) and the III MEF UDP. MRF-D Phase
    II, the growth in Australia from a company to battalion sized SP-MAGTF,
    may be impacted by sequestration. Initial fiscal year 2013/2014 costs
    related to site preparation for the larger unit, and the costs
    associated with moving the gear set, agricultural inspections, and unit
    movement, as well as regional TSC strategic-lift expenses could be at
    risk. III MEF UDP is the Marine Corps' method to project Marine forces
    forward in the PACOM AOR and may be affected adversely by sequestration
    if funding is unavailable for deployment.
        The significant impact to USMC equity in the Pacific due to
    sequestration is the effect on strategic mobility. Intra-theater lift
    is a requirement due to the distances in the PACOM AOR. USMC ability to
    participate in TSC events could be impacted if U.S. Navy ships are less
    available due to maintenance and other forms of Intra-theater lift
    become too expensive. While the Joint High-Speed Vessel (JHSV) is not
    currently available, sustained sequestration may impact USMC capacity
    to fund JHSV use when the asset does become available.

             IMPACT OF SEQUESTRATION ON SPECIAL OPERATIONS COMMAND

        120. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, SOCOM will be
    especially hard hit by the impacts of sequestration and a year-long CR.
    In addition to their annual budget of approximately $10.5 billion,
    SOCOM is heavily dependent on roughly $7 billion annually in direct
    support from the Services--including the provision of Service-common
    equipment like the Army's Blackhawk and Chinook aircraft as well as
    enabling support for deployed forces, such as air mobility and
    intelligence, surveillance, and reconnaissance (ISR). Have you
    conducted an assessment of how sequestration will impact your ability
    to continue providing direct support to special operations forces?
        General Dempsey. Yes, we remain in a close dialog with SOCOM
    regarding the impacts of sequestration on the availability of Service-
    common equipment that also supports special operations forces. In the
    short term, I am assured that all mission critical equipment and
    personnel will remain available. We continue to place the highest
    emphasis on support to those deployed, preparing for deployment, and
    ensuring that essential services are in place for servicemembers upon
    their return from combat. However, sequestration will certainly
    negatively impact SOCOM as a result of Service reductions. SOCOM
    depends on the Services to provide support for institutional training,
    depot maintenance, second destination transportation and intra-theater
    lift. The combined effects of Service reductions in these areas will
    lead to a less capable SOF Warrior that is subject to increased risk in
    real world operations.
        General Odierno. The Army continues to assess the impact of the
    year-long continuing resolution and sequestration on U.S. Army Special
    Operations Command (USASOC) and their ability to support SOCOM
    operations. It is important to note that despite the reduced budget
    caps, the global operational tempo of USASOC and SOCOM is not projected
    to decrease in the near-term. USASOC, like many Army commands, will be
    impacted by reduced funding for the depot repair of Army common
    equipment (non-aviation), common stock-funded items that support unit
    level maintenance and unit training. USASOC projects being able to
    manage the shortfall in equipment readiness in the near-term with
    moderate risk, but if the current budget caps persist, will face
    increasing levels of risk starting in fiscal year 2014. Reduced funding
    for USASOC training will reduce training opportunities at the JRTC and
    at home station. This again will impact readiness in the near-term and,
    as these conditions persist, create a greater cumulative effect on
    readiness that will take significant time and resources to recover
    from.
        The decrement to Army Aviation fiscal year 2013 Reset/Special
    Technical Inspection and Repair (STIR) will stop the reset of 23
    special operations aircraft. The lack of full STIR funding for fiscal
    year 2013 will cause these aviation assets to be deferred until fiscal
    year 2014. This significantly increases the risk as special operations
    aircraft are a low-density/high-demand fleet, continuously in the
    fight, and have a national mission that must be preserved. The impacts
    of the continuing resolution and sequestration will further impact
    special operations aircraft in fiscal year 2014 resulting in 27
    aircraft going unfunded. Along with the 23 deferred from fiscal year
    2013, this totals 50 special operations platforms that would not be
    reset to their pre-deployment condition. The longer these budget
    conditions persist the greater the risk becomes and the longer it will
    take to recover special operations capabilities. Commanders in the
    field do not have the funds or the capability to reset these aircraft.
        The Army is not currently projecting any significant intelligence,
    surveillance, and reconnaissance (ISR) enabler shortfall in support of
    SOCOM.
        Admiral Ferguson. Navy has not conducted a complete assessment on
    the impact of sequestration on the service and its support of SOF.
    However, if the current reduction of approximately 9 percent across all
    lines remains in place, there will be a reduction of $9 million in SOF
    common items and secondary impacts on training, equipping, and
    integration of non-SOF units affected by a reduction in O&M funds to
    include:

            - HSC-84 and -85 helicopter squadrons;
            - Dry Deck shelter operations;
            - ISR support;
            - Afloat Forward Staging Bases (AFSB); and
            - Navy Expeditionary Combat Command.

        Navy will continue to support the Navy Special Warfare Command and
    provide the enablers, but decreased forward presence and reduced
    OPTEMPO will impact platform availability.
        General Amos. An assessment of how sequestration would affect the
    Marine Corps' ability to continue providing direct support to Marine
    Special Operations Forces (MARSOF) has been conducted. Lower funding
    rates across the budget, in this case Major Force Program-2 funding,
    would reduce resources for manpower, recruitment, purchase or
    replacement of critical equipment, maintenance and sustainment
    activities.
        General Welsh. We have not conducted a specific assessment of
    sequestration impacts to SOCOM; however, the availability of Air Force
    assets to combatant commanders, including SOCOM, will be significantly
    impacted by weapon system sustainment reductions. Additionally,
    sequestration will defer procurement of AC-130J gunships, delaying
    replacement of a high demand/low density special operations aircraft.
    The Air Force will continue to support contingency operations, however
    currency training for SOF aircraft, such as aerial refueling and
    exercise participation, will be limited due to the impacts of flying
    hour and weapon system sustainment reductions on other Air Force
    aircraft.
        General Grass. Yes. The National Guard understands the importance
    of the support provided to SOCOM by Army and Air National Guard forces.
    Despite the high priority of these missions, our analysis indicates
    that our ability to support SOCOM will be severely degraded if
    sequestration is fully implemented.

        121. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, General Welsh, and General Grass, have you
    spoken with Admiral McRaven, Commander of SOCOM, about how
    sequestration would impact your ability to provide support to Special
    Operations Forces?
        General Dempsey. Yes, we remain in a close dialog with SOCOM
    regarding the impacts of sequestration on Services' ability to provide
    support to Special Operations Forces. In the short term, I am assured
    that all mission critical support will remain available. We continue to
    place the highest emphasis on support to those deployed, preparing for
    deployment, and ensuring that essential services are in place for
    servicemembers upon their return from combat. However, sequestration
    will certainly negatively impact SOCOM as a result of Service
    reductions. SOCOM depends on the Services to provide support for
    institutional training, depot maintenance, second destination
    transportation and intra-theater lift. The combined effects of Service
    reductions in these areas will lead to a less capable SOF Warrior that
    is subject to increased risk in real world operations.
        General Odierno. Yes.
        Admiral Ferguson. The Navy has not yet spoken directly to Admiral
    McRaven on how sequestration will impact service support, but the
    support staff and coordinating offices are constantly engaged with
    their counterparts at SOCOM & U.S. Naval Special Warfare Command.
        General Amos. An assessment of how sequestration would affect the
    Marine Corps' ability to continue providing direct support to Marine
    Special Operations Forces (MARSOF) has been conducted.
        MARSOF is still growing in end strength to meet its commitment to
    SOCOM. This vital growth is composed of combat and combat service
    support structure that both provides the proper balance of operator to
    supporter and facilitates sufficient forces to reduce wear and tear on
    some of the busiest marines in the force. Sequestration has the
    potential to delay this manpower build.
        MARSOF recruiting and initial training efforts in fiscal year
    2013--which are paid for with Major Force Program-2 (MFP-2) funding--
    directly impact MARSOF's operational capability in 2014 and beyond.
    Lower funding rates across the budget, again including MFP 2, would
    reduce resources for recruiting, and ultimately reduce throughput of
    new critical skills operators (CSO) in the military occupational
    specialty 0372. These ``operators'' are the cornerstone of MARSOC force
    capability. MARSOC is also still growing operators to meet its
    commitment to SOCOM.
        Continued aggressive recruiting is absolutely critical in meeting
    its force growth goals and SOCOM operational requirements. While
    detailed projections are still being refined, some rough projections
    can be made already. I believe that any reduction in CSO recruiting
    would prevent the creation of as many as three special operations
    teams' worth of critical skills operators. This shortfall will incur a
    high risk to MARSOC's future assigned missions and would induce
    increased operational tempo and a resultant stress on the remaining
    MARSOC marines and families.
        Sequestration would also hamper my ability to buy or replace
    critical equipment for MARSOF. Furthermore, shortfalls in funding for
    intermediate and operational maintenance activities would reduce
    equipment readiness below 90 percent. These equipment readiness rates
    would negatively affect availability and support for essential
    training, exercises, and other pre-deployment activities. Delayed
    ground equipment repairs would ultimately affect adversely our MARSOF
    warfighting capability as forward deployed units would begin to suffer
    lower equipment readiness rates.
        Finally, sequestration will impact sustainment activities such as
    inspections and classifications; servicing, adjustments, and tunings;
    testing and calibrations; repairs; modifications; rebuilding and
    overhauling; reclamation; and recovery and evacuation. These related
    activities are essential to supporting MARSOF equipment and marines.
        General Welsh. No, I have not spoken directly to Admiral McRaven on
    this subject. Nor have I spoken directly to the other combatant
    commanders, but their Air Component Commanders are well aware of the
    impacts. That includes the Commander of Air Force SOCOM. The
    availability of Air Force assets to combatant commanders, including
    SOCOM, will be significantly impacted by weapon system sustainment
    reductions. Additionally, sequestration will defer procurement of AC-
    130J gunships, delaying replacement of a high-demand/low-density
    special operations aircraft. The Air Force will continue to support
    contingency operations, however currency training for SOF aircraft,
    such as aerial refueling and exercise participation, will be limited
    due to the impacts of flying hour and weapon system sustainment
    reductions on other Air Force aircraft.
        General Grass. Sequestration would degrade the readiness of Special
    Operations Forces.

                STATUS OF THE F-35 LIGHTNING ACQUISITION PROGRAM

        122. Senator Inhofe. Secretary Carter, the F-35 Lightning program
    is the most critical major weapon acquisition being currently managed
    by DOD. Have you determined what will happen to aircraft development,
    production, and deliveries if sequestration is allowed to take place?
        Secretary Carter. The Under Secretary of Defense for Acquisition,
    Technology and Logistics is working closely with the F-35 program
    office, the Services, and the contractor to preserve the development
    program to the maximum extent possible. However, at a minimum,
    sequestration reductions will decrease the fiscal year 2013 LRIP 7
    quantities, increasing unit recurring flyaway cost. We would also see a
    decrease in investments in tooling, redesigns for out-of-production
    parts, and cost reduction initiatives. Additionally, if a furlough of
    government workers and the shutdown of military airfields on weekends
    were to occur, these actions would significantly slow the execution of
    the F-35 flight test and delay fielding of capability.
        If sequestration were to occur as laid out today, the F-35
    development program would lose approximately $325 million in fiscal
    year 2013. To preserve the block 2B software delivery date and all the
    block 2B capability, the program would have to defer some work being
    done on the block 3I/3F capabilities. This deferral would delay the
    fielding of our international partners' capability as well as the full
    warfighting capability for the U.S. military.

        123. Senator Inhofe. Secretary Carter, will there be a potential
    for higher costs and further delays?
        Secretary Carter. Please refer to my answer to question #122.

        123a. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, what will be the impact to your military
    capabilities if the F-35 program is significantly delayed?
        General Odierno. Any significant delay to the F-35 program will
    have negligible impact to Army capabilities. To the extent that
    existing capabilities and capacity are maintained during the delay the
    Army would be able to adjust.
        Admiral Ferguson. Strike fighter inventory management will become
    more difficult with a delay or procurement reduction in the JSF
    program. A delay in delivery of the F-35C will result in a deferral to
    the fleet of a 5th generation fighter aircraft that brings the ability
    to effectively engage a wide range of targets and threats in contested
    airspace. It provides a ``day-one'' strike capability enabling greater
    tactical agility and strategic flexibility required to counter a broad
    spectrum of threats and win in an anti-access/area denied environment.
        Also, the F-35C fused sensors improve and leverage many other
    existing systems and capabilities including those from F/A-18E/F. The
    Department found that the integration of F-35B and F-35C with key
    legacy aircraft (e.g. F/A-18E/F, E/A-18G, et cetera) provides the
    required multi-role mix of fourth and fifth-generation capabilities
    needed across the full spectrum of combat operations to deter potential
    adversaries and enable future Naval and Marine Aviation power
    projection to address assigned U.S. National and Military Strategy
    requirements.
        General Amos. The Marine Corps continues to adjust tactical air
    (TACAIR) transition plans as F-35 procurement ramps are flattened,
    extending the sundown of our legacy fleet 7 years in the last two
    Presidential budgets. Any further delays in procuring the F-35 for the
    Marine Corps will not only result in increased unit recurring flyaway
    costs but will also create gaps in our operational capabilities due to
    the service life expiring on our legacy TACAIR inventory.
        Currently, 80 percent of Marine F/A-18s have surpassed the designed
    service life limit of 6,000 hours and 110 of the Marine Corps' 256 will
    reach an extended service life authorization limit of 9,000 hours by
    2020 equating to nearly half (43 percent) of the operational F/A-18
    inventory. Successful achievement of the 9,000 hour service life is
    predicated on an intense depot level, High Flight Hour inspection
    process. Sequestration and the CR impact the ability to perform these
    High Flight Hour inspections through reduced funding and the furlough
    of specialized artisans. The ability to extend the F/A-18 beyond 9,000
    is unknown. Even if technically feasible, the extension beyond 9,000
    hours would require significant investment in both manpower and
    materiel.
        Scheduled AV-8B to F35B transitions in 2016 and 2023 are required
    to account for attrition losses and ensure available inventory meets
    flight line requirements. Any delays will create a shortfall in the AV-
    8B community and a delay in the fielding of F-35 squadrons, thereby
    reducing MEU capable squadrons to meet COCOM requirements.
    Additionally, extending AV-8B beyond 2030 incurs a significant cost
    with regard to capability upgrades for the aircraft to successfully
    operate in the future threat environment.
        Relevancy, sustainment, and life extension issues for AV-8B and F/
    A-18 would be compounded by the delay of the introduction of F-35's
    fifth generation combat capability. This capability is critical to
    execute the National Security Strategy and our rebalance to the
    Pacific.
        General Welsh. Our strategic shift to the Pacific and the
    proliferation of advanced aircraft and air defense systems
    significantly increases our requirement to be able to operate in an
    anti-access, area denial environment. Along with the F-22, the F-35
    will be the cornerstone of this capability. Any delay in the F-35 will
    have an immediate and lasting impact on our ability to support our new
    strategy.

                 IMPACT OF SEQUESTRATION TO THE INDUSTRIAL BASE

        124. Senator Inhofe. Secretary Carter, I am particularly concerned
    with the impact of sequestration to the industrial base, both in the
    public and private sector. This budget uncertainty, which directly
    impacts every State, makes efficient workload planning impossible and
    creates waste as workers sit idle or are let go and critical repairs
    are delayed. In addition, deferred depot and shipyard work will have a
    negative long-term effect by sending a bow wave of delays through
    future requirement for years to come. What will happen to the civilian
    workforce at public depots and shipyards if sequestration takes effect
    and work is cancelled for the third and fourth quarters?
        Secretary Carter. If sequestration occurs, the civilian workforce
    at Defense depots and shipyards will be furloughed for up to 22 days.
    Previously funded workload that was inducted into the depots will
    continue, although at a slower rate. If the budget caps remain in place
    beyond fiscal year 2013, there will have to be a significant downsizing
    across the Department, including at depots and shipyards. The
    Department has not determined how this impact would be distributed and
    what the consequences for the depot and shipyard workforce would be,
    but it would be significant and probably fall much more heavily in some
    locations than others.

        125. Senator Inhofe. Secretary Carter, when will they be notified
    of their status?
        Secretary Carter. The Department will follow all of the required
    processes and notifications required for a planned furlough
    implementation. Our goal is to be consistent across the Department in
    the implementation of the planned furlough. Civilian employees at
    depots will be notified during the same timeframe as other DOD civilian
    employees affected by sequestration. Under our current furlough plan,
    civilians subject to furlough would begin to be notified in mid-March.
    Furloughs could begin as early as late April.

        126. Senator Inhofe. Secretary Carter, in the private sector, the
    budget uncertainty has the most drastic negative effects for second-
    and third-tier suppliers. These are mostly small businesses that need a
    steady contract to maintain their dedicated workforces. I fear that
    without these contracts, some of these small companies may be forced to
    go out of business. In your opinion, what effect will sequestration
    have on these small businesses?
        Secretary Carter. I believe you have described the situation
    accurately in your question; budget swings and uncertainty
    disproportionately affect lower-tier suppliers and small businesses.
    Second- and third-tier suppliers rely on the prime contractors to pay
    them in a timely manner; this will become increasingly difficult during
    sequestration as firms conserve cash. Smaller firms, which form the
    backbone and technological future of the industrial base, tend to focus
    on inventing, and they have smaller cash Reserves to rely upon and less
    access to capital in hard times. Smaller firms are generally more
    financially vulnerable than the larger, more stable prime contractors.
    As top-lines and margins are squeezed, sequestration will severely
    impact our smaller, lower-tier firms. Some small firms will have no
    choice but to close their doors.

        127. Senator Inhofe. Secretary Carter, when will they be notified
    of the impact to their contracts?
        Secretary Carter. Generally, we will try to avoid opening
    previously funded contracts. Contracting Officers will notify a
    contractor of any impact to a given contract once a decision has been
    made by the program manager and his team that some change will be
    required for the program and the scope of the change to be made has
    been identified. I have already authorized our acquisition leadership
    to begin discussions with industry on potential impacts of
    sequestration on a case-by-case basis.

        128. Senator Inhofe. Secretary Carter, do you have an estimate of
    the extra costs and workload for DOD to stop and then start contracts?
        Secretary Carter. Any change to a contract that affects scope or
    schedule increases workload and administrative costs. However, it is
    not possible to provide a general estimate of cost based on potential
    changes. We will be able to project cost on an individual contract
    basis once we have identified the specific changes that will occur.

     sequester implications on the national nuclear security administration
        129. Senator Inhofe. Secretary Carter, more than most people, you
    understand the necessity to maintain the safety, security, and
    reliability of our nuclear weapons and to modernize the nuclear weapons
    complex. You also understand the critical relationship--stated in the
    2010 NPR--between nuclear force reductions and a responsive nuclear
    infrastructure. While funding for the nuclear weapons complex falls
    within the Department of Energy budget, please give me your assessment
    of the impact of a further 7.7 percent reduction to National Nuclear
    Security Administration (NNSA) weapons activity funding that would be
    required under the sequester.
        Secretary Carter. While we would have to defer to NNSA for
    specifics, a sequester cut, if applied across the board reduction to
    NNSA weapons activity funding, would impact our ability to continue our
    plans to modernize the nuclear stockpile. Eighty percent of the nuclear
    stockpile will be in various stages of life extension efforts over the
    next 5 to 10 years. A budget reduction that impacts NNSA's ability to
    perform one or more of these life extension programs would introduce
    substantial risk in our ability to sustain the stockpile and diminish
    confidence in the nuclear deterrent. We are also relying heavily on a
    modernized nuclear weapons complex to perform this work. Budget
    reductions delaying construction would introduce additional significant
    risk to scheduled modernization.

        130. Senator Inhofe. Secretary Carter, is it not the case that
    delays to achieving a responsive nuclear infrastructure should also
    impact whether we continue to reduce our remaining nuclear stockpile?
        Secretary Carter. The infrastructure and the stockpile size are
    related, but a number of factors affect the needed size of the
    stockpile and the timing and scale of needed modernization programs for
    our nuclear infrastructure. The Department has been working closely
    with DOE for the past year to understand infrastructure needs to
    support the current and planned stockpile and we believe we have a
    sound plan. We would have to reevaluate some of that work if the
    stockpile were significantly reduced below today's levels; however I
    believe that the central elements of that plan would not change. The
    administration and the Department are committed to maintaining a safe,
    secure and reliable stockpile and the necessary infrastructure to
    support the strategic deterrent, whether or not total stockpile size is
    reduced.

                          COMMANDER'S RISK ASSESSMENT

        131. Senator Inhofe. General Dempsey, last year you conducted a
    series of strategic seminars with the Joint Chiefs and combatant
    commanders to discuss critical strategy and policy issues. The seminars
    were intended to contribute to an updated risk assessment required by
    Congress each year on the ability of the Armed Forces to carry out its
    roles and responsibilities. Can you provide a brief review of the major
    findings and risks identified during the seminars? Specifically, what
    general areas (in an unclassified setting) do the Joint Chiefs deem as
    high to severe risk?
        General Dempsey. These seminars were very helpful in gaining
    insights on joint force priorities and looking for alternative ways to
    meet global and regional end states with reduced means, in the context
    of implementing a fiscally constrained Defense Strategic Guidance
    (DSG). We identified major challenges that, given further budget cuts,
    will require reevaluation of our strategy and future force structure
    requirements. With regard to risk, those findings were used to inform
    risk characterizations in my 2013 Chairman's Risk Assessment which I
    will soon submit to the Secretary of Defense for forwarding to
    Congress.

        132. Senator Inhofe. General Dempsey, how will you address the
    threat of sequestration in your upcoming risk assessment?
        General Dempsey. An immediate effect of the threat of sequestration
    which I will address in my Chairman's Risk Assessment is the negative
    impact of budget uncertainty on our ability to most effectively plan,
    resource and conduct activities vital to our national security. Fiscal
    uncertainty undermines U.S. credibility and complicates effective,
    efficient military strategic planning.

                      EFFECTS OF SEQUESTRATION ON TRICARE

        133. Senator Inhofe. Secretary Carter and Secretary Hale, during an
    August 1st House Armed Services Committee hearing you warned that,
    ``Funds for the Defense Health Program, which provides health care for
    retirees and military dependents, would be sequestered, resulting in
    delays in payments to service providers and, potentially, some denial
    of medical services.'' At a September 20, 2012, hearing before the same
    committee, Secretary Hale indicated that under sequestration, DOD may
    not be able to cover all its TRICARE bills and stated, ``I'm not sure
    what our providers would do in that case. We would be just late, and
    then we would try to fix it in 2014, but it is not a good situation.''
    In today's hearing statement, you again say that ``DOD might not have
    enough funds to pay TRICARE bills toward the end of the fiscal year.''
    TRICARE providers are willing to accept a discounted fee off of
    Medicare rates because DOD has a good reputation for making timely
    claims payments. Prompt payments drive TRICARE provider satisfaction
    and allow TRICARE contractors to build a robust provider network for
    military personnel, dependents, and retirees across the country. The
    President exempted military personnel accounts from sequester in order
    not to break faith with military personnel, their families, and our
    retirees. Yet, sequestering funds from the TRICARE program would, in
    effect, erode this commitment. What reductions in TRICARE coverage
    should beneficiaries expect in the event of sequestration?
        Secretary Carter. Beneficiaries will not see reductions in TRICARE
    coverage in the event of sequestration. Access to TRICARE by eligible
    beneficiaries is a benefit provided by law, and we have no authority to
    curtail that benefit. However, sequestration will result in the
    potential loss of over $3 billion in resources from the Defense Health
    Program in the last half of fiscal year 2013. This substantial loss in
    funds could force us to slow or suspend claims payments or to make
    difficult funding tradeoffs to continue paying private sector claims.
    We are actively looking at plans to mitigate these problems, but we do
    not yet have a plan to avoid all problems unless Congress acts to
    detrigger sequestration.
        Secretary Hale. Beneficiaries will not see reductions in TRICARE
    coverage in the event of sequestration. Access to TRICARE by eligible
    beneficiaries is a benefit provided by law, and we have no authority to
    curtail that benefit. However, sequestration will result in the
    potential loss of over $3 billion in resources from the Defense Health
    Program in the last half of fiscal year 2013. This substantial loss in
    funds could force us to slow or suspend claims payments or to make
    difficult funding tradeoffs to continue paying private sector claims.
    We are actively looking at plans to mitigate these problems, but we do
    not yet have a plan to avoid all problems unless Congress acts to
    detrigger sequestration.

        134. Senator Inhofe. Secretary Carter and Secretary Hale, what
    effects will cuts in DOD health budget accounts have on the TRICARE
    provider network?
        Secretary Carter. Sequestration could have a potentially ruinous
    effect on the provider network if we are forced to slow or suspend
    claims payments. We have spent years building a provider network that
    has come to recognize us as a reliable payer. Our goal is to maintain
    these good relationships and sustain the provider network intact
    despite the challenges posed by sequestration.
        Secretary Hale. Sequestration could have a potentially ruinous
    effect on the provider network if we are forced to slow or suspend
    claims payments. We have spent years building a provider network that
    has come to recognize us as a reliable payer. Our goal is to maintain
    these good relationships and sustain the provider network intact
    despite the challenges posed by sequestration. As I have noted
    elsewhere, we are searching for ways to minimize these problems.

