[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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