        135. Senator Inhofe. Secretary Carter and Secretary Hale, what
    steps are you taking to minimize these effects?
        Secretary Carter. In order to minimize the impact on the Direct
    Care system and insure we do not have to suspend payment of TRICARE
    claims, we will be forced to disproportionately use RDT&E and
    Procurement funds for O&M purposes. To accomplish this, we will need
    significant financial transfer and/or reprogramming authority. This
    strategy will help preserve the delivery of health care but doing so
    will mean that important research projects will be slowed or stopped
    altogether. Existing equipment will be used longer with the chance for
    more breakdowns and increased maintenance costs. At some point,
    equipment becomes obsolete and cannot be repaired any longer. These
    actions, in response to a sequestration, will substantially delay the
    benefits of research projects and will drive increased bills for
    equipment in future years.
        In addition, by focusing all resources on the provision of patient
    care under a sequestration, we will have less funding to address
    facility maintenance and needed restoration and modernization projects.
    This will negatively affect the care environment and potentially drive
    substantial bills in the future. While we will continue to fund
    projects that affect patient safety or that are emergent in nature, we
    will see a degradation in the aesthetic quality and functionality of
    our facilities. This can impact the morale of both the staff and the
    patients and can greatly degrade the patient's experience of care. Many
    of our facilities are older and require substantial upkeep. To delay
    these projects only exacerbates the problem and ultimately the staff
    and more concerning, the patients, suffer the consequences. This is not
    a sustainable strategy.
        Secretary Hale. In order to minimize the impact on care provided in
    military treatment facilities and by the private sector network, we may
    be forced to attempt to make disproportionate use of RDT&E and
    Procurement funds for healthcare purposes. This means that important
    research projects will be slowed or stopped altogether. Existing
    medical equipment will be used longer with the chance for more
    breakdowns and increased maintenance costs. At some point, equipment
    becomes obsolete and cannot be repaired any longer. These actions, in
    response to a sequestration, will substantially delay the benefits of
    research projects and will drive increased bills for equipment in
    future years.
        In addition, by focusing all resources on the provision of patient
    care under a sequestration, we will have less funding to address
    medical facility maintenance and the needed restoration and
    modernization projects. As with the use of research funds, this
    mitigation strategy would come with a cost. This will negatively affect
    the healthcare environment and potentially drive substantial bills for
    facility maintenance in the future. While we will continue to fund
    projects that directly affect patient safety or that are emergent in
    nature, we will see a degradation in the aesthetic quality and
    functionality of our medical facilities. This can impact the morale of
    both the medical staff and the patients and can greatly degrade the
    patient's experience of healthcare within the military health system.
    Many of our facilities are older and require substantial upkeep. To
    delay these medical facility projects only exacerbates the problem and
    ultimately the medical staff and more concerning, the patients, suffer
    the consequences. This is not a sustainable strategy.
        Nor is it clear that this strategy to mitigate the effects on
    TRICARE will work. Its viability depends on decisions about
    appropriations bills and other legal issues. Therefore, we still do not
    feel that we have a good strategy to offset TRICARE problems. Indeed,
    the only sure way to offset them would be to detrigger sequestration.

        136. Senator Inhofe. Secretary Carter and Secretary Hale, since
    solo or small practice providers, like mental health counselors, don't
    necessarily have the financial resources to wait a long time for claims
    payments, they may drop out of TRICARE's provider network. If this
    happens, what is your plan to ensure TRICARE's access standards are met
    under sequestration?
        Secretary Carter. As we work to address the impact of sequestration
    within the Military Health System, our focus will remain on providing
    exceptional, accessible care to all beneficiaries and avoiding the
    suspension or delay of TRICARE claim payments. To do so, we will
    require significant financial transfer and/or reprogramming authority
    to allow us to disproportionately use investment account funds (RDT&E
    and Procurement) to sustain our health care operations. While we
    believe this will minimize the disruption to our patients in the very
    short term, it comes at a high cost, especially in subsequent years.
        Secretary Hale. As we work to address the impact of sequestration
    within the Military Health System, our focus will remain on providing
    exceptional, accessible care to all beneficiaries. Our goal is to
    maintain our provider network to include solo, small practice, and
    mental health counselors despite the challenges posed by sequestration.
    To do so, we are considering making disproportionate use of investment
    account funds (RDT&E and Procurement) and/or facility maintenance
    projects funding to sustain our health care operations. If this plan
    works, it will minimize the disruption to our patients in the very
    short term. But it comes with a significant cost, especially in
    subsequent years, and it is not yet certain that it will work.

        137. Senator Inhofe. Secretary Carter and Secretary Hale, if
    providers drop out of the TRICARE network, how will you convince them
    to get back into the network after you have destroyed their trust in
    TRICARE?
        Secretary Carter. It has taken us years to build our robust health
    care network. Our strategy is to maintain that to the best of our
    ability despite the devastating impact that sequestration will bring in
    other areas. In addition to obtaining financial transfer and/or
    reprogramming authority for the use of RDT&E and Procurement funds, we
    intend to take substantial risk in Operation and Maintenance accounts,
    such as Facility Sustainment and Restoration and Modernization, in
    order to continue to pay TRICARE claims and avoid harming the network.
    Otherwise we may have to slow or suspend TRICARE claims payment as soon
    as July 2013.
        Secretary Hale. It has taken us years to build our robust health
    care network. Our strategy is to maintain that to the best of our
    ability despite the devastating impact that sequestration will bring in
    other areas. We hope that we can identify a plan that permits us to
    take substantial risk in other areas, such as Facility Sustainment,
    Restoration and Modernization and investment accounts, in order to
    continue to pay TRICARE claims and avoid harming the network.

              EFFECTS OF SEQUESTRATION ON FAMILY SUPPORT PROGRAMS

        138. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, the Services are in a budget bind and I am
    worried that morale will suffer with cuts to important military family
    support programs--child care centers, youth programs, recreation
    programs, commissaries, exchanges, and others. While dodging bullets
    and bombs, deployed servicemembers want to know that their family
    members are well cared for at home. What will you do to minimize the
    impact of budget cuts on morale of our Armed Forces?
        General Odierno. The Army remains steadfast in its commitment to
    provide soldiers and families a quality of life commensurate with their
    service. With an across the board decrement to all other programs,
    critical Family Programs will be protected. Nevertheless, it will not
    be possible to protect every family program. An assessment is now
    underway to help us identify the most important programs. One of our
    biggest challenges will be to ensure morale remains high as we
    implement these large cuts. Soldiers are concerned about their future
    training, readiness and ability to serve in the future. They are
    dedicated professional soldiers who expect and deserve the best
    equipment, best military education and best training.
        Admiral Ferguson. Ensuring our sailors and their families are well
    cared for is a top priority. As a result, critical support programs
    will continue to be funded at levels that provide the support our
    sailors and their families deserve. Despite funding level reductions,
    we anticipate the following sailor and family programs will not see any
    impact:

        1.  Childcare Development Centers and Childcare Development Homes:
    Current staffing levels will be maintained to provide the required
    services in Childcare Development Centers and Childcare Development
    Homes.
        2.  Sexual Assault Prevention Program: Sexual Assault Prevention
    and Response remains a very high priority and no reductions in service
    or availability will occur.
        3.  Fleet and Family Service Centers: Through program efficiencies
    we expect Fleet and Family Support Services such as counseling, will
    continue with no impact on military members and their dependents.

        By prioritizing resources this way, we will minimize the impact of
    budget cuts on our sailors and their families.
        General Amos. Marines and families are no different than their
    fellow citizens. Talk of looming budget cuts and the possible impact
    those cuts will have on their quality of life, their families, their
    children, their jobs all take a toll. Marines and families are
    resilient and morale remains high. They have proven that over the past
    decade of fighting two wars. Even though they have concerns, your
    marines continue to thrive while training hard and fighting hard. They
    stand ready to contain the crisis, fill the gap, and hold the line.
    They don't know when they will be called, but you should know that your
    marines, with their families standing behind them, are ready to leave
    tonight.
        The Marine Corps' approach to potential sequestration cuts to our
    Marine and Family support portfolio is focused on preserving programs
    that support the health, welfare and morale of our marines and their
    families while taking acceptable levels of risk in lower-priority
    programs.
        General Welsh. We have already begun to feel the impacts of reduced
    funding levels in previous years and under Continuing Resolution (CR)
    in fiscal year 2013. While there have been no enterprise-wide
    eliminated programs, Air Force Services closed 19 facilities and
    programs in fiscal year 2012. If sequestration occurs, and budgets are
    further constrained, we expect community support programs will be
    forced to make difficult decisions regarding future service models.
        To help manage funding shortages from an enterprise-wide approach,
    we have conducted a clean slate review of all Morale, Welfare and
    Recreation programs and identified a funding strategy model for
    guidance in making fiscal decisions with regard to Family Support
    Programs when funding becomes limited. This involved identifying
    ``Core'' family support programs, i.e. Appropriated Fund Dining (i.e.
    dining facilities, flight kitchens); Fitness; Child and Youth Care;
    Airmen and Family Readiness; Libraries; Outdoor Recreation and Youth
    Programs to prioritize scarce funding towards these important programs.
    This strategy provides an avenue to focus support programs to promote
    retention, readiness, unit cohesion and morale of our Airmen and their
    families. In addition, commissaries and exchanges have conducted top to
    bottom operational reviews in efforts to reduce costs and become more
    efficient while continuing to provide quality services to our Airmen
    and their families.

        139. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, how will you shield family support programs
    from the cuts you expect to happen under sequestration?
        General Odierno. If sequestration takes place, we must take care of
    must-pay civilian pay, utilities, and key life health and safety
    services. This strains our ability to protect Army Family Programs
    which are a priority for the Army. Impacts will likely be caused by
    termination of contracts when possible or by other reductions to family
    programs. Child Development Centers (CDCs) will likely lose flex and
    hourly childcare support, and will likely reduce hours based on the
    Army wide hiring freeze, looming furlough, and funding reduction
    appropriated funds previously used to assist in recapitalization of
    CDCs and Child, Youth, and School Age Services facilities will likely
    be withdrawn and sustainment and maintenance projects deferred or
    cancelled. Additional actions such as a reduction in physical fitness
    facility hours and library services may be required. Furloughs will
    affect the delivery of services at Army Community Service, in programs
    like Army Family Team Building, spouse employment services, victim
    advocate support to domestic violence victims, survivor outreach
    support to our surviving family members, critical family and new parent
    life skill development programs and support to families with special
    needs children. We will protect these programs to the extent feasible,
    but the Army-wide hiring freeze will prevent us from arresting natural
    attrition, potentially causing soldiers to perform duty in fitness
    centers, personnel service retirement service, and housing referral
    service offices. These are our initial insights, as the Army Staff and
    Commands continue analysis and planning as we respond to emerging
    missions and priorities.
        Admiral Ferguson. Overseas Morale, Welfare, and Recreation (MWR)
    programs will be preserved to the greatest extent possible. There will
    likely be reductions in service hours and capacity in the following
    programs CONUS:

             Fitness Centers will see possible reductions in hours
            of operations and services. Our focus is on providing fitness
            programs to a level that meets current readiness requirements.
             MWR facilities across the Navy are likely to
            experience reduced operating hours and services.

        To mitigate sequestration impacts on and maintain the highest level
    of support to military members and their families, Navy will cancel
    construction of MWR facilities, as well as reduce sustainment of
    existing MWR facilities. This will increase long-term risk as
    facilities age without recapitalization and will increase operating
    costs, negatively impacting the long-term MWR self-sustaining business
    model. However, it will enable Navy to continue to provide minimum
    levels of service for the longest possible time.
        General Amos. The Marine Corps' approach to potential sequestration
    cuts is focused on preserving programs that support the health,
    welfare, and morale of our marines and their families while taking
    acceptable levels of risk in lower-priority programs. These protected
    program areas are considered most essential in meeting the
    organizational objectives of the Marine Corps. They collectively
    promote the physical and mental well-being of marines and families, a
    requirement that supports the accomplishment of our operational
    requirements.
        General Welsh. The cuts that will result under sequestration in
    family support programs make it challenging to provide programs to
    maintain ready, resilient Airman and may further impact readiness and
    unit cohesion. Recognizing these challenges, demographics and
    lifestyles of today's Airmen and families, we are reviewing all family
    and MWR programs based on customer satisfaction surveys and business
    analysis. Our goal is to determine how best to provide family and MWR
    programs and base-level support services in today's budget-constrained
    environment. For instance, we are focusing our resources on those core
    programs (ex: Food, Fitness, Child Care) which best support ready,
    resilient Airman and may be forced to make hard decisions to not
    support those non-core programs (ex: Auto Hobby, Arts & Crafts, Bowling
    Centers) which are less utilized by Airman and their families. In
    summary, we are leveraging our resources to better meet the needs of
    Airmen and their families we serve.

        140. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, how are services, such as child care support
    and family readiness programs, affected by sequestration?
        General Odierno. If sequestration takes place, we must take care of
    must-pay civilian pay, utilities, and key life health and safety
    services. This strains our ability to protect Army Family Programs
    which are a priority for the Army. Impacts will likely be caused by
    termination of contracts when possible or by other reductions to Family
    programs. Child Development Centers (CDCs) will likely lose flex and
    hourly childcare support, and will likely reduce hours based on the
    Army wide hiring freeze, looming furlough, and funding reduction.
    Appropriated funds previously used to assist in recapitalization of
    CDCs and Child, Youth, and School Age Services facilities will likely
    be withdrawn and sustainment and maintenance projects deferred or
    cancelled. Additional actions such as a reduction in physical fitness
    facility hours and library services may be required. Furloughs will
    affect the delivery of services at Army Community Service, in programs
    like Army Family Team Building, spouse employment services, victim
    advocate support to domestic violence victims, survivor outreach
    support to our surviving family members, critical family and new parent
    life skill development programs and support to Families with special
    needs children. We will protect these programs to the extent feasible,
    but the Army-wide hiring freeze will prevent us from arresting natural
    attrition, which may cause degradation of services. These are our
    initial insights, as the Army Staff and Commands continue analysis and
    planning as we respond to emerging missions and priorities.
        Admiral Ferguson. The Navy will limit to the greatest extent
    possible the impact on Childcare, Sexual Assault Prevention and
    Response (SAPR), and Fleet and Family Support Service programs for
    military members and their families. The Navy plans to maintain current
    staffing levels at Childcare Development Centers and Childcare
    Development Homes to provide childcare services under our Child and
    Youth Program. Overseas MWR programs will be preserved to the greatest
    extent possible, while CONUS programs will likely see reductions in
    service hours and capacity. SAPR hiring actions to meet NDAA 12
    requirements are ongoing and will be complete by 1 Oct 2013.
        General Amos. Programs such as child care and other family
    readiness programs were not part of the exempted personnel costs.
    However, the Marine Corps' approach to potential sequestration cuts to
    our Marine and Family support portfolio, to include our child care and
    family readiness programs, is focused on preserving the programs that
    support the health, welfare and morale of our marines and their
    families, while taking maneagble risk in lower-priority programs such
    as our youth and teen and recreation programs. These services may be
    impacted by fewer support staff, shorter hours of operation, imposition
    of user fees, or termination of the program.
        General Welsh. Child care support will be affected by sequestration
    if Child and Youth Program staff are furloughed. The impact will vary
    by installation based on available staffing but could result in reduced
    hours of operation, or reduced class sizes, leading to longer wait
    lists. If Child Development Programs (Child Development Centers, Family
    Child Care and School-Age Programs) are curtailed, single and dual
    working parents will be required to adjust their work hours or find
    alternative care. Child care outside the gate is extremely limited for
    infants/toddlers at many locations.
        Another potential impact of sequestration and a furlough will be
    the inability to open approximately 750 child care spaces that are
    currently in different phases of construction. Child care waiting lists
    may continue to grow without this additional space. In addition,
    military spouses comprise an estimated 25 percent of our Child and
    Youth Program workforce, thus causing added financial hardship to
    military families.
        We are committed to supporting our airmen and their families and
    will make adjustments in an effort to focus our resources to where they
    are most needed.

        141. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, what is the projected impact on housing
    entitlements and tuition assistance?
        General Odierno. The President exempted the military pay accounts
    from sequester. The Department is committed to ensure military members
    continue to be paid in a timely manner. As such, housing entitlements
    will not be impacted by either a sequestration or a full-year CR. Basic
    Allowance for Housing (BAH) is paid with the Military Personnel, Army
    (MPA) appropriation which, as stated, has been exempted by the
    President. With the fiscal year 2012 enacted budget, and the fiscal
    year 2013 OCO request, MPA is adequately funded for fiscal year 2013.
    However, while the Department fully expects to meet its military
    payroll obligations and ensure military members are paid in the event
    sequester occurs, other areas of pay administration, such as the
    timeliness of executing payroll changes, will be degraded.
        Tuition assistance may see significant impacts in the event of
    sequestration. With the military pay accounts exempted, the O&M
    accounts will be targeted with a higher percentage of the bill to pay.
    Tuition assistance is paid from O&M, so while existing tuition
    assistance agreements (i.e., for those currently enrolled in class or
    those approved prior to sequestration) will be honored, the shortfall
    in O&M for fiscal year 2013 means funding for future enrollments may be
    diverted to mitigate risk to higher priority Army programs.
        Admiral Ferguson. Since Basic Allowance for Housing is funded
    through Military Personnel appropriations, which are exempt from
    sequester, we do not anticipate any impact on housing entitlements. The
    CNO has consistently emphasized his commitment to protect tuition
    assistance funding as much as practical.
        General Amos. The Marine Corps' approach to potential sequestration
    cuts is focused on preserving programs that support the health,
    welfare, and morale of our marines and their families while taking risk
    in lower priority programs such as Tuition Assistance (TA). These
    protected program areas are considered most essential in meeting the
    organizational objectives of the Marine Corps. They collectively
    promote the physical and mental well-being of marines and families, a
    requirement that supports the accomplishment of our operational
    requirements.
        Based on the impact of sequestration, the Marine Corps will only be
    able to offer TA to eligible marines for the first through third
    quarters of fiscal year 2013. While a marine's educational goals are a
    priority, marines have other tools at their disposal to achieve their
    goals. Marines interested in pursuing higher education after the
    expiration of TA funds will still have their GI Bill benefits to fund
    higher education needs.
        Because the military personnel accounts have been expressly
    exempted from sequestration spending cuts for this fiscal year, pay and
    allowances, including housing entitlements, for our marines should be
    unaffected during 2013. However, if not exempted in fiscal year 2014
    and beyond, the level of these benefits will need to be re-evaluated
    and may be negatively impacted.
        General Welsh. The Air Force continues to be committed to the
    professional development of our airmen, including the financial
    assistance military tuition assistance provides toward post-secondary
    academic education. We believe the programs supported by military
    tuition assistance are vital to the retention and readiness of airmen
    in an increasingly complex environment. As such, the Air Force
    currently has no plans to curtail military tuition assistance. However,
    the Air Force will consider various eligibility management controls, if
    needed, to mitigate the effects of sequestration.
        Were military tuition assistance to be stopped due to
    sequestration, approximately 100,000 airmen, primarily from the E-4 to
    E-6 grades, would be impacted. Also, approximately 6,500 senior
    noncommissioned officers without a degree may see promotion impacts due
    to the missed opportunity to complete their Community College of the
    Air Force degree. In addition, over 200 technical training instructors
    may not be able to complete their degrees within timelines prescribed
    by the accrediting agency, possibly impacting the overall accreditation
    status of Air University.
        In regards to housing entitlements, Basic Allowance for Housing
    entitlement is paid through the military personnel account, which is
    exempt from sequestration impacts. There will be no impact to housing
    entitlements.

        142. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, as we see this looming threat just over the
    horizon, can you say how a sequestration is affecting the morale of our
    servicemembers?
        General Odierno. The workforce mix of the Army will be negatively
    impacted. Soldiers exhibit the best morale when they are able to do
    their jobs. Sequestration will force the Army to use its most valuable
    human capital, its soldiers, in ways we would prefer not to. As
    civilians and contractors are furloughed or eliminated due to the
    fiscal reality, critical missions must still be performed. Some of
    those missions will have to be performed by soldiers because there
    isn't another source of other manpower available. This could negatively
    impact morale as well as degrade overall readiness.
        Of course, our soldiers count on us to ensure they have the
    resources to do their jobs and take care of their families. The overall
    sense of uncertainty that sequestration hangs over the force will, over
    time, have an impact. One of our biggest challenges as leaders will be
    to ensure morale remains high as we implement these large cuts.
    Soldiers are concerned about their future training, readiness and
    ability to serve in the future. They are dedicated professional
    soldiers who expect and deserve the best equipment, best military
    education and best training.
        Admiral Ferguson. Our sailors, civilians, and their families are
    experiencing increased anxiety as a result of this fiscal uncertainty.
    This will have a corrosive effect on the morale of our people over
    time.
        For most sailors and their families, the immediate effect of
    sequestration and a year-long continuing resolution is the uncertainty
    in the deployment schedules of our ships and aircraft. Delayed,
    extended, or canceled deployments disrupt the lives of Navy families.
    Increased anxiety, family separation, and impacts to family budgets due
    to this uncertainty clearly have an impact.
        The reduction of ready forces will also put greater stress on
    deployed or soon-to-deploy sailors assigned to ships and squadrons as
    they operate at a higher tempo. While military compensation is exempt
    from sequestration, there is a cost to the force in having them
    maintain our ships and aircraft and train for future deployments with
    fewer resources, spare parts, and less depot maintenance. The overall
    anxiety and fiscal uncertainty could affect the decisions of our
    sailors and civilians to continue their service in the Navy.
        General Amos. Marines and families are no different than their
    fellow citizens. Talk of looming budget cuts and the possible impact
    those cuts will have on their quality of life, their families, their
    children, their jobs all take a toll.
        Marines and families are resilient and morale remains high. They
    have proven that over the past decade of fighting two wars. Even though
    they have concerns, your marines continue to thrive while training hard
    and fighting hard. They stand ready to contain the crisis, fill the
    gap, and hold the line. They don't know when they will be called, but
    you should know that your marines, with their families standing behind
    them, are ready to leave tonight.
        General Welsh. The potential impacts of sequestration are providing
    a lot of uncertainty in the force and add another stressor affecting
    the resilience and readiness of our airmen and their families and are
    affecting morale. Our airmen are concerned about potential force
    reductions, civilian furloughs, and the effects it will have on their
    teammates, the weapon systems they operate and support to the myriad
    programs they execute in defense of our Nation.

        143. Senator Inhofe. General Odierno, Admiral Ferguson, General
    Amos, and General Welsh, how is this uncertainty affecting their
    families?
        General Odierno. I believe all families are concerned in this
    uncertain fiscal climate, but I also believe they are trusting the Army
    to do the right thing. To this end, family programs remain the Army's
    priority, and I intend to protect those programs, to the extent
    possible, that hold the most value, and that provide the most benefit
    to our soldiers and their families.
        Admiral Ferguson. For most sailors and their families, the
    immediate effect of sequestration and a year-long continuing resolution
    is the uncertainty in the deployment schedules of our ships and
    aircraft. Delayed, extended, or canceled deployments disrupt the lives
    of Navy families. Increased anxiety, family separation, and impacts to
    family budgets due to this uncertainty clearly have an impact.
        The reduction of ready forces will put greater stress on deployed
    or soon-to-deploy sailors assigned to ships and squadrons as they
    operate at a higher tempo. While military compensation is exempt from
    sequestration, there is a cost to the force in having them maintain our
    ships and aircraft and train for future deployments with fewer
    resources, spare parts, and less depot maintenance. The overall anxiety
    and fiscal uncertainty could affect the decisions of our sailors and
    civilians to continue their service in the Navy.
        General Amos. Marines and families are no different than their
    fellow citizens. Talk of looming budget cuts and the possible impact
    those cuts will have on their quality of life, their families, their
    children, their jobs all take a toll.
        Marines and families are resilient and morale remains high. They
    have proven that over the past decade of fighting two wars. Even though
    they have concerns, your marines continue to thrive while training hard
    and fighting hard. They stand ready to contain the crisis, fill the
    gap, and hold the line. They don't know when they will be called, but
    you should know that your marines, with their families standing behind
    them, remain your expeditionary force in readiness.
        General Welsh. The current fiscal uncertainty is impacting Air
    Force families as they plan for a loss of family income due to (the
    anticipated) furlough of civilian employees and the elimination of some
    temporary and/or term employees, and general uncertainty of unknown end
    strength reductions. However, our Airman and Family Readiness Centers
    provide a wide variety of programs and referral services such as
    financial planning, budgeting, resume writing, et cetera, designed to
    minimize impacts to airmen and their families.
        If future force reductions become a reality, an increased number of
    mandatory Transition Assistance Program (TAP) classes may be required
    to support servicemembers. Additionally, wait times for services may be
    increased due to limited availability of all staff. However, we are
    committed to supporting our airmen and their families and will make
    adjustments as necessary.

                 EFFECTS OF SEQUESTRATION ON CIVILIAN PERSONNEL

        144. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, the Services have told us they will furlough
    civilian personnel for up to 22 days under sequestration. This will
    result in a 20 percent pay cut for thousands of workers across the
    country, and many of them will not be able to make ends meet. Their
    families will suffer unnecessarily, and the President has shown no
    inclination to work with Congress to stop this devastation to families.
    How are you planning to minimize the financial impact of sequestration
    on civilian personnel?
        Secretary Carter. If sequestration occurs, by law it is required to
    impact all programs and appropriations across the board. Given the
    requirements of the law, DOD is implementing furloughs in a consistent
    manner across the Department. The Department will make every effort to
    monitor the stress on our employees and make sure we communicate the
    state of play. Government wide furlough rules will generally preserve
    benefits such as healthcare, but the Department does not have the tools
    or resources to minimize the impact of sequestration on our employees
    and their families.
        Secretary Hale. The magnitude of the reductions that must be
    absorbed in the O&M accounts leaves the Department no choice but to
    reduce the funding required for civilian personnel. The timing of the
    sequestration exacerbates the situation, leaving only 6 months or less
    to execute these furloughs. This will result in making almost all
    Department civilians subject to being placed in a furlough status for 2
    days of every pay period beginning in April and ending in September.
    This equates to a 20 percent reduction in their salaries for the
    remainder of the year. Unfortunately, the Department has little ability
    to minimize the financial impact on our civilians. However, the
    financial impact on civilian personnel can be avoided if Congress was
    to act to avoid sequestration.
        General Dempsey. To the extent the Joint Staff is able to minimize
    the impacts of sequester, we will work within the law's parameters and
    OMB guidance to do so. The principal measures available are to keep
    civilian employees informed through regular communications advising
    them of Departmental deliberations on how best to handle the budget
    uncertainty, and their rights and obligations.
        If sequestration is triggered, the Department may initiate civilian
    employee furloughs. These furloughs will occur across the civilian
    workforce in order to reduce individual impacts by spreading the costs
    more broadly throughout the Department. Affected employees will receive
    notification 30 days in advance stating the length and cause of the
    furlough. OSD will also notify Congress of its intent to possibly
    furlough government civilian employees prior to the actions occurring.
        According to guidance from the Office of Personnel Management,
    Federal Employee Health Benefits coverage will continue as long as
    premiums are paid. Dental, vision and long-term care insurance programs
    will also continue. Additionally, furloughed employees may become
    eligible for unemployment compensation dependent on State laws.
        General Odierno. Our dedicated civilians do not deserve to be
    furloughed. It simply is not right. But furlough is the tool of last
    resort and due to the magnitude of sequestration we will most likely
    have to use it to achieve the mandated savings. The Army will minimize
    the financial impact of sequestration on civilian personnel by: working
    with Commands and labor partners to balance mission requirements and
    employee needs; spreading the furlough out over a 5-month period so
    that employees are only forced to take 1 day off per week without pay;
    and pursuing means to provide financial counseling through
    organizations such as Army Community Service (ACS) and information
    regarding assistance from local community services. In addition, the
    Army is planning to establish emergency assistance centers to advise
    and assist civilians on additional benefits they may be eligible for
    (e.g. State unemployment, et cetera).
        Admiral Ferguson. Once the decision is made to carry out an
    administrative furlough of civilian employees, other than terminating
    or shortening the furlough, there is no action the Department can take
    to mitigate the financial impact on our personnel of a 20 percent loss
    of pay; however, we are working with financial counselors, who
    routinely assist members and their families in times of financial
    hardship, to provide a minimum level of support to these civilian
    personnel and their families. Just as we are very concerned about the
    families of our military personnel, we are equally cognizant of the
    impacts of these things on the families of our civilian workforce.
        General Amos. The current plans of discontinuous furlough is the
    most viable means of curtailing negative financial impact on families
    by spreading the pain across multiple weeks rather than bundling all 22
    days together and creating a full ``work-month'' where employees would
    go a full 4 weeks without pay. Although still negatively impacting our
    civilian workforce, this is the best way to minimize the financial
    impact of a 20 percent pay cut over a 6-month period. By law, such
    furloughed employees cannot receive severance pay; they cannot
    substitute paid leave or other time off for furlough time; they cannot
    earn overtime to compensate for furlough days off; and, they may not be
    able to receive unemployment compensation depending on State
    requirements.
        While we would like to believe that a discontinuous furlough will
    reduce the impact on our employees, most will not be able to easily
    absorb this sudden loss of income. Overall, employee stress will
    increase; morale will decline; productivity will suffer; commitment to
    Federal service may decrease; and military missions will suffer.
        General Welsh. We are fully aware of the crippling financial impact
    sequestration and an administrative furlough will have on our civilian
    workforce during the furlough period. In an effort to minimize the
    impact, the Air Force plans to spread out furlough days over multiple
    pay periods through the remaining fiscal year to minimize immediate
    financial impact for each employee.
        General Grass. We will work with our title 5 civilian force and
    with our much-larger Military-Technician force, as well as with their
    union representatives in order to minimize as much as possible the
    transition affects that may be imposed on both groups by sequestration
    actions and to ensure that the actions taken are consistent with law
    and with appropriate consideration of the provisions and parameters
    provided for within their collective bargaining agreements.

        145. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, civilian personnel faithfully provide many of
    the clinical and support services our Active Duty servicemembers and
    their family members need. Just last Friday, I visited Walter Reed
    National Military Medical Center and witnessed the outstanding care
    that our wounded warriors are getting there. Civilian employees at
    Walter Reed make up 43 percent of total employees. They are the
    doctors, nurses, records clerks, pharmacists, mental health counselors,
    and lab technicians caring for our Nation's heroes. How do you plan to
    maintain the critical clinical and support services civilian workers
    provide to our wounded warriors and other beneficiaries while you
    furlough thousands of them across the country?
        Secretary Carter. Wounded Warriors are a priority for the
    Department and will be protected above all else. In no case will
    quality of care be compromised. However, if civilian healthcare staff
    is furloughed, we will have considerably less capacity to treat
    patients in military treatment facilities. In patient care areas,
    nearly 40 percent of the full-time equivalent staffing is civilian.
    While we are looking at ways to mitigate the impact of a furlough, we
    can expect it will cause confusion, inconvenience and dissatisfaction
    amongst patients who are accustomed to getting their care in military
    treatment facilities. This frustration may translate into patients who
    formerly received care in a military treatment facility now seeking
    care in the private sector at an increased cost to the Government. If
    sufficient increases in the demand and cost for care in the private
    sector occur, we could find ourselves in a position of exceeding the
    budgeted funding for purchased care and will have to make additional,
    difficult funding tradeoffs to continue paying private sector claims.
        Secretary Hale. If civilian healthcare staff is furloughed, we will
    have considerably less capacity to treat patients in military treatment
    facilities. We will find ways to protect the care provided to our
    wounded warriors, but that decision may exacerbate other problems. In
    patient care areas, nearly 40 percent of the full-time equivalent
    staffing is civilian. We will offset effects for wounded warriors and
    we will look for ways to mitigate the impact of a furlough. But we can
    expect it will cause confusion, inconvenience and dissatisfaction
    amongst patients who are accustomed to getting their care in military
    treatment facilities. This frustration may translate into patients who
    formerly received care in a military treatment facility now seeking
    care in the private sector at an increased cost to the Government. If
    sufficient increases in the demand and cost for care in the private
    sector occur, we could find ourselves in a position of exceeding the
    budgeted funding for purchased care and will have to make additional,
    difficult funding tradeoffs to continue paying private sector claims.
        General Dempsey. We remain committed to world-class medical care
    for wounded warriors and other beneficiaries. We will support the
    Services' and OSD's efforts to mitigate the effects of sequestration on
    the systems that provide this care, and will advocate for joint
    coordination of medical resources as necessary to allow cross-leveling
    of resources between facilities and between Services. However,
    mitigating the impact of sequestration on our wounded warriors will
    impact our other beneficiary populations through decreased access to
    Military Treatment Facility care, and will increase TRICARE costs as we
    utilize its network to maintain benefit delivery despite any resource
    losses.
        General Odierno. Our valued civilian employees represent as much as
    60 percent of the workforce at many Army medical treatment facilities.
    Wounded Warriors have first priority for health care and are covered by
    an enhanced access standard under the Army Medical Action Plan.
    Additionally, the Secretary of the Army's guidance for fiscal
    uncertainty protects Wounded Warrior programs. The collateral impact is
    that our soldiers, their family members, and the rest of our
    beneficiary population may experience degraded access to care and the
    potential dissatisfaction with our system as nonurgent care is deferred
    to the network.
        Admiral Ferguson. The impact of sequestration will be felt
    throughout the Navy, including Navy Medicine. We recognize that any
    potentially directed furlough of civilian employees will have some
    impact to health care services at our medical treatment facilities. We
    will continue to carefully assess mitigation strategies to minimize
    impact on all our beneficiaries; however, care for our wounded warriors
    will remain our highest priority.
        We will ensure continued care to wounded warriors as they are
    identified in the patient population through the case management
    programs and specialty care treatment they receive. If furlough occurs,
    we will be able to carefully track our wounded warriors and ensure
    their continuum of care is uninterrupted. In the event of furlough,
    Navy medicine is prepared to shift military assets as required to
    ensure uninterrupted care to wounded warriors and their families. This
    action, however, may require Navy medicine to divert non-wounded
    warrior patient care to the private sector network.
        General Amos. The impact of sequestration will be felt throughout
    the Navy and Marine Corps, including Navy medicine. Our wounded and
    injured marines and their families receive outstanding care through
    Navy medical treatment facilities. The Navy Bureau of Medicine and
    Surgery (BUMED) recognizes that any potentially directed furlough of
    civilian employees will have some impact on health care services at
    medical treatment facilities. Navy medicine plans to carefully assess
    mitigation strategies to minimize impact on all beneficiaries; however,
    care for wounded warriors will remain Navy medicine's highest priority.
        BUMED plans to ensure continued care to wounded warriors as they
    are identified in the patient population through the case management
    programs and specialty care treatment they receive. If furlough occurs,
    Navy medicine will be able to carefully track our wounded warriors and
    ensure their continuum of care is uninterrupted. In the event of
    furlough, Navy medicine is prepared to shift military assets as
    required to ensure uninterrupted care to wounded warriors and their
    families. This action, however, may require Navy medicine to divert
    non-wounded warrior patient care to the private sector network.
        General Welsh. Only 24-hour inpatient or emergency service care
    providers are excepted from furlough. Care providers serving wounded
    warriors, in addition to regular case loads, are subject to furlough.
    However, we expect medical facility leadership to staff their units to
    best serve their patients with the least disruption to patient care. 80
    percent of our non-medical wounded warrior care is provided through
    protected contracts (Recovery Care Coordinators and non-clinical case
    managers). The 20 percent of civilian case managers subject to furlough
    will continue to provide coverage through adjusted work schedules.
        General Grass. The National Guard relies on the Services for
    medical support; any impacts to the Services will impact the National
    Guard.

        146. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, many healthcare providers and support
    personnel in DOD facilities are civilians--Navy (18 percent), Army (60
    percent), and Air Force (18.5 percent). When you furlough civilian
    employees in military hospitals and clinics, it seems to me that
    healthcare for wounded warriors will suffer. Many of the healthcare
    providers that I saw treating our wounded warriors at Walter Reed were
    caring, dedicated civilians, not military personnel. DOD has said that
    it will protect wounded warrior programs from sequestration, but I find
    this hard to believe if DOD plans indiscriminant civilian furloughs.
    How will wounded warriors stay on their treatment and rehabilitation
    plans if you furlough civilian employees that are providing those
    services?
        Secretary Carter. Wounded Warriors are a priority for the
    Department and will be protected above all else. In no case will
    quality of care be compromised. However, the duration and magnitude of
    a sequestration may adversely impact some of these programs. It may
    take longer to provide care because staff will not have the same
    availability during a furlough. We run the risk of losing qualified
    staff who cannot endure a 20 percent pay cut. Patient frustration will
    rise. For example, the Integrated Disability Evaluation System (IDES)
    is heavily staffed with civilian employees. Although it is our intent
    to develop furlough plans that minimize disruptions, a civilian
    furlough may affect their ability to provide timely service.
        Secretary Hale. Wounded Warrior Programs are a priority for the
    Department and will be fully protected. If we must, we will make
    offsetting changes for other patients or we will provide exceptions
    from furloughs for some of the civilian personnel who staff our
    hospitals.
        General Dempsey. Treatment and rehabilitation of wounded warriors
    remains a top priority. We recognize the differences in civilian
    staffing between Services and between facilities, and therefore
    understand that the effects of sequestration will differ between each
    Service and facility. As such, we will advocate for joint coordination
    of medical resources as necessary to allow Services to share resources
    between each other. However, mitigating the impact of sequestration on
    our wounded warriors will impact our other beneficiary populations
    through decreased access to Military Treatment Facility care, and will
    increase TRICARE costs as we utilize its network to maintain benefit
    delivery despite any resource losses.
        General Odierno. It is absolutely true the Army Medical Department
    relies on civilian employees for our workforce more than our Sister
    Services. A strategy which relies on an across the board furlough to
    meet sequestration cuts rather than targeted programmatic or structural
    reforms disproportionately hurts the Army. Despite this reality, Army
    Medicine remains committed to healing our wounded warriors and will not
    break that trust. The Army Surgeon General's guidance to our Army
    treatment facilities is to internally realign staff to cover civilian
    absences in our most critical programs, to include Warrior Care,
    behavioral health, and the Integrated Disability Evaluation System. For
    continuity of care, we endeavor to maintain warrior care in our direct
    care system clinics and ancillary services. We also will exercise our
    options to refer warriors to our partners in the Managed Care Support
    Contract network when it is appropriate. However, it is likely that
    significant second order impacts will be felt by soldiers and family
    members when we re-align services and staff to continue Wounded Warrior
    care.
        Admiral Ferguson. The impact of sequestration will be felt
    throughout the Navy, including Navy Medicine. We recognize that any
    potentially directed furlough of civilian employees will have some
    impact on health care services at our medical treatment facilities. We
    will continue to carefully assess mitigation strategies to minimize
    impact on all our beneficiaries; however, care for our wounded warriors
    will remain our highest priority.
        We will ensure continued care to wounded warriors as they are
    identified in the patient population through the case management
    programs and specialty care treatment they receive. If furlough occurs,
    we will be able to carefully track our wounded warriors and ensure
    their continuum of care is uninterrupted. In the event of furlough,
    Navy medicine is prepared to shift military assets as required to
    ensure uninterrupted care to wounded warriors and their families. This
    action, however, may require Navy medicine to divert non-wounded
    warrior patient care to the private sector network.
        General Amos. The impact of sequestration will be felt throughout
    the Navy and Marine Corps, including Navy Medicine. Our wounded and
    injured marines receive outstanding care through Navy medical treatment
    facilities. Civilian health care providers are important to the Navy
    Medicine workforce and the capability to deliver services to
    beneficiaries. The Navy BUMED recognizes that any potentially directed
    furlough of civilian employees will have some impact on health care
    services at medical treatment facilities. Navy Medicine plans to
    maintain the continuum of care via the clinical case managers who have
    established care plans for our wounded warriors. These plans include
    shifting military assets to address those needs as required. BUMED
    acknowledges this action, however, may require Navy Medicine to divert
    non-wounded warrior patient care to the private sector network. The
    Marine Corps provides non-clinical support for our wounded warriors
    through the Wounded Warrior Regiment. Although DOD guidance states
    wounded warrior programs are protected, should the Wounded Warrior
    Regiment ultimately be impacted by furloughs, we will mitigate risk by
    staggering civilian furloughs associated with sequestration, whereby
    there would be reduced instances that would allow for a wounded warrior
    service or support mechanism to cease operation. A sufficient number of
    multi-disciplinary team members would remain available for care
    coordination actions in support of individual wounded, ill, and injured
    marines. Operation under this scenario, while allowing services to
    continue, is not sustainable over time as there is high potential that
    compromised staffing will eventually lead to the delayed delivery of
    services (i.e., transition support, therapy and reconditioning, and
    administration support).
        General Welsh. Only 24-hour inpatient or emergency service care
    providers are excepted from furlough. Care providers serving wounded
    warriors, in addition to regular case loads, are subject to furlough.
    However, we expect medical facility leadership to staff their units to
    best serve their patients with the least disruption to patient care. 80
    percent of our non-medical wounded warrior care is provided through
    protected contracts (Recovery Care Coordinators and non-clinical case
    managers). The 20 percent of civilian case managers subject to furlough
    will continue to provide coverage through adjusted work schedules.
        General Grass. Our post-mobilization behavioral healthcare for our
    National Guard warriors, once they return home to their communities, is
    coordinated entirely on a contracted basis and is therefore not
    directly impacted by civilian furloughs. We will ensure that our
    wounded warriors stay on their behavioral treatment and rehabilitation
    plans by continuing to fund these contracted services from our same O&M
    accounts that provide for National Guard equipment and personnel
    readiness.

        147. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, how will you ensure that wounded warriors
    will not suffer under sequestration?
        Secretary Carter. Wounded Warriors are a priority for the
    Department and will be protected above all else. In no case will
    quality of care be compromised. However, the duration and magnitude of
    a sequestration may adversely impact some of the Wounded Warrior
    programs. It may take longer to provide care because staff will not
    have the same availability during a furlough. We run the risk of losing
    qualified staff who cannot endure a 20 percent pay cut. Patient
    frustration will rise. For example, the Integrated Disability
    Evaluation System (IDES) is heavily staffed with civilian employees.
    Although it is our intent to develop furlough plans that minimize
    disruptions, a civilian furlough may affect their ability to provide
    timely service.
        Secretary Hale. Wounded Warrior Programs are a priority for the
    Department and will be fully protected. If we must, we will make
    offsetting changes for other patients or we will provide exceptions
    from furloughs for some of the civilian personnel who staff our
    hospitals.
        General Dempsey. We remain committed to our wounded warriors and
    will not break that trust. We recognize the differences in civilian
    staffing among military departments and among facilities, and therefore
    understand that the effects of sequestration will differ between each
    military department and facility. As such, we will support the military
    departments' and OSD's efforts to mitigate to effects of sequestration
    on the systems that care for wounded warriors, and will advocate for
    joint coordination of medical resources as necessary to allow cross-
    leveling of resources between facilities and between Services. However,
    mitigating the impact of sequestration on our wounded warriors will
    impact our other beneficiary populations through decreased access to
    Military Treatment Facility care, and will increase TRICARE costs as we
    utilize its network to maintain benefit delivery despite any resource
    losses.
        General Odierno. Army Medicine remains committed to healing our
    wounded warriors and will not break that trust. The Warrior Transition
    Command provides oversight, direction, and advocates for wounded, ill,
    and injured soldiers, veterans, and their families. This ensures
    standardization of staffing ratios and processes to deliver quality and
    priority access. The Secretary of the Army's guidance for fiscal
    uncertainty protects Wounded Warrior programs. Furthermore, The Surgeon
    General's guidance to our commanders is to internally realign staff to
    cover any gaps caused by civilian absences for our most critical
    programs to include all warrior care, behavioral health, and the
    Integrated Disability Evaluation System. For continuity of care, we
    endeavor to maintain warrior care in our direct care system clinics and
    ancillary services. We also will exercise our options to refer warriors
    to our partners in the Managed Care Support Contract network when it is
    appropriate. However, it is likely that significant second order
    effects will be felt by soldiers and family members when we realign
    services and staff to continue wounded warrior care.
        Admiral Ferguson. The impact of sequestration will be felt
    throughout the Navy, including Navy Medicine. We recognize that any
    potentially directed furlough of civilian employees will have some
    impact on health care services at our medical treatment facilities. We
    will continue to carefully assess mitigation strategies to minimize
    impact on all our beneficiaries; however, care for our wounded warriors
    will remain our highest priority.
        We will ensure continued care to wounded warriors as they are
    identified in the patient population through the case management
    programs and specialty care treatment they receive. If furlough occurs,
    we will be able to carefully track our wounded warriors and ensure
    their continuum of care is uninterrupted. In the event of furlough,
    Navy Medicine is prepared to shift military assets as required to
    ensure uninterrupted care to wounded warriors and their families. This
    action, however, may require Navy Medicine to review other treatment
    options for non-wounded warrior patient care such as referral to the
    private sector network.
        General Amos. The Marine Corps will continue to maintain its stance
    that keeping faith with our wounded warriors is a top priority. Wounded
    Warrior Programs, under their protected status (as indicated by DOD's
    statement that limitations on sequestration include the protection of
    wounded warrior programs), would not be impacted. However, a pragmatic
    view of this fiscal crisis indicates that the responsibility to care
    for wounded warriors could eventually be placed at risk. A risk
    mitigation strategy would be to manage civilian furlough schedules.
    Operations under this scenario, while allowing services to continue,
    are not sustainable over time as there is high potential that
    compromised staffing will eventually lead to the delayed delivery of
    services (i.e., transition support, therapy and reconditioning, and
    administration support).
        General Welsh. It is Air Force policy that all wounded warrior
    programs will be protected from the effects of sequestration. 80
    percent of our non-medical care is provided through protected contracts
    (Recovery Care Coordinators and non-clinical case managers). The 20
    percent of civilian case managers subject to furlough will continue to
    provide coverage through adjusted work schedules.
        General Grass. Many of our wounded warriors are Military
    Technicians. The last thing that we want to have happen to them is to
    welcome them home from deployment and, once they've recuperated from
    their injuries, advise them that they've been furloughed from their
    Military Technician positions. The National Guard Bureau will continue
    to work with the Department and Congress to ensure that sequestration
    does not disproportionately impact our wounded warriors.

                          IMPACT TO HOMELAND SECURITY

        148. Senator Inhofe. General Grass, every day the Nation's
    governors rely on the National Guard to respond to emergencies and
    disasters as the primary military force for Federal domestic
    contingency response. I have been told that under sequestration, your
    equipment resets for redeploying Army National Guard units will cease,
    affecting equipment availability and readiness for 8 National Guard
    BCTs and 450 separate Army National Guard units for use in their
    domestic missions. Can you tell me how sequestration will impact the
    Guard's ability to quickly and effectively respond to natural disasters
    like Hurricane Sandy or other major domestic events?
        General Grass. The Army and Air National Guard will experience
    significant impacts if sequestration actions are fully implemented.
    Disrupting, delaying and cancelling contracts to maintain our equipment
    immediately impacts our readiness for domestic as well as combat
    deployments. This forces States to request and source capabilities from
    more States, thereby increasing movement costs and slowing our response
    efforts. It will take longer for the military to support civil
    authorities in meeting the urgent needs of Americans suffering through
    the turmoil of a natural disaster like Hurricane Sandy. Our inability
    to properly train and equip our National Guard formations also impacts
    our ability to support civil authorities for a large-scale or
    catastrophic domestic incident such as an earthquake or major
    hurricane.

        149. Senator Inhofe. General Grass, over the last decade the
    National Guard has been a vital operational force, indistinguishable
    from the Active component. How will sequestration affect the National
    Guard's ability to maintain itself as an operational force and
    contribute to contingency operations overseas?
        General Grass. Sequestration will significantly degrade the
    National Guard's ability to maintain a truly operational force, able to
    rapidly contribute to contingency operations both domestically and
    overseas. Further, if sequestration is executed in accordance with the
    current law, it will have a significant effect on training
    opportunities, equipment, and personnel readiness, which will have a
    negative impact on the National Guard as an operational force. Clearly,
    this is something we all want to avoid; it would be extremely bad for
    the country, both at home and abroad. While more cuts in defense
    spending are inevitable, appropriate as we end combat operations after
    two wars, and even desirable (to the extent these cuts help the country
    return to a better financial footing), sequestration is not the right
    way to make these cuts. If the defense budget faces further significant
    reductions, I advocate these cuts be made more gradually and with
    greater programmatic flexibility.

        150. Senator Inhofe. General Grass, how would the readiness of the
    National Guard be impacted by the potential furlough of your military
    technicians?
        General Grass. Our military technicians in the National Guard
    comprise the majority of mechanics who ensure our equipment is
    operational for domestic missions here at home as well overseas
    missions supporting the combatant commanders. They also support key
    logistics, intelligence, contracting and health care functions.
    National Guard Military Technicians typically occupy critical military
    positions in deployable units as a condition of their Federal
    employment and therefore would impact readiness of the units to which
    they are assigned.

        151. Senator Inhofe. General Grass, additionally, how will these
    potential furloughs impact communities across our Nation?
        General Grass. The National Guard is the hometown force and first
    military responder for 3,000 communities across the country. The direct
    economic impacts of furloughs will be felt in smaller communities, the
    most noteworthy impact to all our communities will be the National
    Guard equipment degradations and response times caused by the furloughs
    of Military Technicians that maintain our equipment for first response
    to CBRN events, natural disasters, and other urgent needs of State and
    local authorities. The longer sequestration continues the more degraded
    response times will become. Degraded response times to CBRN or natural
    disasters will lead to more American lives lost.

             BURN RATE ON FUNDS FOR OVERSEAS CONTINGENCY OPERATIONS

        152. Senator Inhofe. Secretary Hale, on top of the budget crisis
    DOD currently faces, I am aware that the amount provided to you this
    year of $88.5 billion for OCO may not be sufficient to maintain combat
    forces through the fiscal year at the current rate of expenditure. Can
    you estimate at the current burn rate what additional funds will be
    required?
        Secretary Hale. The Department will ensure there is sufficient
    funding to maintain our deployed combat forces at all costs. Based on
    the current burn rate and troop levels, additional funds will be
    required in the O&M accounts, where there is at least a $5 to $6
    billion shortfall due to higher than anticipated costs for
    transportation, base operations, flying hours and other emerging
    requirements. These shortfalls could be fixed in appropriations
    legislation or an extended Continuing Resolution. Otherwise they must
    be mitigated by reprogramming funding from other less urgent OCO
    requirements such as equipment reset which can be delayed, and by
    reprioritizing base funding as necessary, to meet warfighter needs.
    Further analysis is ongoing in light of the recent announcement of
    troop withdrawals where the schedule of the withdrawals during fiscal
    year 2013, if any, will likely impact the current cost estimates.

        153. Senator Inhofe. Secretary Hale, what costs or new requirements
    are exceeding the President's budget request?
        Secretary Hale. At this time, the Department estimates at least a
    $5 to $6 billion shortfall in the Army, Navy and Air Force O&M accounts
    associated with unanticipated OCO requirements. The Army has a roughly
    $3 to $4 billion shortfall, possibly more, primarily due to higher than
    anticipated operations costs and also higher transportation costs
    resulting from the previous closure of the Pakistan ground lines of
    communication. Although the supply route is open, the cargo is not
    moving at the pace needed so equipment and other support items must be
    flown in and out at a much higher cost. The Air Force is also
    experiencing O&M shortfalls, about $2 billion, due to increased flying
    hours, airlift, base operations and communications supporting flight
    operations at a level greater than expected. The Navy estimates a $700
    million O&M shortfall due to extended presence and emergent ship
    repairs (USS Porter) that were not budgeted in the fiscal year 2013 OCO
    budget request. Depending on the timing of the recently announced troop
    withdrawals, and the associated costs of equipment removal, the O&M
    shortfalls may be adjusted up or down.

        154. Senator Inhofe. Secretary Hale, if sequestration takes place,
    where do you expect to find the funding?
        Secretary Hale. If sequestration occurs, OCO funding will be
    reduced. However, the Department will make disproportionately larger
    reductions in other areas to minimize such reductions and protect
    funding for our warfighters and fully support their efforts. Where
    there are shortfalls in the OCO budget, the Department will
    reprioritize or delay equipment reset schedules and purchases, or use
    base funding to support more urgent warfighting requirements and will
    ask Congress to allow the reprogramming of funds as necessary.

        155. Senator Inhofe. Secretary Hale, given this additional shortage
    of funds and the prospect of sequestration, is there a potential that
    our warfighters in Afghanistan, the Middle East, and Africa may not be
    able to get the equipment and resources they need?
        Secretary Hale. Even under sequestration, the Department will
    ensure that warfighters in Afghanistan, the Middle East, and Africa
    will be able to get the equipment and resources they need. Fully
    supporting our deployed warfighters is our top priority and the
    Department will use all means, including reprogramming and
    reprioritizing other funding, to keep that commitment. But under
    sequestration we cannot guarantee that same level of support should a
    future contingency arise.

                    REBALANCE TOWARD THE ASIA-PACIFIC REGION

        156. Senator Inhofe. General Dempsey, the January 2012 DSG says
    ``we will of necessity rebalance toward the Asia-Pacific region'' and
    further that in Africa and Latin America ``Whenever possible, we
    develop innovative, low-cost, and small-footprint approaches to achieve
    our security objectives, relying on exercises, rotational presence, and
    advisory capabilities.'' The administration's announcement of
    rebalancing our military strategy significantly raised expectations of
    allies and partners in the Asia-Pacific region. Will sequestration
    reduce rather than increase our presence, engagement, and partnership
    building capacity in the Pacific?
        General Dempsey. Sequestration will squeeze our ability to follow
    through on the rebalance while maintaining other commitments around the
    world. Our ability to execute the DSG relies upon a smaller force that
    capitalizes and depends upon 21st century advancements that make small
    footprint rotational forces highly effective, attentive, and impactful.
    This approach reassures partners and allies in the region while being
    sensitive to their needs and limitations, and also enables us to uphold
    our commitments and leadership role in the rest of the world.
    Sequestration will force us to relook how we execute the rebalance, in
    addition to the DSG.

        157. Senator Inhofe. General Dempsey, if we reduce rather than
    increase our presence in the Pacific, what will that do to our
    alliances and partnerships in the region?
        General Dempsey. All nations in the Asia-Pacific are analyzing what
    we say here today, and what we do in the region, and are making
    judgments regarding the reliability of their partnerships and security.
    Following through on the rebalance means focusing attention to the
    region, engaging with our partners and allies, and bringing the highest
    quality capabilities; failure to do so will diminish our ability to
    shape the region and ensure the continued stability that has fostered
    unparalleled economic development in the region, and economic immense
    prosperity here at home.

        158. Senator Inhofe. General Dempsey, does the growing terrorist
    threat and the lack of ability of our military to intervene in places
    like Benghazi indicate we are under-resourcing our counterterrorism
    efforts in Northern Africa?
        General Dempsey. The U.S. military resources our counterterrorism
    efforts in Northern Africa with an amount of personnel and equipment
    balanced against known credible terrorist threats, host nation
    capacity, U.S. Government access, and available intelligence.

        159. Senator Inhofe. General Dempsey, does an event like Benghazi,
    where our military was not postured to have adequate reach to intervene
    in a timely manner, demonstrate the kind of strategic risk we are
    accepting by under-resourcing theaters outside of the Middle East and
    Pacific?
        General Dempsey. We are constantly adjusting our finite resources
    in order to best align with global requirements with strategic risk.
    With regard to another Benghazi-like attack, we will continue to work
    with the Department of State to assess and take action where necessary
    to improve security arrangements for diplomatic facilities.

                 DEFENSE BUDGET CUTS IN THE BUDGET CONTROL ACT

        160. Senator Inhofe. Secretary Carter, I have consistently heard
    leadership in DOD refer to the proposed reduction of defense budgets by
    $487 billion over the next 10 years as being ``mandated'' by the Budget
    Control Act (BCA) of 2011. This is even a quote in the written
    statement of the Chairman of the Joint Chiefs of Staff for this
    hearing. Now, I am well aware that part three of the BCA specifically
    establishes reduced funding caps on defense funds and then directs the
    sequestration of $492 billion over 10 years. But the spending caps
    imposed by Part 1 were to be applied to all Federal discretionary
    accounts after 2013 in order to achieve a total of $917 billion over 10
    years. The administration responded with pass-back guidance from OMB in
    November 2011 to reduce defense accounts by $487 billion. Do you agree
    that the President has the flexibility from fiscal year 2014 forward to
    determine priorities and adjust budget numbers for each Federal agency
    within those caps in future budget submissions?
        Secretary Carter. The President has some flexibility to adjust
    budgets in fiscal year 2015 forward. The American Taxpayer Relief Act
    of 2012 establishes specific limits for security and nonsecurity
    spending in fiscal year 2014, reducing flexibility in that year.
    Moreover, any adjustments in fiscal year 2015 and forward would need to
    account for the possibility of specific sequestration reductions
    required by the BCA.

        161. Senator Inhofe. Secretary Carter, since there is no $487
    billion mandate in part 1 of the BCA, can you explain how that number
    was determined?
        Secretary Carter. OMB provided topline guidance. In the government-
    wide reductions to planned discretionary spending required to comply
    with the BCA, DOD maintained roughly the same percentage of
    discretionary budget authority through fiscal year 2021 that was
    established in fiscal year 2013 by the BCA and extended into fiscal
    year 2014 by the American Taxpayer Relief Act.

        162. Senator Inhofe. Secretary Carter, aside from sequestration,
    why does DOD continue to assert a mandate for defense accounts in the
    BCA?
        Secretary Carter. The BCA mandated a significant reduction in
    discretionary spending. The specific spending limits in fiscal year
    2013, their extension into fiscal year 2014 by the American Taxpayer
    Relief Act, and revised the annual limits through fiscal year 2021
    which establish the Joint Committee Sequestration process all
    contribute to the pressure for downward adjustments in Federal
    discretionary funding.

        163. Senator Inhofe. Secretary Carter, in your opinion, does DOD
    have the flexibility to advocate to the President for a decrease in the
    $487 billion reduction to defense budgets if our military leaders
    determine a significant adverse impact to national security?
        Secretary Carter. The Department will always provide the President
    with its best advice on the funding required to carry out the assigned
    missions.

                IMPACT OF SEQUESTER ON OPERATION AND MAINTENANCE

        164. Senator Inhofe. General Dempsey, General Odierno, Admiral
    Ferguson, General Amos, and General Welsh, overall, sequestration in
    fiscal year 2013 will result in a $46 billion reduction, but as we all
    know, the impact on our military goes well beyond $46 billion. For
    example, of that $46 billion, $13 billion will be axed from O&M
    accounts. But as I understand it, that $13 billion cut will be
    exacerbated by an additional $5 billion cut to protect ongoing
    operations in Afghanistan, and is already $11 billion below the level
    required because DOD has yet to receive a fiscal year 2013
    appropriation. Once you account for other unfunded or higher than
    anticipated execution issues, in O&M alone, DOD as a result of
    sequestration and the CR will be $35 billion in the red, a deficit that
    cannot be absorbed in 7 months without taking dramatic and
    unprecedented actions. Please provide specific examples of how this
    shortfall in O&M will impact your respective Service.
        General Dempsey. I defer to the Service Chiefs to provide specific
    examples of shortfalls in O&M dollars.
        General Odierno. Sequestration and CR effects on the O&M accounts
    directly impact fiscal year 2013 readiness and create a training
    backlog to regain proficiency that would last into fiscal year 2014 and
    beyond. In order to support the direct war effort in Afghanistan, the
    Army will reduce readiness in 80 percent of our BCTs--including the
    cancellation of four brigade combat team training center rotations.
    Flying hours will be reduced and nondeploying aviation units will not
    maintain their aircrew proficiency. This reduction in readiness will
    create a training backlog for aviation and intelligence military
    occupational specialties. The Army will potentially furlough up to
    251,000 Army civilians for up to 22 discontinuous workdays.
        There will be no new depot maintenance orders issued beyond March,
    which will affect six combat divisions and ancillary units in Alaska,
    Colorado, Georgia, Hawaii, Kentucky, Louisiana, New York, and North
    Carolina, and will result in the release of nearly 5,000 depot
    temporary, term, contract, and permanent employees. The reduction in
    workload at the depots will affect nearly 3,000 Companies putting 366
    at high risk and 742 at medium risk of bankruptcy. Moreover, Second
    Destination Transportation shortfalls will create a potential backlog
    of 3 plus years.
        The Army will be forced to reduce support for soldier and family
    programs. The Army will not be able to meet Sexual Harassment/Assault
    Response and Preventionprogram goals. There will be a significant
    decrease to the Yellow Ribbon Program, Soldier Family Assistance
    Centers, and the Army Substance Abuse Program.
        Installations operations are at risk. The Army will reduce
    facilities sustainment by 70 percent, servicing only life, health, and
    safety requirements. All restoration and modernization projects will be
    cancelled, which will critically affect the West Point Cadet Barracks.
    All energy and environmental projects will be stopped, and European
    transformation projects postponed.
        Admiral Ferguson. Sequestration and the CR will render Navy unable
    to continue current and anticipated level of operations, compel Navy to
    cancel some maintenance and training, and constrain Navy's ability to
    invest in future capability and capacity. Some specific examples
    include:

             Cancel the majority of ship maintenance in private
            shipyards and all aircraft maintenance scheduled in the third
            and fourth quarters of fiscal year 2013; this affects up to 25
            ships and 327 aircraft, and eliminates critical ship and
            aircraft repairs, adding to an existing maintenance backlog
            generated by a decade of high operations tempo.
             Reduce by about one-third the number of days at sea
            and hours of flight operations for ships and aircraft
            permanently stationed in the Asia-Pacific; cancel all aircraft
            deployments and four of six ship deployments to the region.
             Reduce by half the number of days at sea and by one-
            quarter the hours of flight operations for ships and aircraft
            in the Middle East and Arabian Gulf; reduce carrier presence in
            the Arabian Gulf to one (the request is two carriers).
             Stop training and certification for CSGs except for
            the one next to deploy to the Middle East/Arabian Gulf. There
            will be only one additional or ``surge'' CSG certified for
            Major Combat Operations in fiscal year 2013 and throughout
            fiscal year 2014 (down from almost three on average).
             Cancel most nondeployed operations including
            exercises, pre-deployment certification, and all port visits in
            the continental United States. As a result, the number of ships
            available for homeland defense will be reduced, and it will
            take 9 to 12 months for ships that were not preparing to deploy
            to regain certification for Major Combat Operations.
             Implement an across the board hiring freeze, impacting
            approximately 1,000 vacancies. Navy's attrition rate over the
            last 3 years is approximately 18,000/year (350/week).
             Navy will follow the administration's guidance
            regarding civilian furloughs. Navy may have to furlough up to
            186,000 civilians who will lose 20 percent of their pay if
            furloughed for 22 days.

        On top of reductions in O&M funding, sequestration will reduce
    fiscal year 2013 funding for each investment program (about $7.2
    billion overall).
        General Amos. The impact of shortfalls in O&M funding will have a
    severe impact on the Marine Corps in both the short term and the long-
    term. Because of our special role as America's crisis response force,
    the Marine Corps places a high premium on readiness, and we have made
    every effort to protect our forward deployed forces from the impact of
    these budget cuts. However, this has come at a cost to our crisis
    response units at home station, and as the full impact of sequestration
    is realized, we will see an exponential degradation of readiness that
    will ultimately affect every aspect of Marine Corps operations.
        Under the current continuing resolution, I have been able to ensure
    the readiness of our deploying units, but only by decrementing the
    long-term readiness of the total force. Our forward deployed marines
    and our marines engaged in combat operations in Afghanistan will
    continue to be our top priority, and we will also work to ensure that
    our units preparing to deploy have what they need. However, due to $1.2
    billion in CR and sequestration-induced cuts to O&M and over $500
    million in new requirements in fiscal year 2013 alone, this readiness
    will come at the expense of our units at home station, our families,
    and our crisis response capacity.
        For example, we have already slowed our efforts to rebalance to the
    Pacific, and should sequestration go into effect, we will be forced to
    significantly curtail our plans for shifting additional forces into
    this region. While we have resumed our UDP to Okinawa, Japan, we
    currently have insufficient funding for the latest deployed battalion
    to return from deployment on time. Additionally, aviation units
    required to support this increase in ground combat capability will be
    unable to deploy. This will reduce the Nation's forward presence, and
    limit our ability to interact with our partners and allies in the PACOM
    area of operations. Our absence will create gaps in forward presence,
    slow crisis response times, and reduce our ability to conduct theater
    security cooperation by over 30 percent. We will be less capable to
    respond to natural disasters such as Operation Tomodachi, typhoons in
    the Phillipines, or floods in Thailand, and participate in Joint and
    combined exercises. Our absence will create a void that will quickly be
    filled by others. In the Asia-Pacific region, this could very likely be
    China, as ASEAN nations will likely interpret our absence as a lack of
    commitment to the region and will thus seek to form bilateral
    partnerships with China in order to hedge against China's rising power
    in the region.
        Additionally, the Continuing Resolution has already had a
    significant impact to the readiness of our home station units, and
    sequestration will only serve to exacerbate this problem. Further, as
    the full 9-year impact of sequestration is realized, this erosion of
    home station/crisis response forces will worsen and will certainly
    begin to affect our ``next to deploy'' units. Despite the constrained
    funding resulting from the CR and sequestration, in the next 6 months
    we will be able to continue meeting Marine Corps deployed warfighting
    needs and the training of next-to-deploy forces. Between 6 and 12
    months, however, we'll continue to decrement readiness accounts with
    ever increasing erosion of home station unit readiness and force
    modernization, and begin to show small impacts in next-to-deploy
    forces. Beyond 12 months we will see a real impact to all home station
    units (e.g. fixed wing squadrons will have on average only 5 of 12
    assigned aircraft on the ramp due to aviation depot shutdowns) and the
    beginning of impacts to our next-to-deploy and some deployed forces--in
    all a slide to a hollow force we have fought so hard to avoid. Our MEFs
    will be forced to postpone or cancel preventive maintenance and
    selectively replace replacement equipment with reduced readiness in the
    last half of 2013, with a ripple effect on training, negatively
    impacting readiness. We predict over 55 percent of USMC forces (ground
    combat, logistics, and combat support) will have unsatisfactory
    readiness ratings, which will have a dramatic impact to respond to
    crises outside of Afghanistan when called upon by the Nation.
        In partnership with the Navy, we will cancel third and fourth
    quarter inductions of aircraft into depot maintenance cycles parking
    over 80 aircraft awaiting critical maintenance. Our forward deployed
    squadrons will have what they need, but our next to deploy squadrons
    will begin to experience reduced aircraft availability, which means our
    pilots will not get the training they require in order to maintain
    currency and proficiency in their respective aircraft. For example in
    the F-18 squadrons, by January 2014, the Marine Corps will still be
    able to source the required aircraft to meet operational commitments,
    but the squadrons that are preparing to deploy will only have 5 of the
    12 aircraft that compose a squadron available for training.
    Additionally, each of the pilots in those squadrons preparing to deploy
    would complete approximately 7 hours of training per month when the
    minimum deployable readiness requires approximately 17 hours per month.
    For the individual aircrew, this equates to greater personal risk due
    to less experience--for the Nation, it means we will respond with less
    ready forces, and we will pay a price in terms of lives and equipment.
        Depot maintenance will be reduced to 27 percent of our baseline
    requirement, delaying our ability to reset war torn equipment for a
    period of 18 months or greater; this will reduce the readiness of
    nondeployed forces in both the near and long term, and means we will
    not be able to accomplish our planned reset of equipment returning from
    Operation Enduring Freedom. Accordingly, the Marine Corps will not be
    able to reconstitute a ready force by 2017 as originally planned.
    Further, we will not have the funds to work down a backlog of equipment
    returning from 11 years of combat, and we will have to lay off many of
    our skilled workers and artisans who are the key to revitalizing
    equipment at our Depots. Even if funding were to be restored at some
    point in the future, we will not be able to reconstitute this labor
    force quickly or regain the expertise that can only be developed over
    time.
        Under the cuts imposed by sequestration, we will have to reduce our
    civilian workforce which will further chip away at our readiness. Our
    civilian marines make a significant contribution in all aspects of
    Marine Corps operations, from family readiness to maintenance to
    command and control and intelligence operations. We expect we will have
    to eliminate thousands of positions across the Marine Corps in order to
    meet the budget reductions mandated by sequestration, and as such, the
    services that our marines and their families rely upon will also be
    reduced or eliminated. We expect that we will have to cut or curtail
    many family readiness programs to include eliminating paid family
    readiness officers in some units, cutting teen and youth programs, and
    closing morale, welfare, and recreation facilities. This will have an
    adverse impact on our families at home station and will adversely
    affect their personal readiness when spouses and parents leave their
    families in order to execute routine deployments or respond to crisis.
        The cuts imposed as part of an annualized continuing resolution and
    sequestration result in a $1.2 billion reduction to O&M in fiscal year
    2013 alone, and does not address the additional requirements levied as
    a result of the current Defense Strategic Guidance and the security
    situation around the globe. The Marine Corps prides itself on being a
    frugal service that asks only for what it needs and not what it wants.
    Any cut to our $10 billion O&M budget will entail risk; a cut of $1.2
    billion will immediately affect every aspect of Marine Corps operations
    and readiness. The long term cuts associated with sequestration will
    erode readiness, limit crisis response capacity, and adversely affect
    our Active and Reserve marines, our civilian marines, and their
    families.
        General Welsh. If sequestration occurs, there would be no way to
    spare readiness accounts. Flying hours and weapons system sustainment
    would be reduced by 18 percent. There would be no support for most
    combatant command requirements, exercises, or advanced training. The
    Air Force would also furlough approximately 180,000 civilians for 22
    days, restricting access to institutional knowledge. There would also
    be adverse and irreversible impact to depot workforce impacting
    approximately 24,000 employees. Reduced command budgets would terminate
    funding to training ranges, and drive commands to incrementally fund
    base maintenance and dining facility until funds run out. The majority
    of combat units will execute home station mission until funds run out
    which could be as early as mid-May 2013, and will not be ready to meet
    emergent contingency or operational plans within 60 days of stand down.
    We estimate it will take up to 6 months for many units to regain
    current, already sub-optimal readiness level. Readiness recovery will
    require reduced operations tempo and additional resources above that
    which would be available in our presequestration fiscal year 2014
    budget. Degradation to readiness would be severe.

                        IMPACT OF CONTINUING RESOLUTION

        165. Senator Inhofe. Secretary Hale, I just want to be clear on the
    impact of a year-long CR to DOD that you seem to lump in there with
    sequestration. First, DOD has been unfortunately dealing with CRs for
    many years because Congress can't seem to pass a budget. The problem
    with the current one is that the O&M accounts are under funded by $11
    billion while other defense accounts are overfunded by $16 billion. So
    you really have more money under a CR than the President requested for
    fiscal year 2013, but it's just in the wrong place. If Congress extends
    the CR through the fiscal year, there are certain new requirements that
    won't be able to get started. To fix these problems, have you submitted
    you list of proposed anomalies to OMB?
        Secretary Hale. We are working with OMB to identify the critical
    issues which the Department believes must be corrected if we are
    required to transition from the current continuing resolution to a
    year-long continuing resolution.

        166. Senator Inhofe. Secretary Hale, can we get a specific list of
    the fixes you have proposed with the response to this question so we
    can be sure to fix them?
        Secretary Hale. We are working with the Services to develop and
    finalize the anomalies needed to execute our military construction and
    acquisition programs. When we have completed our assessment, they will
    be provided to the committee.

     REVIEW OF SAME SEX SPOUSE BENEFITS AND IMPACT OF DEFENSE OF MARRIAGE
                                      ACT

        167. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, do you agree that extending benefits to same
    sex spouses of military members will increase costs and create
    increased demand for limited resources for all military families during
    a time when this administration has imposed drastic budget cuts to DOD?
        Secretary Carter. From a fiscal perspective, the benefits that are
    being extended are of negligible cost and some are cost neutral for
    self-sustaining such as MWR programs, Commissary and Exchange
    privileges. I do not believe that the extension of any of these
    benefits will result in any increase in cost to the Military Services'
    top line budgets.
        Secretary Hale. From a fiscal perspective, the benefits that are
    being extended are of negligible cost and some are cost neutral for
    self-sustaining such as MWR programs, Commissary and Exchange
    privileges. I do not believe that the extension of any of these
    benefits will result in any increase in cost to the military services'
    top line budgets.
        General Dempsey. The changes in benefits to same sex spouses allow
    access to bases and facilities, commissary and exchanges, counseling
    programs and services. These benefits help our servicemembers at little
    cost. The proper implementation of this policy will be important to
    assure benefits are appropriately administered.
        General Odierno. The DOD Joint Benefits Review Working Group
    (JBRWG) conducted a cost analysis on each of the benefits that will be
    extended to same-sex domestic partners of soldiers who have executed a
    Declaration of Domestic Partnership. The JBRWG determined that any
    costs resulting from extending these benefits would be minimal.
        Admiral Ferguson. Ensuring that Navy missions are carried out by
    the best qualified and the most capable servicemembers will always be a
    priority, regardless of gender, regardless of creed and beliefs, and
    regardless of this budget constrained environment. Actual costs cannot
    be fully determined until Navy's implementation plan is submitted and
    approved by OSD. Navy is required to submit this plan in April 2013. We
    anticipate some cost associated with developing and providing training
    to installation leadership and benefit providers, to include all Navy
    Personnel Support Detachments.
        We do anticipate significant additional costs associated with
    extending additional benefits to same-sex domestic partners, and where
    applicable, children of same-sex domestic partners. Examples of these
    additional benefits, in addition to increased BAH and other related pay
    and allowances, include:

             Dependent ID cards
             Commissary/Exchange Privileges
             Morale, Welfare, and Recreation Programs
             Youth Programs
             Family Center Programs
             Sexual Assault Counseling Program
             Child Care
             Legal Assistance

        General Amos. Supporting marines and their families is extremely
    important to me; this support allows my marines to focus on their
    missions in support of our Nation. I do not believe we should create
    separate classes of marines--we only have one type of marine; a U.S.
    marine. When single marines become married, our Marine Corps family
    grows--as it does when Marine families add children or, for that
    matter, add any other dependent. Increasing numbers of dependents,
    regardless of their orientation or gender, tends to increase family
    support costs. Budget cuts will, of course, tend to adversely impact
    our support programs and we are working hard to mitigate those
    potential adverse impacts.
        General Welsh. Yes, extension of benefits will increase costs and
    place additional demand on resources for military families. However, we
    believe impacts will be manageable across our installations. Within our
    Total Force, including retirees, RAND estimates approximately 4,800
    same-sex partners (3.7 percent) based on application of general
    population estimates to our active duty and retiree population, a
    comparatively small percentage of our total population eligible for
    benefits. In addition, since medical benefits and housing allowances
    are not included in the current set of benefits to be extended, the
    actual costs should be relatively low at this time. Demand for child
    care, youth programs, legal assistance, MWR programs, et cetera--each
    of these programs could be impacted by increased requirements, further
    straining resources that are already constrained. However, we will do
    everything within our capability to take care of all airmen with our
    available resources and in accordance with existing law.
        General Grass. Yes, extension of benefits will increase costs and
    place additional demand on resources for military families. However,
    the DOD JBRWG conducted a cost analysis on each of the benefits that
    will be extended to same-sex domestic partners of soldiers who have
    executed a Declaration of Domestic Partnership. The JBRWG determined
    that any costs resulting from extending these benefits would be
    minimal.

        168. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, do you agree that extending benefits to same
    sex spouses is currently prohibited by the Defense of Marriage Act
    (DOMA)?
        Secretary Carter. When a statute limits eligibility for a benefit
    to a spouse, the Department applies the definition of spouse
    established in DOMA: a person of the opposite sex who is a husband or
    wife. A same sex partner is not a spouse, and would not be eligible for
    that benefit. For benefits established by statutes that do not limit
    eligibility to spouses, the Department reviews the eligible categories
    established in the statute to determine whether same-sex partners would
    be eligible. Finally, for benefits established by DOD policy, the
    Department has authority to establish eligibility categories, including
    a category for same-sex partners.
        Secretary Hale. When a statute limits eligibility for a benefit to
    a spouse, the Department applies the definition of spouse established
    in DOMA: a person of the opposite sex who is a husband or wife. A same-
    sex partner is not a spouse, and would not be eligible for that
    benefit. For benefits established by statutes that do not limit
    eligibility to spouses, the Department reviews the eligible categories
    established in the statute to determine whether same-sex partners would
    be eligible. Finally, for benefits established by DOD policy, the
    Department has complete authority to establish eligibility categories,
    including a category for same-sex partners.
        General Dempsey. There are several benefits currently prohibited by
    the DOMA. For example, DOMA prevents the extension of BAH for housing
    at the ``with dependents'' rate, Cost of Living Allowance at the ``with
    dependents'' rate, dental care, and medical care to include eligibility
    for TRICARE. The Department examined the remaining benefits, such as
    the ones listed in attachment 2 of the Secretary's 11 Feb memorandum,
    from a policy, fiscal, legal, and feasibility perspective, and
    determined these benefits could be provided without violating DOMA.
        General Odierno. While DOMA does preclude the extension of some
    benefits to same-sex domestic partner of soldiers, to the best of my
    knowledge the benefits that will be extended to same-sex domestic
    partner are not prohibited by the DOMA.
        Admiral Ferguson. As reflected in the Secretary of Defense's recent
    guidance, selected benefits can and have been legally extended to same
    sex couples. The Office of the Secretary of Defense has determined in
    this policy that eligibility for other benefits--those based on a
    marital or spousal relationship--cannot be made available to same sex
    partners of military members due to current law.
        General Amos. Supporting marines and their families is extremely
    important to me; this allows my marines to focus on their missions in
    support of our Nation. My understanding is that under the law, for the
    purpose of any ruling, regulation, or interpretations of various
    bureaus and agencies, the word ``marriage"' means only the union of one
    man and one woman as husband and wife, and the word ``spouse'' refers
    only to a person of the opposite sex who is a husband or wife. There
    are some benefits that hinge on the use of these terms, such as access
    to housing and healthcare, and other benefits that do not, such as
    designation of life insurance beneficiaries.
        General Welsh. DOMA states ``In determining the meaning of any Act
    of Congress, or of any ruling, regulation, or interpretation of the
    various administrative bureaus and agencies of the United States, the
    word `marriage' means only a legal union between one man and one woman
    as husband and wife, and the word `spouse' refers only to a person of
    the opposite sex who is a husband or a wife.'' DOMA is a definitional
    statute and must be applied whenever another statute, ruling,
    regulation etc. uses the term ``spouse'' or ``marriage.'' With regards
    to benefit eligibility, some statutory benefits (ie: medical care,
    basic allowance for housing) define eligibility by explicitly using the
    terms ``spouse'' or ``marriage.'' These benefits would fall within the
    DOMA definition and, therefore, could not be extended to same-sex
    spouses. Other statutory benefits (ie: commissary, exchange) do not
    define eligibility by explicitly using the term ``spouse'' or
    ``marriage.'' Eligibility for these benefits would not be precluded by
    DOMA, and therefore, these benefits could be extended to same-sex
    spouses as a matter of policy.
        General Grass. I respectfully defer this question to the acting
    General Counsel of DOD.

        169. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, do you support the administration's decision
    to not defend suits in Federal courts, challenging the
    constitutionality of DOMA?
        Secretary Carter. On February 23, 2011, the Attorney General
    announced that the President had concluded section 3 of DOMA, as
    applied to legally married same-sex couples, is unconstitutional.
    Consequently, the Attorney General also announced the Department of
    Justice would not defend the constitutionality of section 3 as applied
    to same-sex married couples. Finally, the Attorney General stated that
    the executive branch would continue to enforce section 3. DOD has
    continued to enforce section 3 of DOMA. I support the President's
    conclusion and the related actions by the Department of Justice and
    DOD.
        Secretary Hale. On February 23, 2011, the Attorney General
    announced that the President had concluded section 3 of DOMA, as
    applied to legally married same-sex couples, is unconstitutional.
    Consequently, the Attorney General also announced the Department of
    Justice would not defend the constitutionality of section 3 as applied
    to same-sex married couples. Finally, the Attorney General stated that
    the executive branch would continue to enforce section 3. DOD has
    continued to enforce section 3 of DOMA. I support the President's
    conclusion and the related actions by the Department of Justice and
    DOD.
        General Dempsey. ``The decision to not defend lawsuits in Federal
    courts, to include those challenging the constitutionality of the DOMA,
    is a decision made by the President with advice from the Attorney
    General.''
        General Odierno. There has not been a lawsuit filed against the
    Army challenging section 3 of DOMA. As always, the Army defers to the
    Department of Justice on the constitutionality and interpretation of
    DOMA.
        Admiral Ferguson. As required by statute, the Department of the
    Navy will carry out the lawful orders of our elected civilian
    leadership. Per the direction of the President as reflected in the
    Attorney General's letter of February 23, 2011, the Navy will continue
    to comply with section 3 of DOMA, unless and until Congress repeals
    section 3 or the judicial branch renders a definitive verdict against
    the law's constitutionality.
        General Amos. The decision whether to defend certain legal cases in
    the Court system is not within my purview as a Service Chief. Because
    the constitutionality of DOMA is an issue that has broad impacts across
    the Federal Government, I believe other agencies within the executive
    branch are better positioned to provide comment. I understand that DOMA
    is currently the law, and I will follow the law.
        General Welsh. As the Chief of Staff of the Air Force, I am
    required to follow the laws of the United States. Until directed
    otherwise, DOMA is the law of the land, and I am obliged to act in a
    manner consistent with it. Decisions as to the defense of legislation
    in litigation are within the purview of the Department of Justice.
    Decisions as to the constitutionality of any act are ultimately for the
    courts to decide.
        General Grass. Questions regarding the constitutionality and
    defense of particular statutes are best addressed by the Department of
    Justice and I would be appropriately guided by their recommendations.

                                WOMEN IN COMBAT

        170. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, I am concerned about the potential adverse
    impacts to readiness resulting from Secretary Panetta's announcement to
    rescind the 1994 rule that prohibits women from being assigned to
    smaller ground combat units, and his plan to potentially open more than
    230,000 combat positions to women. Women have made incredibly valuable
    sacrifices in service to their country. One such example is Oklahoman
    Sarina Butcher who was killed in combat--a position she volunteered
    for--while serving in Afghanistan for the Oklahoma National Guard. We
    are forever indebted to her and others like her, who have given their
    lives in defending our Nation. My concern is DOD is pursuing this major
    policy change during a time when every branch of the armed services has
    consistently met recruitment goals, is attracting and retaining high
    quality of skilled personnel at record rates, and recently requested
    Congress to provide authority to reduce Army and Marine Corps end
    strength by 100,000 ground troops over the next 4 years due to high
    retention rates and drawdown in Afghanistan. What is the compelling
    national security interest in opening up more positions to women at
    this time?
        Secretary Carter. The recent policy change was based upon the
    experiences and feedback of our commanders and service women in combat
    over the past 10 years. Many commanders noted that Department's gender-
    based assignment policies precluded them from selecting the best
    qualified personnel for a given job. As the Services are required to
    drawdown over 100,000 members in the next 4 years, it is critical the
    military recruit and retain the best qualified personnel in order to
    continue to defend our Nation.
        Secretary Hale. The recent policy change was based upon the
    experiences and feedback of our commanders and service women in combat
    over the past 10 years. Many commanders noted that Department's gender-
    based assignment policies precluded them from selecting the best
    qualified personnel for a given job. As the Services are required to
    drawdown over 100,000 members in the next 4 years, it is critical the
    military recruit and retain the best qualified personnel in order to
    continue to defend our Nation.
        General Dempsey. We must maintain an agile and capable force to
    meet our national security objectives. I value all of our
    servicemembers and opening more job opportunities to our female
    servicemembers only makes us better by increasing the pool of talented
    individuals the Services have to choose from. We will continue to
    select the best qualified personnel for every assignment.
        General Odierno. Over the last decade, thousands of female soldiers
    have shown great courage and sacrifice; we simply could not accomplish
    the mission without them. By opening up more positions to women, the
    Army is opening up opportunity to every qualified soldier regardless of
    race, creed, or gender. Rescinding the 1994 Direct Ground Combat
    Assignment Rule expands career opportunities for women and provides a
    greater pool of highly qualified soldiers to our force as we drawdown.
    Even though the Army is meeting our recruiting goals, it is critical
    that we recruit and retain the best qualified soldiers in our All-
    Volunteer Force. The Army's goal is to ensure the mission is met with
    the most capable individual for the Army of 2020, regardless of gender.
        Admiral Ferguson. The Navy's goal is to ensure that the mission is
    met with the best-qualified and most capable personnel. This is
    fundamentally about getting the best talent available in the Nation to
    serve in the Navy, regardless of gender. Women continue to serve
    bravely and honorably at sea and ashore. Approximately 90 percent of
    Navy's billets are already open to women to include ships, aviation
    squadrons, and ballistic missile submarines. Drawing from the best
    available talent increases our ability to maintain readiness and is a
    critical element in enabling women to serve and advance in the military
    service.
        General Amos. The decision to rescind the combat exclusion policy
    has not yet resulted in opening additional positions to women in the
    Marine Corps. The administration's policy decision provides the
    Services the ability to focus on the capability requirements for any
    individual to serve successfully in any unit. The Marine Corps has been
    on a path for some time to deliberately and methodically study these
    requirements in an effort to ensure that we are properly focused on
    capability. The recent change in the combat exclusion policy has not
    altered or deterred the Marine Corps from this path. Accordingly, I am
    confident that any decision we make as a Service pursuant to the
    ongoing research will, in fact, be based on capability, and will occur
    only after the required notifications to Congress.
        General Welsh. This year marks the 20th anniversary of female
    combat aviators serving in the Air Force. As we take a deliberate
    approach to opening up the last 1 percent of our positions to women,
    our goals are to not only ensure all airmen are given the opportunity
    to succeed but also to ensure success of our Air Force by preserving
    unit readiness, cohesion, and morale. We believe these goals are
    furthered by giving women the opportunity to compete and be recognized
    for their contributions along with their male peers.
        General Grass. This is about now and the future. The Army
    Capabilities Integration Center Unified Quest series in early December
    2012 concluded the competition between the military and the non-
    military public and private sectors for the military-eligible
    population will be so increased by 2030 and 2040, that the military
    will have trouble filling its ranks. Competition assumptions for this
    study were based upon growing numbers of Americans battling with
    obesity, poor physical fitness, disease, lack of education and
    increased numbers with criminal legal problems will severely lower the
    qualified candidate pool for Military Service. In light of this
    increased competition, disqualifying an entire segment of the remaining
    qualified population seems, to me, to heighten risk from a national
    security perspective. Furthermore, women must be allowed to rise to a
    fair, representative level in positions of significant leadership roles
    in all branches of the military by 2030 and 2040, which takes time.
    Otherwise, it will be difficult to shape the culture to allow for
    appropriate rates of retention and recruiting.

        171. Senator Inhofe. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, what assurance can you provide that decisions
    to open positions will be based on bona fide military requirements, and
    will not result in needlessly exposing any American servicemember, men
    or women, to more risk of death or serious injury, than is absolutely
    required by military necessity?
        Secretary Carter. The decision considering the assignment of women
    will follow the Joint Chiefs' guiding principles to ensure:

             The success of our Nation's warfighting forces by
            preserving unit readiness, cohesion and morale.
             All service men and women are given the opportunity to
            succeed and are set up for success with viable career paths.
             We retain the trust and confidence of the American
            people to defend this Nation by promoting policies that
            maintain the best quality and most qualified people.

        In addition, we continue to comply with Public Law 103-160, Section
    543, which requires occupational standards be established on a gender-
    neutral basis, and prevents the Department from changing standards for
    the purpose of increasing or decreasing the number of women in that
    occupational career field.
        Secretary Hale. The decision considering the assignment of women
    will follow the Joint Chiefs' guiding principles to ensure:

             The success of our Nation's warfighting forces by
            preserving unit readiness, cohesion and morale.
             All Service men and women are given the opportunity to
            succeed and are set up for success with viable career paths.
             We retain the trust and confidence of the American
            people to defend this Nation by promoting policies that
            maintain the best quality and most qualified people.

        In addition, we continue to comply with Public Law 103-160, section
    543, which requires occupational standards be established on a gender-
    neutral basis, and prevents the Department from changing standards for
    the purpose of increasing or decreasing the number of women in that
    occupational career field.
        General Dempsey. Our female servicemembers have been serving in the
    combat zones of Iraq and Afghanistan since the beginning of the war and
    are often exposed to the same dangers as their male counterparts.
    Anyone serving in combat could be called upon to return fire on the
    enemy regardless of the unit they are assigned or their gender. The
    1994 Direct Ground Combat Definition and Assignment Rule never limited
    a service woman's proximity to danger. By rescinding the 1994 rule, we
    only increase the opportunities to assign personnel from our growing
    talent pool. In doing so, the Joint Chiefs remain committed to ensuring
    unit readiness and combat effectiveness.
        General Odierno. As directed by OSD, the Army will use a
    deliberate, phased approach to open positions in a manner that will
    integrate women into occupational fields in a climate where they can be
    successful and flourish, while not sacrificing warfighting capability
    and maintain the trust of the American People. The Army will establish
    reasonable standards that will define and help predict success for each
    Military Occupational Specialty. The Army will:

             Ensure the success of our Nation's warfighting forces
            by preserving unit readiness, cohesion and morale.
             Ensure our men and women are given the opportunity to
            succeed and are set up for success with viable career paths.
             Retain the trust and confidence of the American people
            to defend this Nation by promoting policies that maintain the
            best quality and most qualified people.
             Validate occupational performance standards, both
            physical and mental, for all Military Occupational Specialties
            (MOS), with initial focus specifically on those that remain
            closed to women and then complete the remaining MOS.
             Ensure mid-grade and senior women enlisted and
            officers are assigned to commands to ensure future success.

        Admiral Ferguson. Service women are assigned to billets
    commensurate with their capabilities to the maximum extent practicable
    and allowable by current DOD policy. We will continue to approach the
    assignment of women to our platforms to ensure we balance professional
    opportunity, fiscal constraints, operational readiness, and mission
    accomplishment.
        General Amos. I am confident that any decision we make as a Service
    pursuant to the ongoing research will, in fact, be based on capability,
    and will occur only after the required notifications to Congress. The
    Marine Corps is focused on the capability requirements for any
    individual to serve successfully in any unit. The Marine Corps has been
    on a path for some time to deliberately and methodically study these
    requirements in an effort to ensure that we are properly focused on
    capability. The recent change in policy has not altered or deterred the
    Marine Corps from this path.
        General Welsh. The Air Force has been conducting studies of all
    Battlefield Airmen specialties to ensure all bona fide requirements
    (occupational, physical fitness) are validated and/or established.
    These standards will consist of qualitative and quantifiable measures
    reflecting abilities required for each specialty and will ensure that
    we do not put anyone, man or woman, into an occupation without an
    assurance that they have the aptitude and physical ability to
    adequately perform the mission. We anticipate these studies will
    conclude by September 2015 (OSD deadline).
        General Grass. The safety and welfare of the men and women in
    uniform is always an overriding concern to me and the members of the
    Department. Decisions are not made that would needlessly endanger their
    lives.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss

                                     ALLIES

        172. Senator Chambliss. General Dempsey, during the hearing, you
    commented on the elevated risk from the effects of sequestration. You
    stated the mission of DOD is to ``deter adversaries and assure
    allies.'' China is watching our budget debate closely and is executing
    a strategic communication strategy to convince our allies in the Asia-
    Pacific that the United States is not a reliable partner. In the
    current environment, how do we deter our adversaries and assure our
    allies?
        General Dempsey. I stated at my confirmation hearings that there is
    unquestionably a relationship between U.S. security and current
    economic conditions. There are clear indications that many nations in
    the Asia-Pacific, not just China, are watching these debates closely,
    and will make judgments regarding the endurance and dependability of
    our rebalance and the efficacy of the United States as the security
    partner of choice in the region based upon the decisions we make in the
    near term. Our continued access to the commons in a region that
    accounts for an ever growing share of world economic traffic is
    dependent upon the stability that our relationships and capabilities
    provide. In order to deter our adversaries and assure our allies, we
    must follow through on our commitments, or accept elevated risk.

                                     DEPOTS

        173. Senator Chambliss. General Welsh, sequestration and the
    possible year-long CR are forcing you to reduce weapons system
    sustainment by approximately 30 percent. This will result in a
    reduction of depot workload by at least one third, driving down
    aircraft availability and mission capability rates which will have an
    adverse effect long into the future. How will the Air Force manage
    public-private depot workload?
        General Welsh. The Air Force will continue to manage public-private
    depot workload through its standing processes; e.g, the Depot Source of
    Repair Process (DSOR) for depot maintenance workload. Although the use
    of the DSOR process ensures a ready and controlled source of repair for
    workloads that sustain a ``Core'' capability for the Air Force, that
    ``core'' capability is at risk by the sequestration process. With
    sequestration and the possible year-long CR, there will be significant
    implications to both our organic depots and the industrial base. Our
    current estimate of the reduction to Weapon System Sustainment (WSS)
    due to sequestration is approximately 18-20 percent. The anticipated
    reduction has been split 50 percent to WSS and 50 percent to Contactor
    Logistics Support (CLS), so both public and private depot workloads
    will be affected.

        174. Senator Chambliss. General Welsh, how will the Air Force
    recover, and at what cost?
        General Welsh. The recovery effort must focus on reversing all
    adverse effects of sequestration to weapon systems, supply chain, and
    workforce. Full depot workload recovery will likely take more than 5
    years. The focus will be on regenerating and reprioritizing workload
    requirements, hiring/rehiring civilian personnel, and reinvigorating
    the supply chain. In some cases, we will need contractor sites to
    restart dormant lines impacted during sequestration to meet production
    demands. The potential $1.7 billion loss in funding for total force
    weapon system sustainment activities would result in significantly
    increased costs to recover due to rehiring efforts, training new
    personnel, re-establishing linkages in the supply chain, as well as
    normal cost growth. A balance of force structure changes, investments,
    and sustainment activities will be required to recover Air Force
    readiness levels.

        175. Senator Chambliss. General Welsh, the Air Force is asking
    Congress for relief from the 50/50 depot-contractor ratio and the Depot
    Purchase Equipment Maintenance floor requirements to mitigate the
    impact of possible sequestration and year-long CR for fiscal year 2013.
    I have been a strong supporter of DOD depots throughout my time in
    Congress, in particular to ensure we maintain the proper balance
    between organic depot maintenance and private sector workloads. This
    not only provides capabilities to our warfighters at the best cost to
    taxpayers, it preserves organic maintenance capabilities--and therefore
    flexibility--for the service. Your request for relief in these areas
    implies that depot maintenance work performed by contractors is more
    cost-effective than work performed in the public depots. What is the
    current public/private depot workload ratio?
        General Welsh. Air Force fiscal year 2013 50/50 projections, pre-
    sequestration, are approximately 53 percent organic and 47 percent
    contract.

        176. Senator Chambliss. General Welsh, why are you asking for
    relief?
        General Welsh. At this time the Air Force is uncertain as to
    whether it will require relief from 50/50, but we believe it is
    appropriate to alert Congress that the potential exists. Should
    sequestration take effect, the Air Force will take approximately a
    $1.6-$1.8 billion reduction to its sustainment accounts, including its
    Weapon System Sustainment (WSS) account. The WSS account contains funds
    for organic depot maintenance, sustaining engineering, technical order
    development, and Contractor Logistics Support (CLS). CLS includes depot
    maintenance along with other sustainment funding such as supply chain
    and program management, and engineering. Approximately 50 percent of
    the WSS reduction will be applied to CLS, and the remaining 50 percent
    will be spread between the three organic accounts of WSS. At this time
    the Air Force has a higher level of understanding as to where it will
    take the adjustments to the three organic accounts within WSS than the
    CLS account. Depot maintenance is the largest amongst the three organic
    accounts and will be reduced approximately $550 million. The Air Force
    is working with industry to determine how best to apply the reductions
    to the CLS account. The Air Force's plan to reduce the fiscal year 2013
    flying hour program also will drive a reduction to organic and
    contracted depot maintenance. This funding does not reside in its WSS
    account. At this point the Air Force has not assessed the impact of
    this reduction on the organic and contracted commodity depot
    maintenance workloads.

        177. Senator Chambliss. General Welsh, will Congress receive a
    formal, legislative request for relief?
        General Welsh. Air Force will explore a waiver to fiscal year 2013
    as soon as the impacts of the CR and sequestration reductions are
    finalized.

        178. Senator Chambliss. General Welsh, what is the duration of the
    relief request?
        General Welsh. The duration of any waiver would depend in part on
    what actions Congress takes to address the fiscal year 2013 and beyond
    CR and sequestration reductions.

        179. Senator Chambliss. General Welsh, what are the projected
    savings of these initiatives?
        General Welsh. Since sequestration actions are budget reductions
    there are no savings. Approximately $1.6-$1.8 billion in fiscal year
    2013 third and fourth quarter total force weapon system sustainment
    activities are at risk due to sequestration. Analysis of current
    workload and Air Force implementation planning indicates over 150
    aircraft depot inductions (17 percent) and 85 engine overhauls (15
    percent) would be deferred/cancelled in the third and fourth quarters
    of fiscal year 2013. Depot level reparable parts supporting flying
    operations will be significantly reduced as flying hours are reduced
    across all fleets. Over $100 million in sustaining engineering tasks,
    including various structural integrity test programs across all fleets,
    will be deferred or eliminated. In addition, potential CLS contract
    reductions range from $550 million to $760 million, affecting workload
    at contractor sites and depot partnerships.

        180. Senator Chambliss. General Amos, the possibility of
    sequestration along with the year-long CR will severely affect our
    ability to conduct maintenance in the coming year. The Marine Corps
    plans to reduce depot maintenance to 22 percent of the baseline
    requirement. How does this translate into specific impacts for Marine
    Corps depots, in particular, Marine Corps Logistics Base, Albany, GA?
        General Amos. Funding at this level would force us to assume
    significant risk in mission-essential weapon system readiness and would
    delay our reset from operations in Afghanistan an additional 12-18
    months. We estimate that reset would be complete 2 years after the last
    equipment leaves Afghanistan, which is projected for early fiscal year
    2015. This delay translates to reset completion in fiscal year 2017 or
    2018. We expect that contractors would release 723 employees, and the
    government would layoff 122 Federal term employees, a total of 845
    workers, or one-third of the combined government and contractor
    workforce. Once this workforce is laid off, and assuming funding is
    available, it would take 1-2 years to fully re-establish this
    maintenance capability, further delaying reset. These depot workforce
    reductions would affect both Albany, GA, and Barstow, CA, personnel.

        181. Senator Chambliss. General Amos, how will the Marine Corps
    recover from this reduction, and at what cost?
        General Amos. If reductions in funding are permanent, the Marine
    Corps would not be able to provide the capabilities that the Nation
    requires and expects. Marines would deploy without all equipment
    required for the mission, or with equipment that does not perform to
    required standards; resulting in risk to the safety of personnel and
    their ability to respond quickly and decisively to crisis. Even with
    short-term reductions, we would be forced to assume risk in mission-
    essential weapon system readiness.

                                   OHIO-CLASS

        182. Senator Chambliss. Admiral Ferguson, the possibility of
    sequestration and the year-long CR will have major impacts on the Navy
    Fleet modernization. How will these budget constraints affect the Ohio-
    class submarine replacement program?
        Admiral Ferguson. A full-year continuing resolution will not impact
    the Ohio Replacement Program (ORP) since the fiscal year 2012
    appropriations were greater than the fiscal year 2013 requested amount;
    however, sequestration will reduce R&D funding by $55 million in fiscal
    year 2013, which would result in a 3-month delay to construction start
    and delivery. If the R&D funds are not restored in fiscal year 2014,
    then the ORP will not achieve the planned design completion at the
    start of ship construction, which will pose significant risk to the OR
    SSBN being ready to replace retiring Ohio SSBNs in 2031.
                                     ______

                 Questions Submitted by Senator Roger F. Wicker

                                POWER PROJECTION

        183. Senator Wicker. Admiral Ferguson and General Amos, the Navy
    recently released a CR and sequestration impact statement that
    primarily focuses on the impacts to fleet operations such as the Navy's
    decision to reduce our carrier presence in the Persian Gulf from two
    carriers to one. This reduction in deployed naval forces will have a
    negative impact on our ability to respond to global crises promptly and
    decisively. Can you briefly elaborate on how sequestration would
    threaten the Navy and Marine Corps' ability to decisively project power
    abroad?
        Admiral Ferguson. The combined effect of a year-long continuing
    resolution and sequestration will reduce our Navy's overseas presence
    and adversely impact the material readiness and proficiency of our
    force. As a result, the Navy will be limited in its ability to provide
    the capability and capacity called for in the current defense strategy
    and will be unable to execute all of the naval force requirements of
    the combatant commanders.
        General Amos. The impacts of sequestration can be looked at in
    terms of immediate effects (current fiscal year) and effects over time
    (future years), both of which have significant effects on the ability
    of the Marine Corps to project power. The Marine Corps relies heavily
    on amphibious shipping to project power and maintain presence.
    Sequestration measures the Navy may implement can have second and third
    order consequences on the Corps' ability to meet its core missions,
    particularly with respect to degraded unit training and reduced support
    to theater geographic combatant commander requirements for shaping
    their theaters, crisis response, and deterrence. Immediate steps the
    Navy might take:

             Cancelling all fiscal year 2013, third and fourth
            quarter ship maintenance availabilities which would affect the
            following amphibious ships: Wasp, Peleliu, Green Bay, and
            Rushmore.
             Cancelling or deferring essential maintenance would
            adversely affect the ships' ability to deploy, either
            independently or with amphibious ready groups (ARG)/Marine
            expeditionary units (MEU), and decrease their service life.
             Cancelling independent deployers to the Caribbean and
            South America, providing no support to SOUTHCOM amphibious ship
            and associated MAGTF requirements.
             Cancelling independent deployers that support
            combatant commander engagement priorities, specifically Africa
            Partnership Station, which in turn reduces the Marine Corps'
            ability to project power and respond to crisis in the AFRICOM
            AOR.

        The long-term effects of sequestration include the cancellation of
    ARG/MEU deployments. Beginning in fiscal year 2014, the BATAAN ARG and
    22 MEU deployments could be cancelled, followed by two more ARG/MEUs
    scheduled to deploy in fiscal year 2015. This will cause a gap in
    presence in the CENTCOM AOR for an undetermined amount of time,
    depriving 5th and 6th Fleets of a theater strategic Reserve and a sea-
    based crisis response capability. Further reduction of ARG/MEU
    deployments limits forward presence in flash point regions from North
    Africa to the Levant, and throughout the Middle East and South Asia.
        Outside the realm of amphibious shipping, the Marine Corps provides
    strike aircraft in support of carrier battle group deployments and as
    part of forward-based formations in Japan and Bahrain. Reduced Navy CSG
    presence in support of operations in the Persian Gulf forces the
    Service to focus on one theater over others with regard to Marine Corps
    F/A-18 deployments.
        The Marine Corps provides other deployed forces ranging from the
    Black Sea Rotational Force in EUCOM AOR, to SP-MAGTF Africa in the
    AFRICOM AOR, to Marine Rotational Force-Darwin in the PACOM AOR. These
    rotations would be impacted as the Marine Corps would be forced to
    prioritize among multiple combatant commander requirements. In the Asia
    Pacific alone, reduced presence would potentially decrease theater
    security cooperation and multi-national training participation,
    degrading one of the most effective investments in building partner
    nation capacity. This puts U.S. credibility at risk with allies and
    partners. Lastly, the Marine Corps decisions to reduce support to
    theater geographic combatant commander requirements negatively impact
    shaping activities within theaters, responding to crisis and preventing
    conflict.

        184. Senator Wicker. Admiral Ferguson and General Amos, what is
    your assessment of the impact sequestration would have on the Navy and
    Marine Corps' ability to execute DOD pivot to Asia?
        Admiral Ferguson. A year-long CR and/or sequestration will impact
    our ability to support the Asia-Pacific rebalance in four ways:

             Forces: Delays the deployment of Navy forces in the
            Pacific. We will mitigate impacts by operating forward with
            Forward Deployed Naval Forces, rotational crews on Littoral
            Combat Ship, and rotational Military Sealift Command crews on
            the JHSV, Mobile Landing Platform, and the AFSB.
             Capabilities: Enhanced capabilities will deliver to
            the Navy more slowly, face reduced procurement objectives, or
            possibly cancellation (F-35s, P-8s, SSNs, LCS, and enhanced
            capabilities in our weapons and sensors).
             Home porting: The shift of 60 percent of our ships and
            aircraft in the Pacific will be delayed since our operating and
            maintenance funds will have a ripple effect on the movement of
            all ships and because newly procured ships and aircraft
            destined to be based in the Pacific will deliver more slowly.
             Intellectual capital: fiscal year 2013 exercises
            (Carats, Foal Eagle, Malabar), travel for partnership events,
            and education opportunities in the region would be reduced.

        As the Secretary of Defense has stated, sequestration impacts our
    ability to support the Defense Strategic Guidance, and may compel us to
    change the defense strategy altogether.
        General Amos. We are concerned that sequestration, when applied in
    the midst of our planned redistribution of forces in the Pacific, will
    impose significant impacts to our operational readiness and
    responsiveness, and hinder our ability to maintain deterrence, project
    power, respond to crises and contribute to stability, in accordance
    with combatant commander requirements and timelines. Our rebalance to
    the Pacific faced a significant challenge with the planned downsizing
    of the Marine Corps to 182,100. We mitigated this by pacing the
    reconstitution of the III MEF UDP commensurate with our force
    requirements in the CENTCOM AOR and by accepting the impacts of the
    downsizing in other commands in favor of sustaining, and in some cases
    increasing, our III MEF force levels under the distributed laydown.
    Sequestration will reduce the operational readiness of those Pacific-
    based forces to conduct their assigned missions. Sequestration will
    also incur a proportional delay in executing the facilities and force
    posture restructuring necessary to achieve the distributed laydown
    plan, inducing further risk for Marine Corps forces in the Pacific.
    Extending the already protracted timeline for the distributed laydown
    increases risk for III MEF due to disruption of operational
    capabilities during the transition and relocation process.
        Sequestration may affect USMC participation in Theater Security
    Cooperation (TSC) events across the Pacific, to include Phase II of the
    MRF-D, and the III MEF UDP. MRF-D Phase II, the growth in Australia
    from a company to battalion sized SP-MAGTF, may be impacted by
    sequestration. Initial fiscal year 13/2014 costs related to site
    preparation for the larger unit, and the costs associated with moving
    the gear set, agricultural inspections, and unit movement, as well as
    regional TSC strategic-lift expenses could be at risk. III MEF UDP is
    the Marine Corps' method to project Marine forces forward in the PACOM
    AOR and may be affected by sequestration if funding is unavailable for
    deployment.
        The significant impact to USMC equity in the Pacific due to
    sequestration is the effect on strategic mobility. Intra-theater lift
    is a requirement due to the distances in the PACOM AOR. USMC ability to
    participate in TSC events could be impacted if U.S. Navy ships are less
    available due to maintenance and other forms of Intra-theater lift are
    too expensive. While the JHSV is not currently available, sustained
    sequestration may impact USMC capacity to fund JHSV use when the asset
    becomes available.

                          SHIPBUILDING INDUSTRIAL BASE

        185. Senator Wicker. Admiral Ferguson, like many of my colleagues,
    I am concerned about the impact the CR and sequestration will have on
    our industrial base. In recent days, the Navy submitted to Congress a
    revised force structure assessment that identifies a 306-ship
    requirement, down from the previous 313-ship requirement that has been
    in effect since 2005. I am concerned that sequestration, a lack of
    annual appropriations, and decreasing top-line budget numbers would
    drive a generation of highly-trained and highly-skilled workers away
    from the shipbuilding industry. Given the impending threat of
    sequester, what is the Navy's near-term contingency plan to help
    protect and preserve the U.S. shipbuilding industry and its employees?
        Admiral Ferguson. The mechanical nature of sequestration, the lack
    of an annual appropriations bill, and decreasing discretionary budget
    caps will adversely affect the Nation's shipbuilding industry. Delayed
    or cancelled ship and aircraft construction and cancelled depot
    maintenance will result in a reduction of the civilian workforce in our
    military industrial base. The loss of work in fiscal year 2013 alone
    may cause some smaller suppliers and service providers to shut down,
    causing irreversible damage to small businesses and component
    manufacturers. For example, over 90 percent of our nuclear components
    are provided by sole-source manufacturers, putting them and our ability
    to procure and sustain our nuclear-powered ships and submarines at
    risk. The health and viability of the shipbuilding industrial base
    depend on the productive relationship between private industry and the
    Navy. As we have done in the past, Navy will continue to be flexible in
    working with shipyards to minimize adverse impacts, where it is prudent
    and reasonable. For current and future contracts, we will consider
    adjusting schedules and other novel approaches to allow shipbuilders to
    more effectively manage the reduced workload. However, any such
    approaches will need to be carefully weighed against operational
    requirements and schedules, as well as the need to reduce cost and
    include competition. Even with these efforts it will be increasingly
    difficult to sustain current employment levels under sequestration.

        186. Senator Wicker. Admiral Ferguson, how do we keep them employed
    if we build fewer ships and perform less ship maintenance?
        Admiral Ferguson. Navy will work within existing law, should
    sequestration be triggered and discretionary budget caps be imposed in
    the long-term, to minimize the adverse impact to the shipbuilding
    industrial base.
        The health and viability of the shipbuilding industrial base depend
    on the partnership between private industry and the Navy. As we have
    done in the past, Navy will continue to be flexible in working with
    shipyards to minimize adverse impacts, where it is prudent and
    reasonable. For current and future contracts, we would be willing to
    consider adjusting schedules and other novel approaches to allow
    shipbuilders to more effectively manage the reduced workload. However,
    any such approaches will need to be carefully weighed against
    operational requirements and schedules, as well as the need to reduce
    cost and include competition. Over the long term, it is likely we will
    not sustain current employment levels in our industrial facilities with
    the projected reductions to depot maintenance, force structure, and
    shipbuilding under sequestration.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                                  north korea
        187. Senator Ayotte. Secretary Carter, what is your assessment of
    North Korea's ICBM capabilities?
        Secretary Carter. [Deleted.]

        188. Senator Ayotte. Secretary Carter, when do you predict that
    North Korea may be able to strike the Mainland United States with an
    ICBM?
        Secretary Carter. [Deleted.]

                                      IRAN

        189. Senator Ayotte. Secretary Carter, when do you predict that
    Iran may be able to strike the mainland United States with an ICBM?
        Secretary Carter. With sufficient foreign assistance, Iran may be
    technically capable of flight-testing an intercontinental ballistic
    missile (ICBM) by 2015. Iran could also have a longer-range Medium-
    Range Ballistic Missile (MRBM) or an intermediate-range ballistic
    missile capable of threatening much of the Western Europe by 2015.
        Iran's development of MRBMs and successful launching of the Safir,
    a multistage space launch vehicle, demonstrate progress in some
    technologies relevant to ICBMs. Iran displayed its next-generation SLV,
    the Simorgh, in February 2010. It is much larger than the Safir and
    shows progress in booster design that could also be applicable to an
    ICBM.

                                  NUCLEAR ARMS

        190. Senator Ayotte. Secretary Carter, is the administration
    honoring its past nuclear modernization commitment under the New START
    treaty?
        Secretary Carter. Within existing budget constraints, the
    administration, through the efforts of DOD and NNSA, is modernizing
    U.S. strategic delivery systems, the nuclear complex and its associated
    infrastructure, and is sustaining the nuclear stockpile in accordance
    with its commitments to Congress and under the New START treaty.

        191. Senator Ayotte. Secretary Carter, are the Russians in full
    compliance with our existing arms control agreements?
        Secretary Carter. As Congress knows, the United States has raised
    concerns regarding Russian compliance with the Chemical Weapons
    Convention and the Conventional Forces in Europe Treaty. More broadly,
    DOD works with the Department of State and its other interagency
    partners in assessing and responding to compliance concerns. With
    respect to nuclear arms control, issues related to New START treaty
    implementation are currently under discussion in that Treaty's
    implementation oversight forum, the Bilateral Consultative Commission.
    Resolution of such issues with Russia is clearly important.

        192. Senator Ayotte. Secretary Carter, should we be discussing
    further reductions if they have not complied with current obligations?
        Secretary Carter. As the President has stated, reductions to U.S.
    nuclear forces beyond those in the New START treaty are possible while
    still ensuring the security of the United States and its allies and
    partners. Such reductions would be consistent with both Article VI of
    the Nuclear Nonproliferation Treaty and with the conclusions of the
    2010 NPR. Issues related to new START treaty compliance are currently
    under discussion in that Treaty's compliance forum, the Bilateral
    Consultative Commission. Resolution of such issues with Russia is
    clearly important.

        193. Senator Ayotte. Secretary Carter, do you believe we should
    continue to reduce our remaining nuclear stockpile if we are failing to
    appropriately modernize our nuclear arsenal?
        Secretary Carter. The administration is committed to a safe,
    secure, and effective nuclear deterrent as long as nuclear weapons
    exist. As reflected in the 2010 NPR, maintaining the Triad and
    modernizing U.S. nuclear forces and the nuclear weapons infrastructure
    are--and will remain--national security priorities. The President has
    also made clear that reductions to U.S. nuclear forces beyond those in
    the New START treaty are possible while still ensuring the security of
    the United States and its allies and partners. Such reductions would be
    consistent with both Article VI of the NPT and with the conclusions of
    the 2010 NPR.

        194. Senator Ayotte. Secretary Carter, with Russia and China
    modernizing their nuclear arsenals, Iran pursuing a nuclear weapons
    capability, and North Korea conducting a third nuclear test, do you
    believe this is a good time to discuss major additional reductions to
    America's nuclear deterrent?
        Secretary Carter. Please see my answer to question #193.

                           MARINE EXPEDITIONARY UNIT

        195. Senator Ayotte. General Amos, is it accurate to say that
    before September 11, 2001, the Marine Corps regularly had an East Coast
    Marine Expeditionary Unit (MEU) in the Mediterranean?
        General Amos. Prior to 11 September 2001, the Navy and Marine Corps
    provided a sustained Amphibious Ready Group/Marine Expeditionary Unit
    (ARG/MEU) presence in the Mediterranean with forces from the east
    coast. At the time, the U.S. Navy had over 40 amphibious ships in the
    inventory; that number of amphibious warships supported a greater
    global presence. Overtime, the number of amphibious warships has
    declined significantly: 1990 (64); 2000 (41); and 2013 (30).
        Since 11 September 2001, ARG/MEUs from both coasts have deployed in
    an alternating rotation to fill specifically a continuous presence in
    the CENTCOM AOR, providing only transitory presence in the
    Mediterranean. Amphibious forces have responded to crises in these
    theaters, but at the expense of presence in CENTCOM AOR. Given the low
    numbers and operational availability of amphibious warships today,
    along with a potential reduction in force or curtailment in operations,
    the U.S. Navy-Marine Corps team would be challenged to provide a
    sustained presence, capable of responding to crisis in the
    Mediterranean without accepting risk elsewhere.

        196. Senator Ayotte. General Amos, did the Marine Corps have a MEU
    in the Mediterranean on September 11, 2012?
        General Amos. 24 MEU was deployed in the CENTCOM area of operations
    (AOR) on 11 September 2012, fulfilling the CENTCOM theater Reserve
    mission.
        The 24 MEU had previously transited the Mediterranean Sea from 5
    April to 1 May 2012 on its way to the CENTCOM AOR.
        The 24 MEU subsequently redeployed to the Mediterranean Sea on 6
    November 2012 during its out-bound transit and remained there until 11
    December 2012.

        197. Senator Ayotte. General Amos, would you agree that under
    current spending reductions, and certainly under sequestration, we are
    likely to have more incidences in which the Marine Corps will not be
    able to respond in a timely way to save American lives?
        General Amos. Given the low numbers and operational availability of
    amphibious warships today, along with a potential reduction in force or
    curtailment in operations, the Navy-Marine Corps team will be
    challenged to provide a sustained presence, capable of responding to
    crisis without accepting risk elsewhere.
        If sequestration occurs, the Department of the Navy may be forced
    to gap the required CENTCOM AOR presence. Response to crises in the
    Mediterranean might have to rely on the global response force ARG/
    Marine Expeditionary Unit (MEU), which would take 10 days for transit
    (following equipment/forces onload) if an east coast ARG/MEU responds,
    and 28 days for transit if a west coast ARG/MEU responds.
        In response to Secretary of Defense's direction to the geographic
    combatant commands and the Services to develop crisis response options
    to be deployed to EUCOM or AFRICOM, the Marine Corps developed a
    concept for a Marine Special Purpose Marine Air Ground Task Force-
    Crisis Response capable of conducting limited crisis response missions
    to include embassy reinforcement, limited NEOs, tactical recovery of
    aircraft and personnel, and fixed site security. The Marine Corps would
    have to rely on a combination of land-based and maritime platforms,
    based on availability, to sustain and employ this force. The MV-22B
    would be the primary aviation asset due to its range and flexibility.
    However, fiscal constraints imposed upon the Marine Corps as a result
    of sequestration would have a direct impact on the Service's ability to
    initiate this capability while maintaining the support it provides to
    all other global demands.
        Despite the constrained funding resulting from a combination of the
    continuing resolution and sequestration, in the next 6 months the Corps
    would be able to continue meeting its deployed warfighting needs and
    the training of its next-to-deploy forces. In the next 6 to 12 months,
    however, the Corps will see degradation in home-station unit readiness,
    impacts to force modernization, and impacts to next-to-deploy forces.
    Beyond 12 months, it will see a real impact to all home station units
    (e.g. fixed wing squadrons will have on average only four of twelve
    assigned aircraft on the ramp due to aviation depot shutdowns) and the
    beginning of more severe impacts to next-to-deploy and deployed forces.

                               SEQUESTRATION PLAN

        198. Senator Ayotte. Secretary Carter, in your written statement,
    you mention your testimony last August. Why didn't you issue guidance
    last August asking your Service Chiefs to submit detailed plans to
    implement sequestration?
        Secretary Carter. We did a great deal of pre-planning over the past
    year and communicated the fundamental problems sequester would cause
    repeatedly in speeches and testimony, both before and after we started
    planning. Starting in January, we began detailed budget planning and,
    importantly, we started taking actions to slow spending. Indeed actual
    action is the main difference between our sequestration efforts before
    and after January.
        We felt that it was premature to order detailed budget planning
    last August. As it turns out, that planning would have been largely
    wrong because it couldn't have taken into account the far-reaching
    effects of the Continuing Resolution and it would have had the wrong
    dates for the beginning of sequestration. Even though it would have
    been wrong, premature planning would have forced an early start to the
    degradation in morale and productivity, and the overall increase in
    inefficiency, that we are experiencing right now as we do detailed
    planning. Moreover, no matter how much planning we do, or when we do
    it, the adverse effects of sequestration and the Continuing Resolution
    cannot be significantly offset. The only good solution is to detrigger
    sequestration and pass appropriations bills.

        199. Senator Ayotte. Secretary Carter, based on the OMB guidance
    that makes DOD responsible for liabilities for any defense contractor
    that does not abide by the Worker Adjustment and Retraining
    Notification Act (WARN Act), how much money do you anticipate DOD will
    have to spend on WARN Act-related reimbursements?
        Secretary Carter. The OMB guidance does not make DOD responsible
    for any additional liabilities; instead, the guidance applies existing
    FAR provisions to a specific question regarding WARN Act-related costs
    raised by the Federal contracting community, and it explains how
    governing cost principles would apply in those circumstances.
    Specifically, the guidance states that if sequestration occurs, an
    agency terminates or modifies a contract as a result of sequestration
    that necessitates that the contractor order a plant closure or mass
    layoff subject to WARN Act requirements, and the contractor has
    followed a course of action consistent with the Department of Labor's
    Training and Employment Guidance Letter No. 3-12 (the TEGL), then
    certain liability and litigation costs would be allowable and be
    covered by the contracting agency, if otherwise reasonable and
    allocable. This is an appropriate application of existing FAR
    provisions and reflects a fair and reasonable approach. As
    circumstances evolve, each contractor must make its own decisions with
    regard to sequestration's impact on its business and whether the
    requirement to issue WARN Act notices has been triggered. As made clear
    in the TEGL, if and when ``specific closings or mass layoffs are
    reasonably foreseeable,'' notice would be required, and if a contractor
    failed to provide appropriate notice in that circumstance the relevant
    FAR principles may provide a different answer regarding the
    allowability of related costs.
        I do not anticipate that application of the OMB guidance will
    result in any significant costs to the Department.
                                     ______

                   Questions Submitted by Senator Deb Fischer

                                STRATEGIC FORCES

        200. Senator Fischer. Secretary Carter, according to the
    President's 2010 NPR, an important basis for reducing the role and
    numbers of nuclear weapons is that ``U.S., allied, and partner
    conventional military capabilities now provide a wide range of
    effective conventional response options to deter and if necessary
    defeat conventional threats from regional actors.'' As this statement
    makes clear, shifting responsibility for deterrence missions from
    nuclear to conventional forces is a central rationale for reducing our
    reliance on nuclear weapons. In light of General Dempsey's testimony
    before the Armed Services Committee on February 7, 2012, that pending
    spending cuts would require DOD to ``do less with less,'' can we expect
    our conventional forces to assume additional missions--such as
    providing deterrence--with devastating reductions in funding looming?
        Secretary Carter. As the Secretary and I have stated repeatedly,
    reductions of the scale that would be imposed by sequestration would
    have devastating effects on the ability of the U.S. Armed Forces to
    accomplish their missions. If sequester occurs, irrespective of
    prospective cuts to our conventional forces, the United States has and
    must maintain a safe, secure, and effective nuclear arsenal able to
    meet our deterrence requirements. That said, sequester-level reductions
    would require some very hard choices. I urge Congress to eliminate the
    sequester threat permanently and pass a full-year appropriations bill
    for the Department and other Federal agencies, along with a balanced
    deficit reduction plan.

        201. Senator Fischer. Secretary Carter, during our conversation in
    the hearing, you stated, ``we in DOD, will try to protect our nuclear
    capabilities to the maximum extent possible. But there may be some
    effects on some parts of it.'' Please describe in detail the effects
    that the pending budget cuts could have on our nuclear capabilities
    and, in particular, the efforts to modernize our nuclear deterrent and
    the facilities that support it.
        Secretary Carter. While we would have to defer to NNSA for
    specifics, a reduction to NNSA weapons activity funding would adversely
    impact our ability to continue our plans to modernize the nuclear
    stockpile. Eighty percent of the nuclear stockpile will be in various
    stages of life extension efforts over the next 5-10 years. A budget
    reduction that impacts NNSA's ability to perform one or more of these
    life extension programs would introduce risk in our ability to sustain
    the stockpile and diminish confidence in the nuclear deterrent. We are
    also relying heavily on a modernized nuclear weapons complex to perform
    this work. Budget reductions delaying needed infrastructure
    modernization would introduce more risk to scheduled life extension
    programs. We have been working closely with DOE to find efficiencies in
    both our weapons programs and the infrastructure modernization
    programs, some of which Congress has already been informed of, and we
    plan to provide additional measures in the fiscal year 2014 budget.
    Sequestration has not been assumed in these plans, and would add
    substantial risk for the maintenance and modernization of our nuclear
    stockpile.
                                     ______

                  Questions Submitted by Senator David Vitter

                                    TRAINING

        202. Senator Vitter. General Odierno, I understand that the Army
    will cancel several NTC and JRTC rotations this year regardless of
    whether we solve sequestration and the CR. Will the Army be able to
    reschedule these rotations in 2014?
        General Odierno. Unfortunately, no. The Army will conduct rotations
    at the NTC and JRTC as funds are available, but we will have missed the
    window for improving readiness for those units as they flow through the
    ARFORGEN cycle into the Available Phase. Our capacity is limited and
    even with additional funding in fiscal year 2014, we cannot
    significantly increase capacity and will have lost this critical
    training opportunity for those units with canceled rotations until they
    again rotate through the ARFORGEN cycle in 2 years.

        203. Senator Vitter. General Odierno, what do you see as the
    potential second and third term effects of not keeping BCTs stationed
    the way they currently are?
        General Odierno. The Army's Programmatic Environmental Assessment
    ensures we examine the military utility, impacts on the communities,
    infrastructures, and the costs and savings of stationing. The key is
    stationing to ensure we meet our treaty obligations, maintain our
    readiness and responsiveness, and achieve the goals of the defense
    strategy, while keeping in mind our great military communities.

        204. Senator Vitter. General Odierno, are there any additional
    values in maintaining BCTs that are trained and ready? For example, and
    more specifically, the 4/10 Mountain Brigade recently had their
    deployment orders advanced from October to July. The 4/10 was able to
    easily adjust their training and enter directly into the JRTC schedule
    on an earlier date with no additional cost to the Army, and they are
    able to be certified combat ready at the JRTC.
        General Odierno. Yes, the availability of an inventory of trained
    and ready BCTs enables the Army to adjust and respond to changing
    situations and requirements. The Army's Force Generation model is
    designed to ensure sufficient Army forces are available to meet not
    only standing combatant commander requirements for forces, but also to
    ensure some forces are reasonably available and ready for possible
    contingencies. Army forces not assigned a specific mission prepare for
    a broad range of missions that include both Combined Arms Maneuver and
    Wide Area Security.

        205. Senator Vitter. General Odierno, if the Army is forced to cut
    other planned training of BCTs at NTC/JRTC, how much more valuable does
    it become for the Army to keep combat brigades stationed at these
    installations to be able to train and respond quickly without a
    significant cost?
        General Odierno. CTC rotations are only one part of creating
    trained and ready BCTs. Having a BCT stationed at or near a CTC may
    save on some costs, but it also imposes other costs, and re-stationing
    additional BCTs to these installations is neither supportable nor
    affordable. Additionally, one of the training values of the CTC
    experience is the going through the deployment process and learning
    valuable lessons about how to move a unit long distances and then
    rapidly employ it. We will find ways to effectively and efficiently
    continue our training at NTC and JRTC.

        206. Senator Vitter. General Odierno, how much more costly would it
    be to the Army if they had to transport and support a change in
    schedule with a BCT from another base in the United States to either
    the NTC or the JRTC?
        General Odierno. There is a wide variance in transportation costs
    to our Combat Training Centers depending on the type of unit and its
    location. Transportation costs are usually in the range of $17.8
    million for NTC, and $18.2 million for JRTC. But these costs can be
    mitigated by prepositioning combat sets of equipment at our training
    centers. This will be analyzed as we move forward as one of the courses
    of actions if we implement sequestration.

        207. Senator Vitter. General Odierno, what will be the impact on
    readiness?
        General Odierno. The impact on readiness will be sudden and long
    lasting. While Army soldiers and leaders have immense experience from
    the past 12 years of conflict, those skills have been most closely
    associated with stability operations. Our skills in other operations
    both individual and collective that are necessary to conduct unified
    land operations have atrophied. Collective training skills degrade
    quickly over time and require not only initial certification training,
    but resources to sustain the required level of training readiness. We
    will only be able to train to squad and platoon level and will be
    limited in our ability to train to company, battalion and brigade
    level. The longer our units are not able to conduct collective training
    at our Combat Training Centers, the risk to the force increases
    exponentially.

        208. Senator Vitter. General Odierno, are there other areas of
    readiness from which we will not be able to recover because of the CR?
        General Odierno. Almost every component of readiness is recoverable
    based on time and resourcing. However, outlined below are several areas
    that will pose significant recovery challenges.
        One of the primary challenges we face over the next 6 years is to
    reorient our force to the broader array of missions we may face in the
    years ahead, whether it be weapons of mass destruction recovery, cyber
    operations, support to civilian authorities, or high-intensity combat.
    The Continuing Resolution, coupled with sequestration, will limit any
    flexibility to meet these demands of the National Security Strategy.
        The long-term nature of sequestration puts every 1 of the Army's 10
    major investment priorities in jeopardy including vital network, combat
    vehicle and aviation modernization programs.
        One of my highest priorities is leader development. This requires
    continued investment. While we can recruit and train soldiers in
    relatively short order, we cannot build their leaders in a similar time
    span. The professional noncommissioned and commissioned officers who
    carry the Army across the years need the benefit of not only serving in
    units that train for and conduct wide ranging missions but also the
    professional education that deepens their knowledge of and commitment
    to the profession.

        209. Senator Vitter. General Welsh, in the National Defense
    Authorization Act for Fiscal Year 2013, Congress mandated the new Long-
    Range Strike Bomber (LRS-B) must be nuclear capable at Initial
    Operating Capability (IOC). I also understand the Air Force recently
    approved the Operational Requirements Document for the bomber which
    demonstrates your seriousness to moving ahead with the program. But,
    given sequestration and near certain budget cuts, I would like your
    views on how we limit risk to this program and keep it moving forward
    in a difficult funding period. Similarly, I remain deeply concerned
    that the Air Force has cancelled so many of the B-52 fleet
    modernization programs, solely for budgetary issues among them, the
    cancellation of the Strategic Radar program for the B-52. I find it
    distressing that considering all the money we have invested in radar
    technology in this country, we cannot somehow reengineer existing radar
    technology using off-the-shelf technology. Are you satisfied that
    splitting the responsibility for the new bomber design between two
    headquarters, Air Combat Command and Air Force Global Strike Command,
    will keep technical risk low in this program?
        General Welsh. Per the National Defense Authorization Act for
    Fiscal Year 2013, the LRS-B must be capable of carrying nuclear weapons
    at IOC and certified for nuclear weapons employment within 2 years
    after IOC. The baseline aircraft will be built with the features and
    components necessary for the nuclear mission to ensure an efficient
    nuclear certification effort, conducted with a mature aircraft. The
    current bomber fleet will continue to provide a robust nuclear
    deterrent during LRS-B's development and initial fielding.
        Regarding sequestration, LRS-B would not be impacted as a result of
    fiscal year 2013 contract funding being less than originally projected.
    However, multi-year sequestration cuts would delay fielding of initial
    capability.
        There is no split responsibility for LRS-B requirements since I am
    ultimately responsible for approving all requirements and obtaining
    validation from the Joint Requirements Oversight Council. Air Combat
    Command has the lead role in LRS-B requirements generation. Air Force
    Global Strike Command is closely consulted on all requirements, but
    especially for nuclear requirements. Further, both commands participate
    in design trades with the LRS-B Program Office to ensure affordability.

        210. Senator Vitter. General Welsh, does the current environment
    not make it even more important to follow-through with the nuclear
    modernization commitments that were made by the President to secure
    Senate support for the New START treaty?
        General Welsh. Nuclear modernization is an important objective for
    the Air Force, and we remain committed to a safe, secure, and effective
    nuclear deterrent. As reflected in the current NPR, maintaining and
    modernizing the Air Force legs of the Triad and dual-capable aircraft
    are critical to our Nation's security and remain top Air Force
    priorities. The Air Force will continue to provide the leadership focus
    and institutional excellence on nuclear deterrence necessary to support
    the President's comprehensive approach to nuclear security. Even though
    the Air Force is committed to providing the Nation a safe, secure, and
    effective nuclear deterrent, the impact of sequestration will force
    some difficult choices.

        211. Senator Vitter. General Welsh, if the United States must now
    depend more on its nuclear deterrent to compensate for weaknesses in
    our conventional capabilities (due to the decline in defense spending
    anticipated over the next 10 years), why, then, is the President
    exploring further nuclear reductions with Russia, as has been reported
    in the press?
        General Welsh. The Air Force has not been made aware of any policy
    determination that the United States will depend more on its nuclear
    deterrent to compensate for any potential weaknesses in our
    conventional capabilities caused by the decline in defense spending
    anticipated over the next 10 years.

        212. Senator Vitter. General Welsh, regarding the B-52 fleet, are
    you comfortable that our air crews have capable radar, given the types
    of missions, both current ones, and those envisioned for the B-52 in
    the future?
        General Welsh. Yes, the Air Force is comfortable that the B-52
    radar meets all current and foreseeable future requirements.

        213. Senator Vitter. General Welsh, regarding the Air National
    Guard and Air Force Reserves, in the Air Force fiscal year 2013 budget
    plan, the Air Force proposed cutting 5,100 Guard, 900 reservists, in
    addition to 3,900 Active-Duty personnel, with very little consultation
    with Congress or with the Nation's governors. At the time, I expressed
    my discontent regarding the proposal to abolish the 917th Fighter Wing
    at Barksdale Air Force Base and the 259th Air Traffic Control Squadron
    in Alexandria, LA. I was particularly surprised at not only the lack of
    consultation among the governors, but among your fellow Services, in
    this case, the Army. It was clear the Army was never properly consulted
    regarding the potential impacts to Air Force support during Green Flag
    East exercises at Fort Polk. I was assured by the Chief of Staff of the
    Air Force at the time that those commitments will be maintained. I hope
    they are. I want to commend you for working with Congress and dialing
    back those fiscal year 2013 plans to something much more reasonable. I
    understand the 259th Air Traffic Controllers will be maintained. I also
    applaud you for directing the stand-up of the Total Force Task Force to
    serve as the main body to assist the congressionally-mandated National
    Commission on the Structure of the Air Force and to encourage a better
    working relationship among the Active and Reserve components. I
    understand your new Total Force Task Force will be primarily designed
    to inform the fiscal year 2015 budget. But, considering the Air Force's
    original fiscal year 2013 force structure proposal was scaled down, and
    considering you are working hard to meet the demands imposed upon you
    by a CR and a potential sequestration, what can this Congress
    anticipate seeing in your fiscal year 2014 request when it comes to
    additional proposals impacting the Guard and Reserves?
        General Welsh. While the Air Force cannot release details of its
    fiscal year 2014 budget proposal until the President submits it to
    Congress, I can assure you preparations for the fiscal year 2014 budget
    included representatives from the entire Total Force: Active, Guard and
    Reserve.

        214. Senator Vitter. General Welsh, will Congress be surprised
    again or have we turned the page on last year's construct?
        General Welsh. Preparations for the fiscal year 2014 budget
    involved representatives from the entire Total Force--Active, Guard,
    and Reserve. We worked hard to ensure transparency in our decisions,
    and to that end, we did not use non-disclosure agreements as was
    directed during the fiscal year 2013 budget preparation.

        215. Senator Vitter. General Welsh, DOD recently announced it wants
    to add 4,000 cyber experts to its workforce. I am aware of ongoing
    efforts to expand the use of the National Guard to meet this
    requirement. We all know these positions will not come with a separate
    appropriation but they will come from DOD's existing ranks. In the case
    of the Air Force, and certainly I invite comments from General Grass
    and others, how can we assure our talent in the National Guard and
    Reserves are being fully utilized for these future cyber missions, when
    we know we have a national shortage in cyber talent?
        General Welsh. Senator Vitter, the Air Force will be responsible
    for approximately 30 percent of the Cyber Mission Forces that U.S.
    Cyber Command (CYBERCOM) is proposing to stand up. There will be
    challenges in shifting operational focus to align with DOD's new cyber
    guidance in light of the effects of increasingly constrained budgets
    and reduced force structure. Through Air Force Total Force Integration,
    we expect to leverage Air Reserve component (Guard and Reserve)
    experience to increase total force effectiveness in the cyber arena. In
    fact, one of the first teams fielded by the Air Force currently
    leverages cyber talent found in the Delaware Air National Guard. As we
    move forward to meet CYBERCOM requests for cyber mission forces, we are
    reaching out to our Guard/Reserve units to leverage their associate
    units to support future teams. Total Force Integration will be
    fundamental to ensuring the Air Force continues to become more
    efficient and effective in the cyber arena.
                                     ______

                    Questions Submitted by Senator Mike Lee

                                    TRAINING

        216. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, in a December 2012 interview, Senator Hagel
    was asked about defense sequestration. In response, he stated he feels
    DOD is bloated and needs paring down. He said: ``DOD, I think in many
    ways has been bloated... It has gotten everything it's wanted the last
    10 years and more. We've taken priorities, we've taken dollars, we've
    taken programs, we've taken policies out of the State Department, out
    of a number of other departments and put them over in DOD . . . The
    abuse and the waste and the fraud is astounding . . . I think DOD needs
    to be pared down. I think we need DOD to look at their own
    priorities.'' Do you agree with Senator Hagel? Please provide a yes or
    no answer along with your explanation.
        Secretary Carter. Yes, we need to look at our priorities.
        Secretary Hale. Yes, we need to look at our priorities.
        General Dempsey. No. However, I do agree the Department needs to
    share the burden of the current fiscal crisis, and we have. As a result
    of Secretary of Defense Gates' initiatives, the DOD took nearly $178
    billion in efficiencies followed by the 2011 BCA which further reduced
    the DOD base budget by $487 billion over 10 years. These are
    significant and responsible reductions in the Department's operating
    budget, and reflect our continuous efforts to be good stewards of
    taxpayer resources. Any further reductions will cause us to revise our
    strategy and recalibrate risk.
        General Odierno. The Army has been at war in Iraq and Afghanistan
    for more than 10 years which has required significant growth for the
    Army. With the end of the Iraq war and the drawdown in Afghanistan, the
    Army will reduce force structure that was required to sustain two
    protracted conflicts. The Army leadership understands the current
    fiscal environment that the U.S. Government faces and is committed to
    doing what we can to be the best stewards of the government resources.
    This means getting the most out of every dollar. Over the past 3 years,
    the Army supported DOD's plan to cut $487 billion from the defense
    budget, which resulted in an 89,000 reduction in military personnel.
        The Defense budget needs to continue to be iteratively evaluated to
    achieve every efficiency possible, while still maintaining our
    priorities to maintain a balanced force that is trained, equipped and
    ready to win the current fight and maintain responsiveness to
    unforeseen contingencies.
        Admiral Ferguson. I agree that DOD and, by extension the Navy, can
    be more efficient with our resources. We strongly support efforts that
    improve our efficiency while sustaining our operational and
    administrative effectiveness. Acquisition reform and other efforts
    should be made to deliver programs with lower cost, on schedule, and
    with necessary capabilities for the future.
        General Amos. I do not have enough information about Senator
    Hagel's views to agree or disagree with him. Certainly I would agree
    that Congress has supported DOD's requirements in recent years as we
    have fought the Nation's wars. I do believe that the organization under
    my charge, the Marine Corps--the smallest and the leanest of all
    Services--has maintained its traditional focus on combat effectiveness
    and readiness.
        General Welsh. The Air Force defers to OSD for a response on the
    overall DOD budget. From the Air Force's perspective, sequestration is
    not the appropriate method to deal with concerns such as fraud, waste,
    and abuse or the funding of other cabinet departments. At a time when
    Air Force readiness is long-overdue for vital reconstruction, with a
    fleet aged beyond the bounds of comfort, and a force at its smallest
    since its inception, sequestration, if allowed to occur, puts the Air
    Force in the untenable trade space of forcing further risk to the
    Nation's defense by sacrificing elements of the three keys to effective
    provision of airpower--airmen, readiness, and modernization.
        General Grass. The Department has been postured for wartime
    operations for going on 12 years. As that wartime posture is drawn
    down, I expect that savings and efficiencies will be achieved. Some of
    those efficiencies will be realized by ensuring that our force
    structure is maintained in the Service components that can most
    effectively provide those capabilities to meet our national security at
    the most cost-effective manner.

        217. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, in Secretary Carter's testimony he states,
    ``[O]n January 10 I authorized all defense components to begin taking
    immediate actions to slow spending in order to prevent even more dire
    consequences later in the year. I directed each of the defense
    component heads to report back to me by February 1st with a list of
    proposed actions and an implementation plan.'' January 10, 2013, was
    approximately 1 year after the ``Supercommittee'' failure that forced
    budget sequestration. It was also after the date budget sequestration
    was originally supposed to begin. Why were these steps taken so late,
    and why did preparation not occur earlier?
        Secretary Carter and Secretary Hale. Secretary Panetta, both of us,
    and other defense leaders were warning of the effects of sequestration
    long before last August. We provided examples of the damage that would
    occur, and stressed that the mechanism of sequestration made these
    consequences obvious, and that there was no ``plan'' that would
    substantially mitigate the damage. We did not, however, begin taking
    harmful actions last year in anticipation of sequestration, since we
    believed that Congress would act to avert it. After the events of early
    January indicated to us that, despite the damage it would cause,
    sequestration might in fact take place, we began to take such actions.
    Those actions were also necessary because of funding shortfalls and
    misallocations resulting from the continuing resolution and the need to
    shield our warfighters in harms' way from the impact of sequestration.
    Additionally, on January 10, I instructed components to inform me by
    February 8 of their implementation actions for March 1. The Department
    will be fully ready to implement sequestration on March 1.
        General Dempsey. As it became apparent that sequestration would not
    be de-triggered and as it became clear that we would be operating under
    an extended continuing resolution, we began to assess the detailed
    impacts in earnest.
        General Odierno. The mechanics of implementing sequestration
    obviate the benefit of significant advance planning. That is the
    fundamental flaw with sequester. It takes away the flexibility for the
    Secretary and me to decide the Army priorities. Because the mechanism
    of sequester would so clearly be damaging to national security--as I
    have made clear for over a year in public comments and testimony--I
    have regularly advocated a different solution.
        Admiral Ferguson. DOD and Navy leaders have consistently requested
    Congress act to replace sequestration with a coherent approach to
    deficit reduction that addresses our national security interests. We
    believe that the effects of sequestration would be devastating, and we
    have been discussing this with Congress over the last year. The Navy is
    now taking prudent steps to slow our spending in the face of a
    potential year-long CR, and is prepared to initiate actions for
    sequestration after March 1, 2013. Should Congress enact an fiscal year
    2013 appropriations bill or other legislation that provides the ability
    to transfer funds between accounts and authority for new starts, we
    will be able to reverse most of the actions we have taken in
    preparation for a year-long continuing resolution.
        Our planned actions for sequestration would have been premature
    given the ongoing discussions and would be completely unnecessary if
    sequester is averted.
        General Amos. This question asks me to speculate about the thought
    processes and actions of Secretary Carter or others in the
    administration. I cannot answer for him, and therefore I defer to
    Secretary Carter for a response. However, the Marine Corps commenced
    formal sequestration planning as directed. This should not imply that
    significant work had not previously been undertaken to prepare for a
    fiscal environment characterized by declining resources. Since the
    passage of the Budget Control Act in 2011, we have worked to assess the
    potential impacts, optimize our force structure and prioritize our
    requirements in order to meet what we acknowledge will be significantly
    reduced funding. Additionally, we have also had to assess the potential
    impact to mission readiness should we be faced with an annualized
    Continuing Resolution and should Congress fail to reach an agreement
    and sequestration commence. These are exceptionally complex problems,
    and we have invested significant time and analysis to understand the
    problem, frame our assumptions, assess impacts against our mission, and
    determine what we could and could not accomplish within these funding
    constraints. Despite these upfront efforts, we could not assess the
    detailed impacts until we executed detailed planning as opposed to
    higher level assessments. The Marine Corps maintains a longstanding
    reputation in DOD as being a frugal, lean Service that delivers the
    best value for the defense dollar. As such, the Marine Corps has worked
    to adapt to budgetary reductions by continuing our tradition of
    pursuing ways to streamline operations, identifying efficiencies, and
    reinvesting savings in order to get the most out of every dollar. It is
    this mentality that has allowed us to continue to provide the best
    trained and equipped Marine units to Afghanistan, even in this era of
    constrained resources.
        General Welsh. The Air Force firmly agreed with DOD's belief that
    sequestration should be avoided at all costs. As Secretary Panetta
    articulated repeatedly, the proposed budget is a balanced and complete
    package with no margin of error. Additionally, the Air Force did not
    want to sequester ourselves and unnecessarily disrupt operations,
    training, and program execution.
        General Grass. I cannot speculate on the deliberations within the
    Department leading up to the January 10, 2013, direction provided to
    the Services.

        218. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, were any of you told to not prepare for
    sequestration?
        Secretary Carter and Secretary Hale. We were not directed to avoid
    preparations for sequestration. Indeed we began pre-planning activities
    shortly after the law was passed. For reasons noted in an earlier
    question, it would have made little sense to begin detailed
    ``planning'' last summer.
        General Dempsey. The Department followed the sequestration guidance
    provided by OMB.
        General Odierno. Yes.
        Admiral Ferguson. No.
        General Amos. This question is difficult to answer as asked. As I
    recall, the Marine Corps was permitted to begin to ``assess'' the
    effects of sequestration around September 2012. I did not receive
    direction to not ``prepare'' for sequestration. However, my
    recollection is that I did receive direction not to ``plan'' for
    sequestration until December 2012, when we received permission to begin
    ``early planning.''
        General Welsh. No. However, the Air Force did not want to
    unnecessarily sequester ourselves given our forces were engaged in
    combat operations and we were confident Congress would be successful in
    passing the legislation necessary to avoid sequestration.
        General Grass. We were provided guidance to not plan for
    sequestration ahead of the Department.

        219. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, were you told that the cuts would not take
    place?
        Secretary Carter and Secretary Hale. We were not told to assume
    that the cuts would not take place.
        General Dempsey. I was not told directly that sequester would not
    happen. However, there was a clear suggestion by our elected leaders
    that it would not be allowed to occur.
        General Odierno. No. I realized that the cuts were law; however, I
    expressed repeatedly in the past year my desire for Congress to create
    a solution to avert sequester and the devastating impacts it would have
    on the Army.
        Admiral Ferguson. No.
        General Amos. I do not recall ever being told that the cuts would
    not take place. However, beginning in approximately September 2012, I
    do recall hearing much speculation about the possibility and likelihood
    of sequestration.
        General Welsh. No. However, we viewed sequestration as a tool that
    was never intended to be implemented, but rather, a cause for action.
    We firmly believed a sequestration deal would be reached.
        General Grass. No.

        220. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, if either or both of your answer above to
    this question were ``yes'' or some other affirmative response, please
    also reply who told you these things and when were you told these
    things?
        Secretary Carter and Secretary Hale. Not applicable.
        General Dempsey. The Department followed the sequestration guidance
    provided by OMB.
        General Odierno. Not applicable.
        Admiral Ferguson. Not applicable.
        General Amos. I do not recall ever being told that the cuts would
    not take place. However, beginning in approximately September 2012, I
    do recall hearing much speculation about the possibility and likelihood
    of sequestration. As I recall, the Marine Corps was permitted to begin
    to ``assess'' the effects of sequestration around September 2012. I did
    not receive direction to not ``prepare'' for sequestration. However, my
    recollection is that I did receive direction not to ``plan'' for
    sequestration until December 2012, when we received permission to begin
    ``early planning.''
        General Welsh. The Air Force was not told the cuts would not
    happen.
        General Grass. Not applicable.

        221. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, if either or both of your answer above to
    this question ``no'' or some other negative response, also please
    explain why you did not fully prepare for sequestration?
        Secretary Carter and Secretary Hale. In the unfortunate event that
    sequestration occurs, we will be prepared. We did a great deal of
    preplanning over the past year and communicated the fundamental
    problems sequester would cause repeatedly in speeches and testimony,
    both before and after we started planning. Starting in January, we
    began detailed budget planning and, importantly, we started taking
    actions to slow spending. Indeed actual action is the main difference
    between our sequestration efforts before and after January.
        We felt that it was premature to order detailed budget planning
    last August. As it turns out, that planning would have been largely
    wrong because it couldn't have taken into account the far-reaching
    effects of the Continuing Resolution and it would have had the wrong
    dates for the beginning of sequestration. Even though it would have
    been wrong, premature planning would have forced an early start to the
    degradation in morale and productivity, and the overall increase in
    inefficiency, that we are experiencing right now as we do detailed
    planning. Moreover, no matter how much planning we do, or when we do
    it, the adverse effects of sequestration and the Continuing Resolution
    cannot be significantly offset. The only good solution is to detrigger
    sequestration and pass appropriations bills.
        General Dempsey. As discussed in question #217, the Department knew
    that we must be ready to implement the law. As it became apparent that
    sequestration would not be de-triggered we began to assess the effects
    of sequestration in earnest.
        General Odierno. The mechanics of how sequestration is implemented
    obviate the benefit of significant advance planning. That is the
    fundamental flaw with sequester. It takes away the flexibility for the
    secretary and me to decide the Army priorities. Because the mechanism
    of sequester would so clearly be damaging to national security--as I
    have made clear for over a year in public comments and testimony--I
    have regularly advocated a different solution.
        Admiral Ferguson. The Navy is prepared for sequestration to the
    extent that the mechanical nature of the sequestration law allows. The
    automatic cuts do not allow for prioritization or strategic planning,
    so by nature, you cannot prepare for sequestration in the manner that
    we consider other budgetary changes. We understand the numbers of cuts
    required and the dates by which they are required. The only budget area
    with any flexibility under sequestration is O&M. Since sequestration is
    being imposed halfway through the fiscal year, however, there is very
    little flexibility on how to apportion the 9 percent reduction imposed
    by sequestration. About half of our funds in this account are already
    spent and about half of the remaining funds are committed to items such
    as existing contracts, civilian retirement, and bills the Navy must
    pay.
        Although detailed plans and actions were articulated to Congress
    and the public in January, Navy and its components fully considered
    contingencies for sequestration, and communicated the impacts in
    previous hearings with Congress. For example, in his testimony to the
    SASC on 15 March 2012 CNO testified to the impact on Navy force
    structure, noting a reduction to approximately 230 ships, and in
    testimony to the HASC on 2 December 2011 said our readiness accounts
    would face a reduction of about 18 percent and that we may need to end
    procurement programs and begin laying off civilian personnel under
    sequestration.
        General Amos. I do not recall ever being told that the cuts would
    not take place. However, beginning in approximately September 2012, I
    do recall hearing much speculation about the possibility and likelihood
    of sequestration. As I recall, the Marine Corps was permitted to begin
    to ``assess'' the effects of sequestration around September 2012. I did
    not receive direction to not ``prepare'' for sequestration. However, my
    recollection is that I did receive direction not to ``plan'' for
    sequestration until December 2012, when we received permission to begin
    ``early planning.''
        General Welsh. The Air Force postured for sequestration following
    OMB and DOD guidance while not unnecessarily taking actions that would
    have disrupted program execution. Our intent was to preserve readiness
    and not disrupt combat operations.
        General Grass. We were provided guidance to not push out any
    Service-component specific guidance ahead of the Department therefore
    our planning efforts did not include publishing any Service-component
    guidance ahead of the Department's guidance.

        222. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, do you acknowledge that budget sequestration
    is current law?
        Secretary Carter and Secretary Hale. Yes.
        General Dempsey. Yes, Budget sequestration is current law.
        General Odierno. Yes.
        Admiral Ferguson. Yes.
        General Amos. My understanding is that the process of sequestration
    is provided for by law, but the conditions requiring its implementation
    have not yet been fully triggered. The Budget Control Act (BCA) is law.
    Sequestration is required when triggered by the conditions established
    by the BCA. Briefly, that Act established a savings target of 1.2
    trillion dollars, to be achieved based on the adoption of
    recommendations to be made by the Joint Select Committee on Deficit
    Reduction (the ``Super Committee''). It is my understanding that these
    conditions were not realized, and therefore, the sequestration
    provisions of the BCA would have become operative on 1 January.
    However, additional legislation, i.e., the American Taxpayer Relief Act
    of 2012, was passed delaying the potential implementation of
    sequestration until 1 March 2013, upon which date an order may issue
    from the President of the United States implementing sequestration.
        General Welsh. Yes. Under the Balanced Budget and Emergency Deficit
    Control Act of 1985, as amended by the Budget Control Act of 2011,
    across-the-board reductions known as ``the sequester'' or ``budget
    sequestration'' are statutorily required.
        General Grass. Yes, to the best of my knowledge as of the date of
    this hearing, the provisions of the Budget Control Act of 2011 and the
    American Taxpayer Relief Act of 2012 pertaining to the budget
    sequestration are current law.

        223. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, do you feel that DOD should follow every law?
        Secretary Carter and Secretary Hale. DOD should follow all
    applicable laws of the United States.
        General Dempsey. DOD should follow all applicable laws of the
    United States.
        General Odierno. DOD should follow all applicable laws of the
    United States.
        Admiral Ferguson. DOD should follow all applicable laws of the
    United States.
        General Amos. DOD should follow all applicable laws of the United
    States.
        General Welsh. DOD should follow all applicable laws of the United
    States.
        General Grass. DOD should follow all applicable laws of the United
    States.

        224. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, are there any exceptions?
        Secretary Carter and Secretary Hale. No.
        General Dempsey. No.
        General Odierno. No.
        Admiral Ferguson. No.
        General Amos. I have taken an oath to support and defend the
    Constitution of the United States. I have done so for virtually all of
    my adult life. I understand that oath to mean that I must also obey the
    law. I am unaware of any exception that I could make regarding my
    obligation to follow existing laws.
        General Welsh. I am aware of no exceptions to the Balanced Budget
    and Emergency Deficit Control Act of 1985, as amended, that would allow
    the Department to not implement the sequester. The Department is
    legally required to and will implement the sequester.
        General Grass. I respectfully defer to the leadership within the
    Department and the executive branch for guidance regarding what would
    constitute exception in this context.

        225. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, in his testimony, Secretary Carter wrote:
    [T]he CR plays a deleterious role in shaping the fiscal year 2013
    budgetary landscape . . . [T]he current CR directs that the base budget
    remain at the level enacted for fiscal year 2012. That provides
    sufficient total base budget dollars to DOD, but the dollars are in the
    wrong appropriations. Compared to our needs for fiscal year 2013, the
    CR provides too much funding in most investment accounts and
    insufficient funding in the O&M accounts that sustain day-to-day
    operations and military readiness . . . The impact of these
    [sequestration] cuts will be compounded by the misallocation of funding
    under the CR. Do you think it is fair to say that the lack of a
    functional Senate budget and appropriations process has denied the DOD
    opportunities to request that Congress calibrate its funding priorities
    to current military needs, conditions, and missions?
        Secretary Carter and Secretary Hale. To function effectively, DOD
    needs timely enactment of both authorization and appropriations
    legislation, and we have not had either one for the past several years.
        General Dempsey. I have expressed my concerns to Congress about
    budget uncertainty, the lack of flexibility associated with
    sequestration, and speed of its implementation.
        General Odierno. The lack of a fiscal year 2013 Appropriation bill
    from Congress and continued funding through a Continuing Resolution at
    fiscal year 2012 appropriation levels prevents the Secretary and me
    from appropriately prioritizing funding for current readiness and
    critical sustainment functions. This effect will cascade into fiscal
    year 2014, creating readiness problems in that year and beyond. If not
    given relief through passage of either an appropriation or authorities
    to reprogram funding, the Army will not be appropriately resourced to
    ensure a balanced trained, equipped and ready force, which will put our
    ability to meet wartime needs and combatant commander requirements at
    significant risk.
        Admiral Ferguson. The Navy is grateful for the continued support
    and understanding provided by Members of Congress. The Navy understands
    that we must do our mission within the appropriated resources and the
    authorities granted by Congress. Therefore, we urge Congress to act
    quickly to pass a Defense appropriations bill, or to provide an
    effective and prudent legislative mechanism for the DOD to make the
    adjustments within our budget that are necessary for us to continue to
    perform our missions, sustain our readiness, and build the warfighting
    capability of our Fleet.
        General Amos. The Marine Corps has had opportunities, and will
    continue to pursue opportunities, to provide our best information to
    the President and Congress regarding our budgetary requirements. Having
    an approved fiscal year 2013 appropriation that considered the
    requirements outlined in our budget submission would significantly help
    ameliorate the challenges of operating under a Continuing Resolution.
    We have provided detailed information about our current and future
    military requirements, and I along with others, have had opportunities
    to communicate the current and projected condition of the force.
    Although we may face difficult fiscal challenges, those challenges will
    not deter me from articulating the information necessary to resource
    the Marine Corps this Nation deserves.
        General Welsh. The Air Force along with all other agencies who rely
    on appropriated funding would benefit from an orderly and predictable
    appropriations process.
        General Grass. I respectfully defer to the civilian leadership of
    the Department to decide.

        226. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, are current missions identical to what they
    were expected to be in August 2011 when the BCA was passed?
        Secretary Carter. There have been detailed changes in specific
    missions, but the overall mission of the Department has not changed
    since December 2011.
        Secretary Hale. There have been detailed changes in specific
    missions, but the overall mission of the Department has not changed
    since December 2011.
        General Dempsey. A comprehensive review of the roles and missions
    of the U.S. Armed Forces resulted in development of the Defense
    Strategic Guidance (DSG). We played a large role in the development of
    that document throughout 2011 and were not surprised by the missions
    described when it was published in January 2012. Since then, our
    operating tempo in both the Middle East and Africa has increased.
        General Odierno. No, missions are not identical due to changes in
    the operational environment as well as changes in national strategy.
    The operational environment today is more dynamic in the Middle East,
    North Africa, and Northeast Asia than in August 2011. Additionally, the
    new National Security Strategy has identified several new areas of
    emphasis such as the Asia-Pacific rebalancing.
        Admiral Ferguson. In August 2011, Navy missions directly supported
    the objectives of the 2010 National Security Strategy. New Defense
    Strategic Guidance (DSG) released in January 2012 re-affirms those same
    objectives while recognizing the changing strategic environment. Navy
    continues to provide forces in support of Global Force Management
    Allocation Plan (GFMAP) and primary missions of the DSG.
        General Amos. The current missions of the United States Marine
    Corps are identical to what was expected in August of 2011. Our forces
    remain committed to the Afghanistan mission and CENTCOMs commitments in
    the region. Our forces continue to provide a ready response to emerging
    threats globally. Additionally our force remains uniquely postured to
    support humanitarian and disaster relief worldwide at the direction of
    the President.
        With these global roles in mind however, the nature of operations
    and our Nation's security outlook has evolved since 2011 along with
    changes around the world. Our ability to meet those challenges will be
    affected by sequestration. Sequestration will affect the planning and
    sourcing of future missions across the Range of Military Operations
    (ROMO) especially with respect to the Asia-Pacific rebalance and
    Theater Security Cooperation to include bi-lateral and multi-lateral
    security training and exercises.
        General Welsh. Today's missions are generally the same as those the
    Air Force expected it would execute in 2011. The Air Force accommodated
    the Budget Control Act reductions by reducing force structure while
    maintaining the capability required to provide airpower to cover the
    full range of military operations.

            - Defense Strategic Guidance, Jan. 2012
            - Defense Budget Priorities and Choices, Jan. 2012
            - USAF Force Structure Changes: Sustaining Readiness and
            Modernizing the Total Force

        General Grass. Yes.

        227. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, are current missions identical to what they
    were expected to be in December 2011 when the Consolidated
    Appropriations Act that initially set funding levels passed?
        Secretary Carter. There have been detailed changes in specific
    missions, but the overall mission of the Department has not changed
    since December 2011.
        Secretary Hale. There have been detailed changes in specific
    missions, but the overall mission of the Department has not changed
    since December 2011.
        General Dempsey. A comprehensive review of the roles and missions
    of the U.S. Armed Forces resulted in development of the Defense
    Strategic Guidance (DSG). We played a large role in the development of
    that document throughout 2011 and were not surprised by the missions
    described when it was published in January 2012. Since then, our
    operating tempo in both the Middle East and Africa has increased.
        General Odierno. No, missions are not identical due to changes in
    the operational environment as well as changes in national strategy.
    The operational environment today is more dynamic in the Middle East,
    North Africa, and Northeast Asia than in August 2011. Additionally, the
    new National Security Strategy has identified several new areas of
    emphasis such as the Asia-Pacific rebalancing.
        Admiral Ferguson. In December 2011, Navy missions directly
    supported the objectives of the 2010 National Security Strategy. The
    New Defense Strategic Guidance (DSG) released in January 2012 re-
    affirms those objectives while recognizing the changing strategic
    environment. Navy continues to provide forces in support of Global
    Force Management Allocation Plan (GFMAP) and primary missions of the
    DSG.
        General Amos. The current missions of the United States Marine
    Corps are identical to what they were expected to be in December 2011,
    taking into account the draw-down to counter-insurgency operations in
    Afghanistan. The DOD Strategic Guidance emphasizes a smaller and leaner
    force that will no longer be sized to support long-term stability
    operations that have dominated the past decade. As such, the Marine
    Corps has worked diligently to prepare for this future security
    environment by designing a tailored force that ensures a sufficient
    type and quantity of forces to meet the forward presence, engagement,
    and crisis response requirements of the combatant commanders, while
    maintaining the capacity to respond to additional major contingencies
    within planned timelines.
        General Welsh. Since the time that the Consolidated Appropriations
    Act was passed in December 2011, the Air Force has maintained its
    missions as expected, taking minor deviations from what was planned.
    Any deviations occurred not because of the CAA but because the mission
    changed in ways that caused our response to change appropriately.
        General Grass. Yes.

        228. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, did the process by which the BCA passed allow
    sufficient input from and consideration of military needs?
        Secretary Carter and Secretary Hale. It is up to Congress to
    determine the process it uses to formulate legislation. However, to our
    knowledge, there were no hearings on the specific effects of BCA on
    Federal agency needs, including DOD needs.
        General Dempsey. We did have the opportunity to inform Congress on
    our priorities and the impact of the $487 billion cuts contained in the
    BCA.
        General Odierno. Yes, the Army was allowed to provide sufficient
    input to support the $487 billion in cuts that were levied by the
    Budget Control Act (BCA) of 2011's discretionary caps to the DOD after
    passage. However, this did not include the further reduction of
    discretionary caps mandated if the Joint Select Committee on Deficit
    Reduction was unable to enact legislation that reduced projected
    deficits by at least $1.2 trillion. The outcome of the Joint Select
    Committee on Deficit Reduction was unknown at the passage of the BCA.
        Admiral Ferguson. Yes. While there has been adequate time to access
    the impacts of the BCA on the military, the BCA did not envision the
    confluence of a year-long CR and sequestration. Moreover, sequestration
    was never supposed to come to pass. It was the ``forcing function'' to
    arrive at a measured approach to a balanced budget. When it became
    clear that there would be no relief from sequestration and/or a
    Continuing Resolution, the military began planning for this contingency
    in earnest. The timing afforded to the military to deal with this
    confluence of events has been very short and is occurring in the middle
    of an execution year.
        General Amos. My understanding is that the BCA was passed according
    to our legislative processes. I am not aware of the information
    submitted to or considered by any individual legislator or committee
    and I would prefer not to speculate about whether the Congressmen and
    Congresswomen or committees would have considered that information
    sufficient.
        General Welsh. The Department of the Air Force did not have direct
    input to the development of the Budget Control Act (BCA) of 2011.
    However, we recognize deficit reduction is a matter of national
    security and are committed to staying within the BCA's funding levels
    for the duration of the law, as enacted. That said, it would be most
    helpful to our Air Force if Congress would pass a defense
    appropriations bill, avoid sequestration altogether, and generally move
    back to regular order.
        General Grass. I am unaware of what opportunities existed for the
    Department to provide input or views before the passing of the BCA.

        229. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, do you feel that a BRAC will be required in
    the next 5 years given the projected drawdowns in both force structure
    and manpower?
        Secretary Carter. I would refer to what Secretary Panetta said last
    week ``We'll have to consolidate, obviously, in infrastructure and for
    that reason we will likely, again, propose that--that BRAC be put in
    place. We'll have to because you can't have a huge infrastructure
    supporting a reduced force.''
        The Department has limited authority to close and realign military
    installations absent a congressionally authorized BRAC round. As part
    of the fiscal year 2013 President's budget request, the administration
    asked Congress to authorize two new BRAC rounds in 2013 and 2015, but
    Congress did not act favorably on that request.
        Our infrastructure must be sized to match our force structure and
    strategy, and BRAC has proven to be the best way to achieve that
    balance.
        Secretary Hale. Yes. We believe we need to consolidate
    infrastructure in order to hold down costs, and infrastructure
    consolidation can only be effectively carried out if we have BRAC
    authority.
        General Dempsey. Yes, as with industry, the Department should
    examine its infrastructure and eliminate excess where it makes sense.
    The BRAC process is not perfect, but I believe BRAC is a fair and
    comprehensive way to right-size the Department's footprint.
        General Odierno. Yes. Army Active Duty component end strength is
    declining by 80,000 from a peak end strength of 570,000 (fiscal year
    2010) to 490,000 by fiscal year 2017. With full sequestration at least
    an additional 100,000 soldiers will be reduced out of the Active Duty,
    National Guard, and U.S. Army Reserve. This is a significant reduction
    in the Army. Almost every installation will be affected in some way.
    Given that total facility square footage at Army installations have
    either remained constant or slightly increased since 2005, a reduction
    of 14 percent in end strength is likely to create excess U.S.-based
    installation infrastructure. A future round of BRAC is essential in
    order to Army identify excess infrastructure and prudently align
    supporting civilian personnel and infrastructure with reduced force
    structure and reduced industrial base demand.
        The Army requires authority from Congress to close or realign
    installations in the United States above certain civilian employee
    thresholds (e.g. 10 U.S.C. 2687). At overseas installations (i.e., Asia
    and Europe), the Army is consolidating facilities already and
    congressional authorization is not required. The Army anticipates that
    a future round of BRAC, if authorized by Congress, would more closely
    resemble prior rounds of BRAC in which elimination of excess
    installation capacity was the main objective. BRAC allows for a
    systematic review of existing DOD installations for joint and multi-
    service component utilization.
        Admiral Ferguson. Navy supports a future BRAC round. BRAC offers
    the opportunity to objectively assess and make informed judgments
    regarding the future size of our infrastructure.
        General Amos. Yes, it is impossible for me to see how any aspect of
    the DOD budget would not have to bear some of the burden of
    sequestration. While I see this as essential for the Department, I do
    not foresee a requirement to reduce the Marine Corps base and station
    footprint. The magnitude of the fiscal reduction to DOD necessitates a
    look at every aspect of our operations, and in order to achieve some
    degree of balance, a reduction of bases and stations will likely have
    to occur. The Marine Corps represents a very small fraction of the
    overall DOD budget, and our expeditionary nature has resulted in a very
    lean footprint when it comes to bases and stations. For DOD as a whole,
    I think we must undertake a holistic review of the entirety of the DOD
    budget, and the closure of bases and stations must be a part of this
    review. Sequestration is driving the DOD to a level of funding in which
    nothing can be considered sacred and withheld from consideration; in an
    era of cuts to personnel, readiness, infrastructure, modernization, and
    forward presence, we simply cannot eliminate a reduction to bases from
    consideration.
        General Welsh. Yes. In 2004, OSD's report to Congress stated the
    Air Force had excess infrastructure. BRAC 2005 eliminated very little
    of the excess infrastructure and since then the Air Force has retired
    hundreds of aircraft and reduced its manpower without the ability to
    make corresponding infrastructure reductions. Even if there are no
    further force or manpower reductions, the Air Force will need Base
    Realignment and Closure to provide the most effective and likely only
    method of bringing infrastructure in balance with strategy, force
    structure and fiscal capability.
        General Grass. I believe an objective review of DOD installations
    can provide critical information to inform national debates if there is
    a need for significant drawdown in installations. The Base Closure and
    Realignment Commission process provided a vital model that could be
    useful if similar conditions that prompted the original BRAC process
    arise.

        230. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, what impact does the sequestration of the
    defense budget have on the F-35?
        Secretary Carter. The Under Secretary of Defense for Acquisition,
    Technology, and Logistics is working closely with the F-35 program
    office, the Services, and the contractor to preserve the development
    program to the maximum extent possible; keep Initial Operational
    Capability options open with Block 2B; support and sustain all
    delivered aircraft; and preserve production efficiencies and maintain
    production capacity to the maximum extent possible. However, at a
    minimum, sequestration reductions will decrease the fiscal year 2013
    LRIP 7 quantities, increasing unit recurring flyaway cost. We would
    also see a decrease in investments in tooling, redesigns for out of
    production parts, and cost reduction initiatives. Additionally, if a
    furlough of government workers and the shutdown of military airfields
    on weekends were to occur, these would significantly slow the execution
    of the F-35 flight test and delay fielding of capability.
        If sequestration were to occur as laid out today, the F-35
    development program would lose approximately $325 million in fiscal
    year 2013. To preserve the block 2B software delivery date and all the
    block 2B capability, the program would have to defer some work being
    done on the block 3I/3F capabilities. This deferral would delay the
    fielding of our international partners' capability as well as the full
    warfighting capability for the U.S. Services.
        Secretary Hale. The Under Secretary of Defense for Acquisition,
    Technology, and Logistics is working closely with the F-35 program
    office, the Services, and the contractor to preserve the development
    program to the maximum extent possible; keep Initial Operational
    Capability options open with Block 2B; support and sustain all
    delivered aircraft; and preserve production efficiencies and maintain
    production capacity to the maximum extent possible. However, at a
    minimum, sequestration reductions will decrease the fiscal year 2013
    LRIP 7 quantities, increasing unit recurring flyaway cost. We would
    also see a decrease in investments in tooling, redesigns for out of
    production parts, and cost reduction initiatives. Additionally, if a
    furlough of government workers and the shutdown of military airfields
    on weekends were to occur, these would significantly slow the execution
    of the F-35 flight test and delay fielding of capability.
        If sequestration were to occur as laid out today, the F-35
    development program would lose approximately $325 million in fiscal
    year 2013. To preserve the block 2B delivery date and all the block 2B
    capability, the program would defer work being done on the block 3I/3F
    capabilities. This deferral would delay the fielding of our
    international partners' capability as well as the final full
    warfighting capability for the U.S. Services.
        General Dempsey. In today's fiscal environment, we must carefully
    consider all options. As the largest acquisition in DOD history, many
    will see the F-35 as an attractive candidate for sequestration cuts.
    However, the U.S. military must be able to defeat anti-access, area-
    denial threats worldwide. F-35s bring maneuverability, survivability,
    advanced avionics and stealth technology attributes which support our
    new defense strategy. The Department supports the continued development
    and fielding of the F-35 as a large component of the Department's
    future airborne capability as well as an evolutionary successor for an
    aging legacy fleet.
        General Odierno. I do not believe that sequestration of the Army's
    budget will directly impact the F-35 program. However, the F-35 program
    may be impacted as part of sequestration to the overall DOD budget, and
    those of the other Services.
        Admiral Ferguson. Sequestration will reduce the Navy's investment
    programs (about $7.2 billion) as well as O&M funding. This reduction
    will compel us to reduce the number of F-35s procured in fiscal year
    2013 by at least four aircraft.
        General Amos. Immediate reductions in procurement will delay the
    Marine Corps' ability to transition out of legacy aircraft which
    extends the burden of their sustainment costs. Reductions in RDT&E
    funding will impact the integration and development of critical combat
    capabilities, to include Small Diameter Bomb II, Electronic Attack
    enhancements, deployable ALIS support system, and air-ship integration
    activities. For the Marine Air Ground Task Force, our Nation's force in
    readiness, diluted and degraded aviation capabilities will negatively
    impact the Marine Corps' ability to support the National Security
    Strategy as the country's crisis response force.
        General Welsh. The Department is assessing the impacts to all
    acquisition programs, including the F-35 program, in the event that
    sequestration takes place. The Under Secretary of Defense for
    Acquisition, Technology, and Logistics is working closely with the F-35
    program office, the Services, and the contractor to minimize the
    effects that sequestration would have on the F-35 program. The
    Department is prioritizing the following areas--Preserve the
    development program to the maximum extent possible; keep Initial
    Operational Capability options open with Block 2B; support and sustain
    all delivered aircraft; and preserve production efficiencies and
    maintain production capacity to the maximum extent possible. However,
    sequestration reductions will decrease the fiscal year 2013 Low Rate
    Initial Production (LRIP) 7 quantities by three to five Air Force
    Conventional Take Off and Landing (CTOL) aircraft, depending upon the
    sequestration assumptions we consider and the associated risk; this
    will increase unit recurring flyaway cost. We would also see a decrease
    in investments in tooling, redesigns for out of production parts, and
    cost reduction initiatives. Additionally, if a furlough of government
    workers occurs and the shutdown of military airfields on weekends
    occurs, this would significantly slow the execution of the F-35 flight
    test and delay fielding of capability.
        If sequestration occurs as laid out today, the Air Force F-35
    development program would lose approximately $176 million in fiscal
    year 2013 of RDT&E funds. Combined with the Department of Navy, the
    total fiscal year 2013 loss would be approximately $325 million in
    RDT&E funding. To preserve the block 2B delivery date and all the block
    2B capability, the program would defer work being done on the block 3I/
    3F capabilities. This deferral would delay the fielding of our
    international partners' capabilities as well as the final full
    warfighting capability for the U.S. Services.
        General Grass. Sequestration could delay or lead to a reduction of
    F-35 procurement which puts at risk Air National Guard active-
    association initiatives that are most cost-effective for fielding the
    next-generation F-35. If delays or reductions in F-35 procurement are
    substantial, then Air National Guard fighter force structure will not
    be recapitalized as aging F-16 aircraft exhaust their structural lives.
    Mitigation would include unplanned service life extension programs
    (SLEP) for aging, less-capable F-16 aircraft, at the expense of any
    savings realized from F-35 procurement delays or reductions and leaving
    the Nation with a less-capable, less enduring fighter force.

        231. Senator Lee. Secretary Carter, Secretary Hale, General
    Dempsey, General Odierno, Admiral Ferguson, General Amos, General
    Welsh, and General Grass, what will the shift to the Pacific mean for
    your forces?
        Secretary Carter. Rebalancing toward the Asia-Pacific region is a
    whole-of-government approach for the United States and a key pillar of
    the defense strategy. For the Defense Department, the rebalance
    encompasses a focus on strengthening our regional defense
    relationships, building the capacity of key allies and partners, as
    well as maintaining the United States' ability to deter conflict and
    respond to any contingencies in the Asia-Pacific region. The rebalance
    also requires the Department to develop new concepts and capabilities
    in order to maintain a technological edge, our freedom of action, and
    the ability to project power in the region. That said, sequester-level
    reductions would require some very hard choices and, in principle, all
    elements of the defense program would be on the table.
        Secretary Hale. Rebalancing toward the Asia-Pacific region is a
    whole-of-government approach for the United States and a key pillar of
    the defense strategy. For the Defense Department, the rebalance
    encompasses a focus on strengthening our regional defense
    relationships, building the capacity of key allies and partners, as
    well as maintaining the United States' ability to deter conflict and
    respond to any contingencies in the Asia-Pacific region. The rebalance
    also requires the Department to develop new concepts and capabilities
    in order to maintain a technological edge, our freedom of action, and
    the ability to project power in the region. That said, sequester-level
    reductions would require some very hard choices and, in principle, all
    elements of the defense program would be on the table.
        General Dempsey. The rebalance is a whole-of-government effort, and
    it obviously involves more than just bringing more forces to the
    region. While this is a necessary component of the Defense Department's
    commitment to the rebalance, it is just a small part. The main effort
    of the rebalance is building and reinvigorating partnerships and
    relationships. We are paying more attention to the needs of the
    security environment in the Asia-Pacific; participating in more
    engagements with our increased forces to develop relationships,
    capabilities, understanding, and trust; we are also bringing quality to
    the region, ensuring that our most advanced capabilities are resident
    in and available to the region. Our forces are posturing to maintain
    the stability that has enabled unparalleled economic development,
    raised millions out of poverty, and contributed immensely to economic
    prosperity here at home.
        General Odierno. As the transition in Afghanistan continues, the
    Army reinforces the defense strategy by engaging with the region's
    large armies across the broad spectrum of Army capabilities. The Army
    initiated a balanced approach in several ways:

        (a)  assigning more Army forces to U.S. Pacific Command than any
    other combatant command for fiscal year 2014;
        (b)  improving Army pre-positioned material in the region to build
    multilateral training collaboration opportunities;
        (c)  increasing Building-Partner-Capacity activities;
        (d)  building tailorable and scalable packages for Humanitarian
    Assistance/Disaster Relief and contingency operations in support of
    PACOM Commander.
        (e)  increasing the rank of the U.S. Army Pacific Commander to
    four-star general to allow comparable leverage with his regional land-
    power peers.

        The Army supports the Republic of Korea (ROK) as the cornerstone of
    U.S. defense partnerships to field the necessary capabilities which
    enable the transition of wartime operational control to Korea.
    Beginning in fiscal year 2013, the Army is planning to provide a
    stabilizing but ready presence in the region by rotating select forces
    to the peninsula in support of peacetime and contingency response
    activities.
        Sequestration and budget uncertainty, however, will inhibit the
    Army's ability to rebalance to the Pacific other than maintenance of
    its forces on the Korean peninsula.
        Admiral Ferguson. The Navy is renewing its emphasis in the Asia-
    Pacific region in four ways: The ship and air forces built and deployed
    to the region; the capabilities developed and fielded for the region;
    the intellectual capital applied to Asia-Pacific security challenges;
    and the homeporting balance of U.S. ships toward the Pacific Coast and
    the Asia-Pacific region. The Navy continuously reviews and assesses
    plans for reaching the goal of 60 percent Pacific homeports for the
    Fleet in 2020.
        General Amos. The Marine Corps is adjusting its force lay-down in
    the Asia-Pacific region to support the President's Strategic Guidance
    for DOD issued in January 2012. As our Nation is shifting its strategic
    focus to the Pacific, in many ways the Marine Corps is returning home
    to our historic backyard. We have a long history in the Pacific replete
    with many hard-won victories, so this area of the world is in our
    institutional DNA.
        The Marine Corps is the premier expeditionary force in readiness--
    ``the most ready when the Nation is least ready.'' We have begun our
    rebalance to the Pacific. As the Marine Corps draws down its forces in
    Afghanistan, we are resetting in stride, strategically balancing
    capabilities in Hawaii, Guam, Japan, and Australia so that we can
    train, exercise, and operate with allies and partners, and to be able
    to respond to crises and promote security cooperation across the
    region. Inter-theater lift is an essential requirement for mobility in
    the Asia Pacific Region. Given the vast distances in this area of the
    world, strategic maritime lift is necessary to provide our forward
    deployed forces with the required mobility and force projection to meet
    combatant commander requirements.
        No forces are more suitable to addressing emerging strategic needs
    in the Pacific than naval amphibious forces. Naval amphibious forces
    can station off the coast and leave a temporary and light footprint
    when partnering or conducting humanitarian operations, or they can
    serve as an enabler for a larger joint force effort. A resumption of
    the Marine UDP in the Pacific has reestablished a key component of the
    Nation's stabilizing presence in the Asia-Pacific region. The
    establishment of a rotational presence of marines in Darwin, Australia
    has already had a positive impact on the confidence of our allies and
    our ability to respond to crises in the South and Southeast Asian
    littoral.
        General Welsh. The strategic shift to the Pacific requires a high
    state of full-spectrum readiness and continued modernization. Twenty-
    two years of high OPTEMPO and combat operations have deterred our
    ability to focus on full-spectrum readiness for the A2/AD environment;
    it will take time and resources to recover. Sequestration will continue
    to sacrifice readiness and severely impact modernization efforts
    leading to unmanageable risk in the ability to execute national
    strategic guidance.
        General Grass. I see the proposed shift to the Pacific as an
    opportunity for the National Guard. We seek to be a full partner in the
    rebalancing of forces towards the Pacific.

        232. Senator Lee. Secretary Carter, why did you wait until after
    sequestration was scheduled to kick in to ask each defense component to
    report proposed actions and implementation plans?
        Secretary Carter. I directed a start to early actions and
    implementation planning on January 10, 2013, almost 2 months before
    sequestration is currently scheduled to start. Moreover, over the past
    year we did a great deal of preplanning and communicated the
    fundamental problems sequester would cause repeatedly in speeches and
    testimony, both before and after we started planning. I felt that it
    was premature to order detailed budget planning much earlier--say, last
    summer as some have urged. As it turns out, that planning would have
    been largely wrong because it couldn't have taken into account the far-
    reaching effects of the Continuing Resolution and it would have had the
    wrong dates for the beginning of sequestration. Even though it would
    have been wrong, premature planning would have forced an early start to
    the degradation in morale and productivity, and the overall increase in
    inefficiency, that we are experiencing right now as we do detailed
    planning. Finally, no matter how much planning we do, or when we do it,
    the adverse effects of sequestration and the Continuing Resolution
    cannot be significantly offset. The only good solution is to detrigger
    sequestration and pass appropriations bills.
        233. Senator Lee. General Grass, why does the National Guard feel
    the need to cut Senior Scout recently spending $300 million on
    modifications and upgrades?
        General Grass. The Air Force's rationale for the divestment of
    Senior Scout is based on its long-term airborne signals intelligence/
    linguist migration plan.

        [Whereupon, at 12:06 p.m., the committee adjourned.]

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